<PAGE>1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
For the quarterly period ended January 1, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to _________
COMMISSION FILE NUMBER 0-17060
WLR FOODS, INC.
(Exact name of Registrant as specified in its charter)
Virginia 54-1295923
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
P.O. Box 7000
Broadway, Virginia 22815
(Address including Zip Code of Registrant's principal executive offices)
(703) 896-7001
(Registrant's telephone number, including area code)
Indicate by cross mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the Registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes (X) No ()
The number of shares outstanding of Registrant's Common Stock, no par
value, at February 1, 1994 was 10,967,193 shares.
Total Number of
Sequentially Numbered
Pages is 111
<PAGE>2
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
WLR FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands) (unaudited)
Jan. 1, 1994 July 3, 1993
ASSETS
Current Assets
Cash and cash equivalents $465 $680
Accounts receivable, less allowance for doubt-
ful accounts of $366 & $363, respectively. 37,928 41,090
Inventories (Note 2) 78,056 76,728
Other current assets 8,414 1,309
------ ------
Total current assets 124,863 119,807
Investments 814 720
Property, plant and equipment, net 139,707 140,540
Other assets 4,054 4,559
------- -------
TOTAL ASSETS $269,438 $265,626
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Notes payable to banks $8,300 $12,900
Current maturities of long-term debt 6,334 6,381
Excess checks over bank balances 4,309 7,213
Trade accounts payable 18,590 18,451
Accrued expenses 10,094 15,687
Federal and state income taxes --- 790
Current deferred taxes 8,055 ---
Other current liabilities 877 876
------ ------
Total current liabilities 56,559 62,298
Long-term debt, excluding current maturities 52,337 52,253
Deferred income taxes 9,292 6,190
Minority interest in consolidated subsidiary 463 441
Other liabilities and deferred credits 2,134 2,189
------ ------
TOTAL LIABILITIES 120,785 123,371
Shareholders' equity:
Common stock, no par value. Authorized
100,000,000 shares; issued and outstanding
10,964,776 & 10,951,069 shares, respectively 60,787 60,552
Additional paid-in capital 3,253 3,253
Retained earnings 84,613 78,450
------ ------
Total shareholders' equity 148,653 142,255
------- -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $269,438 $265,626
======= =======
______________________________________________________________________
See accompanying Notes to Consolidated Financial Statements.
<PAGE>3
WLR FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
______________________________________________________________________
(unaudited) Thirteen Weeks Ended
Dollars in thousands,
except per share data Jan. 1, 1994 Dec 26, 1992
______________________________________________________________________
Net sales $182,315 $146,619
Cost of sales 159,419 127,487
------- -------
Gross profit 22,896 19,132
Selling, general and adminis-
trative expenses 14,995 13,530
------ ------
Operating income 7,901 5,602
Other expense:
Interest expense 1,245 817
Miscellaneous expense (income) (75) (88)
----- -----
Other expense 1,170 729
----- -----
Earnings before incomes taxes and
minority interest 6,731 4,873
Income tax expense 2,591 1,852
Minority interest in net earnings
of consolidated subsidiary 7 2
----- -----
NET EARNINGS $4,133 $3,019
LESS PREFERRED DIVIDENDS DECLARED --- 516
----- -----
NET EARNINGS AVAILABLE TO COMMON
SHAREHOLDERS $4,133 $2,503
===== =====
NET EARNINGS PER COMMON SHARE (PRIMARY) $0.37 $0.29
NET EARNINGS PER COMMON SHARE (FULLY DILUTED) $0.37 $0.29
DIVIDENDS DECLARED PER COMMON SHARE $0.08 $0.08
AVERAGE COMMON SHARES OUTSTANDING (PRIMARY) 10,962,799 8,589,821
AVERAGE COMMON SHARES OUTSTANDING
(FULLY DILUTED) 10,962,799 10,228,935
See accompanying Notes to Consolidated Financial Statements. <PAGE>
<PAGE>4
WLR FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
______________________________________________________________________
(unaudited) Twenty-Six Weeks Ended
(Dollars in thousands,
except per share data) Jan. 1, 1994 Dec. 26, 1992
_______________________________________________________________________
Net sales $361,343 $287,367
Cost of sales 315,810 247,360
------- -------
Gross profit 45,533 40,007
Selling, general and adminis-
trative expenses 30,339 27,115
------ ------
Operating income 15,194 12,892
Other expense:
Interest expense 2,503 1,491
Miscellaneous expense (income) (219) (182)
----- -----
Other expense 2,284 1,309
----- -----
Earnings before incomes taxes and
minority interest 12,910 11,583
Income tax expense 4,970 4,368
Minority interest in net earnings
of consolidated subsidiary 23 13
------ ------
NET EARNINGS $7,917 $7,202
LESS PREFERRED DIVIDENDS DECLARED --- 1,032
----- -----
NET EARNINGS AVAILABLE TO COMMON
SHAREHOLDERS $7,917 $6,170
===== =====
NET EARNINGS PER COMMON SHARE (PRIMARY) $0.72 $0.72
NET EARNINGS PER COMMON SHARE (FULLY DILUTED) $0.72 $0.71
DIVIDENDS DECLARED PER COMMON SHARE $0.16 $0.16
AVERAGE COMMON SHARES OUTSTANDING (PRIMARY) 10,959,496 8,537,164
AVERAGE COMMON SHARES OUTSTANDING
(FULLY DILUTED) 10,959,496 10,176,278
_____________________________________________________________________
See accompanying Notes to Consolidated Financial Statements.
<PAGE>5
WLR FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
______________________________________________________________________
(unaudited) Twenty-Six Weeks Ended
Dollars in thousands Jan. 1, 1994 Dec. 26, 1992
________________________________________________________________________
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $7,917 $7,202
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 10,510 7,835
Gain on sale of property, plant and equipment (27) (7)
Deferred income taxes 9,149 437
Other, net 449 218
Change in operating assets and liabilities:
Decrease in accounts receivable 3,162 3,745
(Increase) decrease in inventories (1,328) 1,362
(Increase) decrease in other current assets (7,105) 300
Increase (decrease) in accounts payable 139 (808)
Decrease in accrued expenses and other (5,520) (3,445)
----- -----
Net Cash Provided by Operating Activities 17,346 16,839
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (8,106) (21,588)
Proceeds from sales of property, plant
and equipment 45 70
Cash used in acquisition --- (1,176)
Investments in other assets (38) (407)
Minority interest in net earnings of
consolidated subsidiary 22 13
----- -----
Net Cash Used in Investing Activities (8,077) (23,088)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt (461) (326)
Proceeds from long-term debt --- 10,000
Notes payable to banks(net of principal payments)(4,600) (2,168)
Increase (decrease) in checks drawn not presented(2,904) 1,210
Issuance of stock 235 ---
Dividends paid (1,754) (2,339)
----- -----
Net Cash Provided by (used in) Financing
Activities (9,484) 6,377
----- -----
Increase (Decrease) in Cash and Cash Equivalents (215) 128
--- ---
Cash and Cash Equivalents at Beginning of
Fiscal Year 680 361
--- ---
Cash and Cash Equivalents at End of Period $465 $489
=== ===
Supplemental cash flow information:
Cash paid for:
Interest $2,387 $1,986
Income taxes 2,131 5,722
======================================================================
<PAGE>6
The Company considers all highly liquid investments of maturity of 3
months or less at purchase to be cash equivalents.
The adoption of SFAS 109 necessitated the reclassification of certain
amounts of deferred tax which had been previously netted with the
related assets and liabilities under APB Opinion 11. The following is
a summary of those reclassifications:
Fixed Assets $1,589
Long-term debt 498
Current taxes payable (857)
Current deferred taxes 413
Long-term deferred taxes 1,535
These reclassifications are only reported to reconcile the Statement of
Cash Flows for the period ended January 1, 1994.
See accompanying Notes to Consolidated Financial Statements.
<PAGE>7
WLR FOODS, INC.
Notes to Consolidated Financial Statements
======================================================================
1. Accounting Policies:
The consolidated financial statements include the accounts of WLR Foods,
Inc. and its wholly-owned and majority-owned subsidiaries. All material
intercompany balances and transactions have been eliminated in
consolidation. The consolidated balance sheet as of January 1, 1994,
the consolidated statements of earnings for the thirteen week and
twenty-six week periods ended January 1, 1994 and December 26, 1992, and
the consolidated statements of cash flows for the twenty-six week
periods ended January 1, 1994 and December 26, 1992 are unaudited. In
the opinion of management, all adjustments necessary for a fair
presentation of such consolidated financial statements have been
included. Such adjustments consisted only of normal recurring accruals
and the use of estimates. Interim results are not necessarily
indicative of results for the entire fiscal year.
The consolidated financial statements and notes are presented as
permitted by Form 10-Q and do not contain certain information included
in the Company's annual consolidated financial statements and notes.
The Company's unaudited interim consolidated financial statements should
be read in conjunction with the consolidated financial statements
included in the Annual Report to Shareholders for the fiscal year ended
July 3, 1993. In both, the accounting policies and principles used are
consistent in all material respects. Certain fiscal 1993 amounts have
been reclassified to conform with fiscal 1994 presentations.
2. Inventories
A summary of inventories at January 1, 1994 and July 3, 1993 follows:
______________________________________________________________________
(unaudited)
Dollars in thousands Jan. 1, 1994 July 3, 1993
______________________________________________________________________
Live poultry and breeder flocks $39,677 $34,588
Processed poultry and meat products 18,207 23,057
Packaging supplies, parts and other 12,973 12,439
Feed, grain and eggs 7,199 6,644
------ ------
Total inventories $78,056 $76,728
====== ======
3. Change in Accounting Principle
Effective July 4, 1993, the Company adopted SFAS Statement 109 using the
cumulative effect of a change in accounting principle. There was no
cumulative effect adjustment necessary on the consolidated statement of
earnings as a result of SFAS 109 for periods prior to July 4, 1993.
<PAGE>8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
General Information
WLR Foods, Inc. (the Company) is a fully-integrated poultry production,
processing and marketing business with operations in Virginia, West
Virginia and Pennsylvania.
On January 28, 1994, the Company paid an $0.08 per common share
dividend, and on February 14, 1994 the Company paid a dividend of one
right, issued pursuant to a recently-adopted Shareholder Protection
Rights Agreement, for each outstanding share of common stock, as further
described under Item 5 of this report.
On January 24, 1994, the Board of Directors of the Company received an
unsolicited proposal from Tyson Foods, Inc., by which Tyson Foods
proposed to acquire WLR Foods. Tyson offered to pay $30.00 per share in
cash for each outstanding share of WLR Foods, Inc. common stock. On
February 4, 1994, the Board of Directors voted unanimously to reject
Tyson Foods' proposal stating that it believed it is in the best
interests of the Company, its shareholders and its constituencies for
WLR Foods to remain independent. The Company retained special legal
counsel and two investment banking firms to advise it in this decision-
making process. Depending upon future developments, the Company may
incur legal and financial advisory expenses that under certain
circumstances may be material.
On December 31, 1993 the Company merged its two poultry subsidiaries
into one company, Wampler-Longacre, Inc. Management is very pleased
with the improved efficiencies resulting from this merger. In addition
to the organizational change, WLR Foods, Inc. corporate offices have
been relocated effective January 26, 1994. The new corporate address is
P.O. Box 7000, Broadway, Virginia 22815-7000. The shipping address is
800 Co-op Drive, Timberville, Virginia 22853. The new telephone number
is (703) 896-7001.
The Company adopted Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" in the first quarter of fiscal 1994. As
noted in the financial statements provided, and the accompanying notes,
there was no impact on the statement of earnings for the cumulative
effect of the accounting change.
The table of Changes in Results of Operations shows dollars and
percentage changes in the components of operating results over the past
thirteen weeks and twenty-six weeks compared to the corresponding
periods of the previous year.
<PAGE>9
Changes in Results of Operations
Thirteen Weeks Ended Twenty-six Weeks Ended
1/1/94 vs. 12/26/92 1/1/94 vs. 12/26/92
In millions except $Increase %Change $Increase %Change
per share data
______________________________________________________________________
Net sales $35.7 24.3% $73.9 25.7%
Cost of sales 31.9 25.0 68.4 27.7
---- ---- ---- ----
Gross margin 3.8 19.7 5.5 13.8
Selling, general and
administrative expenses 1.5 10.8 3.2 11.9
---- ---- ---- ----
Operating income 2.3 41.0 2.3 17.9
Other expense .4 60.5 1.0 74.5
---- ---- ---- ----
Earnings before income taxes
and minority interest 1.9 38.1 1.3 11.5
Income tax expense and
minority interest .8 40.1 .6 14.0
---- ---- ---- ----
Net earnings $1.1 36.9% $0.7 9.9%
==== ==== ==== ====
Net earnings per share
(fully diluted) $0.08 27.6% $0.01 1.4%
____________________________________________________________________
Results of Operations for the Thirteen and Twenty-six Weeks
Ended January 1, 1994 as Compared to the
Thirteen and Twenty-six Weeks Ended December 26, 1992
Net sales increased $35.7 million to $182.3 million for the thirteen
weeks ended January 1, 1994, compared to $146.6 million for the same
period last year. Sales pounds increases of 25.5% and higher average
quoted market prices for whole turkeys and chickens were the main
factors increasing sales. Year-to-date sales were $361.3 million
compared to $287.4 million for the twenty-six weeks ended December 26,
1992. Net sales increased $73.9 million, or 25.7%, for the twenty-six
weeks ended January 1, 1994 compared to the same period last year.
Sales pounds increased 26.6% for the twenty-six weeks over the same
period last year as a result of the acquisition of the New Oxford,
Pennsylvania turkey operation and the chicken expansion program.
Average quoted market prices for whole turkeys and chickens increased
9.9% and 3.3%, respectively, on a thirteen week comparison, and 7.0% and
4.5%, respectively, on a twenty-six week comparison. The Company
continues to make progress selling the additional chicken production
from the Moorefield, West Virginia complex.
Cost of sales increased 25.0% for the thirteen week period, and 27.7%
for the twenty-six week period, a result of higher volumes sold and
higher feed costs. Cost of sales for the thirteen weeks ended
January 1, 1994 was $159.4 million compared to $127.5 million for the
same period last year. Feed costs increased approximately 8.5% over the
same thirteen week period last year. Cost of sales increased $68.4
<PAGE>10
million to $315.8 million for the twenty-six weeks ended January 1, 1994
compared to $247.4 million for the same period last year. Feed costs
for the twenty-six weeks rose approximately 6.6% over the same period
last year. Based on the 1993 reported grain harvest, management
believes there is sufficient supply of grains; however, feed costs are
higher now than the average cost for the first half of fiscal 1994.
Nevertheless, management believes higher feed costs will be offset by
the Company's increased production in chicken and improving operating
efficiencies.
Gross profit was $22.9 million, up 19.7%, or $3.8 million over the same
thirteen weeks last year. For the twenty-six weeks, gross profit
increased $5.5 million to $45.5 million. Gross margin as a percentage
of sales was 12.6% for the current thirteen weeks, compared to 13.0% for
the same period of fiscal 1993, and 12.6%, compared to 13.9%, for the
twenty-six weeks ended January 1, 1994 and December 26, 1992,
respectively.
During the thirteen weeks ended January 1, 1994, selling, general and
administrative expenses increased $1.5 million over the same period last
year. Selling and delivery costs increased 10.8% due to higher sales
volume. General and administrative expenses remained approximately the
same on a thirteen week comparative basis. For the current thirteen
week period, total selling, general and administrative expenses as a
percent of sales were 8.2% compared to 9.2% for the same period last
year. Selling, general and administrative expenses increased $3.2
million for the twenty-six weeks ended January 1, 1994 compared to the
same period last year. This increase relates to a $2.9 million increase
in delivery expenses and a net increase of $0.3 million in selling and
advertising expenses. General and administrative expenses remained
approximately the same on a twenty-six week comparison with last year.
Total selling, general and administrative expenses as a percent of sales
were 8.4% versus 9.4% for the current and prior twenty-six week periods,
respectively. Management is hopeful that this trend will continue with
the anticipated higher sales generated as the final volume increase in
the chicken operation is realized for the remainder of fiscal 1994. The
Company is focused on controlling administrative expenses and expects to
experience greater efficiencies from its combined poultry operations.
Operating income increased $2.3 million for both the thirteen and
twenty-six week periods, the result of higher volumes sold and lower
selling, general and administrative costs as a percent of sales.
Operating income as a percentage of sales was 4.3%, compared to 3.8%, on
a thirteen week comparison, and 4.2%, compared to 4.5%, for the twenty-
six week periods ended January 1, 1994 and December 26, 1992,
respectively.
Other expense increased $0.4 million for the thirteen weeks and $1.0
million for the twenty-six weeks due to no capitalized interest in the
current periods and slightly higher average debt levels in the current
fiscal year.
Income tax expense increased $0.8 million and $0.6 million for the
thirteen and twenty-six weeks, respectively, a result of increased
profits and higher federal statutory income tax rates. The effective
tax rate was 38.5% for the thirteen and twenty-six weeks of fiscal 1994
<PAGE>11
compared to 38.0% and 37.7% for the thirteen and twenty-six weeks of
fiscal 1993, respectively.
Net earnings increased to $4.1 million for the thirteen weeks, up $1.1
million over the same period last year. Net earnings were $7.9 million
for the current twenty-six weeks compared to $7.2 million generated for
the period last year.
Liquidity
The financial condition of the Company remained strong at January 1,
1994. Working capital increased to $68.3 million. The current ratio
improved to 2.2-to-1. The total-debt-to-total-capitalization was 31.1%
at January 1, 1994. This decreased since July 3, 1993 due to lower
total debt levels and higher equity levels from additional earnings.
The Company will make scheduled debt payments of $5.25 million each
spring beginning in 1994 to repay the long-term note holders.
Management believes the Company will generate internal funds to meet
current levels of dividends along with servicing existing debt.
The Company has available a $35 million revolving line of credit. On
January 1, 1994 the balance outstanding was $8.3 million, with $26.7
million available and adequate for current needs. Management is in the
process of reviewing proposals from potential lenders to replace and
expand this revolver which matures on June 30, 1994. Initial
information indicates the terms and rates of a replacement facility will
have similar terms as the existing facility. For the period ending
January 1, 1994 the Company's book value increased to $13.56 per common
share, up from $12.99 per common share at July 3, 1993.
Capital Resources and Financial Condition
Capital expenditures for the twenty-six weeks were $8.1 million which
included equipment replacements and up-grades of existing facilities
along with the new Cassco cold storage warehouse. Construction is
progressing on the $4.4 million Cassco cold storage warehouse project
with completion expected by late spring 1994. Other capital
expenditures include replacements, enhancements and up-grades of
existing facilities which are expected to be funded through internally-
generated funds. The original capital budget for fiscal 1994 remains at
$25.0 million and current depreciation expense projection remain at
approximately $21.6 million. The Company did not experience any
material change in its financial condition from that reported as of
July 3, 1993 in the Annual Report to Shareholders.
<PAGE>12
PART II. OTHER INFORMATION
Item 5. Other Information
Adoption of Shareholder Protection Rights Agreement
On February 4, 1994, the Company's Board of Directors declared a
dividend payable February 14, 1994 of one right (a "Right") for each
outstanding share of common stock, no par value ("Common Stock"), of the
Company held of record at the close of business on February 14, 1994
(the "Record Time"), or issued thereafter and prior to the Separation
Time (as hereinafter defined) and thereafter pursuant to options and
convertible securities outstanding at the Separation Time. The Rights
were issued pursuant to a Shareholder Protection Rights Agreement, dated
as of February 4, 1994 (the "Rights Agreement"), between the Company and
First Union National Bank of North Carolina, as Rights Agent (the
"Rights Agent"). Each Right entitles its registered holder to purchase
from the Company, after the Separation Time, one one-hundredth of a
share of Participating Preferred Stock, no par value ("Participating
Preferred Stock"), for $68.00 (the "Exercise Price"), subject to
adjustment.
The Rights will be evidenced by the Common Stock certificates until the
close of business on the earlier of (either, the "Separation Time")
(i) the tenth business day (or such later date as the Board of Directors
of the Company may from time to time fix by resolution adopted prior to
the Separation Time that would otherwise have occurred) after the date
on which any Person (as defined in the Rights Agreement) commences a
tender or exchange offer which, if consummated, would result in such
Person's becoming an Acquiring Person, as defined below, and (ii) the
first date (the "Flip-in Date") of public announcement by the Company or
any Person that such Person has become an Acquiring Person, other than
as a result of a Flip-over Transaction or Event (as defined below);
provided that if the foregoing results in the Separation Time being
prior to the Record Time, the Separation Time shall be the Record Time;
and provided further that if a tender or exchange offer referred to in
clause (i) is cancelled, terminated or otherwise withdrawn prior to the
Separation Time without the purchase of any shares of stock pursuant
thereto, such offer shall be deemed never to have been made. An
Acquiring Person is any Person having Beneficial Ownership (as defined
in the Rights Agreement) of 15% or more of the outstanding shares of
Common Stock, which term shall not include (i) the Company, any wholly-
owned subsidiary of the Company or any employee stock ownership or other
employee benefit plan of the Company, (ii) any person who shall become
the Beneficial Owner of 15% or more of the outstanding Common Stock
solely as a result of an acquisition of Common Stock by the Company,
until such time as such Person acquires additional Common Stock, other
than through a dividend or stock split, (iii) any Person who becomes an
Acquiring Person without any plan or intent to seek or affect control of
the Company if such Person, upon notice by the Company, promptly divests
sufficient securities such that such 15% or greater Beneficial Ownership
ceases or (iv) any Person who Beneficially Owns shares of Common Stock
consisting solely of (A) shares acquired pursuant to the grant or
exercise of an option granted by the Company in connection with an
agreement to merge with, or acquire, the Company at a time at which
there is no Acquiring Person, (B) shares owned by such Person and its
<PAGE>13
Affiliates and Associates at the time of such grant and (C) shares,
amounting to less than 1% of the outstanding Common Stock, acquired by
Affiliates and Associates of such Person after the time of such grant.
The Rights Agreement provides that, until the Separation Time, the
Rights will be transferred with and only with the Common Stock. Common
Stock certificates issued after the Record Time but prior to the
Separation Time shall evidence one Right for each share of Common Stock
represented thereby and shall contain a legend incorporating by
reference the terms of the Rights Agreement (as such may be amended from
time to time). Notwithstanding the absence of the aforementioned
legend, certificates evidencing shares of Common Stock outstanding at
the Record Time shall also evidence one Right for each share of Common
Stock evidenced thereby. Promptly following the Separation Time,
separate certificates evidencing the Rights ("Rights Certificates") will
be mailed to holders of record of Common Stock at the Separation Time.
