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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14D-9
(Amendment No. 2)
Solicitation/Recommendation Statement Pursuant to
Section 14(d)(4) of the Securities Exchange Act of 1934
WLR FOODS, INC.
(Name of Subject Company)
WLR FOODS, INC.
(Name of Person(s) Filing Statement)
Common Stock, No Par Value
(including the associated preferred stock purchase rights)
(Title of Class of Securities)
929286 10 2
(CUSIP Number of Class of Securities)
Delbert L. Seitz
Chief Financial Officer
WLR Foods, Inc.
P.O. Box 7000
Broadway, Virginia 22815
(703) 896-7001
(Name, address and telephone number of person authorized to receive notice
and communications on behalf of the person(s) filing statement)
Copies to:
Neil T. Anderson, Esq. John W. Flora, Esq.
Sullivan & Cromwell Wharton, Aldhizer & Weaver
125 Broad Street 100 South Mason Street
New York, New York 10004 Harrisonburg, Virginia 22801
(212) 558-4000 (703) 434-0316
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This Amendment No. 2 amends and supplements the
Solicitation/Recommendation Statement on Schedule 14D-9, dated
March 14, 1994, as amended (the "Schedule 14D-9"), filed by WLR
Foods, Inc., a Virginia corporation (the "Company"), relating to
the tender offer disclosed in the Schedule 14D-1, dated March 9,
1994, as amended (the "Schedule 14D-1"), of the bidder, Tyson Foods,
Inc., a Delaware corporation (the "Bidder"), to, through its
wholly-owned subsidiary, WLR Acquisition Corp., purchase all of the
outstanding Shares upon the terms and subject to the conditions
set forth in the Offer to Purchase, dated March 9, 1994, and the
related Letter of Transmittal (together, the "Offer").
Capitalized terms used and not defined herein shall have the
meanings set forth in the Schedule 14D-9.
Item 8. Additional Information to be Furnished.
Item 8(d) is hereby amended and supplemented by
adding thereto the following:
On March 21, 1994, the Bidder filed an
amended Answer and Counterclaims (the "Bidder's Amended Answer
and Counterclaims"), a copy of which is filed as Exhibit 17 hereto
and incorporated herein by reference.
Item 9. Material to be Filed as Exhibits.
Item 9 is hereby amended and supplemented by
adding thereto the following:
Exhibit 17 -- Bidder's Amended Answer and Counterclaims.
Exhibit 18 -- Form of Letter to Shareholders of the Company,
dated March 30, 1994.
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SIGNATURE
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.
Dated: March 29, 1994
WLR FOODS, INC.
By: /s/ James L. Keeler
Name: James L. Keeler
Title: President and Chief
Executive Officer
<PAGE> COVER
EXHIBIT 17
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. and )
WLR ACQUISITION CORP., ) Civil Action No. 94-0012(H)
)
Counterclaim- )
Plaintiffs )
)
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. )
______________________________)
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AMENDED ANSWER AND COUNTERCLAIMS
ANSWER
Defendant Tyson Foods, Inc. ("Tyson Foods"), by its
undersigned 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 Foods
denies them.
2. Admits that the Amended Complaint purports to seek a
declaration that Article 14, Va. Code Sections 13.1-725 et
seq. and Article 14.1, Va. Code Sections 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 Foods
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 Foods believes that WLR's
Directors breached their fiduciary duties by adopting the
Rights Plan and continue to breach their fiduciary duties by
not redeeming the Rights issued thereunder. Tyson Foods
denies the remaining allegations, except to the extent that
the letter dated January 24, 1994 is quoted accurately.
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7. Admits that Tyson Foods believes that Articles 14
and 14.1 of Virginia's Stock Corporation Act are invalid on
their face and as applied. Tyson Foods denies the remaining
allegations, except 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 Foods is aware that the Board of
Directors of WLR adopted a "Shareholders Rights Plan." Tyson
Foods is without sufficient information to admit or deny the
remaining allegations and therefore denies them.
16. Admits that Tyson Foods is aware that the WLR Board
of Directors adopted a "Shareholders Rights Plan." Tyson
Foods refers to the full text of the "Shareholders Rights
Plan" for its content.
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17. Admits that Tyson Foods is aware that the WLR Board
of Directors adopted a "Shareholders Rights Plan." Tyson
Foods refers to the full text of the "Shareholders Rights
Plan" for its content.
18. Denies, except to the extent that the allegations
constitute legal conclusions to which no response is required.
19. Tyson Foods is without knowledge or information
sufficient to form a belief as to the truth of the allegations
relating to WLR's belief. Tyson Foods 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 Foods denies them.
23. Tyson Foods denies every allegation not specifically
admitted.
COUNTERCLAIMS
Counterclaim plaintiffs Tyson Foods and WLR Acquisition
Corp. ("Tyson Acquisition")(collectively "Tyson"), by their
undersigned counsel, state as their counterclaims:
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THE PARTIES
1. Tyson Foods is a Delaware corporation with its
principal place of business in Arkansas. Tyson Foods has
operations throughout the United States, including facilities
in the Commonwealth of Virginia. At all relevant times, Tyson
Foods owned shares of WLR.
2. Tyson Acquisition is a direct, wholly-owned
subsidiary of Tyson Foods. It is a Delaware corporation with
its principal place of business in Arkansas. Tyson
Acquisition has not engaged in any business since its
incorporation other than incident to its organization and in
connection with an offer to purchase for cash all outstanding
shares of common stock of WLR. On March 1, 1994, Tyson Foods
transferred to Tyson Acquisition, as a contribution to its
capital, 600,000 shares of WLR theretofore purchased by Tyson
Foods.
3. 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.
4. Counterclaim defendants 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. Counterclaim
defendants are citizens of states other than Delaware and
Arkansas.
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JURISDICTION AND VENUE
5. This Court has subject matter jurisdiction over
these counterclaims pursuant to:
(a) 28 U.S.C. Section 1331 because the matter in
controversy arises under the United States Constitution and
the laws of the United States;
(b) 28 U.S.C. Section 1332 because there is
complete diversity of citizenship between counterclaim
plaintiffs and the counterclaim defendants and the amount in
controversy, exclusive of interest and costs, exceeds $50,000;
(c) 28 U.S.C. Section 1337(a) because the action
arises under an act of Congress regulating commerce;
(e) 28 U.S.C. Section 1367 under the principles of
supplemental jurisdiction.
NATURE OF THE COUNTERCLAIMS
6. The counterclaims asserted herein concern actions
taken by counterclaim defendants to prevent a fair and timely
referendum by WLR's disinterested shareholders on Tyson's cash
tender offer ("Tyson Offer") under the Virginia Control Share
Acquisitions Act (Article 14.1 of the Virginia Stock
Corporation Act)("Control Share Act") and a meaningful
opportunity for WLR's shareholders to tender their shares
pursuant to Tyson's all cash tender offer.