The Rights will not be exercisable until the Business Day (as defined in
the Rights Agreement) following the Separation Time. The Rights will
expire on the earliest of (i) the Exchange Time (as defined below),
(ii) the close of business on February 14, 2004, (iii) the date on which
the Rights are redeemed as described below and (iv) upon the merger of
the Company into another corporation pursuant to an agreement entered
into when there is no Acquiring Person (in any such case, the "Expi-
ration Time").
The Exercise Price and the number of Rights outstanding, or in certain
circumstances the securities purchasable upon exercise of the Rights,
are subject to adjustment from time to time to prevent dilution in the
event of a Common Stock dividend on, or a subdivision or a combination
into a smaller number of shares of, Common Stock, or the issuance or
distribution of any securities or assets in respect of, in lieu of or in
exchange for Common Stock.
In the event that prior to the Expiration Time a Flip-in Date occurs,
the Company shall take such action as shall be necessary to ensure and
provide that each Right (other than Rights Beneficially Owned by the
Acquiring Person or any affiliate or associate thereof, which Rights
shall become void) shall constitute the right to purchase from the
Company, upon the exercise thereof in accordance with the terms of the
Rights Agreement, that number of shares of Common Stock or Participating
Preferred Stock of the Company having an aggregate Market Price (as
defined in the Rights Agreement), on the date of the public announcement
of an Acquiring Person's becoming such (the "Stock Acquisition Date")
that gave rise to the Flip-in Date, equal to twice the Exercise Price
for an amount in cash equal to the then current Exercise Price. In
addition, the Board of Directors of the Company may, at its option, at
any time after a Flip-in Date and prior to the time that an Acquiring
Person becomes the Beneficial Owner of more than 50% of the outstanding
shares of Common Stock, elect to exchange all (but not less than all)
the then outstanding Rights (other than Rights Beneficially Owned by the
Acquiring Person or any affiliate or associate thereof, which Rights
become void) for shares of Common Stock at an exchange ratio of one
share of Common Stock per Right, appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the
date of the Separation Time (the "Exchange Ratio"). Immediately upon
such action by the Board of Directors (the "Exchange Time"), the right
<PAGE>14
to exercise the Rights will terminate and each Right will thereafter
represent only the right to receive a number of shares of Common Stock
equal to the Exchange Ratio.
Whenever the Company shall become obligated under the preceding
paragraph to issue shares of Common Stock upon exercise of or in
exchange for Rights, the Company, at its option, may substitute therefor
shares of Participating Preferred Stock, at a ratio of one one-hundredth
of a share of Participating Preferred Stock for each share of Common
Stock so issuable.
In the event that prior to the Expiration Time the Company enters into,
consummates or permits to occur a transaction or series of transactions
after the time an Acquiring Person has become such in which, directly or
indirectly, (i) the Company shall consolidate or merge or participate in
a binding share exchange with any other Person if, at the time of the
consolidation, merger or share exchange or at the time the Company
enters into an agreement with respect to such consolidation, merger or
share exchange, the Acquiring Person controls the Board of Directors of
the Company and any term of or arrangement concerning the treatment of
shares of capital stock in such merger, consolidation or share exchange
relating to the Acquiring Person is not identical to the terms and
arrangements relating to other holders of Common Stock or (ii) the
Company shall sell or otherwise transfer (or one or more of its
subsidiaries shall sell or otherwise transfer) assets (A) aggregating
more than 50% of the assets (measured by either book value or fair
market value) or (B) generating more than 50% of the operating income or
cash flow, of the Company and its subsidiaries (taken as a whole) to any
other Person (other than the Company or one or more of its wholly owned
subsidiaries) or to two or more such Persons which are affiliated or
otherwise acting in concert, if, at the time of such sale or transfer of
assets or at the time the Company (or any such subsidiary) enters into
an agreement with respect to such sale or transfer, the Acquiring Person
controls the Board of Directors of the Company (a "Flip-over Transaction
or Event"), the Company shall take such action as shall be necessary to
ensure, and shall not enter into, consummate or permit to occur such
Flip-over Transaction or Event until it shall have entered into a
supplemental agreement with the Person engaging in such Flip-over
Transaction or Event or the parent corporation thereof (the "Flip-over
Entity"), for the benefit of the holders of the Rights, providing, that
upon consummation or occurrence of the Flip-over Transaction or Event
(i) each Right shall thereafter constitute the right to purchase from
the Flip-over Entity, upon exercise thereof in accordance with the terms
of the Rights Agreement, that number of shares of common stock of the
Flip-over Entity having an aggregate Market Price on the date of
consummation or occurrence of such Flip-over Transaction or Event equal
to twice the Exercise Price for an amount in cash equal to the then
current Exercise Price and (ii) the Flip-over Entity shall thereafter be
liable for, and shall assume, by virtue of such Flip-over Transaction or
Event and such supplemental agreement, all the obligations and duties of
the Company pursuant to the Rights Agreement. For purposes of the
foregoing description, the term "Acquiring Person" shall include any
Acquiring Person and its Affiliates and Associates counted together as
a single Person.
<PAGE>15
The Board of Directors of the Company may, at its option, at any time
prior to the Flip-in Date, redeem all (but not less than all) the then
outstanding Rights at a price of $0.01 per Right (the "Redemption
Price"), as provided in the Rights Agreement. Immediately upon the
action of the Board of Directors of the Company electing to redeem the
Rights, without any further action and without any notice, the right to
exercise the Rights will terminate and each Right will thereafter
represent only the right to receive the Redemption Price in cash for
each Right so held.
The holders of Rights will, solely by reason of their ownership of
Rights, have no rights as shareholders of the Company, including,
without limitation, the right to vote or to receive dividends.
The Rights will not prevent a takeover of the Company. However, the
Rights may cause substantial dilution to a person or group that acquires
15% or more of the Common Stock unless the Rights are first redeemed by
the Board of Directors of the Company. Nevertheless, the Rights should
not interfere with a transaction that is in the best interests of the
Company and its shareholders because the Rights can be redeemed on or
prior to the Flip-in Date, before the consummation of such transaction.
As of February 1, 1994 there were 10,967,193 shares of Common Stock
outstanding. As long as the Rights are attached to the Common Stock,
the Company will issue one Right with each new share of Common Stock so
that all such shares will have Rights attached. The Company's Board of
Directors has reserved for issuance upon exercise of the Rights 110,000
shares of Participating Preferred Stock.
The Rights Agreement (which includes as Exhibit A the forms of Rights
Certificate and Election to Exercise and as Exhibit B the form of
Certificate of Designation and Terms of the Participating Preferred
Stock) is attached hereto as an exhibit and is incorporated herein by
reference. The foregoing description of the Rights is qualified in its
entirety by reference to the Rights Agreement and such exhibits thereto.
Approval of Severance Arrangements
Copies of the executive severance arrangements discussed below are
attached hereto as exhibits and are incorporated herein by reference.
The following description of the severance agreements is qualified in
its entirety by reference to the severance agreements.
On February 4, 1994, the Board also adopted individual and group
severance arrangements covering executives and all salaried and hourly
employees of the Company. For the Company's executive officers named in
last year's proxy statement, the severance arrangements fall into three
categories. In category one is James L. Keeler, President and Chief
Executive Officer of the Company, who is provided a severance payment if
his employment is terminated during a three-year period
following a "Change of Control" as defined in his severance agreement.
Mr. Keeler's severance payment will equal three times his total
compensation (base salary plus an average of bonuses and deferred
compensation). In the event such payments to Mr. Keeler become subject
to an excise tax imposed by Section 4999 of the Internal Revenue Code
(or similar tax), he shall also be entitled to receive a "gross-up"
<PAGE>16
payment in respect of such taxes as specified in his agreement.
Mr. Keeler will also receive a cash payment equivalent to the value of
his stock options which are not vested at the time of the Change of
Control. Mr. Keeler's fringe benefits, such as health insurance, will
also be extended for three years in the event of a Change
of Control.
In the second category is Delbert L. Seitz, Chief Financial Officer,
Secretary and Treasurer, and James L. Mason, President of Wampler-
Longacre, Inc. Messrs. Seitz and Mason's severance packages are
identical to Mr. Keeler's, except that their severance payment will not
include deferred compensation because it has not been part of their
compensation package historically.
Among the executives in the third category are John J. Broaddus,
President of Cassco Ice & Cold Storage, and V. Eugene Misner, Vice
President of Live Production. Executives in the third category are
provided a severance payment if their employment is terminated during a
two-year period following a Change of Control. The
severance payment will equal 150% of their annual compensation (base
salary plus an average of bonuses). In the event such payments to these
executives become subject to an excise tax imposed by Section 4999 of
the Internal Revenue Code (or similar tax), such executives shall also
be entitled to receive a "gross-up" payment in respect of such taxes as
specified in their agreement. They will also receive a cash payment
equivalent to the value of their stock options which are not vested at
the time of Change of Control and their fringe benefits, such as health
insurance, will be extended for one and one-half years.
Bylaw Amendments
At its February 4, 1994 meeting of the Board of Directors, the Company's
Board amended its Bylaws to clarify that the roles of the Chairman of
the Board and the Vice Chairman of the Board are as officers of the
Board, rather than the Company, and to establish a procedure for
setting the record date for any special meeting of shareholders pursuant
to Virginia Code Section 13.1-728.5. The revised Bylaws are attached
hereto as an exhibit and are incorporated herein by reference. The
foregoing description of the amendments is qualified in its entirety by
reference to the revised Bylaws.
Resignation of Officers and Approval of
Post-Retirement Health Insurance Coverage
Effective February 4, 1994, directors Charles W. Wampler, Jr. and
Herman D. Mason agreed to terminate their compensation from the Company.
Further, directors William D. Wampler and George E. Bryan resigned in
their capacity as senior vice president and likewise terminated their
compensation from the Company.
In connection with these resignations, these gentlemen were provided
individual deferred compensation agreements which provide post-
retirement health insurance coverage for these directors and their
families. Copies of such individual deferred compensation agreements
are attached hereto as exhibits and are incorporated herein by
<PAGE>17
reference. The foregoing description of the individual deferred
compensation agreements is qualified in its entirety by reference to the
individual deferred compensation agreements.
Declaratory Judgment Action
On February 6, 1994, the Company filed an action seeking a ruling from
the U.S. District Court, Harrisonburg Division, concerning the validity
of its shareholder protection rights plan, as well as the
constitutionality of Articles 14 and 14.1 of Virginia's Stock
Corporation Act.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(3) Bylaws of the Company, as amended by the Board of Directors on
February 4, 1994
(4) Shareholder Protection Rights Agreement, dated as of February 4,
1994, which includes as Exhibit A the forms of Rights Certificate and
Election to Exercise and as Exhibit B the form of Certificate of
Designation and Terms of the Participating Preferred Stock incorporate
by reference to Exhibit 1 of Form 8-A filed with the Securities and
Exchange Commission accepted electronically on February 8, 1994
(10.1) Employment Agreement dated July 4, 1993 between the Registrant
and James L. Keeler (Deferred Compensation Agreement attached thereto as
Exhibit 4) incorporated by reference to Exhibit 10.6 of Form 10-K filed
with the Securities and Exchange Commission on September 30, 1993
(10.2) Amendment to Employment Agreement dated February 4, 1994 between
the Registrant and James L. Keeler
(10.3) Amendment to Deferred Compensation Agreement dated February 4,
1994 between the Registrant and James L. Keeler
(10.4) Severance Agreement dated February 4, 1994 between the Regis-
trant and James L. Keeler
(10.5) Severance Agreement dated February 4, 1994 between the Regis-
trant and Delbert L. Seitz
(10.6) Severance Agreement dated February 4, 1994 between the Regis-
trant and James L. Mason
(10.7) Severance Agreement dated February 4, 1994 between the Regis-
trant and John J. Broaddus
(10.8) Severance Agreement dated February 4, 1994 between the Regis-
trant and V. Eugene Misner
(10.9) Deferred Compensation Agreement dated February 4, 1994 between
the Registrant and Charles W. Wampler, Jr.
<PAGE>18
(10.10) Deferred Compensation Agreement dated February 4, 1994 between
the Registrant and Herman D. Mason
(10.11) Deferred Compensation Agreement dated February 4, 1994 between
the Registrant and George E. Bryan
(10.12) Deferred Compensation Agreement dated February 4, 1994 between
the Registrant and William D. Wampler
(10.13) Executive Cash Bonus Program incorporated by reference to
Exhibit 10.7 of Form 10-K filed with the Securities and Exchange
Commission on September 30, 1993.
(10.14) Long-Term Incentive Plan, as amended, incorporated by reference
to Exhibit 28 of Post-Effective Amendment Number One to Form S-8
(No. 33-27037) filed with the Securities and Exchange Commission on
November 18, 1992
(99.1) Press release, dated February 6, 1994, issued by the Registrant
regarding rejection of Tyson Foods' proposal
(99.2) Press release, dated February 7, 1994, issued by the Registrant
regarding adoption of Shareholder Protection Rights Agreement
(99.3) Press release, dated February 9, 1994, issued by the Registrant
regarding declaratory judgment action
(b) Form 8-K
Reporting Date, December 31, 1993. Item Reported - Item 5, Other
Events. WLR Foods, Inc. reported on the merger of its poultry
subsidiaries into one subsidiary, Wampler-Longacre, Inc. and the move of
its corporate offices.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report is signed this 15th day of February, 1994 by the
Registrant's principal financial officer who is also authorized by the
Registrant to sign on its behalf.
WLR FOODS, INC.
___/s/ Delbert L. Seitz_________
Delbert L. Seitz, Chief Financial
Officer and duly authorized signator
for Registrant
<PAGE>19
EXHIBIT INDEX
Exhibit Sequentially
No. Description No. Page
3 Bylaws of the Company, as amended by the 21
Board of Directors on February 4, 1994
4 Shareholder Protection Rights Agreement, N/A
dated as of February 4, 1994, which includes
as Exhibit A the forms of Rights Certificate
and Election to Exercise and as Exhibit B
the form of Certificate of Designation and
Terms of the Participating Preferred Stock
incorporated by reference to Exhibit 1 of
Form 8-A filed with the Securities and
Exchange Commission accepted electronically
on February 8, 1994
10.1 Employment Agreement dated July 4, 1993 between N/A
the Registrant and James L. Keeler (Deferred
Compensation Agreement attached thereto as
Exhibit 4) incorporated by reference to
Exhibit 10.6 of Form 10-K filed with the
Securities and Exchange Commission on
September 30, 1993
10.2 Amendment to Employment Agreement dated 32
February 4, 1994 between the Registrant and
James L. Keeler
10.3 Amendment to Deferred Compensation Agreement 33
dated February 4, 1994 between the Registrant
and James L. Keeler
10.4 Severance Agreement dated February 4, 1994 34
between the Registrant and James L. Keeler
10.5 Severance Agreement dated February 4, 1994 47
between the Registrant and Delbert L. Seitz
10.6 Severance Agreement dated February 4, 1994 60
between the Registrant and James L. Mason
10.7 Severance Agreement dated February 4, 1994 73
between the Registrant and John J. Broaddus
10.8 Severance Agreement dated February 4, 1994 86
between the Registrant and V. Eugene Misner
10.9 Deferred Compensation Agreement dated February 4, 99
1994 between the Registrant and Charles W.
Wampler, Jr.
10.10 Deferred Compensation Agreement dated February 4, 100
1994 between the Registrant and Herman D. Mason
<PAGE>20
10.11 Deferred Compensation Agreement dated February 4, 102
1994 between the Registrant and George E. Bryan
10.12 Deferred Compensation Agreement dated February 4, 103
1994 between the Registrant and William D. Wampler
10.13 Executive Cash Bonus Program incorporated by N/A
reference to Exhibit 10.7 of Form 10-K filed with
the Securities and Exchange Commission on
September 30, 1993.
10.14 Long-Term Incentive Plan, as amended, incor- N/A
porated by reference to Exhibit 28 of Post-
Effective Amendment Number One to Form S-8
(No. 33-27037) filed with the Securities
and Exchange Commission on November 18, 1992
99.1 Press release, dated February 6, 1994, issued 104
by the Registrant regarding rejection of Tyson
Foods' proposal
99.2 Press release, dated February 7, 1994, issued by 110
the Registrant regarding adoption of Shareholder
Protection Rights Agreement
99.3 Press release, dated February 9, 1994, issued by 111
the Registrant regarding declaratory judgment
action
<PAGE>21
Exhibit 3
BYLAWS
OF
WLR FOODS, INC.
ARTICLE I
Shareholders
Section 1. Place of Meetings. All meetings of the shareholders shall
be held at such place as may be designated in writing by the Board of
Directors.
Section 2. Voting. Shareholders shall be entitled to vote at meetings
of the shareholders in person or by proxy. If by proxy, such proxy
shall be appointed by an instrument in writing, subscribed by the
shareholder or by his duly authorized attorney. A shareholder shall be
entitled to one vote for each share of stock entitled to vote registered
in his name on the books of the Corporation.
Section 3. Quorum. Shares entitled to vote as a separate voting group
may take action on a matter at a meeting only if a quorum of those
shares exists with respect to that matter. A majority of the votes
entitled to be cast on the matter by the voting group constitutes a
quorum of that voting group for action on that matter.
Section 4. Adjournment of Meetings. If less than a quorum shall be
in attendance at the shareholders' meeting, the meeting shall be
adjourned from time to time by a majority vote of the shareholders
entitled to vote present or represented by proxy until a quorum shall
attend. Any meeting at which a quorum is present may also be adjourned
in like manner for such time upon such call as may be determined by the
shareholders entitled to vote present in person or by proxy at such
meetings. At any adjourned meeting at which a quorum is present, any
business may be transacted which might have been transacted if the
meeting had been held as originally called.
Section 5. Annual Election of Directors. The annual meeting of the
shareholders for the election of directors and the transaction of other
business shall be held in October of each year, the date and time of
such meeting to be fixed from time to time by resolution of the Board of
Directors.
Section 6. Special Meetings - How Called. Special meetings of the
shareholders shall be held upon the call of the Chairman of the Board,
the President, or the Board of Directors.
Section 7. Inspectors of Election. (a) In advance of any meeting of
the shareholders of the Corporation, the Board may appoint inspectors of
election, who may be officers or employees, but not directors, of the
Company, to act at the meeting and any adjournment thereof. If
inspectors of election are not so appointed, or if any person so
appointed fails to appear or refuses to act, the chairman of any meeting
of shareholders may appoint at the meeting inspectors of election or
<PAGE>22
persons to replace those who so fail or refuse to act. The number of
inspectors shall be three (3).
(b) The inspectors of election shall determine the number of shares
outstanding and the voting power of each, the shares represented at the
meeting, the existence of a quorum, and the authenticity, validity and
effect of proxies; they shall receive votes, ballots or consents and
shall hear and determine all challenges and questions if any may arise
in connection with the right to vote; they shall count and tabulate all
votes or consents, determine when the polls shall close, and determine
the result; and they shall do such acts as may be proper to conduct the
election or vote with fairness to all shareholders.
(c) The inspectors of election shall perform their duties impartially,
in good faith, to the best of their ability, and as expeditiously as is
practical. The decision, act or certificate of a majority of the
inspectors is effective in all respects as the decision, act or
certificate of all. Any report or certificate made by the inspectors of
election is prima facie evidence of the facts stated therein.
Section 8. Organization. The Chairman of the Board of Directors, or
such other officer or board member as the Board of Directors may
designate, shall preside at each meeting of shareholders. The
Secretary or an Assistant Secretary shall act as secretary of the
meeting and keep a record of the proceedings thereof. The Board of
Directors of the Corporation shall be entitled to make such rules or
regulations for the conduct of meetings of shareholders as it shall deem
necessary, appropriate or convenient. Subject to such rules and
regulations of the Board of Directors, if any, the chairman of the
meeting shall have the right and authority to prescribe such rules,
regulations and procedures, and to do all such acts as, in the judgment
of such chairman, are necessary, appropriate or convenient for the
proper conduct of the meeting, including, without limitation,
establishing an agenda or order of business for the meeting,
establishing rules and procedures for maintaining order at the meeting
and the safety of those present, limiting the participation in such
meeting to shareholders of record of the Corporation and their duly
authorized and constituted proxies, and such other persons as the
chairman shall permit, restricting entry to the meeting after the time
fixed for the commencement thereof, limiting the time allotted to
questions or comments by participants, and regulating the opening and
closing of the polls for balloting on matters which are to be voted on
by ballot. Unless, and to the extent, determined by the Board of
Directors or the chairman of the meeting, meetings of shareholders shall
not be required to be held in accordance with rules of parliamentary
procedure.
Section 9. Record Date for Special Meeting. For purposes of setting
the record date for determination of the holders of common stock of the
Corporation entitled to vote at any special meeting of shareholders
called pursuant to the provisions of the Virginia Control Share
Acquisition Act (the Act), the record date shall be the date on which
the Acquiring Person (as defined by the Act) requests such shareholders'
meeting pursuant to Va. Code Section 13.1-728.5.
<PAGE>23
ARTICLE II
Directors
Section 1. Board of Directors. The Board of Directors shall have
power to manage and administer the business and affairs of the
Corporation. Except as expressly limited by law, all corporate powers
of the Corporation shall be vested in and may be exercised by the Board
of Directors.
Section 2. Number. The Board shall consist of not less than nine (9)
nor more than twenty-one (21) directors, the exact number within such
minimum and maximum limits to be fixed and determined from time to time
by resolution of a majority of the Board of Directors.
Section 3. Retirement. No person shall be eligible for election to
the Board of Directors after his 72nd birthday. The provision of this
Section shall not apply to those directors on the Board of Directors as
of January 1, 1989.
Section 4. Notification of Nominations. Nominations for the election
of directors may be made by the Board of Directors or by any
shareholder entitled to vote for the election of directors. Any
shareholder entitled to vote for the election of directors at a meeting
may nominate persons for election as directors only if written notice of
such shareholder's intent to make such nomination is given, either by
personal delivery or by United States mail, postage prepaid, to the
Secretary of the Corporation not later than (i) with respect to an
election to be held at an annual meeting of shareholders, 90 days in
advance of such meeting, and (ii) with respect to an election to be held
at a special meeting of shareholders for the election of directors, the
close of business on the seventh day following the date on which notice
of such meeting is first given to shareholders. Each such notice shall
set forth the name and address of the shareholder who intends to make
the nomination and of the person or persons to be nominated, a
representation that such shareholder is a holder of record of stock of
the Corporation entitled to vote at such meeting and intends to appear
in person or by proxy at the meeting to nominate the person or persons
specified in the notice, a description of all arrangements or
understandings between such shareholder and each nominee and any other
person or persons specified in the notice, a description of all
arrangements or understandings between such shareholder and each nominee
and any other person or persons (naming such person or persons) pursuant
to which the nomination or nominations are to be made by such
shareholder, such other information regarding each nominee proposed by
such shareholder as would have been required to be included in a proxy
statement filed pursuant to the proxy rules of the Securities and
Exchange Commission had each nominee been nominated, or intended to be
nominated, by the Board of Directors, and the consent of each nominee
to serve as a director of the Corporation if so elected. The chairman
of a shareholders' meeting may refuse to acknowledge the nomination
of any person not made in compliance with the foregoing procedure.
Section 5. Regular Meeting, Election of Officers. A regular meeting
of the Board of Directors shall be held immediately following each
annual meeting of the shareholders of the Corporation at the same place
such shareholders' meeting is held. No notice thereof shall be
<PAGE>24
required. At such meeting, the directors shall elect a President and a
Secretary and may elect a Chief Executive Officer, a Chief Operating
Officer, a Chief Financial Officer, one or more Vice Presidents, an
Assistant Secretary, a Treasurer, and such other officers as the Board
may decide, and may transact such other business as shall properly come
before the meeting, including the election of directors to committees of
the Board of Directors. Unless sooner removed, such officers shall hold
office until the next annual election of officers, and until their
successors shall have been elected and have qualified.
Section 6. Special Meetings, How Called, Notice. Special meetings of
the Board of Directors shall be held upon notice by word-of-mouth,
letter, facsimile communication, or cable delivered not later than
twenty-four (24) hours preceding the time for the meeting upon call
of the Chairman of the Board, President or Secretary, and upon call by
the Secretary upon the written request of any four (4) directors.
Notice of any such meeting may be waived in writing signed by the
persons entitled to notice whether before or after the meeting. Neither
the business to be transacted at, nor the purpose of, any special
meeting need be specified in the notice or waiver of notice of the
meeting.
Section 7. Quorum. A majority of the Board of Directors shall
constitute a quorum for the transaction of business.
Section 8. Consents. Any and all notices herein required, including
the time and place of the meeting and the nature of the business to be
transacted, may be waived by written instrument executed by all the
directors. Further, any action by the directors of the Corporation may
be taken without a meeting by the unanimous written consent of all of
the directors.
Section 9. Committees. The Board of Directors may, by resolution
adopted by a majority of the Board of Directors, create one or more
committees of the Board of Directors and elect members of the Board of
Directors to serve on them at the pleasure of the Board of Directors.
To the extent specified by the Board of Directors or these Bylaws, each
committee may exercise the authority of the Board of Directors to the
extent permitted by law.
Section 10. Officers of the Board. By resolution adopted by a majority
of the Board of Directors, the Board of Directors may create such
offices of the Board, including Chairman of the Board and Vice
Chairman of the Board, as it deems appropriate for the carrying out of
Board functions and assignments, to serve at the pleasure of the Board.
Such persons are not, nor shall they by virtue of their service to the
Board be deemed to be, officers of the Corporation as defined in Section
1, Article VII herein.
ARTICLE III
Executive Committee
Section 1. Qualifications, Elections. The Board of Directors may elect
from its number an Executive Committee composed entirely of members
of the Board of Directors. The Chief Executive Officer, and the
<PAGE>25
Chief Operating Officer, provided such officers are Board members,
shall be members by virtue of their office with the Corporation.
Section 2. Powers and Duties. During the intervals between the Board
of Directors' meetings, the Executive Committee shall possess, and
may exercise, all the powers of the Board of Directors in the
management of the affairs of the Corporation. The Executive Committee
shall keep minutes of the proceedings of its meetings to be submitted
to the Board of Directors for its approval.
ARTICLE IV
Audit Committee
Section 1. Qualifications, Elections. The Board of Directors shall
elect from its number an Audit Committee composed entirely of members
of the Board of Directors. A majority of the Audit Committee shall be
comprised of independent directors of the Board of Directors.
Section 2. Powers and Duties. The Audit Committee shall recommend to
the Board of Directors the independent audit firm to be employed by
the Corporation to examine and report on the financial statements issued
by the Corporation; shall meet with the independent auditor to discuss
pertinent matters including quality of management, financial, accounting
and internal audit procedures; may establish an internal audit
department and thereafter periodically review its functions and its
personnel to assure effectiveness, independence and competence; and may
direct special investigations into significant matters brought to the
Audit Committee's attention within the scope of its duties. The
Audit Committee also shall monitor the Corporation's compliance with the
applicable requirements of the National Association of Securities
Dealers, Inc. relating to independent directors and shall conduct an
appropriate review of all related party transactions and potential
conflicts of interest relating to the directors, as required by the
National Association of Securities Dealers, Inc., on at least an annual
basis, and shall recommend to the Board of Directors such action as it
deems appropriate if it determines that an impermissible relationship or
interest exists.
ARTICLE V
Nominating Committee
Section 1. Qualifications, Elections. The Board of Directors may
elect from its number a Nominating Committee composed entirely of
members of the Board of Directors.
Section 2. Powers and Duties. The Nominating Committee shall propose
to the Board of Directors a slate of nominees for the Board of Directors
to consider in recommending to the Corporation's shareholders persons to
be elected at the annual meeting of shareholders to the Board of
Directors, which slate shall consist of at least two independent
directors; shall propose to the Board of Directors nominees who meet
criteria for Board membership to fill vacancies on the Board as they
occur; and shall propose to the Board of Directors for Board approval
director nominees for appointment to, and the filling of vacancies on,
committees of the Board of Directors.
<PAGE>26
ARTICLE VI
Executive Compensation Committee
Section 1. Qualifications, Elections. The Board of Directors may elect
from its number an Executive Compensation Committee composed entirely
of members of the Board of Directors.
Section 2. Powers and Duties. The Executive Compensation Committee
shall determine the annual salary, bonus and other benefits, direct and
indirect, of the Chief Executive Officer and shall make grants
pursuant to the Corporation's Long Term Incentive Plan.
ARTICLE VII
Officers
Section 1. General. The officers of the Corporation shall consist of
a President and a Secretary, and may consist of a Chief Executive
Officer, Chief Operating Officer, Chief Financial Officer, one or more
Vice Presidents, Assistant Secretary, Treasurer, and such other officers
as the Board may decide. One person may hold more than one office.
Section 2. President. The President of the Corporation shall have
concurrent power, along with the Chairman of the Board and Chief
Executive Officer, to call or cause to be called all meetings of the
Board of Directors. He shall be an ex officio member of all committees
of the Board of Directors. He shall also preside at all meetings of
the Board of Directors in the absence of the Chairman or Vice Chairman
of the Board. He shall make and sign contracts and instruments in
the name and on behalf of the Corporation, including checks,drafts,
notes and orders for the payment of money, subject to the approval of
the Board of Directors, make reports to the shareholders and
directors, and perform all such other duties as are incident to his
office or which may properly be required of him by the Board of
Directors.
Section 3. Chairman of the Board. The Chairman of the Board shall
preside at all meetings of the Board of Directors, and shall
approve the minutes of all meetings at which he presides. He shall
have concurrent power, along with the President, and Chief Executive
Officer, to call or cause to be called all meetings of the Board of
Directors, and shall be an ex officio member of all committees of
the Board of Directors. He shall also serve the Corporation in an
advisory capacity and perform such other duties as may be assigned to
him by the Board of Directors.
Section 4. Vice Chairman of the Board. The Vice Chairman of the
Board shall have concurrent power with the Chairman and shall preside
at all meetings of the Board of Directors in the absence of the
Chairman of the Board.
Section 5. Chief Executive Officer. The Chief Executive Officer
shall give counsel and advice as may be deemed essential for the
best interest of the Corporation. He shall have concurrent power,
along with the Chairman of the Board and President, to call or
cause to be called all meetings of the Board of Directors. He
shall be responsible for all administration of the business and
<PAGE>27
affairs of the Corporation. He shall make and sign contracts and
instruments in the name and on behalf of the Corporation,
including checks, drafts, notes and orders for the payment of money,
subject to the approval of the Board of Directors, make reports to
the shareholders and directors, and perform all such other duties as
are incident to his office of which may properly be required of him by
the Board of Directors.
Section 6. Chief Operating Officer. The Chief Operating
Officer shall give counsel and advice as may be deemed essential
for the best interest of the Corporation. He shall effect active
supervision over the operations of the business. He shall perform
all other duties as may be assigned to him by the Board of
Directors or Chief Executive Officer.
Section 7. Chief Financial Officer. The Chief Financial Officer
shall give counsel and advice as may be deemed essential for the
best interest of the Corporation. He shall be responsible for the
fair presentation of financial statements of the Corporation. He
shall supervise the controllers of the subsidiary corporations. He
shall perform all other duties as may be assigned to him by the
Board of Directors or Chief Executive Officer.
Section 8. Vice Presidents. Each Vice President shall perform such
duties as may be assigned to him by the Board of Directors.
Section 9. Secretary. The Secretary shall give, or cause to be given,
notice of all meetings of shareholders and the Board of Directors, and
all other notices required by law or by these Bylaws, or by the Board
of Directors. He shall record the proceedings of the meetings of the
shareholders and the Board of Directors in a book to be kept for that
purpose, and shall perform such other duties as may be assigned to him
by the Board of Directors, President or Chief Executive Officer.
He shall sign the stock certificates of the Corporation, and shall keep
a current register of the names and addresses of the shareholders.
He shall be the custodian of the corporate seal, the stock
certificate book, minute book and all other records of the
Corporation, other than those hereinafter delegated to the care and
custody of the Treasurer, and shall affix and attest the corporate
seal to any certificate or writing of the Corporation requiring the
same. The Secretary may, but shall not be required to,
guarantee the signatures of endorsers of the Corporation's stock
pursuant to Va. Code Section 8.8-312(1) (Supp. 1989), as amended.
Section 10. Assistant Secretary. The Assistant Secretary shall be
vested with all of the powers and perform all of the duties of the
Secretary in the absence of the Secretary. He shall also perform
such other duties as may be prescribed by the Board of Directors.
Section 11. Treasurer. The Treasurer shall have the custody of, and be
responsible for, the funds and securities of the Corporation. He shall
receive and give, or cause to be given, receipts and acquittances
for monies paid to the Corporation, pay out funds of the
Corporation, and keep full and accurate records and books of
account showing his transactions, which records and books of
account he shall exhibit to any shareholder or director upon request
<PAGE>28
therefor. He shall also perform such other duties as may be required of
him by the Board of Directors.
ARTICLE VIII
Capital Stock
Section 1. Issue of Certificates of Stock. The Corporation shall
cause to be issued to each shareholder one or more certificates under
the seal or its facsimile of the Corporation, signed by the
President, Chairman of the Board, Chief Executive Officer, Chief
Operating Officer, Vice Chairman of the Board or Executive Vice
President and Secretary or Assistant Secretary, which signatures may
be by facsimile, certifying the number of shares owned by the
shareholders. All references in these Bylaws to an officer's
signature of the Corporation's stock certificates shall be deemed to
permit signature by facsimile.
Section 2. Transfer of Shares. The shares of the Corporation shall
be transferable only on its books. Transfers of stock shall be
made upon the corporate records only when an old or previously issued
certificate shall have been surrendered for cancellation, whereupon
it shall be marked CANCELLED by the Secretary, with the date of
such cancellation, before a new certificate is issued therefor.
Section 3. Distributions. To the extent consistent with the
Corporation's Articles of Incorporation and these Bylaws, the
provisions of Title 13.1, Chapter 9, Article VII of the Code of
Virginia of 1950, as amended, shall apply to any distributions with
respect to the Corporation's shares, as well as any other matters
respecting such shares.
Section 4. Lost Certificates. In case any certificate for the capital
stock of the Corporation shall be lost, stolen or destroyed, the
Corporation may require such proof of the fact, such indemnity to be
given to it and to its Transfer Agent and Registrar, and payment of
reasonable fees incurred, as shall be deemed necessary or advisable by
it.
Section 5. Holder of Record. The Corporation shall be entitled to
treat the holder of record of any share or shares of stock as the
holder thereof in fact and shall not be bound to recognize any equitable
or other claim to or interest in such shares on the part of any other
person, whether or not it shall have express or other notice
thereof, except as otherwise expressly provided by law.
Section 6. Closing of Books. The Board of Directors may fix in advance
a date, not exceeding seventy (70) days preceding the date of any
meeting of the shareholders, or the date for payment of any dividend or
the date for allotment of rights, or the date when any change or
conversion or exchange of capital stock shall go into effect, as a
record date for the determination of the shareholders entitled to
notice of and to vote at any such meeting, or entitled to receive
payment of any such dividends, or any such allotment of rights, or
to exercise the rights in respect to any such change, conversion
or exchange of capital stock, and in such case only shareholders of
record on the dates so fixed shall be entitled to such notice of and
<PAGE>29
to vote at such meeting, or to receive payment of such dividend or
allotment of rights, or exercise such rights, as the case may be,
notwithstanding any transfer of any stock on the books of the
Corporation after any such record date fixed as herein provided.
ARTICLE IX
Limitation of Liability and Indemnification
Section 1. Limitation or Elimination of Liability. To the full extent
that the Virginia Stock Corporation Act, as it exists on the date
hereof or may hereafter be amended, permits the limitation or
elimination of the liability of directors or officers, a
director or officer of the Corporation shall not be liable to
the Corporation or its shareholders for any monetary damages in excess
of one dollar.
Section 2. Indemnification. The Corporation shall indemnify a
director or officer of the Corporation who is or was a party to any
proceeding by reason of the fact that he is or was such a director or
officer or is or was serving at the request of the Corporation as a
director, officer, partner, trustee, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit
plan or other enterprise against all liabilities and expenses
incurred in the proceeding except such liabilities and expenses as
are incurred because of his willful misconduct or knowing violation of
the criminal law.
Section 3. Determination to Indemnify. Subject to the provisions of
Section 7 of this Article, a determination to indemnify a director
or officer under Section 2 of this Article shall be made, in the
first instance, by a majority vote of a quorum of the Board of
Directors, such quorum consisting of disinterested directors. If
a quorum of disinterested directors cannot be obtained, then
the determination shall be made by majority vote of a committee
designated by the Board of Directors (in which designation
interested directors may participate), the committee to consist solely
of two or more disinterested directors. If such a committee cannot
be designated, the determination shall be made by special legal counsel
selected by a majority vote of a quorum consisting of disinterested
directors, or, if the same cannot be obtained, by the committee
described above. If neither a quorum consisting of disinterested
directors or the committee described above can be obtained, the
selection of special legal counsel shall be made by majority vote of
the Board of Directors (in which selection interested directors
may participate). Notwithstanding any other provision of this Article,
in any instance, the determination to indemnify a director or
officer may be made by vote of the shareholders, except that any
shares owned, or voted under the control of, directors or officers who
are parties to the proceeding may not be voted.
Section 4. Advances and Reimbursements of Expenses. Once a
determination to indemnify has been made pursuant to the provisions
of Section 3 of this Article, the Corporation shall make advances for
expenses of, and reimbursements for expenses incurred by, any
director or officer in any proceeding described in Section 2 of
this Article, upon receipt of an undertaking from the director or
<PAGE>30
officer to repay the same if it is ultimately determined that he is not
entitled to indemnification. Such undertaking shall be an
unlimited, unsecured general obligation of the director or officer
and shall be accepted without reference to his ability to make
repayment. The director or officer also shall furnish the
Corporation with a written statement of his good faith belief that he
has met the standard of conduct described in Va. Code Section 13.1-697,
as amended.
Section 5. Indemnification of Agents and Employees. The Board of
Directors may cause the Corporation to indemnify and make advances
and reimbursements to any person not specified in Section 2 of this
Article who was or is a party to any proceeding by reason of the fact
that he is or was an employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director,
officer, partner, trustee, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other
enterprise, to the same extent as if such person were specified as
one to whom indemnification is granted in Section 2. The provisions
of Section 2 through 4 of this Article shall be applicable to any
indemnification, determination, advancements and reimbursements provided
pursuant to this Section.
Section 6. Indemnification Insurance. The Corporation may purchase
and maintain insurance to indemnify it against the whole or any
portion of the liability assumed by it in accordance with this
Article, and also may procure insurance in such amounts as the
Board of Directors may determine on behalf of any person who is or
was a director, officer, employee or agent of the Corporation, or is
or was serving at the request of the Corporation as a director,
officer, partner, trustee, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit
plan or other enterprise, against liability asserted against or
incurred by any such person in any such capacity or arising from his
status as such, whether or not the Corporation would have power to
indemnify him against such liability under the provisions of this
Article.
Section 7. Changes in the Board Composition. In the event there has
been a change in the composition of a majority of the Board of Directors
after the date of the alleged act or omission with respect to which
indemnification is claimed, any determination as to indemnification,
advancement or reimbursement of expenses with respect to any claim for
indemnification made pursuant to Sections 2 or 5 of this Article shall
be made by special legal counsel agreed upon by the Board of Directors
and the proposed indemnitee. If the Board of Directors and the
proposed indemnitee are unable to agree upon such special legal
counsel, the Board of Directors and the proposed
indemnitee each shall select a nominee, and the nominee shall
select such special legal counsel.
Section 8. Applicability of this Article. The provisions of this
Article shall be applicable to all actions, claims, suits or
proceedings commenced after the adoption hereof, whether arising from
any action taken or failure to act before or after such adoption. No
amendment, modification or repeals of this Article shall diminish the
<PAGE>31
rights provided hereby or diminish the right to indemnification with
respect to any claim, issue or matter in any then pending or
subsequent proceeding that is based in any material respect on any
alleged action or failure to act prior to such amendment, modification
or repeal. Reference herein to directors, officers, employees or
agents shall include former directors, officers, employees and agents
and their respective heirs, executors and administrators.
ARTICLE X
Redemption Rights
To the full extent permitted by the Control Share Acquisition Act,
Article 14.1 of Title 13.1 of the Code of Virginia of 1950, as
amended, the Corporation is authorized to redeem shares acquired in a
control share acquisition, as that term is defined under the Control
Share Acquisition Act.
ARTICLE XI
Fiscal Year
The Board of Directors shall have power to fix, and, from time to time,
change, the fiscal year of the Corporation. Unless otherwise fixed by
the Board, the fiscal year shall end on the Saturday closest to June
30th.
ARTICLE XII
Amendments
These Bylaws may be amended, in whole or in part, by a two-thirds (2/3)
vote of the Board of Directors, or by the holders of two-thirds (2/3)
of all shares entitled to vote by each voting group of the
shareholders of the Corporation, at any meeting of the Board of
Directors or of the shareholders, as the case may be, except that the
shareholder vote for Bylaw amendments that have been recommended to the
shareholders by a two-thirds (2/3) vote of the Board of Directors shall
require only a majority of all votes entitled to be cast by each
voting group. Bylaws made or amended by the Board of Directors
may be altered or repealed by the shareholders, but shall remain in
effect unless and until such action be taken by the shareholders.
ARTICLE XIII
Implied Amendments
Any action taken or authorized by the shareholders or by the Board of
Directors which would be inconsistent with the Bylaws then in effect,
but which is taken or authorized by the affirmative vote of not less
than that number of shares or the number of directors that would be
required to amend these Bylaws so that the Bylaws would be
consistent with such action, shall be given the same effect as if
these Bylaws had been temporarily amended or suspended to the extent
necessary to permit the specific action so taken or authorized.
<PAGE>32
EXHIBIT 10.2
AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AMENDMENT TO THE EMPLOYMENT AGREEMENT dated July 4, 1993 by
and between WLR Foods, Inc. ("WLR") a Virginia corporation, and James L.
Keeler ("Keeler") (the "Employment Agreement") is made as of the 4th day
of February, 1994, who agree and bind themselves as follows.
1. Preamble. WLR and Keeler entered into an Employee Severance
Agreement dated the 4th day of February, 1994, and WLR and Keeler desire
to amend the Employment Agreement such that its terms will be consistent
with those of the Employee Severance Agreement.
2. The following amendments are hereby made to the Employment
Agreement:
(a) Change in Control. WLR and Keeler agree that for the purpose of
the Employment Agreement, a "Change in Control" shall be defined as set
forth in Section 3 of the Employee Severance Agreement.
(b) Section 10. The last sentence of Section 10 of the Employment
Agreement shall be deleted.
WITNESS the following signatures and seal.
IN WITNESS WHEREOF WLR Foods, Inc. has caused this writing to be signed
in its name and on its behalf as thereunto duly authorized.
________ /s/ James L. Keeler_____________(SEAL)
James L. Keeler
WLR Foods, Inc.
By _____/s/ Herman D. Mason____________________
Herman D. Mason
By _____/s/ Charles W. Wampler, Jr.____________
Charles W. Wampler, Jr.
By _____/s/ Charles L. Campbell________________
Charles L. Campbell
Members of the Executive Compensation
Committee
By ____/s/ Charles W. Wampler, Jr._____________
Chairman of the Board
<PAGE>33
EXHIBIT 10.3
AMENDMENT TO DEFERRED COMPENSATION AGREEMENT
THIS AMENDMENT TO THE DEFERRED COMPENSATION AGREEMENT dated July 4, 1993
by and between WLR FOODS, INC. ("WLR"), a Virginia corporation, and
James L. Keeler ("Keeler") (the "Deferred Compensation Agreement") is
made as of the 4th day of February, 1994, by and between WLR and Keeler
who agree and bind themselves as follows:
1. Preamble. WLR and Keeler entered into an Employee Severance
Agreement dated the 4th day of February, 1994, and WLR and Keeler desire
to amend the Deferred Compensation Agreement such that its terms will be
consistent with those of the Employee Severance Agreement.
2. The following amendment is hereby made to the Deferred Compensation
Agreement:
WLR and Keeler agree that for the purpose of the Employment Agreement,
a "Change in Control" shall be defined as set forth in Section 3 of the
Employee Severance Agreement.