7. In its simplest form, the Control Share Act strips
the voting rights of shares acquired by an offeror, such as
Tyson, once a certain number of shares are acquired, unless
prior to the
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acquisition a majority of the corporation's disinterested
shareholders pass a resolution granting voting rights to those
shares.
8. In direct response to Tyson Foods' merger proposal,
and with full expectation that WLR's rejection of the proposal
would be followed by a tender offer, counterclaim defendants
engaged in a flurry of activity. They erected barriers to
prevent the success of a Tyson Foods' tender offer and to
deprive WLR's disinterested shareholders of their corporate
franchise. Counterclaim defendants granted lucrative "golden
parachute" contracts to senior management, rewarding them with
significant additional compensation if a change in control of
WLR occurs. In addition, WLR adopted new severance
arrangements for all salaried and hourly clerical employees.
Counterclaim defendants also adopted a discriminatory
shareholder rights plan designed to make it prohibitively
expensive for Tyson Foods to acquire 15% or more of WLR's
outstanding common stock. Finally, and most strikingly, they
adopted a series of by-laws and purported to make management
changes that counterclaim defendants publicly acknowledge was
directed at the outcome of a referendum by disinterested
shareholders under the Control Share Act.
9. Tyson seeks a declaratory judgment and a preliminary
and permanent injunction (a) enjoining the actions taken by
counterclaim defendants that interfere with conduct of a
prompt, fair and impartial referendum under the Control Share
Act and Tyson's right to a meaningful opportunity for its
tender offer and
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(b) declaring the Control Share Act unconstitutional under the
Supremacy and Commerce Clauses of the United States
Constitution.
REGULATORY SCHEME GOVERNING TYSON OFFER
10. The Williams Act, along with regulations of the
Securities and Exchange Commission ("SEC"), governs the Tyson
Offer. The purpose of the Williams Act is to protect
shareholders through a policy of neutrality between management
and offeror so that shareholders are free to decide for
themselves whether to accept or reject a tender offer. In
passing the Williams Act, Congress deliberately avoided
tipping the balance in a tender offer contest in favor of
management or the offeror.
11. The Williams Act ensures investor autonomy, and
neutrality between management and offeror, by requiring full
disclosure to shareholders and establishing a timetable for
tender offers. Congress recognized that significant delays in
the tender offer process substantially benefit management,
disadvantage offerors, and harm shareholders by providing time
for management, acting in its self-interest, to erect barriers
that prevent a change of corporate control. Delays of even a
few days or weeks may spell the difference between the success
or failure of a tender offer. When a tender offer is
unreasonably delayed, the market for the target corporation's
stock often fluctuates dramatically, uncertainty prevails, and
shareholders run a serious risk of missing out on the
opportunity to sell their shares at a premium. For these
reasons, the Williams Act sets time periods for how the
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tender offer should proceed. Under federal law, tender offers
must be free to proceed without unreasonable delay.
12. The State of Virginia also regulates tender offers.
The most formidable barrier in Virginia's regulatory scheme is
the Control Share Act, a statute that WLR has taken, reshaped
and exploited as a weapon against Tyson and WLR shareholders.
Under the Act, a shareholder that owns, directly or
beneficially, at least five percent of the target's
outstanding voting shares is entitled to request a special
shareholder meeting for determining whether voting rights will
be extended by the disinterested shareholders. The special
meeting must be held between thirty and fifty days from the
date that the special meeting is requested unless the offeror
agrees otherwise. The Control Share Act also prohibits
solicitations of proxies no sooner than thirty days before the
special meeting.
13. Because no offeror will purchase shares that do not
carry voting rights, the special meeting is tantamount to a
referendum on the tender offer. If the offeror loses the
vote, the tender offer, as a practical matter, cannot proceed.
A fair and impartial vote at the special meeting under the
Control Share Act is critical to the viability of tender
offers for shares of Virginia corporations.
14. The Control Share Act requires the resolution to
pass by a majority of all outstanding shares (exclusive of
"interested shares", that is, shares owned by the offeror, the
target's officers, and the target's directors who also are
employees of the target), regardless of whether all
shareholders vote. The effect
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of this is to count all non-votes as votes for management and
against the offeror. Non-votes typically fall in the range of
five to ten percent of all voting shares outstanding.
BACKGROUND TO TYSON OFFER
15. Tyson is engaged primarily in the business of
producing chicken and chicken products for wholesale and
retail markets nationally and internationally. WLR is in a
similar line of business, but its strength lies in the
production of turkey and turkey products for wholesale and
retail markets. The markets for turkey products is separate
and distinct from the market for chicken products. WLR's
operations are based in the mid-Atlantic region encompassing
the states of Virginia, West Virginia, Pennsylvania and
Maryland, while Tyson's presence in the region is
comparatively small. A strategic merger of Tyson and WLR
makes good business sense.
16. Beginning in early January 1994, a representative of
Tyson Foods approached counterclaim defendant Keeler about the
possibility of a friendly merger of Tyson Foods with WLR at a
price of $30 per share for each outstanding share of WLR.
Following further discussions between Tyson Foods and WLR
about a possible merger, Keeler informed Tyson Foods on
January 24, 1994 that WLR was not interested in discussing
Tyson Foods' proposal further.
17. Following that conversation, Tyson Foods delivered a
letter to WLR's Board of Directors dated January 24, 1994
proposing a merger of WLR with Tyson Foods (or a subsidiary of
Tyson Foods). Tyson's merger offer proposed to pay WLR
shareholders $30 per share
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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. The
letter pointed out Tyson Foods' belief that "there are
extremely attractive opportunities for pursuing the continued
growth and development of our two companies . . . ." The
letter also explained that Tyson Foods was prepared to
negotiate a merger agreement in good faith and suggested
possible approaches to the transaction that would benefit all
of WLR's shareholders.
18. The WLR response to the proposal was swift and
inflexible. On January 25, 1994, WLR's Board of Directors
issued a letter to WLR's shareholders. It stated, among other
things, that, "as it must, [WLR's Board of Directors] will
meet in the near future to evaluate Tyson's offer. . . . And,
as always, we will keep you posted on important corporate
developments." When the WLR Board met, the only thing it
evaluated was how to stiff-arm the proposal from Tyson Foods
by: (a) erecting barriers to prevent WLR's disinterested
shareholders from approving, or indeed voting on, a Tyson
tender offer; and (b) establishing means to thwart WLR's
shareholders from tendering, and Tyson from accepting, any WLR
shares pursuant to a Tyson tender offer.
THE DIRECTORS' CONFLICTS OF INTEREST
19. As set forth more fully below, the Directors have
inherent conflicts of interest in regard to any corporate
transaction between WLR and Tyson and/or the Tyson Offer and
had such conflicts at all relevant times. The conflicts arise
from,
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among other things, (a) the overlapping family and business
relations among the Directors; (b) the direct benefits
received from WLR by the Directors; (c) the indirect benefits
received from WLR by their immediate families; and (d) the
indirect benefits received from WLR by business entities
related to the Directors. By reason of such conflicts, the
Directors had an inherent interest, singly and as a group, to
perpetuate themselves in office and therefore to oppose any
change in control, even a noncoersive proposal, such as the
Tyson Offer, which contemplates a Control Share referendum by
disinterested shareholders.
20. Among the evidences of the Directors' inherent
conflicts of interest with respect to the Tyson Offer are the
following:
(a) Counterclaim defendant Charles W. Wampler, Jr.,
Chairman of the WLR Board, and counterclaim defendant William
D. Wampler are brothers.
(b) Counterclaim defendant Stephen W. Custer is a
nephew of both counterclaim defendants Charles W. Wampler, Jr.
and William D. Wampler.
(c) When Tyson proposed to WLR a merger with Tyson,
counterclaim defendants George E. Bryan and William D. Wampler
were Senior Vice Presidents of WLR and counterclaim defendants
Charles W. Wampler, Jr. and Herman D. Mason were, in their
capacities as Chairman and Vice Chairman of WLR, respectively,
officers and employees of WLR.
(d) During the fiscal year ended July 3, 1993, WLR
paid $34,029 to Custer Associates, a consulting firm owned by
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counterclaim defendant Stephen W. Custer (nephew to the
Wampler brothers).
(e) In addition to his compensation as an employee,
entities related to counterclaim defendant William D. Wampler
were paid by WLR in the fiscal year ended July 3, 1993, a
total amount of $391,327.
(f) Counterclaim defendant James L. Keeler is Chief
Executive Officer and President of WLR and receives in those
capacities compensation of almost $600,000 as well as valuable
stock options. Keeler's son received payments for the fiscal
year ended July 3, 1993 from WLR and its subsidiaries of
almost $100,000.
(g) Counterclaim defendant James L. Mason received
from WLR for its fiscal year ended July 3, 1993 compensation
of almost $250,000 as well as valuable stock options.
(h) Counterclaim defendant Charles L. Campbell and
his son received payments for the fiscal year ended July 3,
1993 from WLR and its subsidiaries totalling more than
$150,000.
(i) Counterclaim defendant J. Craig Hott received
from WLR for the benefit of Hott's Farming, Inc., of which he
is a vice president, payments for the fiscal year ended July
3, 1993 from WLR and its subsidiaries totalling more than
$250,000. In addition, WLR purchased, either directly or
through third-party suppliers, more than $800,000 of fuel oil
and propane from Franklin Oil Co, Inc., of which Hott is a
director and minority shareholder.
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(j) Counterclaim defendant Calvin G. Germroth, a
broiler producer, received from WLR and its subsidiaries in
fiscal year 1993 almost $36,000.
21. The Directors were and are fearful that a merger of
WLR with Tyson and/or the acquisition of voting control of WLR
by Tyson could jeopardize the lucrative Director Benefits that
the Directors receive directly and indirectly from WLR.
COUNTERCLAIM DEFENDANTS' IMPROPER ACTIONS
22. On February 4, 1994, the WLR Board held a meeting in
which they rejected Tyson Foods' proposal. At that February 4
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, to exercise by eliminating any opportunity for
WLR's disinterested shareholders to exercise their shareholder
rights, as contemplated by the Williams Act and the Control
Share Act, thereby attempting to deprive them of the benefits
of an acquisition proposal from Tyson or any other third party
not endorsed by the WLR Board.
23. 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");
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(c) adopted certain severance packages for salaried
and hourly employees ("Other Parachutes");
(d) amended the corporate bylaws ("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 an expected tender offer by Tyson Foods;
(e) took actions which denied WLR's disinterested
shareholders the opportunity to participate in a vote on a
tender offer by Tyson Foods or another party; 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 and
their families in the future, again to enhance management's
voting power to block an expected tender offer by Tyson Foods.
These actions are described in WLR's Form 10-Q for the
quarterly period ending January 1, 1994, which was filed with
the SEC on February 15, 1994 ("Form 10-Q").
A. THE POISON PILL
24. 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.
25. 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
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automatically void, and all other Rights holders automatically
may purchase 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.
26. 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 dramatically
dilute a potential acquiror's voting power and equity interest
in WLR. As a result, the adoption of the Poison Pill has the
effect of deterring any 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, including the Tyson Offer.
27. The Directors, acting in breach of their fiduciary
duties, adopted the Poison Pill with the intent and purpose of
thwarting an expected tender offer by Tyson Foods and with the
intent and purpose of preventing such a tender offer from
succeeding even if Tyson Foods received the favorable vote of
a majority of WLR's disinterested shareholders under the
Control Share Act approving a tender offer by Tyson Foods.
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B. THE GOLDEN AND OTHER PARACHUTES
28. The Golden Parachutes adopted by the Board of
Directors of WLR provide for extremely lucrative financial
benefits to WLR's present management, one of whom is presently
a member of WLR's Board of Directors and another of whom is
related to one of the 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 at the least reduce the price that WLR's
shareholders might receive as a result of any such
acquisition.
29. In its Schedule 14D-9, filed with the SEC on March
14, 1994, WLR for the first time disclosed that the maximum
aggregate lump sum amount that could be payable under the
Golden and Other Parachutes, but exclusive of "gross-up"
payments and fringe benefit costs, is approximately $7.3
million. Even this figure dramatically understates the true
cost of the Parachutes, because "gross up" payments will
result in millions of dollars of additional costs, all or part
of which may not be deductible for tax purposes by WLR.
30. The Directors adopted the Golden and Other
Parachutes with the intent and purpose of thwarting an
expected tender offer by Tyson Foods and with the intent and
purpose of benefitting themselves without regard to the best
interests of WLR or its shareholders.
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C. DISENFRANCHISEMENT OF WLR'S SHAREHOLDERS
31. One of the entrenchment tactics of counterclaim
defendants at the February 4 Board meeting was an amendment of
the WLR Bylaws ("Disenfranchisement Amendment") that provides
that the record date for any special meeting held pursuant to
the Control Share Act will be the day on which an Acquiring
Person (as defined by the statute) requests such a meeting.
This Disenfranchisement Amendment has the effect of
eliminating the advance notice that otherwise would be given
(and is required under the SEC proxy rules) with respect to a
record date for a meeting of shareholders. The
Disenfranchisement Amendment further favors management in a
referendum under the Control Share Act because absent advance
notice of the record date a potentially significant number of
WLR shareholders, as a practical matter, may be unable to vote
their shares at the meeting. The inability of such
shareholders to vote is of great significance in that at the
special meeting any shares not voted count as votes in favor
of WLR's management.