WITNESS the following signatures and seal.
IN WITNESS WHEREOF WLR Foods, Inc. has caused this writing to be signed
in its name and on its behalf as thereunto duly authorized.
_____/s/ James L. Keeler_______________(SEAL)
James L. Keeler
WLR Foods, Inc.
By ____/s/ Herman D. Mason_________________
Herman D. Mason
By ____/s/ Charles W. Wampler, Jr._________
Charles W. Wampler, Jr.
By ____/s/ Charles L. Campbell_____________
Charles L. Campbell
Members of the Executive Compensation
Committee
By ____/s/ Charles W. Wampler, Jr._________
Chairman of the Board
<PAGE>34
EXHIBIT 10.4
February 4, 1994
James L. Keeler
President and Chief Executive Officer
WLR Foods, Inc.
P.O. Box 7000
Broadway, Virginia 22815
Dear Mr. Keeler:
WLR Foods, Inc., a Virginia corporation (the "Company"), considers the
establishment and maintenance of a sound and vital management to be
essential to protecting and enhancing the best interests of the Company
and its shareholders. In this connection, the Company recognizes that,
as is the case with many publicly held corporations, the possibility of
a Change in Control (as defined herein) may arise and that such
possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of management
personnel to the detriment of the Company and its shareholders.
Accordingly, the Board of Directors of the Company (the "Board") has
determined that appropriate steps should be taken to reinforce and
encourage the continued attention and dedication of members of the
Company's management to their assigned duties without distraction in
circumstances arising from the possibility of a Change in Control of the
Company. In particular, the Board believes it important, should the
Company or its shareholders receive a proposal for transfer of control
of the Company, that you be able to assess and advise the Board whether
such proposal would be in the best interests of the Company and its
shareholders and to take such other action regarding such proposal as
the Board might determine to be appropriate, without being influenced by
the uncertainties of your own situation.
In order to induce you to remain in the employ of the Company, this
letter agreement ("Agreement"), which has been approved by the Board,
sets forth the severance benefits which the Company agrees will be
provided to you in the event your employment with the Company is
terminated subsequent to a Change in Control of the Company under the
circumstances described below.
1. Coordination with Employment Agreement.
(i) You have previously entered into a five-year Employment Agreement
with the Company dated July 4, 1993. Pursuant to such Employment
Agreement, the Company agreed to employ you, and you agreed to be
employed by the Company, as President and Chief Executive Officer until
termination of the Employment Agreement on June 27, 1998.
(ii) Notwithstanding the terms of this Agreement, the July 4, 1993
Employment Agreement shall continue in full force and effect. To the
extent that any provision of any other agreement between the Company or
any of its subsidiaries and you, (including, without limitation, your
<PAGE>35
Employment Agreement, dated July 4, 1993), shall limit, qualify or be
inconsistent with any provision of this Agreement, then for purposes of
this Agreement, while the same shall remain in force, the provision of
such other agreement shall be deemed to have been superseded, and to be
of no force or effect, as if such other agreement had been formally
amended to the extent necessary to accomplish such purpose.
2. Term of Agreement. This Agreement shall commence on the date hereof
and shall continue in effect until December 31, 1997; provided, however,
that commencing on January 1, 1998 and each January 1 thereafter, the
term of this Agreement shall automatically be extended for one (1)
additional year unless at least ninety (90) days prior to such January
1st date, the Company or you shall have given notice that this Agreement
shall not be extended; and provided, further, that, notwithstanding the
delivery of any such notice, this Agreement shall continue in effect for
a period of thirty-six (36) months after a Change in Control of the
Company if such Change in Control shall have occurred while this
Agreement is in effect. Notwithstanding anything in this Section 2 to
the contrary, this Agreement shall terminate if you or the Company
terminate your employment prior to a Change in Control of the Company.
3. Change in Control. For the purpose of this Agreement, a "Change in
Control" shall mean:
(i) The acquisition by any individual, entity or group (within the
meaning of Section 13 (d) (3) or 14 (d) (2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of twenty percent (20%) or more of either the then
outstanding shares of common stock of the Company (the "Outstanding
Company Common Stock") or the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally
in the election of directors (the "Outstanding Company Voting
Securities"); provided, however, that in no event may the following
acquisitions constitute a Change in Control: (a) any acquisition
directly from the Company (excluding an acquisition by virtue of the
exercise of a conversion privilege), (b) any acquisition by the Company,
(c) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by
the Company, (d) any acquisition by any corporation pursuant to a
reorganization, merger or consolidation, if, following such
reorganization, merger or consolidation, the conditions described in
clauses (a), (b) and (c) of paragraph (iii) of this Section 3 are
satisfied, or (e) any sale or other disposition of all or substantially
all of the assets of the Company, if , following such sale or other
disposition, the conditions described in (1), (2) and (3) of paragraph
(iv) of this Section 3 are satisfied; or
(ii) Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming
a director subsequent to the date hereof whose election, or nomination
for election by the Company's shareholders, was approved by a vote of at
least seventy-five percent (75%) of the directors then comprising the
Incumbent Board shall be considered as though such individual were a
<PAGE>36
member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of
either an actual or threatened election contest (as such terms are used
in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or
other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board; or
(iii) Approval by the shareholders of the Company of a reorganization,
merger or consolidation, unless, in each case following such
reorganization, merger or consolidation, (a) more than sixty percent
(60%) of, respectively, the then outstanding shares of common stock of
the corporation resulting from such reorganization, merger or
consolidation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in the
election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities immediately prior
to such reorganization, merger or consolidation in substantially the
same proportions as their ownership immediately prior to such
reorganization, merger or consolidation, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, as the case may
be, (b) no Person (excluding the Company, any employee benefit plan (or
related trust) of the Company or a corporation resulting from such
reorganization, merger or consolidation) beneficially owns, directly or
indirectly, thirty-nine percent (39%) or more of, respectively, the then
outstanding shares of common stock of the corporation resulting from
such reorganization, merger or consolidation or the combined voting
power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors, and (c) at
least a majority of the members of the board of directors of the
corporation resulting from such reorganization, merger or consolidation
were members of the Incumbent Board at the time of the execution of the
initial agreement providing for such reorganization, merger or
consolidation; or
(iv) Approval by the shareholders of the Company of (a) a complete
liquidation or dissolution of the Company or (b) the sale or other
disposition of all or substantially all of the assets of the Company,
other than to a corporation with respect to which following such sale or
other disposition, (1) more than sixty percent (60%) of, respectively,
the then outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is
then beneficially owned, directly or indirectly, by all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such sale or other
disposition in substantially the same proportion as their ownership,
immediately prior to such sale or other disposition, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities, as the
case may be, (2) no Person (excluding the Company and any employee
benefit plan (or related trust) of the Company or such corporation)
beneficially owns, directly or indirectly, thirty-nine percent (39%) or
more of, respectively, the then outstanding shares of common stock of
such corporation and the combined voting power of the then outstanding
<PAGE>37
voting securities of such corporation entitled to vote generally in the
election of directors and (3) at least a majority of the members of the
board of directors of such corporation were members of the Incumbent
Board at the time of the execution of the initial agreement or action of
the Board providing for such sale or other disposition of assets of the
Company.
(v) Notwithstanding anything in the paragraphs (i) - (iv) of this
Section 3 to the contrary, no Change in Control shall be deemed to have
occurred for purposes of this Agreement by virtue of any transaction
which results in you, or a group of Persons which includes you,
acquiring, directly or indirectly, twenty percent (20%) or more of the
combined voting power of the Company's Voting Securities.
4. Termination Following Change in Control. If any of the events
described in Section 3 hereof constituting a Change in Control of the
Company shall have occurred, you shall be entitled to the benefits
provided in Section 5 hereof upon the termination of your employment
with the Company within thirty-six (36) months after such Change in
Control, unless such termination is (a) because of your death, (b) by
the Company for Cause or Disability or (c) by you other than for Good
Reason (as all such capitalized terms are hereinafter defined).
(i) Disability. Termination by the Company of your employment based on
"Disability" shall mean termination because of your absence from your
duties with the Company on a full time basis for one hundred eighty
(180) consecutive days as a result of your incapacity due to physical or
mental illness, unless within thirty (30) days after Notice of
Termination (as hereinafter defined) is given to you following such
absence, you shall have returned to the full time performance of your
duties.
(ii) Cause. Termination by the Company of your employment for "Cause"
shall mean termination upon (a) the willful and continued failure by you
to perform substantially your duties with the Company (other than any
such failure resulting from your incapacity due to physical or mental
illness) after a written demand for substantial performance is delivered
to you by the Chairman of the Board or President of the Company which
specifically identifies the manner(s) in which such executive believes
that you have not substantially performed your duties, or (b) the
willful engaging by you in illegal conduct which is materially and
demonstrably injurious to the Company. For purposes of this paragraph
(ii), no act, or failure to act, on your part shall be considered
"willful" unless done, or failed to be done, by you in bad faith and
without reasonable belief that your action or omission was in, or not
opposed to, the best interests of the Company. Any act or failure to
act based upon authority given pursuant to a resolution duly adopted by
the Board or based upon the advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, by you in good
faith and in the best interests of the Company. It is also expressly
understood that your attention to matters not directly related to the
business of the Company shall not provide a basis for termination for
Cause so long as the Board has approved your engagement in such
activities. Notwithstanding the foregoing, you shall not be deemed to
have been terminated for Cause unless and until there shall have been
delivered to you a copy of a resolution duly adopted by the affirmative
<PAGE>38
vote of not less than three-quarters of the entire membership of the
Board at a meeting of the Board called and held for such purpose (after
reasonable notice to you and an opportunity for you, together with your
counsel, to be heard before the Board), finding that in the good faith
opinion of the Board you were guilty of the conduct set forth above in
clauses (a) or (b) of this paragraph (ii) and specifying the particulars
thereof in detail.
(iii) Good Reason. Termination by you of your employment for "Good
Reason" shall mean termination based on:
(A) a determination by you, in your reasonable judgment, that there has
been an adverse change in your status or position(s) as an executive
officer of the Company as in effect immediately prior to the Change in
Control, including, without limitation, any adverse change in your
status or position as a result of a diminution in your duties or
responsibilities (other than, if applicable, any such change directly
attributable to the fact that the Company is no longer publicly owned)
or the assignment to you of any duties or responsibilities which are
inconsistent with such status or position(s), or any removal of you
from, or any failure to reappoint or reelect you to, such positions(s)
(except in connection with the termination of your employment for Cause
or Disability or as a result of your death or by you other than for
Good Reason);
(B) a reduction by the Company in your base salary as in effect
immediately prior to the Change in Control;
(C) the failure by the Company to continue in effect any Plan (as
hereinafter defined) in which you are participating at the time of the
Change in Control of the Company (or Plans providing you with at least
substantially similar benefits) other than as a result of the normal
expiration of any such Plan in accordance with its terms as in effect at
the time of the Change in Control, or the taking of any action, or the
failure to act, by the Company which would adversely affect your
continued participation in any of such Plans on at least as favorable a
basis to you as is the case on the date of the Change in Control or
which would materially reduce your benefits in the future under any of
such Plans or deprive you of any material benefit enjoyed by you at the
time of the Change in Control;
(D) the failure by the Company to provide and credit you with the number
of paid vacation days to which you are then entitled in accordance with
the Company's normal vacation policy as in effect immediately prior to
the Change in Control;
(E) the Company's requiring you to be based at any office that is
greater than thirty (30) miles from where your office is located
immediately prior to the Change in Control except for required travel on
the Company's business to an extent substantially consistent with the
business travel obligations which you undertook on behalf of the Company
prior to the Change in Control;
(F) the failure by the Company to obtain from any Successor (as
hereinafter defined) the assent to this Agreement contemplated by
Section 6 hereof;
<PAGE>39
(G) any purported termination by the Company of your employment which is
not effected pursuant to a Notice of Termination satisfying the
requirements of paragraph (iv) below (and, if applicable, paragraph (ii)
above); and for purposes of this Agreement, no such purported
termination shall be effective; or
(H) any refusal by the Company to continue to allow you to attend to
matters or engage in activities not directly related to the business of
the Company which, prior to the Change in Control, you were permitted by
the Board to attend to or engage in.
Anything in this Agreement to the contrary notwithstanding, a
termination by you for any reason during the thirty (30) day period
immediately following the first anniversary of a Change in Control of
the Company ("Window Period") shall be deemed a termination for Good
Reason for all purposes of this Agreement.
For purposes of this Agreement, "Plan" shall mean any compensation plan
such as the Company Incentive Bonus Plan and your Deferred Compensation
Agreement with the Company dated July 4, 1993, or any employee benefit
plan such as a thrift, pension, profit sharing, medical, disability,
accident, life insurance plan or a relocation plan or policy or any
other plan, program or policy of the Company intended to benefit
employees, except for the Company Restated Long-Term Incentive Plan.
(iv) Notice of Termination. Any purported termination by the Company
or by you following a Change in Control shall be communicated by written
Notice of Termination to the other party hereto. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall
indicate the specific termination provision in this Agreement relied
upon.
(v) Date of Termination. "Date of Termination" following a Change in
Control shall mean (a) if your employment is to be terminated for
Disability, thirty (30) days after Notice of Termination is given
(provided that you shall not have returned to the performance of your
duties on a full-time basis during such thirty (30) day period), (b) if
your employment is to be terminated by the Company for Cause or by you
pursuant to Sections 4(iii)(F) or 6 hereof or for any other Good Reason,
the date specified in the Notice of Termination, (c) if your employment
is to be terminated by the Company for any reason other than Cause, the
date specified in the Notice of Termination, which in no event shall be
a date earlier than ninety (90) days after the date on which a Notice of
Termination is given, unless an earlier date has been expressly agreed
to by you in writing either in advance of, or after, receiving such
Notice of Termination, or (d) if your employment is terminated on
account of your death, the day after your death. In the case of
termination of your employment by the Company for Cause, if you have not
previously expressly agreed in writing to the termination, then within
thirty (30) days after receipt by you of the Notice of Termination with
respect thereto, you may notify the Company that a dispute exists
concerning the termination, in which event the Date of Termination shall
be the date set either by mutual written agreement of the parties or by
such court having the matter before it. During the pendency of any such
dispute, the Company will continue to pay you your full compensation in
effect just prior to the time the Notice of Termination is given and
<PAGE>40
until the dispute is resolved. However, if such court issues a final
and non-appealable order finding that the Company had Cause to terminate
you then you must return all compensation paid to you after the Date of
Termination specified in the Notice of Termination previously received
by you.
5. Compensation Upon Termination or During Disability; Other
Agreements.
(i) During any period following a Change in Control of the Company that
you fail to perform your duties as a result of incapacity due to
physical or mental illness, you shall continue to receive your base
salary at the rate then in effect and any benefits or awards under any
Plans shall continue to accrue during such period, to the extent not
inconsistent with such Plans, until your employment is terminated
pursuant to and in accordance with paragraphs 4(iv) - 4(v) hereof.
Thereafter, your benefits shall be determined in accordance with the
Plans then in effect.
(ii) If your employment is terminated for Cause following a Change in
Control of the Company, the Company shall pay to you your base salary
through the Date of Termination at the rate in effect just prior to the
time a Notice of Termination is given plus any benefits or awards
(including both the cash and stock components) which pursuant to the
terms of any Plans have been earned or become payable, but which have
not yet been paid to you. Thereupon the Company shall have no further
obligations to you under this Agreement.
(iii) Subject to Section 8 hereof, if, within thirty-six (36) months
after a Change in Control of the Company has occurred, your employment
by the Company is terminated other than on account of your death and is
terminated (a) by the Company other than for Cause or Disability or (b)
by you for Good Reason, including any termination by you during the
Window Period, then the Company shall pay to you, no later than the
fifth (5th) day following the Date of Termination, without regard to any
contrary provisions of any Plan, the following:
(A) your base salary through the Date of Termination at the rate in
effect just prior to the time a Notice of Termination is given plus any
benefits or awards (including both the cash and stock components) which
pursuant to the terms of any Plans have been earned or become payable,
but which have not yet been paid to you (including amounts which
previously had been deferred at your request);
(B) an amount in cash equal to three times the sum of (i) the higher of
(a) your annual base salary on the Date of Termination or (b) your
annual base salary in effect immediately prior to the Change in Control
plus (ii) an amount equal to the average of the bonuses awarded to you
in each of the three previous years. For the purposes of this
calculation, the bonuses in (ii) shall include any bonuses awarded
pursuant to any deferred compensation arrangement.
For the purposes of this Agreement, the term "base salary" shall include
any amounts deducted by the Company with respect to you or for your
account pursuant to Sections 125 and 401(k) of the Internal Revenue Code
of 1986, as amended (the "Code").
<PAGE>41
(iv) If, within thirty-six (36) months after a Change in Control of the
Company has occurred, your employment by the Company is terminated for
any reason other than retirement, the Company shall pay to you, on the
date specified below, an amount ("Spread") in cash equal to the
Termination Fair Market Value (as hereinafter defined) less the exercise
price of all options which were granted to you pursuant to the Company's
Restated Long-Term Incentive Plan or any Plan succeeding thereto, and
which shall not become exercisable prior to (a) the end of the one (1)
year period immediately following the Date of Termination if your
employment is terminated on account of your death, or (b) the end of the
third (3rd) month following the Date of Termination if your employment
is terminated for any reason other than death. The Company shall make
such payment upon the fifth (5th) day following such Date of
Termination; provided, however, that if you terminate your employment
during the Window Period, then such payment shall be made on the earlier
of your death or the first (1st) day of the seventh (7th) month
following such Date of Termination.
For the purposes of this Agreement, the "Termination Fair Market Value"
shall be the higher of (a) the highest price of the Company's stock as
quoted on the NASDAQ, or any other exchange complying with the
requirements of the Securities and Exchange Act of 1934, as amended,
within the period beginning ninety (90) days prior to the Date of
Termination and ending upon such Date of Termination, and (b) the
highest price of the Company's stock as quoted on the NASDAQ, or any
other exchange complying with the requirements of the Securities and
Exchange Act of 1934, as amended, within the period beginning ninety
(90) days prior to a Change of Control and ending upon the date of a
Change of Control.
(v) If, within thirty-six (36) months after a Change in Control of the
Company has occurred, your employment by the Company is terminated
(a) by the Company other than for Cause or Disability, or (b) by you for
Good Reason, then the Company shall maintain in full force and effect,
for the continued benefit of you and your dependents for a period
terminating on the earliest of (a) three (3) years after the Date of
Termination, or (b) the commencement date of equivalent benefits from a
new employer, all insured and self-insured employee welfare benefit
Plans in which you were entitled to participate immediately prior to the
Date of Termination, provided that your continued participation is
possible under the general terms and provisions of such Plans (and any
applicable funding media) and you continue to pay an amount equal to
your regular contribution under such Plans for such participation. If
three years after the Date of Termination you have not previously
received, nor are then receiving, equivalent benefits from a new
employer, the Company shall offer you continuation coverage under COBRA
as prescribed under Section 4980B of the Code. At the expiration of
such continuation coverage (or, if COBRA continuation coverage is not
applicable to the Plan, then upon the expiration of the three (3) year
period beginning on the Termination Date), the Company shall arrange, at
its sole cost and expense, to enable you to convert your and your
dependents' coverage under such plans to individual policies and
programs upon the same terms as employees of the Company may apply for
such conversions. In the event that your participation in any such Plan
is barred, the Company, at its sole cost and expense, shall arrange to
have issued for the benefit of you and your dependents individual
<PAGE>42
policies of insurance providing benefits substantially similar (on an
after-tax basis) to those which you otherwise would have been entitled
to receive under such Plans pursuant to this paragraph (v) or, if such
insurance is not available at a reasonable cost to the Company, the
Company shall otherwise provide you and your dependents with equivalent
benefits (on an after-tax basis). You shall not be required to pay any
premiums or other charges in an amount greater than that which you would
have paid in order to participate in such Plans.
(vi) Except as specifically provided in paragraph (v) above, the amount
of any payment provided for in this Section 5 shall not be reduced,
offset or subject to recovery by the Company by reason of any
compensation earned by you as the result of employment by another
employer after the Date of Termination, or otherwise.
(vii) In the event that you become entitled to the payments provided by
paragraphs (iii) and (iv) of Section 5 hereof (the "Agreement
Payments"), if any of the Agreement Payments will be subject to the tax
(the "Excise Tax") imposed by Section 4999 of the Code (or any similar
tax that may hereafter be imposed), the Company shall pay to you at the
time specified in paragraph (viii) below an additional amount (the
"Gross-up Payment") such that the net amount retained by you, after
deduction of any Excise Tax on the Total Payments (as hereinafter
defined) and any federal, state and local income tax and Excise Tax upon
the Gross-up Payment provided for by this paragraph (vii), but before
deduction for any federal, state or local income tax on the Agreement
Payments, shall be equal to the sum of (a) the Total Payments and (b) an
amount equal to the product of any deductions disallowed because of the
inclusion of the Gross-up Payment in your adjusted gross income and the
highest applicable marginal rate of federal income taxation for the
calendar year in which the Gross-up Payment is to be made.
For purposes of determining whether any of the Agreement Payments will
be subject to the Excise Tax and the amount of such Excise Tax, (a) any
other payments or benefits received or to be received by you in
connection with a Change in Control of the Company or your termination
of employment (whether pursuant to the terms of this Agreement or any
other plan, arrangement or agreement with the Company, any Person whose
actions result in a Change in Control of the Company or any person
affiliated with the Company or such person) (which, together with the
Agreement Payments, shall constitute the "Total Payments") shall be
treated as "parachute payments" within the meaning of Section 280G(b)(2)
of the Code, and all "excess parachute payments" within the meaning of
Section 280G(b)(1) of the Code shall be treated as subject to the Excise
Tax, unless in the opinion of tax counsel selected by the Company's
independent auditors such other payments or benefits (in whole or in
part) do not constitute parachute payments, or such excess parachute
payments (in whole or in part) represent reasonable compensation for
services actually rendered within the meaning of Section 280G(b)(4) of
the Code in excess of the base amount within the meaning of
Section 280G(b)(3) of the Code, or are otherwise not subject to the
Excise Tax; (b) the amount of the Total Payments which shall be treated
as subject to the Excise Tax shall be equal to the lesser of (1) the
total amount of the Total Payments or (2) the amount of excess parachute
payments within the meaning of Section 280G(b)(1) of the Code (after
applying clause (a), above); and (c) the value of any non-cash benefits
<PAGE>43
or any deferred payment or benefit shall be determined by the Company's
independent auditors in accordance with the principles of
Sections 280G(d)(3) and (4) of the Code.