32. The Disenfranchisement Amendment, in combination
with other provisions of the Control Share Act, make it
extremely difficult for any acquiring person, including Tyson,
effectively to make its case to WLR's shareholders in
connection with a Control Share referendum. Moreover, in
light of the Disenfranchisement Amendment adopted by WLR, the
operation of the Control Share Act would conflict with the
operation of federal law regarding the solicitation of
proxies.
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33. The Directors adopted the Disenfranchisement
Amendment with the intent and purpose of thwarting an expected
tender offer by Tyson Foods and with the intent and purpose of
preventing a fair and impartial vote by WLR's disinterested
shareholders under the Control Share Act.
D. RIGGING THE VOTE
34. The Control Share Act requires the resolution
granting voting rights to the Acquiring Person to be approved
by a majority of all of the shares entitled to vote other than
"interested shares". Interested shares include shares owned
by the acquiring person (in this case, Tyson). Interested
shares also include shares owned by the target's officers and
its directors who also are employees of the target.
35. As disclosed in WLR's 1993 proxy statement, WLR's
Directors and executive officers, as a group, beneficially own
1,780,881 shares of WLR common stock or 15.9% of such stock.
On information and belief, the Directors beneficially owned
about 14.4% of WLR's common stock prior to the February 4
meeting of the WLR Board.
36. Under the Control Share Act, the shares as to which
counterclaim defendants George E. Bryan, James L. Keeler,
Herman D. Mason, Charles W. Wampler, Jr. and William D.
Wampler were entitled to vote or direct the voting were
interested shares within the meaning of the Control Share Act.
Accordingly, such Directors were not entitled to vote such
shares in a Control Share referendum.
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37. Unwilling to abide a vote by WLR's disinterested
shareholders on a Tyson tender offer, the Directors elected to
elevate form over substance and to convert approximately 10%
of WLR's common stock owned by four of the counterclaim
defendants (then management insiders) into "disinterested
shares." In particular, the Directors amended the 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 officers of WLR. Notwithstanding this supposed
"clarification," in truth and in fact, both the Chairman and
the Vice Chairman of the Board, counterclaim defendants
Charles W. Wampler, Jr. and Herman D. Mason, respectively,
always have acted as officers of WLR, as well as to WLR's
Board. Moreover, the positions of Chairman and Vice Chairman
of the WLR Board are officer-positions so the individuals
occupying those positions are officers of WLR, regardless of
the compensation that they receive.
38. Simultaneously, two members of the Board,
counterclaim defendants William D. Wampler and George E.
Bryan, purported to resign as Senior Vice Presidents of WLR,
although they continued as members of the WLR Board.
Counterclaim defendants Charles W. Wampler, Jr., Herman D.
Mason, William D. Wampler, and George E. Bryan, the four of
whom control approximately 10% of the shares of WLR, purported
to resign as employees of WLR but remained as directors.
39. In connection with the alleged termination of
employment of counterclaim defendants C. Wampler, H. Mason, W.
Wampler and G.
<PAGE>
<PAGE> 20
Bryan, each was provided with individual deferred compensation
agreements that provide "post-retirement" health insurance
coverage for life for these directors and their families. The
granting of such remunerative agreements was a clear breach of
the Directors' fiduciary duties and was a quid pro quo for the
votes of these four Directors against the Tyson Offer in a
Control Share referendum. WLR has not disclosed the value of
such deferred compensation arrangements.
40. The Directors' primary motive for approving the
alleged management changes described above ("Anti-Referendum
Changes") was to circumvent the fundamental purpose of the
Control Share Act, which is to leave solely to the
disinterested shareholders the decision whether "interested"
shareholders will have a right to vote on a transaction.
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, totalling approximately 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 Control Share Act. The wrongful effect of
the Board's actions is compounded by the fact that under the
Control Share Act, 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
Control Share referendum, will have enhanced
<PAGE>
<PAGE> 21
voting power and Tyson and WLR's disinterested shareholders
will be deprived of a fair and impartial vote.
41. An additional motive by counterclaim defendants for
the Anti-Referendum Changes was to prevent a timely Control
Share referendum as contemplated by the Williams Act and the
Control Share Act. Counterclaim defendants believed that
Tyson likely would be constrained to challenge in court the
Disenfranchisement Amendment and the Anti-Referendum Changes
before it would request a special shareholder meeting under
the Control Share Act thereby delaying, or preventing
entirely, Tyson from proceeding with a tender offer for shares
of WLR.
COUNTERCLAIM DEFENDANTS' CONCEAL THEIR MISCONDUCT
42. Not surprisingly, counterclaim defendants were not
forthcoming about the extent of the Directors' activities on
February 4, 1994, even though WLR had promised to keep its
"fellow shareholders" informed of its actions.
43. On Sunday, February 6, 1994, counterclaim defendant
Charles W. Wampler, Jr., Chairman of WLR, sent a letter to the
Chairman of the Board of Directors of Tyson Foods reporting
that the WLR Board unanimously rejected Tyson Foods' offer of
merger.
44. By letter dated February 6, 1994, WLR also announced
to the public that on February 4, 1994 the Directors rejected
Tyson Foods' January 24, 1994 merger proposal.
45. Also on February 6, 1994, the Directors sent a
letter to WLR's shareholders describing the Poison Pill.
<PAGE>
<PAGE> 22
46. None of the February 6, 1994 letters nor any other
voluntary communication revealed -- or even hinted at -- the
actions taken by the Board of Directors of WLR in granting the
Golden and Other Parachutes, adopting the Disenfranchisement
Amendment and approving the Anti-Referendum Changes, which are
described above.
47. These actions were only made public through the
compulsory filing, under applicable rules of the SEC, of the
Form 10-Q, eleven days after the fact.
COUNTERCLAIM DEFENDANTS' LITIGATION TACTICS
48. Also on Sunday, February 6, 1994, counterclaim
defendants arranged for the office of the Clerk of this Court
to be opened so WLR could file a complaint commencing this action.
Counterclaim defendants knew full well that if WLR permitted a
fair and impartial referendum by WLR's disinterested
shareholders under the Control Share Act, a court might never
need to adjudicate the issues raised in the complaint.
49. If a majority of WLR's disinterested shareholders
approved a resolution permitting Tyson to proceed with its
tender offer, counterclaim defendants would have a fiduciary
duty to dismantle the barriers that they have erected to
prevent the Tyson Offer from proceeding. In such
circumstances, it would be unnecessary for a court to make any
determination as to the constitutionality of the Control Share
Act and it might be
<PAGE>
<PAGE> 23
unnecessary to reach issues as to the validity of the Virginia
Affiliated Transactions statute and the Poison Pill.
50. In a letter to WLR's shareholders dated February 23,
1994, counterclaim defendant Keeler described counterclaim
defendants' actions in filing this action as legal steps WLR
has taken to "protect its shareholders' interests."
Counterclaim defendant Keeler knew WLR's true intent and
purpose in filing this action was to entrench management, to
protect counterclaim defendants' Director Benefits and prevent
a prompt, fair and impartial referendum by WLR's disinterested
shareholders on the Tyson Offer under the Control Share Act.
TYSON PREPARES FOR A CONTROL SHARE REFERENDUM
AND COMMENCES ITS OFFER
51. Acting in good faith and relying upon its right to
have a prompt referendum under the Control Share Act, after it
announced its efforts to negotiate an acquisition of WLR,
Tyson Foods purchased on the open market sufficient shares of
WLR to give Tyson Foods beneficial ownership of at least 5% of
WLR's voting shares. Under the Control Share Act, Tyson could
only request such a meeting once it had accumulated a 5% stake
in WLR.
52. Tyson spent $11 million purchasing WLR shares before
it became aware of counterclaim defendants' actions designed
to thwart the right of WLR's disinterested shareholders to
vote on a Tyson tender offer under the provisions of the
Control Share Act. Not until February 16, 1994, did Tyson
first learn of the February 4
<PAGE>
<PAGE> 24
actions that counterclaim defendants had taken to deprive
Tyson of the ability to obtain a prompt, fair and impartial
vote at a special meeting under the Control Share Act.
53. Tyson ultimately expended in excess of $18 million
in order to be able to exercise its right under the Control
Share Act to have a timely Control Share referendum. Tyson
knew when it purchased its 5% stake that those shares could
not vote in the referendum. Its sole reason for purchasing
the shares was to ensure that it could require WLR to schedule
a prompt special meeting to hold the Control Share referendum.
54. On March 9, 1994 Tyson Foods (through its
wholly-owned subsidiary Tyson Acquisition) commenced a cash
tender offer for all WLR shares for $30 a share under the
Williams Act. Upon completion of the offer, Tyson will seek
to consummate a merger with WLR that will result in all
non-tendering WLR shareholders receiving $30 per share as
well. Tyson's offer expires on April 8, 1994.
COUNTERCLAIM DEFENDANT'S CONTINUING
BREACHES OF DUTY
55. On March 14, 1994, counterclaim defendants filed SEC
Schedule 14D-9 announcing their opposition to the Tyson Offer.
56. The Schedule 14D-9 threatens additional and
continuing violations of the counterclaim defendants'
fiduciary and statutory duties. In particular, the Schedule
14D-9 discloses that counterclaim defendants are discussing
acquisitions and that such transactions "could include the
issuance of voting securities" of WLR. Such actions, if
consummated, would constitute a further and
<PAGE>
<PAGE> 25
continuing interference with the right of Tyson and WLR's
shareholders to have a prompt, fair and impartial referendum
on the Tyson Offer under the Control Share Act and the
Williams Act. Any such transaction would be a further breach
of the Directors' fiduciary duties because such extraordinary
corporate transactions would have a material adverse impact on
WLR's business, finances and corporate structure and would be
done solely for the purposes of entrenching the Directors,
preserving their Director Benefits and placing WLR's voting
stock in friendly hands.
57. By its terms, the Control Share Act prohibits
solicitation of proxies in connection with a Control Share
referendum sooner than thirty days before the special meeting
unless otherwise agreed. To have a fair solicitation and
permit the disinterested shareholders to be fully informed, a
minimum thirty-day solicitation period prior to the special
meeting is required. By setting the meeting date for thirty
days after receiving a control share acquisition statement but
delaying the giving of notice of the meeting for ten days
after receiving the statement, a target board can thwart the
intent of the Control Share Act that there be a thirty day
solicitation period.
58. On March 16, 1994, Tyson, by its counsel, requested
that WLR agree to provide Tyson with no less than thirty days'
prior notice of the date set for a special meeting requested
by Tyson under the Control Share Act. Counterclaim defendants
have failed to respond to this request.
<PAGE>
<PAGE> 26
59. Failure to agree to give Tyson thirty days' prior
notice of a special meeting under the Control Share Act, and
thereby assuring a full thirty day period for solicitation of
proxies, is a further and continuing breach by the Directors
of their fiduciary duties and duty of loyalty. It is done for
the sole purpose of depriving Tyson and WLR's disinterested
shareholders of their right to have a fair vote on the Tyson
Offer under the Control Share Act.
60. Under Sections 13.1-770 and 13.1-771 of the Virginia
Code, Tyson is entitled to inspect and copy, among other
records of WLR, WLR's accounting records, its shareholders'
list, minutes of all meetings of its shareholders and board of
directors. Tyson, through an authorized representative, has
made written demand for such records. WLR has failed to
comply fully within five business days as required by
applicable law.
COUNT I
61. The actions taken by counterclaim defendants on
February 4, 1994, including (a) the amendments made to the
Bylaws relating to the roles that the Chairman and Vice
Chairman play as officers of the corporation; (b) the
resignations of counterclaim defendants William D. Wampler and
George E. Bryan as Senior Vice Presidents; and (c) the
termination of compensation from WLR to counterclaim
defendants Charles W. Wampler, Jr., Herman D. Mason, William
D. Wampler, and George E. Bryan, were intended to preserve for
the Directors their Director Benefits and to circumvent the
clear purpose of the Control Share Act by allowing "interested
shares"
<PAGE>
<PAGE> 27
owned by "management" to vote in a manner prohibited by Va.
Code Section 13.1-728.3(B).
62. Notwithstanding the actions taken by counterclaim
defendants, the shares owned or controlled by counterclaim
defendants W. Wampler, C. Wampler, Bryan and Mason are
"interested shares" under the Control Share Act.
63. An actual controversy exists concerning whether the
shares owned or controlled by 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 Section 13.1-728.3(A).
64. In the event the Directors' actions herein are not
rescinded, Tyson is entitled to a declaratory judgment,
pursuant to 28 U.S.C. Section 2201, that all WLR shares owned
directly, indirectly or beneficially, by counterclaim
defendants W. Wampler, C. Wampler, Bryan and Mason, are
"interested shares" under the Control Share Act and
accordingly may not be voted in the referendum provided by the
Act.
COUNT II
65. The Directors have fiduciary duties and a duty of
loyalty to WLR's shareholders and others.
66. Among such duties, the Directors have a duty not to
subvert the shareholder franchise, including any vote by
disinterested shareholders under the Control Share Act.
<PAGE>
<PAGE> 28
67. The actions of the Directors set forth above subvert
the right and ability of Tyson, and WLR's disinterested
shareholders, to have a prompt, fair and impartial Control
Share referendum, as contemplated by the Williams Act, the
Control Share Act and other applicable law, and violate the
Directors' fiduciary duties. Such actions are contrary to the
interests of WLR's shareholders. They are intended to
entrench WLR's present management in its positions at WLR by
making an acquisition by Tyson practically impossible, all for
the purpose of protecting existing management and depriving
WLR's disinterested shareholders of the opportunity to
consider the Tyson Offer.