For purposes of determining the amount of the Gross-up Payment, you
shall be deemed to (a) pay federal income taxes at the highest marginal
rate of federal income taxation for the calendar year in which the
Gross-up Payment is to be made, (b) pay the applicable state and local
income taxes at the highest marginal rate of taxation for the calendar
year in which the Gross-up Payment is to be made, net of the maximum
reduction in federal income taxes which could be obtained from deduction
of such state and local taxes (determined without regard to limitations
on deductions based upon the amount of your adjusted gross income), and
(c) have otherwise allowable deductions for federal income tax purposes
at least equal to those disallowed because of the inclusion of the
Gross-up Payment in your adjusted gross income. In the event that the
Excise Tax is subsequently determined to be less than the amount taken
into account hereunder at the time the Gross-up Payment is made, you
shall repay to the Company at the time that the amount of such reduction
in Excise Tax is finally determined, the portion of the Gross-up Payment
attributable to such reduction (plus the portion of the Gross-up Payment
attributable to the Excise Tax and federal state and local income tax
imposed on the portion of the Gross-up Payment being repaid by you if
such repayment results in a reduction in Excise Tax and/or a federal and
state and local income tax deduction), plus interest on the amount of
such repayment at the rate provided in Section 1274(b)(2)(B) of the
Code. In the event that the Excise Tax is determined to exceed the
amount taken into account hereunder at the time the Gross-up Payment is
made (including by reason of any payment the existence or amount of
which cannot be determined at the time of the Gross-up Payment), the
Company shall make an additional Gross-up Payment in respect of such
excess (plus any interest payable with respect to such excess at the
rate provided in Section 1274(b)(2)(B) of the Code) at the time that the
amount of such excess is finally determined.
(viii) The Gross-up Payment or portion thereof provided for in
paragraph (vii) above shall be paid not later than the thirtieth (30th)
day following payment of any amounts under paragraphs (iii) and (iv) of
Section 5; provided, however, that if the amount of such Gross-up
Payment or portion thereof cannot be finally determined on or before
such day, the Company shall pay to you on such day an estimate, as
determined in good faith by the Company, of the minimum amount of such
payments and shall pay the remainder of such payments (together with
interest at the rate provided in Section 1274(b)(2)(B) of the Code) as
soon as the amount thereof can be determined, but in no event later than
the forty-fifth (45th) day after payment of any amounts under paragraphs
(iii) and (iv) of Section 5. In the event that the amount of the
estimated payments exceeds the amount subsequently determined to have
been due, such excess shall constitute a loan by the Company to you,
payable on the fifth (5th) day after demand by the Company (together
with interest at the rate provided in Section 1274(b)(2)(B) of the
Code).
6. Successors; Binding Agreement.
<PAGE>44
(i) The Company will seek, by written request at least five (5) business
days prior to the time a Person becomes a Successor (as hereinafter
defined), to have such Person, by agreement in form and substance
satisfactory to you, assent to the fulfillment of the Company's
obligations under this Agreement. Failure of such Person to furnish
such assent by the later of (a) three (3) business days prior to the
time such Person becomes a Successor or (b) two (2) business days after
such Person receives a written request to so assent shall constitute
Good Reason for termination by you of your employment if a Change in
Control of the Company occurs or has occurred. For purposes of this
Agreement, "Successor" shall mean any Person that succeeds to, or has
the practical ability to control (either immediately or with the passage
of time), the Company's business directly, by merger or consolidation,
or indirectly, by purchase of the Company's Voting Securities or
otherwise.
(ii) This Agreement shall inure to the benefit of and be enforceable by
your personal legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If you should
die while any amount would still be payable to you hereunder if you had
continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to your
devisee, legatee or other designee or, if no such designee exists, to
your estate.
(iii) For purposes of this Agreement, the "Company" shall include any
subsidiaries of the Company and any corporation or other entity which is
the surviving or continuing entity in respect of any merger,
consolidation or form of business combination in which the Company
ceases to exist; provided, however, for purposes of determining whether
a Change in Control has occurred herein, the term "Company" shall refer
to WLR Foods, , Inc. or its successor(s).
7. Fees and Expenses; Mitigation.
(i) The Company shall reimburse you, on a current basis, for all
reasonable legal fees and related expenses incurred by you in connection
with the Agreement following a Change in Control of the Company,
including without limitation, (a) all such fees and expenses, if any,
incurred in contesting or disputing any termination of your employment
or incurred by you in seeking advice with respect to the matters set
forth in Section 8 hereof or (b) your seeking to obtain or enforce any
right or benefit provided by this Agreement, in each case, regardless of
whether or not your claim is upheld by a court of competent
jurisdiction; provided, however, you shall be required to repay any such
amounts to the Company to the extent that a court issues a final and
non-appealable order setting forth the determination that the position
taken by you was frivolous or advanced by you in bad faith.
(ii) You shall not be required to mitigate the amount of any payment the
Company becomes obligated to make to you in connection with this
Agreement, by seeking other employment or otherwise.
8. Taxes. Subject to the provisions of Section 5(vii), all payments to
be made to you under this Agreement will be subject to required
withholding of federal, state and local income and employment taxes.
<PAGE>45
9. Survival. The respective obligations of, and benefits afforded to,
the Company and you as provided in Sections 5, 6(ii), 7, 8, 12 and 14 of
this Agreement shall survive termination of this Agreement.
10. Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by
United States registered mail, return receipt requested, postage prepaid
and addressed, in the case of the Company, to the address set forth on
the first page of this Agreement or, in the case of the undersigned
employee, to the address set forth below his signature, provided that
all notices to the Company shall be directed to the attention of the
Chairman of the Board or President of the Company, with a copy to the
Secretary of the Company, or to such other address as either party may
have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon receipt.
11. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such modification, waiver or discharge is
agreed to in a writing signed by you and the Chairman of the Board or
President of the Company. No waiver by either party hereto at any time
of any breach by the other party hereto of, or of compliance with, any
condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party
which are not expressly set forth in this Agreement.
12. Governing Law and Venue. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the
Commonwealth of Virginia. Venue for any proceeding related to the
performance or interpretation of this Agreement, or in any way arising
out of this Agreement, shall be either the Circuit Court of Rockingham
County, Virginia, or the United States District Court for the Western
District of Virginia, Harrisonburg Division.
13. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement, which shall remain in full force and
effect.
14. Employee's Commitment. You agree that subsequent to your period of
employment with the Company, you will not at any time communicate or
disclose to any unauthorized person, without the written consent of the
Company, any proprietary processes of the Company or other confidential
information concerning its business, affairs, products, suppliers or
customers which, if disclosed, would have a material adverse effect upon
the business or operations of the Company taken as a whole; it being
understood, however, that the obligations under this Section 14 shall
not apply to the extent that the aforesaid matters (a) are disclosed in
circumstances where you are legally required to do so or (b) become
generally known to, and available for use by, the public otherwise than
by your wrongful act or omission.
<PAGE>46
If this letter correctly sets forth our agreement on the subject matter
hereof, kindly sign and return to the Company the enclosed copy of this
letter which will then constitute our agreement on this subject.
Sincerely,
WLR Foods, Inc.
By____/s/ Herman D. Mason______
Herman D. Mason
By____/s/ Charles W. Wampler, Jr.___
Charles W. Wampler, Jr.
By___/s/ Charles L. Campbell______
Charles L. Campbell
Members of the Executive Compensation Committee
By___/s/ Charles W. Wampler____
Chairman of the Board
Agreed to this 4th day of February, 1994.
____/s/ James L. Keeler____
James L. Keeler
<PAGE>47
EXHIBIT 10.5
February 4, 1994
Delbert L. Seitz
Chief Financial Officer and Secretary-Treasurer
WLR Foods, Inc.
P.O. Box 7000
Broadway, Virginia 22815
Dear Mr. Seitz:
WLR Foods, Inc., a Virginia corporation (the "Company"), considers the
establishment and maintenance of a sound and vital management to be
essential to protecting and enhancing the best interests of the Company
and its shareholders. In this connection, the Company recognizes that,
as is the case with many publicly held corporations, the possibility of
a Change in Control (as defined herein) may arise and that such
possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of management
personnel to the detriment of the Company and its shareholders.
Accordingly, the Board of Directors of the Company (the "Board") has
determined that appropriate steps should be taken to reinforce and
encourage the continued attention and dedication of members of the
Company's management to their assigned duties without distraction in
circumstances arising from the possibility of a Change in Control of the
Company. In particular, the Board believes it important, should the
Company or its shareholders receive a proposal for transfer of control
of the Company, that you be able to assess and advise the Board whether
such proposal would be in the best interests of the Company and its
shareholders and to take such other action regarding such proposal as
the Board might determine to be appropriate, without being influenced by
the uncertainties of your own situation.
In order to induce you to remain in the employ of the Company, this
letter agreement ("Agreement"), which has been approved by the Board,
sets forth the severance benefits which the Company agrees will be
provided to you in the event your employment with the Company is
terminated subsequent to a Change in Control of the Company under the
circumstances described below.
1. Agreement to Provide Services; Right to Terminate.
(i) Except as otherwise provided in paragraph (ii) below, the Company or
you may terminate your employment at any time following a Change in
Control as defined herein, subject to the Company's providing the
benefits hereinafter specified in accordance with the terms hereof.
(ii) In the event a Person (as hereinafter defined) makes an offer
which, if accepted by the Company and subsequently consummated, would
constitute a Change in Control, you agree that you will not leave the
employ of the Company (other than as a result of Disability or upon
Retirement, as such terms are hereinafter defined) and will render the
services contemplated in the recitals to this Agreement until such
<PAGE>48
Change in Control offer has been abandoned or terminated or a Change in
Control has occurred. For the purposes of this Agreement, Retirement
shall mean a termination of your employment by you on or after you have
reached age sixty-five (65) and have completed at least five (5) years
of service for the Company (including any service for a predecessor of
the Company where such prior service is recognized by the Company for
the purpose of awarding other benefits). For purposes of this Section
1, "years of service" shall be defined as in the WLR Profit Sharing and
Salary Savings Plan.
2. Term of Agreement. This Agreement shall commence on the date hereof
and shall continue in effect until December 31, 1994; provided, however,
that commencing on January 1, 1995 and each January 1 thereafter, the
term of this Agreement shall automatically be extended for one (1)
additional year unless at least ninety (90) days prior to such January
1st date, the Company or you shall have given notice that this Agreement
shall not be extended; and provided, further, that, notwithstanding the
delivery of any such notice, this Agreement shall continue in effect for
a period of thirty-six (36) months after a Change in Control, if such
Change in Control shall have occurred while this Agreement is in effect.
Notwithstanding anything in this Section 2 to the contrary, this
Agreement shall terminate if you or the Company terminate your
employment prior to a Change in Control of the Company.
3. Change in Control. For the purpose of this Agreement, a "Change in
Control" shall mean:
(i) The acquisition by any individual, entity or group (within the
meaning of Section 13 (d) (3) or 14 (d) (2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of twenty percent (20%) or more of either the then
outstanding shares of common stock of the Company (the "Outstanding
Company Common Stock") or the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally
in the election of directors (the "Outstanding Company Voting
Securities"); provided, however, that in no event may the following
acquisitions constitute a Change in Control: (a) any acquisition
directly from the Company (excluding an acquisition by virtue of the
exercise of a conversion privilege), (b) any acquisition by the Company,
(c) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by
the Company, (d) any acquisition by any corporation pursuant to a
reorganization, merger or consolidation, if, following such
reorganization, merger or consolidation, the conditions described in
clauses (a), (b) and (c) of paragraph (iii) of this Section 3 are
satisfied, or (e) any sale or other disposition of all or substantially
all of the assets of the Company, if , following such sale or other
disposition, the conditions described in (1), (2) and (3) of paragraph
(iv) of this Section 3 are satisfied; or
(ii) Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming
a director subsequent to the date hereof whose election, or nomination
<PAGE>49
for election by the Company's shareholders, was approved by a vote of at
least seventy-five percent (75%) of the directors then comprising the
Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of
either an actual or threatened election contest (as such terms are used
in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or
other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board; or
(iii) Approval by the shareholders of the Company of a reorganization,
merger or consolidation, unless, in each case following such
reorganization, merger or consolidation, (a) more than sixty percent
(60%) of, respectively, the then outstanding shares of common stock of
the corporation resulting from such reorganization, merger or
consolidation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in the
election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities immediately prior
to such reorganization, merger or consolidation in substantially the
same proportions as their ownership immediately prior to such
reorganization, merger or consolidation, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, as the case may
be, (b) no Person (excluding the Company, any employee benefit plan (or
related trust) of the Company or a corporation resulting from such
reorganization, merger or consolidation) beneficially owns, directly or
indirectly, thirty-nine percent (39%) or more of, respectively, the then
outstanding shares of common stock of the corporation resulting from
such reorganization, merger or consolidation or the combined voting
power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors, and (c) at
least a majority of the members of the board of directors of the
corporation resulting from such reorganization, merger or consolidation
were members of the Incumbent Board at the time of the execution of the
initial agreement providing for such reorganization, merger or
consolidation; or
(iv) Approval by the shareholders of the Company of (a) a complete
liquidation or dissolution of the Company or (b) the sale or other
disposition of all or substantially all of the assets of the Company,
other than to a corporation with respect to which following such sale or
other disposition, (1) more than sixty percent (60%) of, respectively,
the then outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is
then beneficially owned, directly or indirectly, by all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such sale or other
disposition in substantially the same proportion as their ownership,
immediately prior to such sale or other disposition, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities, as the
case may be, (2) no Person (excluding the Company and any employee
benefit plan (or related trust) of the Company or such corporation)
<PAGE>50
beneficially owns, directly or indirectly, thirty-nine percent (39%) or
more of, respectively, the then outstanding shares of common stock of
such corporation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in the
election of directors and (3) at least a majority of the members of the
board of directors of such corporation were members of the Incumbent
Board at the time of the execution of the initial agreement or action of
the Board providing for such sale or other disposition of assets of the
Company.
(v) Notwithstanding anything in the paragraphs (i) - (iv) of this
Section 3 to the contrary, no Change in Control shall be deemed to have
occurred for purposes of this Agreement by virtue of any transaction
which results in you, or a group of Persons which includes you,
acquiring, directly or indirectly, twenty percent (20%) or more of the
combined voting power of the Company's Voting Securities.
4. Termination Following Change in Control. If any of the events
described in Section 3 hereof constituting a Change in Control of the
Company shall have occurred, you shall be entitled to the benefits
provided in Section 5 hereof upon the termination of your employment
with the Company within thirty-six (36) months after such Change in
Control, unless such termination is (a) because of your death, (b) by
the Company for Cause or Disability or (c) by you other than for Good
Reason (as all such capitalized terms are hereinafter defined).
(i) Disability. Termination by the Company of your employment based on
"Disability" shall mean termination because of your absence from your
duties with the Company on a full time basis for one hundred eighty
(180) consecutive days as a result of your incapacity due to physical or
mental illness, unless within thirty (30) days after Notice of
Termination (as hereinafter defined) is given to you following such
absence, you shall have returned to the full time performance of your
duties.
(ii) Cause. Termination by the Company of your employment for "Cause"
shall mean termination upon (a) the willful and continued failure by you
to perform substantially your duties with the Company (other than any
such failure resulting from your incapacity due to physical or mental
illness) after a written demand for substantial performance is delivered
to you by the Chairman of the Board or President of the Company which
specifically identifies the manner(s) in which such executive believes
that you have not substantially performed your duties, or (b) the
willful engaging by you in illegal conduct which is materially and
demonstrably injurious to the Company. For purposes of this paragraph
(ii), no act, or failure to act, on your part shall be considered
"willful" unless done, or failed to be done, by you in bad faith and
without reasonable belief that your action or omission was in, or not
opposed to, the best interests of the Company. Any act or failure to
act based upon authority given pursuant to a resolution duly adopted by
the Board or based upon the advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, by you in good
faith and in the best interests of the Company. It is also expressly
understood that your attention to matters not directly related to the
business of the Company shall not provide a basis for termination for
Cause so long as the Board has approved your engagement in such
<PAGE>51
activities. Notwithstanding the foregoing, you shall not be deemed to
have been terminated for Cause unless and until there shall have been
delivered to you a copy of a resolution duly adopted by the affirmative
vote of not less than three-quarters of the entire membership of the
Board at a meeting of the Board called and held for such purpose (after
reasonable notice to you and an opportunity for you, together with your
counsel, to be heard before the Board), finding that in the good faith
opinion of the Board you were guilty of the conduct set forth above in
clauses (a) or (b) of this paragraph (ii) and specifying the particulars
thereof in detail.
(iii) Good Reason. Termination by you of your employment for "Good
Reason" shall mean termination based on:
(A) a determination by you, in your reasonable judgment, that there has
been an adverse change in your status or position(s) as an executive
officer of the Company as in effect immediately prior to the Change in
Control, including, without limitation, any adverse change in your
status or position as a result of a diminution in your duties or
responsibilities (other than, if applicable, any such change directly
attributable to the fact that the Company is no longer publicly owned)
or the assignment to you of any duties or responsibilities which are
inconsistent with such status or position(s), or any removal of you
from, or any failure to reappoint or reelect you to, such positions(s)
(except in connection with the termination of your employment for Cause
or Disability or as a result of your death or by you other than for Good
Reason);
(B) a reduction by the Company in your base salary as in effect
immediately prior to the Change in Control;
(C) the failure by the Company to continue in effect any Plan (as
hereinafter defined) in which you are participating at the time of the
Change in Control of the Company (or Plans providing you with at least
substantially similar benefits) other than as a result of the normal
expiration of any such Plan in accordance with its terms as in effect at
the time of the Change in Control, or the taking of any action, or the
failure to act, by the Company which would adversely affect your
continued participation in any of such Plans on at least as favorable a
basis to you as is the case on the date of the Change in Control or
which would materially reduce your benefits in the future under any of
such Plans or deprive you of any material benefit enjoyed by you at the
time of the Change in Control;
(D) the failure by the Company to provide and credit you with the number
of paid vacation days to which you are then entitled in accordance with
the Company's normal vacation policy as in effect immediately prior to
the Change in Control;
(E) greater than thirty (30) miles from where your office is located
immediately prior to the Change in Control except for required travel on
the Company's business to an extent substantially consistent with the
business travel obligations which you undertook on behalf of the Company
prior to the Change in Control;
<PAGE>52
(F) the failure by the Company to obtain from any Successor (as
hereinafter defined) the assent to this Agreement contemplated by
Section 6 hereof;
(G) any purported termination by the Company of your employment which is
not effected pursuant to a Notice of Termination satisfying the
requirements of paragraph (iv) below (and, if applicable, paragraph (ii)
above); and for purposes of this Agreement, no such purported
termination shall be effective; or
(H) any refusal by the Company to continue to allow you to attend to
matters or engage in activities not directly related to the business of
the Company which, prior to the Change in Control, you were permitted by
the Board to attend to or engage in.
For purposes of this Agreement, "Plan" shall mean any compensation plan
such as the Company Incentive Bonus Plan or any employee benefit plan
such as a thrift, pension, profit sharing, medical, disability,
accident, life insurance plan or a relocation plan or policy or any
other plan, program or policy of the Company intended to benefit
employees, except for the Company Restated Long-Term Incentive Plan.
(iv) Notice of Termination. Any purported termination by the Company or
by you following a Change in Control shall be communicated by written
Notice of Termination to the other party hereto. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall
indicate the specific termination provision in this Agreement relied
upon.
(v) Date of Termination. "Date of Termination" following a Change in
Control shall mean (a) if your employment is to be terminated for
Disability, thirty (30) days after Notice of Termination is given
(provided that you shall not have returned to the performance of your
duties on a full-time basis during such thirty (30) day period), (b) if
your employment is to be terminated by the Company for Cause or by you
pursuant to Sections 4(iii)(F) or 6 hereof or for any other Good Reason,
the date specified in the Notice of Termination, (c) if your employment
is to be terminated by the Company for any reason other than Cause, the
date specified in the Notice of Termination, which in no event shall be
a date earlier than ninety (90) days after the date on which a Notice of
Termination is given, unless an earlier date has been expressly agreed
to by you in writing either in advance of, or after, receiving such
Notice of Termination, or (d) if your employment is terminated on
account of your death, the day after your death. In the case of
termination of your employment by the Company for Cause, if you have not
previously expressly agreed in writing to the termination, then within
thirty (30) days after receipt by you of the Notice of Termination with
respect thereto, you may notify the Company that a dispute exists
concerning the termination, in which event the Date of Termination shall
be the date set either by mutual written agreement of the parties or by
such court having the matter before it. During the pendency of any such
dispute, the Company will continue to pay you your full compensation in
effect just prior to the time the Notice of Termination is given and
until the dispute is resolved. However, if such court issues a final
and non-appealable order finding that the Company had Cause to terminate
you then you must return all compensation paid to you after the Date of
<PAGE>53
Termination specified in the Notice of Termination previously received
by you.
5. Compensation Upon Termination or During Disability; Other Agreements.
(i) During any period following a Change in Control of the Company that
you fail to perform your duties as a result of incapacity due to
physical or mental illness, you shall continue to receive your base
salary at the rate then in effect and any benefits or awards under any
Plans shall continue to accrue during such period, to the extent not
inconsistent with such Plans, until your employment is terminated
pursuant to and in accordance with paragraphs 4(iv) - 4(v) hereof.
Thereafter, your benefits shall be determined in accordance with the
Plans then in effect.
(ii) If your employment is terminated for Cause following a Change in
Control of the Company, the Company shall pay to you your base salary
through the Date of Termination at the rate in effect just prior to the
time a Notice of Termination is given plus any benefits or awards
(including both the cash and stock components) which pursuant to the
terms of any Plans have been earned or become payable, but which have
not yet been paid to you. Thereupon the Company shall have no further
obligations to you under this Agreement.