68. Specifically, the actions taken by the Directors:
(a) allow intransigent management to set the Record
Date of stock ownership so as to deprive a significant number
of disinterested shareholders of the ability to vote their
stock at a Control Share referendum under the Control Share
Act;
(b) discourage shareholders from voting their
shares at a Control Share referendum 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 a prompt, fair and impartial vote by disinterested
shareholders;
(d) frustrate the full purposes and objectives of
the Virginia legislature in enacting the Control Share Act by
depriving
<PAGE>
<PAGE> 29
disinterested shareholders of an opportunity to have a prompt,
fair and impartial vote on the Tyson Offer;
(e) impermissibly tilt the balance between
management and a potential acquiror in the context of a
noncoercive proposal;
(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 WLR's shareholders of the opportunity to
consider the Tyson Offer in a fully-informed manner.
69. These violations have injured and continue to injure
Tyson because they:
(a) deprive Tyson of its right to have a prompt,
fair and impartial vote on its Offer under the Control Share
Act; and
(b) frustrate Tyson's right to proceed with its
Offer as contemplated by the Williams Act and other applicable
law.
70. If the Court determines that the actions taken by
counterclaim defendants as set forth above were and are
authorized under the Control Share Act, then the Act as
applied is unconstitutional under Count IV.
COUNT III
71. The Directors have fiduciary duties and a duty of
loyalty to WLR's shareholders and others.
<PAGE>
<PAGE> 30
72. Among such duties, the Directors have a duty not to
subvert the right of shareholders to tender their shares in
response to a noncoercive tender offer.
73. The actions of the Directors set forth above in
adopting the Poison Pill and then refusing to redeem the
Rights issued thereunder (even though the Directors have
elected not to opt out of the Control Share Act) violate the
Directors' fiduciary duties. Such actions are contrary to the
interests of WLR's shareholders. They are intended to entrench
WLR's present management in its positions at WLR by making an
acquisition by Tyson practically impossible, all for the
purpose of protecting existing management. They deprive WLR's
shareholders of the opportunity to tender their shares
pursuant to the Tyson Offer (and deprive Tyson of the ability
to accept the tender), assuming that Tyson receives the
favorable vote of a majority of WLR's disinterested
shareholders in a fair and impartial referendum under the
Control Share Act.
74. These violations have injured and continue to injure
Tyson because they frustrate Tyson's right to proceed with its
Offer as contemplated by the Williams Act, the Control Share
Act (assuming a majority of WLR's disinterested shareholders
approve the Tyson Offer in a fair and impartial referendum)
and other applicable law.
COUNT IV
75. The Control Share Act is unconstitutional. It
<PAGE>
<PAGE> 31
(a) is preempted by federal proxy law developed
under Section 14 of the Securities Exchange Act of 1934 and
thereby violates the Supremacy Clause of the United States
Constitution;
(b) is preempted by the Williams Act and thereby
violates the Supremacy Clause of the United States
Constitution; and,
(c) violates the Commerce Clause of the United
States Constitution.
76. The unconstitutionality of the Control Share Act has
injured and continues to injure Tyson because it:
(a) deprive Tyson of its right to have a prompt,
fair and impartial vote on its Offer under the Control Share
Act and other applicable law; and
(b) frustrate Tyson's right to proceed with its
Offer as contemplated by the Williams Act and other applicable
law.
COUNT V
77. The Virginia statutory scheme regulating mergers and
acquisitions, including the Control Share Act, the Virginia
Affiliated Transactions Statute, and Va. Code Section
13.1-646, is unconstitutional. It gives a Virginia
corporation's pre-existing board of directors a DE FACTO veto
power over tender offers and 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
<PAGE>
<PAGE> 32
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.
78. By denying a meaningful opportunity for success by
any possibly interested merger partner in the face of
intransigent management, the Virginia statutory scheme
regulating mergers and acquisitions, including the Control
Share Act, the Virginia Affiliated Transaction statute, and
Va. Code Section 13.1-646, is unconstitutional. It
(a) is preempted by federal proxy law developed
under Section 14 of the Securities Exchange Act of 1934 and
thereby violates the Supremacy Clause of the United States
Constitution;
(b) is preempted by the Williams Act and therefore
violate the Supremacy Clause of the United States
Constitution; and
(c) violates the Commerce Clause of the United
States Constitution.
<PAGE>
<PAGE> 33
79. The unconstitutionality of the Virginia statutory
scheme regulating mergers and acquisitions injured and
continue to injure Tyson because it:
(a) deprives Tyson of its right to have a prompt,
fair and impartial vote on its Offer under the Control Share
Act and other applicable law; and
(b) frustrate Tyson's right to proceed with its
Offer as contemplated by the Williams Act and other applicable
law.
COUNT VI
80. In its Amended Complaint, WLR seeks a declaration
that the Virginia Affiliated Transactions Statute is
constitutional.
81. The Virginia Affiliated Transactions Statute is
unconstitutional. Essentially, it 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.
82. 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 is unconstitutional. It
(a) is preempted by the Williams Act and therefore
violates the Supremacy Clause of the United States
Constitution; and
(b) violates the Commerce Clause of the United
States Constitution.
<PAGE>
<PAGE> 34
83. The unconstitutionality of the Virginia Affiliated
Transactions Statute has injured and continues to injure Tyson
because it deprives Tyson of a meaningful opportunity to have
a successful tender offer.
COUNT VII
84. The Directors have fiduciary duties and a duty of
loyalty to WLR's shareholders and others.
85. Among such duties, the Directors have a duty not to
subvert the right of shareholders to tender their shares in
response to a noncoercive tender offer.
86. The actions of the Directors set forth above in
adopting the Golden Parachutes and the Other Parachutes even
though Virginia gives to WLR's shareholders under the Control
Share Act the right to decide by the vote of a majority of
disinterested shareholders whether a change of control should
be permitted (and even though the Directors have elected not
to opt out of the Control Share Act) violate the Directors'
fiduciary duties. Such actions are contrary to the interests
of WLR's shareholders. They are intended to entrench WLR's
present management in its positions at WLR by making an
acquisition by Tyson unreasonably expensive, all for the
purpose of protecting existing management. They deprive WLR's
shareholders of the opportunity to determine whether and at
what cost to WLR and its shareholders a control share
acquisition should occur as contemplated by the Control Share
Act.
<PAGE>
<PAGE> 35
87. These violations have injured and continue to injure
Tyson because they increase unreasonably the cost to Tyson of
acquiring control of WLR as contemplated by the Williams Act,
the Control Share Act (assuming a majority of WLR's
disinterested shareholders approve the Tyson Offer in a fair
and impartial referendum) and other applicable law.
COUNT VIII
88. By reason of WLR's failure to produce fully all of
the records requested in writing by Tyson, through its
authorized representative, pursuant to Virginia Code Sections
13.1-770-71 within five business days, Tyson is entitled to an
order summarily ordering WLR to produce the requested records
for inspection and copying at WLR's expense.
IRREPARABLE INJURY
89. Unless preliminary and permanent injunctive relief
is granted, Tyson will be irreparably harmed because it will
be denied the opportunity to have the Tyson Offer freely and
fairly considered by WLR's disinterested shareholders, and
WLR's disinterested shareholders will be irreparably harmed
because they will be denied the opportunity to consider and,
if they so choose, to accept the Tyson Offer.
90. 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 Tyson Offer;
<PAGE>
<PAGE> 36
(b) WLR's management will hold a decided and
unlawful advantage in opposing the Tyson Offer;
(c) Tyson will be compelled to terminate its
efforts to acquire control of WLR due to the economic and
financial uncertainties posed by the Control Share Act and the
counterclaim defendants' 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 Control Share Act and the
counterclaim defendants' other actions described above; and
(e) Tyson will be deprived of the opportunity to
acquire control of WLR, a unique business.
91. 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
pursuant to the Tyson Offer.
92. The foregoing circumstances constitute a deprivation
of Tyson's rights under Section 14 of the Securities Exchange
Act and the related SEC proxy rules, 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's disinterested shareholders, and to the investing
public.
RELIEF SOUGHT
93. Tyson has no adequate remedy at law.
94. Tyson seeks a declaration that:
<PAGE>
<PAGE> 37
(a) notwithstanding the actions taken by
counterclaim defendants, the shares owned by counterclaim
defendants W. Wampler, C. Wampler, Bryan and Mason are
"interested shares" under the Control Share Act;
(b) the Directors have breached and continue to
breach their fiduciary duties and duty of loyalty in taking
the actions and threatened actions described in the
counterclaims, including adopting the Disenfranchisement
Amendment, approving the Anti-Referendum Changes and adopting
(and refusing to redeem) the Poison Pill;
(c) the Control Share Act (Va. Code Section
13.1-728.1, et. seq.) is unconstitutional;
(d) the Virginia Affiliated Transactions statute
(Va. Code Section 13.1-725 et seq.) is unconstitutional;
(e) the Disenfranchisement Amendment,
Anti-Referendum Changes and Poison Pill are invalid; and
(f) the Virginia statutory scheme regulating
mergers and acquisitions is unconstitutional.
95. Tyson seeks an order to temporarily, preliminarily
and permanently:
(a) direct counterclaim defendants to rescind the
Disenfranchisement Amendment, or in the alternative enjoin the
operation of such Bylaw;
(b) direct counterclaim defendants to rescind the
Anti-Referendum Changes, or in the alternative enjoin the
voting of any
<PAGE>
<PAGE> 38
shares owned, directly or indirectly, by counterclaim
defendants Bryan, Mason, C. Wampler and W. Wampler;
(c) enjoin counterclaim defendants from interfering
in any way with the conduct of a prompt, fair and impartial
referendum under the Control Share Act;
(d) direct counterclaim defendants to rescind, or
in the alternative to redeem, the Poison Pill; and
(e) enjoin counterclaim defendants from taking any
action in furtherance of the Poison Pill, Golden Parachutes or
Other Parachutes;
(f) enjoin counterclaim defendants from engaging in
any transactions involving the issuance of WLR's voting
securities; and
(g) direct counterclaim defendants to rescind the
Golden Parachutes and Other Parachutes.
96. Tyson seeks an order directing WLR to make available
for inspection and copying to Tyson or its representatives the
corporate records to which Tyson is entitled under Virginia
Code Sections 13.1-770-71.
97. 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:
----------------------------------
Of Counsel
<PAGE>
<PAGE> 39
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)
LITTEN & SIPE
Post Office Box 712
410 Neff Avenue
Harrisonburg, VA 22801
(703) 434-5353
Attorneys for Defendant and
Counterclaim-Plaintiffs,
Tyson Foods, Inc. and WLR
Acquisition Corp.
<PAGE>
<PAGE> 40
CERTIFICATE OF SERVICE
A copy of this document was mailed on March 21,
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
___________________________________
<PAGE> 1 Exhibit 18
[WLR Foods, Inc. Letterhead]
March 30, 1994
Dear Fellow Shareholder:
Your Board of Directors and management maintain their unanimous opposition
to Tyson Foods' hostile, unsolicited and highly conditional tender offer
for your shares of stock in WLR Foods. We continue to urge you to reject
the offer. DO NOT RETURN ANY TENDER MATERIALS YOU RECEIVE FROM TYSON.
We believe that the long-term interests of WLR Foods shareholders--and the
interests of our employees, producers, customers, suppliers and the
communities in which we operate--will best be served if WLR Foods continues
to remain independent and pursues its successful long-term business goals.
YOUR BOARD OF DIRECTORS BELIEVES
THAT TYSON'S OFFER IS INADEQUATE
AND NOT IN YOUR BEST INTERESTS.
One thing is perfectly clear to us: Tyson timed its offer in an attempt to
profit at your expense from the undervalued assets of WLR Foods. Tyson must
believe that the shares they are seeking to buy--your shares--are worth
more than the price which they are offering to pay. Remember, Don Tyson's
duty is clearly to his own company and the Tyson Foods' shareholders, not
to WLR Foods or you.
DON'T BE RUSHED OR CONFUSED BY TYSON
You should have received Tyson's offer papers by now and may be feeling
some pressure to make a decision. You may even have received phone calls
from Tyson urging you to respond quickly. You will not be hurt by taking
your time since Tyson's offer can't expire before April 8, 1994 and given
all its conditions, we believe it is likely to be pushed back even further.
You will be notified of any change in the expiration date.
On another matter, some of our shareholders have told us that they were
confused by Tyson's use of the name "WLR Acquisition Corp." Don't be
<PAGE>
<PAGE> 2
confused. WLR Acquisition Corp. is Tyson--not WLR Foods. Remember, if you
respond to WLR Acquisition Corp., you are responding to Tyson.
TAKE A CLOSER LOOK
In conducting the affairs of WLR Foods, your Board of Directors is
dedicated to building and maintaining the highest value for all its
shareholders. And we are achieving that goal as WLR Foods investments are
already producing positive results and will continue to do so in the
future. We again urge you to consider carefully why we believe that you
should not at this time sell or tender your shares to Tyson.