(iii) Subject to Section 8 hereof, if, within thirty-six (36) months
after a Change in Control of the Company has occurred, your employment
by the Company is terminated other than on account of your death and is
terminated (a) by the Company other than for Cause or Disability or (b)
by you for Good Reason, then the Company shall pay to you, no later than
the fifth (5th) day following the Date of Termination, without regard to
any contrary provisions of any Plan, the following:
(A) your base salary through the Date of Termination at the rate in
effect just prior to the time a Notice of Termination is given plus any
benefits or awards (including both the cash and stock components) which
pursuant to the terms of any Plans have been earned or become payable,
but which have not yet been paid to you (including amounts which
previously had been deferred at your request);
(B) an amount in cash equal to three times the sum of (i) the higher of
(a) your annual base salary on the Date of Termination or (b) your
annual base salary in effect immediately prior to the Change in Control
plus (ii) an amount equal to the average of the bonuses awarded to you
in each of the three previous years.
For the purposes of this Agreement, the term "base salary" shall include
any amounts deducted by the Company with respect to you or for your
account pursuant to Sections 125 and 401(k) of the Internal Revenue Code
of 1986, as amended (the "Code").
(iv) If, within thirty-six (36) months after a Change in Control of the
Company has occurred, your employment by the Company is terminated for
any reason other than retirement, the Company shall pay to you, on the
date specified below, an amount ("Spread") in cash equal to the
<PAGE>54
Termination Fair Market Value (as hereinafter defined) less the exercise
price of all options which were granted to you pursuant to the Company's
Restated Long-Term Incentive Plan or any Plan succeeding thereto, and
which shall not become exercisable prior to (a) the end of the one (1)
year period immediately following the Date of Termination if your
employment is terminated on account of your death, or (b) the end of the
third (3rd) month following the Date of Termination if your employment
is terminated for any reason other than death. The Company shall make
such payment upon the fifth (5th) day following such Date of
Termination; provided, however, that if you terminate your employment
during the Window Period, then such payment shall be made on the earlier
of your death or the first (1st) day of the seventh (7th) month
following such Date of Termination.
For the purposes of this Agreement, the "Termination Fair Market Value"
shall be the higher of (a) the highest price of the Company's stock as
quoted on the NASDAQ, or any other exchange complying with the
requirements of the Securities and Exchange Act of 1934, as amended,
within the period beginning ninety (90) days prior to the Date of
Termination and ending upon such Date of Termination, and (b) the
highest price of the Company's stock as quoted on the NASDAQ, or any
other exchange complying with the requirements of the Securities and
Exchange Act of 1934, as amended, within the period beginning ninety
(90) days prior to a Change of Control and ending upon the date of a
Change of Control.
(v) If, within thirty-six (36) months after a Change in Control of the
Company has occurred, your employment by the Company is terminated
(a) by the Company other than for Cause or Disability, or (b) by you for
Good Reason, then the Company shall maintain in full force and effect,
for the continued benefit of you and your dependents for a period
terminating on the earliest of (a) three (3) years after the Date of
Termination or (b) the commencement date of equivalent benefits from a
new employer, insured and self-insured employee welfare benefit Plans in
which you were entitled to participate immediately prior to the Date of
Termination, provided that your continued participation is possible
under the general terms and provisions of such Plans (and any applicable
funding media) and you continue to pay an amount equal to your regular
contribution under such Plans for such participation. If three (3)
years after the Date of Termination you have not previously received,
nor are then receiving, equivalent benefits from a new employer, the
Company shall offer you continuation coverage under COBRA as prescribed
under Section 4980B of the Code. At the expiration of such continuation
coverage (or, if COBRA continuation coverage is not applicable to the
Plan, then upon the expiration of the three (3) year period beginning on
the Termination Date) the Company shall arrange, at its sole cost and
expense, to enable you to convert you and your dependents' coverage
under such plans to individual policies and programs upon the same terms
as employees of the Company may apply for such conversions. In the
event that your participation in any such Plan is barred, the Company,
at its sole cost and expense, shall arrange to have issued for the
benefit of you and your dependents individual policies of insurance
providing benefits substantially similar (on an after-tax basis) to
those which you otherwise would have been entitled to receive under such
Plans pursuant to this paragraph (v) or, if such insurance is not
available at a reasonable cost to the Company, the Company shall
<PAGE>55
otherwise provide you and your dependents with equivalent benefits (on
an after-tax basis). You shall not be required to pay any premiums or
other charges in an amount greater than that which you would have paid
in order to participate in such Plans.
(vi) Except as specifically provided in paragraph (v) above, the amount
of any payment provided for in this Section 5 shall not be reduced,
offset or subject to recovery by the Company by reason of any
compensation earned by you as the result of employment by another
employer after the Date of Termination, or otherwise.
(vii) In the event that you become entitled to the payments provided by
paragraphs (iii) and (iv) of Section 5(iii) hereof (the "Agreement
Payments"), if any of the Agreement Payments will be subject to the tax
(the "Excise Tax") imposed by Section 4999 of the Code (or any similar
tax that may hereafter be imposed), the Company shall pay to you at the
time specified in paragraph (viii) below an additional amount (the
"Gross-up Payment") such that the net amount retained by you, after
deduction of any Excise Tax on the Total Payments (as hereinafter
defined) and any federal, state and local income tax and Excise Tax upon
the Gross-up Payment provided for by this paragraph (vii), but before
deduction for any federal, state or local income tax on the Agreement
Payments, shall be equal to the sum of (a) the Total Payments and (b) an
amount equal to the product of any deductions disallowed because of the
inclusion of the Gross-up Payment in your adjusted gross income and the
highest applicable marginal rate of federal income taxation for the
calendar year in which the Gross-up Payment is to be made.
For purposes of determining whether any of the Agreement Payments will
be subject to the Excise Tax and the amount of such Excise Tax, (a) any
other payments or benefits received or to be received by you in
connection with a Change in Control of the Company or your termination
of employment (whether pursuant to the terms of this Agreement or any
other plan, arrangement or agreement with the Company, any Person whose
actions result in a Change in Control of the Company or any person
affiliated with the Company or such person) (which, together with the
Agreement Payments, shall constitute the "Total Payments") shall be
treated as "parachute payments" within the meaning of Section 280G(b)(2)
of the Code, and all "excess parachute payments" within the meaning of
Section 280G(b)(1) of the Code shall be treated as subject to the Excise
Tax, unless in the opinion of tax counsel selected by the Company's
independent auditors such other payments or benefits (in whole or in
part) do not constitute parachute payments, or such excess parachute
payments (in whole or in part) represent reasonable compensation for
services actually rendered within the meaning of Section 280G(b)(4) of
the Code in excess of the base amount within the meaning of
Section 280G(b)(3) of the Code, or are otherwise not subject to the
Excise Tax; (b) the amount of the Total Payments which shall be treated
as subject to the Excise Tax shall be equal to the lesser of (1) the
total amount of the Total Payments or (2) the amount of excess parachute
payments within the meaning of Section 280G(b)(1) of the Code (after
applying clause (a), above); and (c) the value of any non-cash benefits
or any deferred payment or benefit shall be determined by the Company's
independent auditors in accordance with the principles of
Sections 280G(d)(3) and (4) of the Code.
<PAGE>56
For purposes of determining the amount of the Gross-up Payment, you
shall be deemed to (a) pay federal income taxes at the highest marginal
rate of federal income taxation for the calendar year in which the
Gross-up Payment is to be made, (b) pay the applicable state and local
income taxes at the highest marginal rate of taxation for the calendar
year in which the Gross-up Payment is to be made, net of the maximum
reduction in federal income taxes which could be obtained from deduction
of such state and local taxes (determined without regard to limitations
on deductions based upon the amount of your adjusted gross income), and
(c) have otherwise allowable deductions for federal income tax purposes
at least equal to those disallowed because of the inclusion of the
Gross-up Payment in your adjusted gross income. In the event that the
Excise Tax is subsequently determined to be less than the amount taken
into account hereunder at the time the Gross-up Payment is made, you
shall repay to the Company at the time that the amount of such reduction
in Excise Tax is finally determined, the portion of the Gross-up Payment
attributable to such reduction (plus the portion of the Gross-up Payment
attributable to the Excise Tax and federal state and local income tax
imposed on the portion of the Gross-up Payment being repaid by you if
such repayment results in a reduction in Excise Tax and/or a federal and
state and local income tax deduction), plus interest on the amount of
such repayment at the rate provided in Section 1274(b)(2)(B) of the
Code. In the event that the Excise Tax is determined to exceed the
amount taken into account hereunder at the time the Gross-up Payment is
made (including by reason of any payment the existence or amount of
which cannot be determined at the time of the Gross-up Payment), the
Company shall make an additional Gross-up Payment in respect of such
excess (plus any interest payable with respect to such excess at the
rate provided in Section 1274(b)(2)(B) of the Code) at the time that the
amount of such excess is finally determined.
(viii) The Gross-up Payment or portion thereof provided for in
paragraph (vii) above shall be paid not later than the thirtieth (30th)
day following payment of any amounts under paragraphs (iii) and (iv) of
Section 5; provided, however, that if the amount of such Gross-up
Payment or portion thereof cannot be finally determined on or before
such day, the Company shall pay to you on such day an estimate, as
determined in good faith by the Company, of the minimum amount of such
payments and shall pay the remainder of such payments (together with
interest at the rate provided in Section 1274(b)(2)(B) of the Code) as
soon as the amount thereof can be determined, but in no event later than
the forty-fifth (45th) day after payment of any amounts under paragraphs
(iii) and (iv) of Section 5. In the event that the amount of the
estimated payments exceeds the amount subsequently determined to have
been due, such excess shall constitute a loan by the Company to you,
payable on the fifth (5th) day after demand by the Company (together
with interest at the rate provided in Section 1274(b)(2)(B) of the
Code).
6. Successors; Binding Agreement.
(i) The Company will seek, by written request at least five (5) business
days prior to the time a Person becomes a Successor (as hereinafter
defined), to have such Person, by agreement in form and substance
satisfactory to you, assent to the fulfillment of the Company's
obligations under this Agreement. Failure of such Person to furnish
<PAGE>57
such assent by the later of (a) three (3) business days prior to the
time such Person becomes a Successor or (b) two (2) business days after
such Person receives a written request to so assent shall constitute
Good Reason for termination by you of your employment if a Change in
Control of the Company occurs or has occurred. For purposes of this
Agreement, "Successor" shall mean any Person that succeeds to, or has
the practical ability to control (either immediately or with the passage
of time), the Company's business directly, by merger or consolidation,
or indirectly, by purchase of the Company's Voting Securities or
otherwise.
(ii) This Agreement shall inure to the benefit of and be enforceable by
your personal legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If you should
die while any amount would still be payable to you hereunder if you had
continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to your
devisee, legatee or other designee or, if no such designee exists, to
your estate.
(iii) For purposes of this Agreement, the "Company" shall include any
subsidiaries of the Company and any corporation or other entity which is
the surviving or continuing entity in respect of any merger,
consolidation or form of business combination in which the Company
ceases to exist; provided, however, for purposes of determining whether
a Change in Control has occurred herein, the term "Company" shall refer
to WLR Foods, , Inc. or its successor(s).
7. Fees and Expenses; Mitigation.
(i) the Company shall reimburse you, on a current basis, for all
reasonable legal fees and related expenses incurred by you in connection
with the Agreement following a Change in Control of the Company,
including without limitation, (a) all such fees and expenses, if any,
incurred in contesting or disputing any termination of your employment
or incurred by you in seeking advice with respect to the matters set
forth in Section 8 hereof or (b) your seeking to obtain or enforce any
right or benefit provided by this Agreement, in each case, regardless of
whether or not your claim is upheld by a court of competent
jurisdiction; provided, however, you shall be required to repay any such
amounts to the Company to the extent that a court issues a final and
non-appealable order setting forth the determination that the position
taken by you was frivolous or advanced by you in bad faith.
(ii) You shall not be required to mitigate the amount of any payment the
Company becomes obligated to make to you in connection with this
Agreement, by seeking other employment or otherwise.
8. Taxes. Subject to the provisions of Section 5(vii), all payments to
be made to you under this Agreement will be subject to required
withholding of federal, state and local income and employment taxes.
9. Survival. The respective obligations of, and benefits afforded to,
the Company and you as provided in Sections 5, 6(ii), 7, 8, 12 and 14 of
this Agreement shall survive termination of this Agreement.
<PAGE>58
10. Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by
United States registered mail, return receipt requested, postage prepaid
and addressed, in the case of the Company, to the address set forth on
the first page of this Agreement or, in the case of the undersigned
employee, to the address set forth below his signature, provided that
all notices to the Company shall be directed to the attention of the
Chairman of the Board or President of the Company, with a copy to the
Secretary of the Company, or to such other address as either party may
have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon receipt.
11. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such modification, waiver or discharge is
agreed to in a writing signed by you and the Chairman of the Board or
President of the Company. No waiver by either party hereto at any time
of any breach by the other party hereto of, or of compliance with, any
condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party
which are not expressly set forth in this Agreement.
12. Governing Law and Venue. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the
Commonwealth of Virginia. Venue for any proceeding related to the
performance or interpretation of this Agreement, or in any way arising
out of this Agreement, shall be either the Circuit Court of Rockingham
County, Virginia, or the United States District Court for the Western
District of Virginia, Harrisonburg Division.
13. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement, which shall remain in full force and
effect.
14. Employee's Commitment. You agree that subsequent to your period of
employment with the Company, you will not at any time communicate or
disclose to any unauthorized person, without the written consent of the
Company, any proprietary processes of the Company or other confidential
information concerning its business, affairs, products, suppliers or
customers which, if disclosed, would have a material adverse effect upon
the business or operations of the Company, taken as a whole; it being
understood, however, that the obligations under this Section 14 shall
not apply to the extent that the aforesaid matters (a) are disclosed in
circumstances where you are legally required to do so or (b) become
generally known to, and available for use by, the public otherwise than
by your wrongful act or omission.
15. Related Agreements. To the extent that any provision of any other
agreement between the Company and you shall limit, qualify or be
inconsistent with any provision of this Agreement, then for purposes of
this Agreement, while the same shall remain in force, the provision of
such other agreement shall be deemed to have been superseded, and to be
<PAGE>59
of no force or effect, as if such other agreement had been formally
amended to the extent necessary to accomplish such purpose.
Notwithstanding the effect of the preceding sentence, the conditional
Employment Agreement, renewed on June 26, 1992 between the Company and
you is hereby cancelled and shall be of no force or effect.
If this letter correctly sets forth our agreement on the subject matter
hereof, kindly sign and return to the Company the enclosed copy of this
letter which will then constitute our agreement on this subject.
Sincerely,
WLR Foods, Inc.
By______/s/ Herman D. Mason________________
Herman D. Mason, Chair
Executive Compensation Committee
WLR Foods, Inc.
Agreed to this 4th day of February, 1994.
_____/s/ Delbert L. Seitz____
Delbert L. Seitz
<PAGE>60
EXHIBIT 10.6
February 4, 1994
James L. Mason
President of Wampler-Longacre, Inc.
Executive Vice President of WLR Foods, Inc.
Wampler-Longacre, Inc.
P.O. Box 7275
Broadway, Virginia 22815
Dear Mr. Mason:
WLR Foods, Inc., a Virginia corporation (the "Company"), considers the
establishment and maintenance of a sound and vital management to be
essential to protecting and enhancing the best interests of the Company
and its shareholders. In this connection, the Company recognizes that,
as is the case with many publicly held corporations, the possibility of
a Change in Control (as defined herein) may arise and that such
possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of management
personnel to the detriment of the Company and its shareholders.
Accordingly, the Board of Directors of the Company (the "Board") has
determined that appropriate steps should be taken to reinforce and
encourage the continued attention and dedication of members of the
Company's management to their assigned duties without distraction in
circumstances arising from the possibility of a Change in Control of the
Company. In particular, the Board believes it important, should the
Company or its shareholders receive a proposal for transfer of control
of the Company, that you be able to assess and advise the Board whether
such proposal would be in the best interests of the Company and its
shareholders and to take such other action regarding such proposal as
the Board might determine to be appropriate, without being influenced by
the uncertainties of your own situation.
In order to induce you to remain in the employ of the Company, this
letter agreement ("Agreement"), which has been approved by the Board,
sets forth the severance benefits which the Company agrees will be
provided to you in the event your employment with the Company is
terminated subsequent to a Change in Control of the Company under the
circumstances described below.
1. Agreement to Provide Services; Right to Terminate.
(i) Except as otherwise provided in paragraph (ii) below, the Company or
you may terminate your employment at any time following a Change in
Control as defined herein, subject to the Company's providing the
benefits hereinafter specified in accordance with the terms hereof.
(ii) In the event a Person (as hereinafter defined) makes an offer
which, if accepted by the Company and subsequently consummated, would
constitute a Change in Control, you agree that you will not leave the
employ of the Company (other than as a result of Disability or upon
Retirement, as such terms are hereinafter defined) and will render the
<PAGE>61
services contemplated in the recitals to this Agreement until such
Change in Control offer has been abandoned or terminated or a Change in
Control has occurred. For the purposes of this Agreement, Retirement
shall mean a termination of your employment by you on or after you have
reached age sixty-five (65) and have completed at least five (5) years
of service for the Company (including any service for a predecessor of
the Company where such prior service is recognized by the Company for
the purpose of awarding other benefits). For purposes of this Section
1, "years of service" shall be defined as in the WLR Profit Sharing and
Salary Savings Plan.
2. Term of Agreement. This Agreement shall commence on the date hereof
and shall continue in effect until December 31, 1994; provided, however,
that commencing on January 1, 1995 and each January 1 thereafter, the
term of this Agreement shall automatically be extended for one (1)
additional year unless at least ninety (90) days prior to such January
1st date, the Company or you shall have given notice that this Agreement
shall not be extended; and provided, further, that, notwithstanding the
delivery of any such notice, this Agreement shall continue in effect for
a period of thirty-six (36) months after a Change in Control, if such
Change in Control shall have occurred while this Agreement is in effect.
Notwithstanding anything in this Section 2 to the contrary, this
Agreement shall terminate if you or the Company terminate your
employment prior to a Change in Control of the Company.
3. Change in Control. For the purpose of this Agreement, a "Change in
Control" shall mean:
(i) The acquisition by any individual, entity or group (within the
meaning of Section 13 (d) (3) or 14 (d) (2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of twenty percent (20%) or more of either the then
outstanding shares of common stock of the Company (the "Outstanding
Company Common Stock") or the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally
in the election of directors (the "Outstanding Company Voting
Securities"); provided, however, that in no event may the following
acquisitions constitute a Change in Control: (a) any acquisition
directly from the Company (excluding an acquisition by virtue of the
exercise of a conversion privilege), (b) any acquisition by the Company,
(c) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by
the Company, (d) any acquisition by any corporation pursuant to a
reorganization, merger or consolidation, if, following such
reorganization, merger or consolidation, the conditions described in
clauses (a), (b) and (c) of paragraph (iii) of this Section 3 are
satisfied, or (e) any sale or other disposition of all or substantially
all of the assets of the Company, if , following such sale or other
disposition, the conditions described in (1), (2) and (3) of paragraph
(iv) of this Section 3 are satisfied; or
(ii) Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming
<PAGE>62
a director subsequent to the date hereof whose election, or nomination
for election by the Company's shareholders, was approved by a vote of at
least seventy-five percent (75%) of the directors then comprising the
Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of
either an actual or threatened election contest (as such terms are used
in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or
other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board; or
(iii) Approval by the shareholders of the Company of a reorganization,
merger or consolidation, unless, in each case following such
reorganization, merger or consolidation, (a) more than sixty percent
(60%) of, respectively, the then outstanding shares of common stock of
the corporation resulting from such reorganization, merger or
consolidation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in the
election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities immediately prior
to such reorganization, merger or consolidation in substantially the
same proportions as their ownership immediately prior to such
reorganization, merger or consolidation, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, as the case may
be, (b) no Person (excluding the Company, any employee benefit plan (or
related trust) of the Company or a corporation resulting from such
reorganization, merger or consolidation) beneficially owns, directly or
indirectly, thirty-nine percent (39%) or more of, respectively, the then
outstanding shares of common stock of the corporation resulting from
such reorganization, merger or consolidation or the combined voting
power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors, and (c) at
least a majority of the members of the board of directors of the
corporation resulting from such reorganization, merger or consolidation
were members of the Incumbent Board at the time of the execution of the
initial agreement providing for such reorganization, merger or
consolidation; or
(iv) Approval by the shareholders of the Company of (a) a complete
liquidation or dissolution of the Company or (b) the sale or other
disposition of all or substantially all of the assets of the Company,
other than to a corporation with respect to which following such sale or
other disposition, (1) more than sixty percent (60%) of, respectively,
the then outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is
then beneficially owned, directly or indirectly, by all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such sale or other
disposition in substantially the same proportion as their ownership,
immediately prior to such sale or other disposition, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities, as the
case may be, (2) no Person (excluding the Company and any employee
<PAGE>63
benefit plan (or related trust) of the Company or such corporation)
beneficially owns, directly or indirectly, thirty-nine percent (39%) or
more of, respectively, the then outstanding shares of common stock of
such corporation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in the
election of directors and (3) at least a majority of the members of the
board of directors of such corporation were members of the Incumbent
Board at the time of the execution of the initial agreement or action of
the Board providing for such sale or other disposition of assets of the
Company.
(v) Notwithstanding anything in the paragraphs (i) - (iv) of this
Section 3 to the contrary, no Change in Control shall be deemed to have
occurred for purposes of this Agreement by virtue of any transaction
which results in you, or a group of Persons which includes you,
acquiring, directly or indirectly, twenty percent (20%) or more of the
combined voting power of the Company's Voting Securities.
4. Termination Following Change in Control. If any of the events
described in Section 3 hereof constituting a Change in Control of the
Company shall have occurred, you shall be entitled to the benefits
provided in Section 5 hereof upon the termination of your employment
with the Company within thirty-six (36) months after such Change in
Control, unless such termination is (a) because of your death, (b) by
the Company for Cause or Disability or (c) by you other than for Good
Reason (as all such capitalized terms are hereinafter defined).
(i) Disability. Termination by the Company of your employment based on
"Disability" shall mean termination because of your absence from your
duties with the Company on a full time basis for one hundred eighty
(180) consecutive days as a result of your incapacity due to physical or
mental illness, unless within thirty (30) days after Notice of
Termination (as hereinafter defined) is given to you following such
absence, you shall have returned to the full time performance of your
duties.
(ii) Cause. Termination by the Company of your employment for "Cause"
shall mean termination upon (a) the willful and continued failure by you
to perform substantially your duties with the Company (other than any
such failure resulting from your incapacity due to physical or mental
illness) after a written demand for substantial performance is delivered
to you by the Chairman of the Board or President of the Company which
specifically identifies the manner(s) in which such executive believes
that you have not substantially performed your duties, or (b) the
willful engaging by you in illegal conduct which is materially and
demonstrably injurious to the Company. For purposes of this paragraph
(ii), no act, or failure to act, on your part shall be considered
"willful" unless done, or failed to be done, by you in bad faith and
without reasonable belief that your action or omission was in, or not
opposed to, the best interests of the Company. Any act or failure to
act based upon authority given pursuant to a resolution duly adopted by
the Board or based upon the advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, by you in good
faith and in the best interests of the Company. It is also expressly
understood that your attention to matters not directly related to the
business of the Company shall not provide a basis for termination for
<PAGE>64
Cause so long as the Board has approved your engagement in such
activities. Notwithstanding the foregoing, you shall not be deemed to
have been terminated for Cause unless and until there shall have been
delivered to you a copy of a resolution duly adopted by the affirmative
vote of not less than three-quarters of the entire membership of the
Board at a meeting of the Board called and held for such purpose (after
reasonable notice to you and an opportunity for you, together with your
counsel, to be heard before the Board), finding that in the good faith
opinion of the Board you were guilty of the conduct set forth above in
clauses (a) or (b) of this paragraph (ii) and specifying the particulars
thereof in detail.
(iii) Good Reason. Termination by you of your employment for "Good
Reason" shall mean termination based on:
(A) a determination by you, in your reasonable judgment, that there has
been an adverse change in your status or position(s) as an executive
officer of the Company as in effect immediately prior to the Change in
Control, including, without limitation, any adverse change in your
status or position as a result of a diminution in your duties or
responsibilities (other than, if applicable, any such change directly
attributable to the fact that the Company is no longer publicly owned)
or the assignment to you of any duties or responsibilities which are
inconsistent with such status or position(s), or any removal of you
from, or any failure to reappoint or reelect you to, such positions(s)
(except in connection with the termination of your employment for Cause
or Disability or as a result of your death or by you other than for Good
Reason);
(B) a reduction by the Company in your base salary as in effect
immediately prior to the Change in Control;
(C) the failure by the Company to continue in effect any Plan (as
hereinafter defined) in which you are participating at the time of the
Change in Control of the Company (or Plans providing you with at least
substantially similar benefits) other than as a result of the normal
expiration of any such Plan in accordance with its terms as in effect at
the time of the Change in Control, or the taking of any action, or the
failure to act, by the Company which would adversely affect your
continued participation in any of such Plans on at least as favorable a
basis to you as is the case on the date of the Change in Control or
which would materially reduce your benefits in the future under any of
such Plans or deprive you of any material benefit enjoyed by you at the
time of the Change in Control;
( D) the failure by the Company to provide and credit you with the
number of paid vacation days to which you are then entitled in
accordance with the Company's normal vacation policy as in effect
immediately prior to the Change in Control;
(E) the Company's requiring you to be based at any office that is
greater than thirty (30) miles from where your office is located
immediately prior to the Change in Control except for required travel on
the Company's business to an extent substantially consistent with the
business travel obligations which you undertook on behalf of the Company
prior to the Change in Control;
<PAGE>65
(F) the failure by the Company to obtain from any Successor (as
hereinafter defined) the assent to this Agreement contemplated by
Section 6 hereof;
(G) any purported termination by the Company of your employment which is
not effected pursuant to a Notice of Termination satisfying the
requirements of paragraph (iv) below (and, if applicable, paragraph (ii)
above); and for purposes of this Agreement, no such purported
termination shall be effective; or
(H) any refusal by the Company to continue to allow you to attend to
matters or engage in activities not directly related to the business of
the Company which, prior to the Change in Control, you were permitted by
the Board to attend to or engage in.
For purposes of this Agreement, "Plan" shall mean any compensation plan
such as the Company Incentive Bonus Plan or any employee benefit plan
such as a thrift, pension, profit sharing, medical, disability,
accident, life insurance plan or a relocation plan or policy or any
other plan, program or policy of the Company intended to benefit
employees, except for the Company Restated Long-Term Incentive Plan.
(iv) Notice of Termination. Any purported termination by the Company or
by you following a Change in Control shall be communicated by written
Notice of Termination to the other party hereto. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall
indicate the specific termination provision in this Agreement relied
upon.
(v) Date of Termination. "Date of Termination" following a Change in
Control shall mean (a) if your employment is to be terminated for
Disability, thirty (30) days after Notice of Termination is given
(provided that you shall not have returned to the performance of your
duties on a full-time basis during such thirty (30) day period), (b) if
your employment is to be terminated by the Company for Cause or by you
pursuant to Sections 4(iii)(F) or 6 hereof or for any other Good Reason,
the date specified in the Notice of Termination, (c) if your employment
is to be terminated by the Company for any reason other than Cause, the
date specified in the Notice of Termination, which in no event shall be
a date earlier than ninety (90) days after the date on which a Notice of
Termination is given, unless an earlier date has been expressly agreed
to by you in writing either in advance of, or after, receiving such
Notice of Termination, or (d) if your employment is terminated on
account of your death, the day after your death. In the case of
termination of your employment by the Company for Cause, if you have not
previously expressly agreed in writing to the termination, then within
thirty (30) days after receipt by you of the Notice of Termination with
respect thereto, you may notify the Company that a dispute exists
concerning the termination, in which event the Date of Termination shall
be the date set either by mutual written agreement of the parties or by
such court having the matter before it. During the pendency of any such
dispute, the Company will continue to pay you your full compensation in
effect just prior to the time the Notice of Termination is given and
until the dispute is resolved. However, if such court issues a final
and non-appealable order finding that the Company had Cause to terminate
you then you must return all compensation paid to you after the Date of
<PAGE>66
Termination specified in the Notice of Termination previously received
by you.
5. Compensation Upon Termination or During Disability; Other Agreements.
(i) During any period following a Change in Control of the Company that
you fail to perform your duties as a result of incapacity due to
physical or mental illness, you shall continue to receive your base
salary at the rate then in effect and any benefits or awards under any
Plans shall continue to accrue during such period, to the extent not
inconsistent with such Plans, until your employment is terminated
pursuant to and in accordance with paragraphs 4(iv) - 4(v) hereof.
Thereafter, your benefits shall be determined in accordance with the
Plans then in effect.
(ii) If your employment is terminated for Cause following a Change in
Control of the Company, the Company shall pay to you your base salary
through the Date of Termination at the rate in effect just prior to the
time a Notice of Termination is given plus any benefits or awards
(including both the cash and stock components) which pursuant to the
terms of any Plans have been earned or become payable, but which have
not yet been paid to you. Thereupon the Company shall have no further
obligations to you under this Agreement.
(iii) Subject to Section 8 hereof, if, within thirty-six (36) months
after a Change in Control of the Company has occurred, your employment
by the Company is terminated other than on account of your death and is
terminated (a) by the Company other than for Cause or Disability or (b)
by you for Good Reason, then the Company shall pay to you, no later than
the fifth (5th) day following the Date of Termination, without regard to
any contrary provisions of any Plan, the following:
(A) your base salary through the Date of Termination at the rate in
effect just prior to the time a Notice of Termination is given plus any
benefits or awards (including both the cash and stock components) which
pursuant to the terms of any Plans have been earned or become payable,
but which have not yet been paid to you (including amounts which
previously had been deferred at your request);
(B) an amount in cash equal to three times the sum of (i) the higher of
(a) your annual base salary on the Date of Termination or (b) your
annual base salary in effect immediately prior to the Change in Control
plus (ii) an amount equal to the average of the bonuses awarded to you
in each of the three previous years.
For the purposes of this Agreement, the term "base salary" shall include
any amounts deducted by the Company with respect to you or for your
account pursuant to Sections 125 and 401(k) of the Internal Revenue Code
of 1986, as amended (the "Code").
(iv) If, within thirty-six (36) months after a Change in Control of the
Company has occurred, your employment by the Company is terminated for
any reason other than retirement, the Company shall pay to you, on the
date specified below, an amount ("Spread") in cash equal to the
<PAGE>67
Termination Fair Market Value (as hereinafter defined) less the exercise
price of all options which were granted to you pursuant to the Company's
Restated Long-Term Incentive Plan or any Plan succeeding thereto, and
which shall not become exercisable prior to (a) the end of the one (1)
year period immediately following the Date of Termination if your
employment is terminated on account of your death, or (b) the end of the
third (3rd) month following the Date of Termination if your employment
is terminated for any reason other than death. The Company shall make
such payment upon the fifth (5th) day following such Date of
Termination; provided, however, that if you terminate your employment
during the Window Period, then such payment shall be made on the earlier
of your death or the first (1st) day of the seventh (7th) month
following such Date of Termination.
For the purposes of this Agreement, the "Termination Fair Market Value"
shall be the higher of (a) the highest price of the Company's stock as
quoted on the NASDAQ, or any other exchange complying with the
requirements of the Securities and Exchange Act of 1934, as amended,
within the period beginning ninety (90) days prior to the Date of
Termination and ending upon such Date of Termination, and (b) the
highest price of the Company's stock as quoted on the NASDAQ, or any
other exchange complying with the requirements of the Securities and
Exchange Act of 1934, as amended, within the period beginning ninety
(90) days prior to a Change of Control and ending upon the date of a
Change of Control.
(v) If, within thirty-six (36) months after a Change in Control of the
Company has occurred, your employment by the Company is terminated
(a) by the Company other than for Cause or Disability, or (b) by you for
Good Reason, then the Company shall maintain in full force and effect,
for the continued benefit of you and your dependents for a period
terminating on the earliest of (a) three (3) years after the Date of
Termination or (b) the commencement date of equivalent benefits from a
new employer, insured and self-insured employee welfare benefit Plans in
which you were entitled to participate immediately prior to the Date of
Termination, provided that your continued participation is possible
under the general terms and provisions of such Plans (and any applicable
funding media) and you continue to pay an amount equal to your regular
contribution under such Plans for such participation. If three (3)
years after the Date of Termination you have not previously received,
nor are then receiving, equivalent benefits from a new employer, the
Company shall offer you continuation coverage under COBRA as prescribed
under Section 4980B of the Code. At the expiration of such continuation
coverage (or, if COBRA continuation coverage is not applicable to the
Plan, then upon the expiration of the three (3) year period beginning on
the Termination Date) the Company shall arrange, at its sole cost and
expense, to enable you to convert you and your dependents' coverage
under such plans to individual policies and programs upon the same terms
as employees of the Company may apply for such conversions. In the
event that your participation in any such Plan is barred, the Company,
at its sole cost and expense, shall arrange to have issued for the
benefit of you and your dependents individual policies of insurance
providing benefits substantially similar (on an after-tax basis) to
those which you otherwise would have been entitled to receive under such
Plans pursuant to this paragraph (v) or, if such insurance is not
available at a reasonable cost to the Company, the Company shall
<PAGE>68
otherwise provide you and your dependents with equivalent benefits (on
an after-tax basis). You shall not be required to pay any premiums or
other charges in an amount greater than that which you would have paid
in order to participate in such Plans.
(vi) Except as specifically provided in paragraph (v) above, the amount
of any payment provided for in this Section 5 shall not be reduced,
offset or subject to recovery by the Company by reason of any
compensation earned by you as the result of employment by another
employer after the Date of Termination, or otherwise.
(vii) In the event that you become entitled to the payments provided by
paragraphs (iii) and (iv) of Section 5(iii) hereof (the "Agreement
Payments"), if any of the Agreement Payments will be subject to the tax
(the "Excise Tax") imposed by Section 4999 of the Code (or any similar
tax that may hereafter be imposed), the Company shall pay to you at the
time specified in paragraph (viii) below an additional amount (the
"Gross-up Payment") such that the net amount retained by you, after
deduction of any Excise Tax on the Total Payments (as hereinafter
defined) and any federal, state and local income tax and Excise Tax upon
the Gross-up Payment provided for by this paragraph (vii), but before
deduction for any federal, state or local income tax on the Agreement
Payments, shall be equal to the sum of (a) the Total Payments and (b) an
amount equal to the product of any deductions disallowed because of the
inclusion of the Gross-up Payment in your adjusted gross income and the
highest applicable marginal rate of federal income taxation for the
calendar year in which the Gross-up Payment is to be made.
For purposes of determining whether any of the Agreement Payments will
be subject to the Excise Tax and the amount of such Excise Tax, (a) any
other payments or benefits received or to be received by you in
connection with a Change in Control of the Company or your termination
of employment (whether pursuant to the terms of this Agreement or any
other plan, arrangement or agreement with the Company, any Person whose
actions result in a Change in Control of the Company or any person
affiliated with the Company or such person) (which, together with the
Agreement Payments, shall constitute the "Total Payments") shall be
treated as "parachute payments" within the meaning of Section 280G(b)(2)
of the Code, and all "excess parachute payments" within the meaning of
Section 280G(b)(1) of the Code shall be treated as subject to the Excise
Tax, unless in the opinion of tax counsel selected by the Company's
independent auditors such other payments or benefits (in whole or in
part) do not constitute parachute payments, or such excess parachute
payments (in whole or in part) represent reasonable compensation for
services actually rendered within the meaning of Section 280G(b)(4) of
the Code in excess of the base amount within the meaning of
Section 280G(b)(3) of the Code, or are otherwise not subject to the
Excise Tax; (b) the amount of the Total Payments which shall be treated
as subject to the Excise Tax shall be equal to the lesser of (1) the
total amount of the Total Payments or (2) the amount of excess parachute
payments within the meaning of Section 280G(b)(1) of the Code (after
applying clause (a), above); and (c) the value of any non-cash benefits
or any deferred payment or benefit shall be determined by the Company's
independent auditors in accordance with the principles of
Sections 280G(d)(3) and (4) of the Code.
<PAGE>69
For purposes of determining the amount of the Gross-up Payment, you
shall be deemed to (a) pay federal income taxes at the highest marginal
rate of federal income taxation for the calendar year in which the
Gross-up Payment is to be made, (b) pay the applicable state and local
income taxes at the highest marginal rate of taxation for the calendar
year in which the Gross-up Payment is to be made, net of the maximum
reduction in federal income taxes which could be obtained from deduction
of such state and local taxes (determined without regard to limitations
on deductions based upon the amount of your adjusted gross income), and
(c) have otherwise allowable deductions for federal income tax purposes
at least equal to those disallowed because of the inclusion of the
Gross-up Payment in your adjusted gross income. In the event that the
Excise Tax is subsequently determined to be less than the amount taken
into account hereunder at the time the Gross-up Payment is made, you
shall repay to the Company at the time that the amount of such reduction
in Excise Tax is finally determined, the portion of the Gross-up Payment
attributable to such reduction (plus the portion of the Gross-up Payment
attributable to the Excise Tax and federal state and local income tax
imposed on the portion of the Gross-up Payment being repaid by you if
such repayment results in a reduction in Excise Tax and/or a federal and
state and local income tax deduction), plus interest on the amount of
such repayment at the rate provided in Section 1274(b)(2)(B) of the
Code. In the event that the Excise Tax is determined to exceed the
amount taken into account hereunder at the time the Gross-up Payment is
made (including by reason of any payment the existence or amount of
which cannot be determined at the time of the Gross-up Payment), the
Company shall make an additional Gross-up Payment in respect of such
excess (plus any interest payable with respect to such excess at the
rate provided in Section 1274(b)(2)(B) of the Code) at the time that the
amount of such excess is finally determined.
(viii) The Gross-up Payment or portion thereof provided for in
paragraph (vii) above shall be paid not later than the thirtieth (30th)
day following payment of any amounts under paragraphs (iii) and (iv) of
Section 5; provided, however, that if the amount of such Gross-up
Payment or portion thereof cannot be finally determined on or before
such day, the Company shall pay to you on such day an estimate, as
determined in good faith by the Company, of the minimum amount of such
payments and shall pay the remainder of such payments (together with
interest at the rate provided in Section 1274(b)(2)(B) of the Code) as
soon as the amount thereof can be determined, but in no event later than
the forty-fifth (45th) day after payment of any amounts under paragraphs
(iii) and (iv) of Section 5. In the event that the amount of the
estimated payments exceeds the amount subsequently determined to have
been due, such excess shall constitute a loan by the Company to you,
payable on the fifth (5th) day after demand by the Company (together
with interest at the rate provided in Section 1274(b)(2)(B) of the
Code).
6. Successors; Binding Agreement.
(i) The Company will seek, by written request at least five (5) business
days prior to the time a Person becomes a Successor (as hereinafter
defined), to have such Person, by agreement in form and substance
satisfactory to you, assent to the fulfillment of the Company's
obligations under this Agreement. Failure of such Person to furnish
<PAGE>70
such assent by the later of (a) three (3) business days prior to the
time such Person becomes a Successor or (b) two (2) business days after
such Person receives a written request to so assent shall constitute
Good Reason for termination by you of your employment if a Change in
Control of the Company occurs or has occurred. For purposes of this
Agreement, "Successor" shall mean any Person that succeeds to, or has
the practical ability to control (either immediately or with the passage
of time), the Company's business directly, by merger or consolidation,
or indirectly, by purchase of the Company's Voting Securities or
otherwise.
(ii) This Agreement shall inure to the benefit of and be enforceable by
your personal legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If you should
die while any amount would still be payable to you hereunder if you had
continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to your
devisee, legatee or other designee or, if no such designee exists, to
your estate.
(iii) For purposes of this Agreement, the "Company" shall include any
subsidiaries of the Company and any corporation or other entity which is
the surviving or continuing entity in respect of any merger,
consolidation or form of business combination in which the Company
ceases to exist; provided, however, for purposes of determining whether
a Change in Control has occurred herein, the term "Company" shall refer
to WLR Foods, , Inc. or its successor(s).
7. Fees and Expenses; Mitigation.
(i) The Company shall reimburse you, on a current basis, for all
reasonable legal fees and related expenses incurred by you in connection
with the Agreement following a Change in Control of the Company,
including without limitation, (a) all such fees and expenses, if any,
incurred in contesting or disputing any termination of your employment
or incurred by you in seeking advice with respect to the matters set
forth in Section 8 hereof or (b) your seeking to obtain or enforce any
right or benefit provided by this Agreement, in each case, regardless of
whether or not your claim is upheld by a court of competent
jurisdiction; provided, however, you shall be required to repay any such
amounts to the Company to the extent that a court issues a final and
non-appealable order setting forth the determination that the position
taken by you was frivolous or advanced by you in bad faith.
(ii) You shall not be required to mitigate the amount of any payment the
Company becomes obligated to make to you in connection with this
Agreement, by seeking other employment or otherwise.
Taxes. Subject to the provisions of Section 5(vii), all payments to be
made to you under this Agreement will be subject to required withholding
of federal, state and local income and employment taxes.
9. Survival. The respective obligations of, and benefits afforded to,
the Company and you as provided in Sections 5, 6(ii), 7, 8, 12 and 14 of
this Agreement shall survive termination of this Agreement.
<PAGE>71
10. Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by
United States registered mail, return receipt requested, postage prepaid
and addressed, in the case of the Company, to the address set forth on
the first page of this Agreement or, in the case of the undersigned
employee, to the address set forth below his signature, provided that
all notices to the Company shall be directed to the attention of the
Chairman of the Board or President of the Company, with a copy to the
Secretary of the Company, or to such other address as either party may
have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon receipt.
11. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such modification, waiver or discharge is
agreed to in a writing signed by you and the Chairman of the Board or
President of the Company. No waiver by either party hereto at any time
of any breach by the other party hereto of, or of compliance with, any
condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party
which are not expressly set forth in this Agreement.
12. Governing Law and Venue. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the
Commonwealth of Virginia. Venue for any proceeding related to the
performance or interpretation of this Agreement, or in any way arising
out of this Agreement, shall be either the Circuit Court of Rockingham
County, Virginia, or the United States District Court for the Western
District of Virginia, Harrisonburg Division.
13. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement, which shall remain in full force and
effect.
14. Employee's Commitment. You agree that subsequent to your period of
employment with the Company, you will not at any time communicate or
disclose to any unauthorized person, without the written consent of the
Company, any proprietary processes of the Company or other confidential
information concerning its business, affairs, products, suppliers or
customers which, if disclosed, would have a material adverse effect upon
the business or operations of the Company, taken as a whole; it being
understood, however, that the obligations under this Section 14 shall
not apply to the extent that the aforesaid matters (a) are disclosed in
circumstances where you are legally required to do so or (b) become
generally known to, and available for use by, the public otherwise than
by your wrongful act or omission.
15. Related Agreements. To the extent that any provision of any other
agreement between the Company and you shall limit, qualify or be
inconsistent with any provision of this Agreement, then for purposes of
this Agreement, while the same shall remain in force, the provision of
such other agreement shall be deemed to have been superseded, and to be
<PAGE>72
of no force or effect, as if such other agreement had been formally
amended to the extent necessary to accomplish such purpose.
Notwithstanding the effect of the preceding sentence, the conditional
Employment Agreement, renewed on June 26, 1992 between the Company and
you is hereby cancelled and shall be of no force or effect.
If this letter correctly sets forth our agreement on the subject matter
hereof, kindly sign and return to the Company the enclosed copy of this
letter which will then constitute our agreement on this subject.
Sincerely,
WLR Foods, Inc.
By ___/s/ Charles W. Wampler, Jr.___
Charles W. Wampler, Jr.
Chairman of the Board
WLR Foods, Inc.
Agreed to this 4th day of February, 1994.
_____/s/ James L. Mason_____
James L. Mason
<PAGE>73
EXHIBIT 10.7
February 4, 1994
John J. Broaddus
President of Cassco Ice & Cold Storage, Inc.
Vice President of Wampler-Longacre, Inc.
Cassco Ice & Cold Storage, Inc.
P. O. Box 548
Harrisonburg, VA 22801
Dear Mr. Broaddus:
WLR Foods, Inc., a Virginia corporation (the "Company"), considers the
establishment and maintenance of a sound and vital management to be
essential to protecting and enhancing the best interests of the Company
and its shareholders. In this connection, the Company recognizes that,
as is the case with many publicly held corporations, the possibility of
a Change in Control (as defined herein) may arise and that such
possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of management
personnel to the detriment of the Company and its shareholders.