TYSON'S PRICE IS INADEQUATE
o WLR FOODS CAPITAL SPENDING PROGRAM IS NOW STARTING TO BUILD VALUE FOR
SHAREHOLDERS
WLR Foods has just completed an aggressive, five-year $133,700,000
capital spending program which is now starting to build value for
shareholders. We've increased production by 115% over 1988 levels
and expect to be fully enjoying the benefits of these substantial
investments in the near future.
o WLR FOODS RESTRUCTURING PROGRAM HAS INCREASED EFFICIENCY AND LOWERED
COSTS
WLR Foods merged its two poultry subsidiaries into one company in
1993. This restructuring is part of our ongoing management effort to
increase production efficiency and lower administrative and labor
costs. Again, these and other savings are expected to improve WLR
Foods bottom line in the near future.
o WLR FOODS RECENT ACQUISITIONS WILL PROVIDE FURTHER BENEFITS
In addition to internally generated growth, WLR Foods has made a
series of friendly acquisitions: Cassco Ice & Cold Storage and Round
Hill Foods, to name two. We are actively upgrading these facilities
and expect to enjoy continued growth and profitability in the near
future.
<PAGE>
<PAGE> 3
o WLR FOODS SEES AN IMPROVED POULTRY CYCLE AND GREATER PROFITS
WLR Foods has endured a low poultry cycle over the last few years--a
cycle which now shows signs of improvement. If historical patterns
hold true, an improvement in the poultry cycle is forthcoming which
should lead to greater profitability for WLR Foods and you.
NOW IS NOT THE TIME TO SELL
As demonstrated above, WLR Foods has made dramatic improvements in its
businesses through a combination of hard work and disciplined investment of
your company's capital. Management has also invested significant resources
in its marketing and export programs for the future. WITH OUR PROVEN
STRENGTHS AND STRATEGIES, THE FUTURE FOR WLR FOODS HAS NEVER BEEN BRIGHTER.
In our judgment, WLR Foods is a growth company entering a strong growth
period -- in short, we believe it is a good time to hold WLR Foods stock,
not to sell it. We firmly believe that WLR Foods has excellent prospects as
an appreciating asset to achieve its full potential and that the market
will better recognize WLR Foods strengths, further enhancing its valuation.
WITHOUT EXCEPTION, YOUR DIRECTORS AND OFFICERS DO NOT INTEND TO TENDER A
SINGLE SHARE OF STOCK TO TYSON.
Don Tyson has criticized the actions of your Board to protect its
shareholders. You should know this self-styled champion of shareholder
rights controls a company with two classes of stock--what you might call
the Don Tyson class with 10 votes per share, and the publicly traded shares
with but only one vote per share. This arrangement leaves Tyson Foods free
from any worries about a hostile takeover--that is, of course, unless Don
Tyson agrees. We think Don Tyson should be more forthcoming with the facts
before he criticizes the actions of your Board of Directors.
Since the Tyson offer commenced, we have enjoyed personally talking with so
many of our shareholders and we are very encouraged by your responses. So
very many of you have told us that you plan to continue to hold your shares
of WLR Foods and to support the Board's recommendation to reject Tyson's
offer. Your overwhelming support is a continuing source of strength and is
deeply appreciated.
<PAGE>
<PAGE> 4
We remain committed to acting with only one goal in mind: to provide you
with superior value while protecting our shareholders, employees,
producers, communities, customers and suppliers.
Thank you for your continued trust and support.
Sincerely,
WLR FOODS, INC.
Charles W. Wampler, Jr. James L. Keeler
Chairman, Board of Directors President and Chief Executive
Officer
IMPORTANT
If you have any questions, please call us at (703) 896-7001. We have
also engaged the services of D.F. King & Co., Inc. to assist us in
communicating with our shareholders. You may call D.F. King at (800)
669-5550.
WITHDRAW YOUR WLR FOODS SHARES
If you have tendered your shares to Tyson and wish to withdraw them,
please use the enclosed form. If you need help or have questions call
D.F. King toll-fee at (800) 669-5550. D.F. King will be pleased to
assist you in getting back your shares.
If your shares are held by a brokerage firm or bank, only your broker
or bank can withdraw them. Please call your broker or banker to
instruct them to effect the withdrawal on your behalf.
<PAGE>
<PAGE> 5
NOTICE OF WITHDRAWAL OF SHARES OF WLR FOODS, INC.
TENDERED TO WLR ACQUISITION CORP., A WHOLLY-OWNED
SUBSIDIARY OF TYSON FOODS, INC.
To: IBJ Schroder Bank & Trust Company, Depositary:
Please withdraw ________________ shares of common stock of WLR Foods, Inc.
(number of shares)
representing all shares tendered pursuant to the Offer to Purchase, dated
March 9, 1994, of WLR Acquisition Corp., a wholly-owned subsidiary of Tyson
Foods, Inc., by the undersigned and return the certificate(s) representing
such shares to the address of the undersigned as recorded on the Letter of
Transmittal which accompanied the tendered shares.
_______________, 1994 ___________________________ __________________________
Today's Date Print Name(s) of Tendering Signature(s) of Tendering
Shareholder(s) Shareholder(s)*
___________________________ __________________________
Print Name(s) of Tendering Signature(s) of Tendering
Shareholder(s) Shareholder(s)*
____________________ ___________________________
Certificate Number(s) Print Name(s) of Registered
Shareholder(s) if different Signature(s) Guaranteed:
than Tendering
Shareholder(s)
____________________ ___________________________ By:_______________________
Certificate Number(s) Print Name(s) of Registered Authorized Signatory
Shareholder(s) if different
than Tendering
Shareholder(s)
*INSTRUCTIONS. Please sign your name as it appeared on the Letter of
Transmittal. Your signature should be guaranteed. If you have any
questions, please call D. F. King & Co., Inc. at (800) 669-5550. This
form must be sent to IBJ Schroder Bank & Trust Company. See reverse
side for addresses.
TO INSURE THAT YOUR SHARES ARE WITHDRAWN, THIS NOTICE SHOULD BE RECEIVED BY
IBJ SCHRODER BANK & TRUST COMPANY NO LATER THAN 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, APRIL 8, 1994.
<PAGE>
<PAGE> 6
You may send this notice by mail, courier or facsimile transmission. The
addresses are as follows:
By Mail-- IBJ Schroder Bank & Trust Company
Attn: Reorganization Operations Department
P.O. Box 84
Bowling Green Station
New York, NY 10274-0084
By Courier--IBJ Schroder Bank & Trust Company
Attn: Securities Processing Window, Subcellar One
One State Street
New York, NY 10004
By Facsimile-- (212) 858-2611
To confirm Facsimile Transmissions call: (212) 858-2103 (for Eligible
Institutions only)
Since this notice is effective upon its receipt by the Depositary, it is
recommended that it be sent by facsimile transmission, with receipt
therefore confirmed or mailed registered mail with return receipt
requested.
TO INSURE THAT YOUR SHARES ARE WITHDRAWN, THIS NOTICE SHOULD BE RECEIVED BY
IBJ SCHRODER BANK & TRUST COMPANY NO LATER THAN 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, APRIL 8, 1994.