Accordingly, the Board of Directors of the Company (the "Board") has
determined that appropriate steps should be taken to reinforce and
encourage the continued attention and dedication of members of the
Company's management to their assigned duties without distraction in
circumstances arising from the possibility of a Change in Control of the
Company. In particular, the Board believes it important, should the
Company or its shareholders receive a proposal for transfer of control
of the Company, that you be able to assess and advise the Board whether
such proposal would be in the best interests of the Company and its
shareholders and to take such other action regarding such proposal as
the Board might determine to be appropriate, without being influenced by
the uncertainties of your own situation.
In order to induce you to remain in the employ of the Company, this
letter agreement ("Agreement"), which has been approved by the Board,
sets forth the severance benefits which the Company agrees will be
provided to you in the event your employment with the Company is
terminated subsequent to a Change in Control of the Company under the
circumstances described below.
<PAGE>
<PAGE>74
1. Agreement to Provide Services; Right to Terminate.
(i) Except as otherwise provided in paragraph (ii) below, the Company or
you may terminate your employment at any time following a "Change in
Control" as defined herein, subject to the Company's providing the
benefits hereinafter specified in accordance with the terms hereof.
(ii) In the event a Person (as hereinafter defined) makes an offer
which, if accepted by the Company and subsequently consummated, would
constitute a Change in Control, you agree that you will not leave the
employ of the Company (other than as a result of Disability or upon
Retirement, as such terms are hereinafter defined) and will render the
services contemplated in the recitals to this Agreement until such
Change in Control offer has been abandoned or terminated or a Change in
Control has occurred. For the purposes of this Agreement, Retirement
shall mean a termination of your employment by you on or after you have
reached age sixty-five (65) and have completed at least five (5) years
of service for the Company (including any service for a predecessor of
the Company where such prior service is recognized by the Company for
the purpose of awarding other benefits). For purposes of this Section
1, "years of service" shall be defined as in the WLR Profit Sharing and
Salary Savings Plan.
2. Term of Agreement. This Agreement shall commence on the date hereof
and shall continue in effect until December 31, 1994; provided, however,
that commencing on January 1, 1995 and each January 1 thereafter, the
term of this Agreement shall automatically be extended for one (1)
additional year unless at least ninety (90) days prior to such January
1st date, the Company or you shall have given notice that this Agreement
shall not be extended; and provided, further, that, notwithstanding the
delivery of any such notice, this Agreement shall continue in effect for
a period of twenty-four (24) months after a Change in Control, if such
Change in Control shall have occurred while this Agreement is in effect.
Notwithstanding anything in this Section 2 to the contrary, this
Agreement shall terminate if you or the Company terminate your
employment prior to a Change in Control of the Company.
3. Change in Control. For the purpose of this Agreement, a "Change in
Control" shall mean:
(i) The acquisition by any individual, entity or group (within the
meaning of Section 13 (d) (3) or 14 (d) (2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of twenty percent (20%) or more of either the then
outstanding shares of common stock of the Company (the "Outstanding
Company Common Stock") or the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally
in the election of directors (the "Outstanding Company Voting
Securities"); provided, however, that in no event may the following
acquisitions constitute a Change in Control: (a) any acquisition
directly from the Company (excluding an acquisition by virtue of the
exercise of a conversion privilege), (b) any acquisition by the Company,
(c) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by
the Company, (d) any acquisition by any corporation pursuant to a
<PAGE>75
reorganization, merger or consolidation, if, following such
reorganization, merger or consolidation, the conditions described in
clauses (a), (b) and (c) of paragraph (iii) of this Section 3 are
satisfied, or (e) any sale or other disposition of all or substantially
all of the assets of the Company, if , following such sale or other
disposition, the conditions described in (1), (2) and (3) of paragraph
(iv) of this Section 3 are satisfied; or
(ii) Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming
a director subsequent to the date hereof whose election, or nomination
for election by the Company's shareholders, was approved by a vote of at
least seventy-five percent (75%) of the directors then comprising the
Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of
either an actual or threatened election contest (as such terms are used
in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or
other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board; or
(iii) Approval by the shareholders of the Company of a reorganization,
merger or consolidation, unless, in each case following such
reorganization, merger or consolidation, (a) more than sixty percent
(60%) of, respectively, the then outstanding shares of common stock of
the corporation resulting from such reorganization, merger or
consolidation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in the
election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities immediately prior
to such reorganization, merger or consolidation in substantially the
same proportions as their ownership immediately prior to such
reorganization, merger or consolidation, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, as the case may
be, (b) no Person (excluding the Company, any employee benefit plan (or
related trust) of the Company or a corporation resulting from such
reorganization, merger or consolidation) beneficially owns, directly or
indirectly, thirty-nine percent (39%) or more of, respectively, the then
outstanding shares of common stock of the corporation resulting from
such reorganization, merger or consolidation or the combined voting
power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors, and (c) at
least a majority of the members of the board of directors of the
corporation resulting from such reorganization, merger or consolidation
were members of the Incumbent Board at the time of the execution of the
initial agreement providing for such reorganization, merger or
consolidation; or
(iv) Approval by the shareholders of the Company of (a) a complete
liquidation or dissolution of the Company or (b) the sale or other
disposition of all or substantially all of the assets of the Company,
other than to a corporation with respect to which following such sale or
other disposition, (1) more than sixty percent (60%) of, respectively,
<PAGE>76
the then outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is
then beneficially owned, directly or indirectly, by all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such sale or other
disposition in substantially the same proportion as their ownership,
immediately prior to such sale or other disposition, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities, as the
case may be, (2) no Person (excluding the Company and any employee
benefit plan (or related trust) of the Company or such corporation)
beneficially owns, directly or indirectly, thirty-nine percent (39%) or
more of, respectively, the then outstanding shares of common stock of
such corporation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in the
election of directors and (3) at least a majority of the members of the
board of directors of such corporation were members of the Incumbent
Board at the time of the execution of the initial agreement or action of
the Board providing for such sale or other disposition of assets of the
Company.
(v) Notwithstanding anything in the paragraphs (i) - (iv) of this
Section 3 to the contrary, no Change in Control shall be deemed to have
occurred for purposes of this Agreement by virtue of any transaction
which results in you, or a group of Persons which includes you,
acquiring, directly or indirectly, twenty percent (20%) or more of the
combined voting power of the Company's Voting Securities.
4. Termination Following Change in Control. If any of the events
described in Section 3 hereof constituting a Change in Control of the
Company shall have occurred, you shall be entitled to the benefits
provided in Section 5 hereof upon the termination of your employment
with the Company within twenty-four (24) months after such Change in
Control, unless such termination is (a) because of your death, (b) by
the Company for Cause or Disability or (c) by you other than for Good
Reason (as all such capitalized terms are hereinafter defined).
(i) Disability. Termination by the Company of your employment based on
"Disability" shall mean termination because of your absence from your
duties with the Company on a full time basis for one hundred eighty
(180) consecutive days as a result of your incapacity due to physical or
mental illness, unless within thirty (30) days after Notice of
Termination (as hereinafter defined) is given to you following such
absence, you shall have returned to the full time performance of your
duties.
(ii) Cause. Termination by the Company of your employment for "Cause"
shall mean termination upon (a) the willful and continued failure by you
to perform substantially your duties with the Company (other than any
such failure resulting from your incapacity due to physical or mental
illness) after a written demand for substantial performance is delivered
to you by the Chairman of the Board or President of the Company which
specifically identifies the manner(s) in which such executive believes
that you have not substantially performed your duties, or (b) the
willful engaging by you in illegal conduct which is materially and
<PAGE>77
demonstrably injurious to the Company. For purposes of this paragraph
(ii), no act, or failure to act, on your part shall be considered
"willful" unless done, or failed to be done, by you in bad faith and
without reasonable belief that your action or omission was in, or not
opposed to, the best interests of the Company. Any act or failure to
act based upon authority given pursuant to a resolution duly adopted by
the Board or based upon the advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, by you in good
faith and in the best interests of the Company. It is also expressly
understood that your attention to matters not directly related to the
business of the Company shall not provide a basis for termination for
Cause so long as the Board has approved your engagement in such
activities. Notwithstanding the foregoing, you shall not be deemed to
have been terminated for Cause unless and until there shall have been
delivered to you a copy of a resolution duly adopted by the affirmative
vote of not less than three-quarters of the entire membership of the
Board at a meeting of the Board called and held for such purpose (after
reasonable notice to you and an opportunity for you, together with your
counsel, to be heard before the Board), finding that in the good faith
opinion of the Board you were guilty of the conduct set forth above in
clauses (a) or (b) of this paragraph (ii) and specifying the particulars
thereof in detail.
iii) Good Reason. Termination by you of your employment for "Good
Reason" shall mean termination based on:
(A) a determination by you, in your reasonable judgment, that there has
been an adverse change in your status or position(s) as an executive
officer of the Company as in effect immediately prior to the Change in
Control, including, without limitation, any adverse change in your
status or position as a result of a diminution in your duties or
responsibilities (other than, if applicable, any such change directly
attributable to the fact that the Company is no longer publicly owned)
or the assignment to you of any duties or responsibilities which are
inconsistent with such status or position(s), or any removal of you
from, or any failure to reappoint or reelect you to, such positions(s)
(except in connection with the termination of your employment for Cause
or Disability or as a result of your death or by you other than for Good
Reason);
(B) a reduction by the Company in your base salary as in effect
immediately prior to the Change in Control;
(C) the failure by the Company to continue in effect any Plan (as
hereinafter defined) in which you are participating at the time of the
Change in Control of the Company (or Plans providing you with at least
substantially similar benefits) other than as a result of the normal
expiration of any such Plan in accordance with its terms as in effect at
the time of the Change in Control, or the taking of any action, or the
failure to act, by the Company which would adversely affect your
continued participation in any of such Plans on at least as favorable a
basis to you as is the case on the date of the Change in Control or
which would materially reduce your benefits in the future under any of
such Plans or deprive you of any material benefit enjoyed by you at the
time of the Change in Control;
<PAGE>78
(D) the failure by the Company to provide and credit you with the number
of paid vacation days to which you are then entitled in accordance with
the Company's normal vacation policy as in effect immediately prior to
the Change in Control;
(E) the Company's requiring you to be based at any office that is
greater than thirty (30) miles from where your office is located
immediately prior to the Change in Control except for required travel on
the Company's business to an extent substantially consistent with the
business travel obligations which you undertook on behalf of the Company
prior to the Change in Control;
(F) the failure by the Company to obtain from any Successor (as
hereinafter defined) the assent to this Agreement contemplated by
Section 6 hereof;
(G) any purported termination by the Company of your employment which is
not effected pursuant to a Notice of Termination satisfying the
requirements of paragraph (iv) below (and, if applicable, paragraph (ii)
above); and for purposes of this Agreement, no such purported
termination shall be effective; or
(H) any refusal by the Company to continue to allow you to attend to
matters or engage in activities not directly related to the business of
the Company which, prior to the Change in Control, you were permitted by
the Board to attend to or engage in.
For purposes of this Agreement, "Plan" shall mean any compensation plan
such as the Company Incentive Bonus Plan or any employee benefit plan
such as a thrift, pension, profit sharing, medical, disability,
accident, life insurance plan or a relocation plan or policy or any
other plan, program or policy of the Company intended to benefit
employees, except for the Company Restated Long-Term Incentive Plan.
(iv) Notice of Termination. Any purported termination by the Company or
by you following a Change in Control shall be communicated by written
Notice of Termination to the other party hereto. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall
indicate the specific termination provision in this Agreement relied
upon.
(v) Date of Termination. "Date of Termination" following a Change in
Control shall mean (a) if your employment is to be terminated for
Disability, thirty (30) days after Notice of Termination is given
(provided that you shall not have returned to the performance of your
duties on a full-time basis during such thirty (30) day period), (b) if
your employment is to be terminated by the Company for Cause or by you
pursuant to Sections 4(iii)(F) or 6 hereof or for any other Good Reason,
the date specified in the Notice of Termination, (c) if your employment
is to be terminated by the Company for any reason other than Cause, the
date specified in the Notice of Termination, which in no event shall be
a date earlier than ninety (90) days after the date on which a Notice of
Termination is given, unless an earlier date has been expressly agreed
to by you in writing either in advance of, or after, receiving such
Notice of Termination, or (d) if your employment is terminated on
account of your death, the day after your death. In the case of
<PAGE>79
termination of your employment by the Company for Cause, if you have not
previously expressly agreed in writing to the termination, then within
thirty (30) days after receipt by you of the Notice of Termination with
respect thereto, you may notify the Company that a dispute exists
concerning the termination, in which event the Date of Termination shall
be the date set either by mutual written agreement of the parties or by
such court having the matter before it. During the pendency of any such
dispute, the Company will continue to pay you your full compensation in
effect just prior to the time the Notice of Termination is given and
until the dispute is resolved. However, if such court issues a final
and non-appealable order finding that the Company had Cause to terminate
you then you must return all compensation paid to you after the Date of
Termination specified in the Notice of Termination previously received
by you.
5. Compensation Upon Termination or During Disability; Other Agreements.
(i) During any period following a Change in Control of the Company that
you fail to perform your duties as a result of incapacity due to
physical or mental illness, you shall continue to receive your base
salary at the rate then in effect and any benefits or awards under any
Plans shall continue to accrue during such period, to the extent not
inconsistent with such Plans, until your employment is terminated
pursuant to and in accordance with paragraphs 4(iv) - 4(v) hereof.
Thereafter, your benefits shall be determined in accordance with the
Plans then in effect.
(ii) If your employment is terminated for Cause following a Change in
Control of the Company, the Company shall pay to you your base salary
through the Date of Termination at the rate in effect just prior to the
time a Notice of Termination is given plus any benefits or awards
(including both the cash and stock components) which pursuant to the
terms of any Plans have been earned or become payable, but which have
not yet been paid to you. Thereupon the Company shall have no further
obligations to you under this Agreement.
(iii) Subject to Section 8 hereof, if, within twenty-four (24) months
after a Change in Control of the Company has occurred, your employment
by the Company is terminated other than on account of your death and is
terminated (a) by the Company other than for Cause or Disability or (b)
by you for Good Reason, then the Company shall pay to you, no later than
the fifth (5th) day following the Date of Termination, without regard to
any contrary provisions of any Plan, the following:
(A) your base salary through the Date of Termination at the rate in
effect just prior to the time a Notice of Termination is given plus any
benefits or awards (including both the cash and stock components) which
pursuant to the terms of any Plans have been earned or become payable,
but which have not yet been paid to you (including amounts which
previously had been deferred at your request);
(B) an amount in cash equal to one and one-half (1.5) times the sum of
(i) the higher of (a) your annual base salary on the Date of Termination
or (b) your annual base salary in effect immediately prior to the Change
in Control plus (ii) an amount equal to the average of the bonuses
awarded to you in each of the three previous years.
<PAGE>80
For the purposes of this Agreement, the term "base salary" shall include
any amounts deducted by the Company with respect to you or for your
account pursuant to Sections 125 and 401(k) of the Internal Revenue Code
of 1986, as amended (the "Code").
(iv) If, within twenty-four (24) months after a Change in Control of the
Company has occurred, your employment by the Company is terminated for
any reason other than retirement, the Company shall pay to you, on the
date specified below, an amount ("Spread") in cash equal to the
Termination Fair Market Value (as hereinafter defined) less the exercise
price of all options which were granted to you pursuant to the Company's
Restated Long-Term Incentive Plan or any Plan succeeding thereto, and
which shall not become exercisable prior to (a) the end of the one (1)
year period immediately following the Date of Termination if your
employment is terminated on account of your death, or (b) the end of the
third (3rd) month following the Date of Termination if your employment
is terminated for any reason other than death. The Company shall make
such payment upon the fifth (5th) day following such Date of
Termination; provided, however, that if you terminate your employment
during the Window Period, then such payment shall be made on the earlier
of your death or the first (1st) day of the seventh (7th) month
following such Date of Termination.
For the purposes of this Agreement, the "Termination Fair Market Value"
shall be the higher of (a) the highest price of the Company's stock as
quoted on the NASDAQ, or any other exchange complying with the
requirements of the Securities and Exchange Act of 1934, as amended,
within the period beginning ninety (90) days prior to the Date of
Termination and ending upon such Date of Termination, and (b) the
highest price of the Company's stock as quoted on the NASDAQ, or any
other exchange complying with the requirements of the Securities and
Exchange Act of 1934, as amended, within the period beginning ninety
(90) days prior to a Change of Control and ending upon the date of a
Change of Control.
(v) If, within twenty-four (24) months after a Change in Control of the
Company has occurred, your employment by the Company is terminated
(a) by the Company other than for Cause or Disability, or (b) by you for
Good Reason, then the Company shall maintain in full force and effect,
for the continued benefit of you and your dependents for a period
terminating on the earliest of (a) one and one-half (1.5) years after
the Date of Termination or (b) the commencement date of equivalent
benefits from a new employer, insured and self-insured employee welfare
benefit Plans in which you were entitled to participate immediately
prior to the Date of Termination, provided that your continued
participation is possible under the general terms and provisions of such
Plans (and any applicable funding media) and you continue to pay an
amount equal to your regular contribution under such Plans for such
participation. If one and one-half (1.5) years after the Termination
Date, you have not previously received, nor are then receiving,
equivalent benefits from a new employer, the Company shall offer you
continuation coverage under COBRA as prescribed under Section 4980B of
the Code. At the expiration of such continuation coverage (or, if COBRA
continuation coverage is not applicable to the Plan, then upon the
expiration of the one and one-half (1.5) year period beginning on the
Termination Date) the Company shall arrange, at its sole cost and
<PAGE>81
expense, to enable you to convert you and your dependents' coverage
under such plans to individual policies and programs upon the same terms
as employees of the Company may apply for such conversions. In the
event that your participation in any such Plan is barred, the Company,
at its sole cost and expense, shall arrange to have issued for the
benefit of you and your dependents individual policies of insurance
providing benefits substantially similar (on an after-tax basis) to
those which you otherwise would have been entitled to receive under such
Plans pursuant to this paragraph (v) or, if such insurance is not
available at a reasonable cost to the Company, the Company shall
otherwise provide you and your dependents with equivalent benefits (on
an after-tax basis). You shall not be required to pay any premiums or
other charges in an amount greater than that which you would have paid
in order to participate in such Plans.
(vi) Except as specifically provided in paragraph (v) above, the amount
of any payment provided for in this Section 5 shall not be reduced,
offset or subject to recovery by the Company by reason of any
compensation earned by you as the result of employment by another
employer after the Date of Termination, or otherwise.
(vii) In the event that you become entitled to the payments provided by
paragraphs (iii) and (iv) of Section 5 hereof (the "Agreement
Payments"), if any of the Agreement Payments will be subject to the tax
(the "Excise Tax") imposed by Section 4999 of the Code (or any similar
tax that may hereafter be imposed), the Company shall pay to you at the
time specified in paragraph (viii) below an additional amount (the
"Gross-up Payment") such that the net amount retained by you, after
deduction of any Excise Tax on the Total Payments (as hereinafter
defined) and any federal, state and local income tax and Excise Tax upon
the Gross-up Payment provided for by this paragraph (vii), but before
deduction for any federal, state or local income tax on the Agreement
Payments, shall be equal to the sum of (a) the Total Payments and (b) an
amount equal to the product of any deductions disallowed because of the
inclusion of the Gross-up Payment in your adjusted gross income and the
highest applicable marginal rate of federal income taxation for the
calendar year in which the Gross-up Payment is to be made.
For purposes of determining whether any of the Agreement Payments will
be subject to the Excise Tax and the amount of such Excise Tax, (a) any
other payments or benefits received or to be received by you in
connection with a Change in Control of the Company or your termination
of employment (whether pursuant to the terms of this Agreement or any
other plan, arrangement or agreement with the Company, any Person whose
actions result in a Change in Control of the Company or any person
affiliated with the Company or such person) (which, together with the
Agreement Payments, shall constitute the "Total Payments") shall be
treated as "parachute payments" within the meaning of Section 280G(b)(2)
of the Code, and all "excess parachute payments" within the meaning of
Section 280G(b)(1) of the Code shall be treated as subject to the Excise
Tax, unless in the opinion of tax counsel selected by the Company's
independent auditors such other payments or benefits (in whole or in
part) do not constitute parachute payments, or such excess parachute
payments (in whole or in part) represent reasonable compensation for
services actually rendered within the meaning of Section 280G(b)(4) of
the Code in excess of the base amount within the meaning of
<PAGE>82
Section 280G(b)(3) of the Code, or are otherwise not subject to the
Excise Tax; (b) the amount of the Total Payments which shall be treated
as subject to the Excise Tax shall be equal to the lesser of (1) the
total amount of the Total Payments or (2) the amount of excess parachute
payments within the meaning of Section 280G(b)(1) of the Code (after
applying clause (a), above); and (c) the value of any non-cash benefits
or any deferred payment or benefit shall be determined by the Company's
independent auditors in accordance with the principles of
Sections 280G(d)(3) and (4) of the Code.
For purposes of determining the amount of the Gross-up Payment, you
shall be deemed to (a) pay federal income taxes at the highest marginal
rate of federal income taxation for the calendar year in which the
Gross-up Payment is to be made, (b) pay the applicable state and local
income taxes at the highest marginal rate of taxation for the calendar
year in which the Gross-up Payment is to be made, net of the maximum
reduction in federal income taxes which could be obtained from deduction
of such state and local taxes (determined without regard to limitations
on deductions based upon the amount of your adjusted gross income), and
(c) have otherwise allowable deductions for federal income tax purposes
at least equal to those disallowed because of the inclusion of the
Gross-up Payment in your adjusted gross income. In the event that the
Excise Tax is subsequently determined to be less than the amount taken
into account hereunder at the time the Gross-up Payment is made, you
shall repay to the Company at the time that the amount of such reduction
in Excise Tax is finally determined, the portion of the Gross-up Payment
attributable to such reduction (plus the portion of the Gross-up Payment
attributable to the Excise Tax and federal state and local income tax
imposed on the portion of the Gross-up Payment being repaid by you if
such repayment results in a reduction in Excise Tax and/or a federal and
state and local income tax deduction), plus interest on the amount of
such repayment at the rate provided in Section 1274(b)(2)(B) of the
Code. In the event that the Excise Tax is determined to exceed the
amount taken into account hereunder at the time the Gross-up Payment is
made (including by reason of any payment the existence or amount of
which cannot be determined at the time of the Gross-up Payment), the
Company shall make an additional Gross-up Payment in respect of such
excess (plus any interest payable with respect to such excess at the
rate provided in Section 1274(b)(2)(B) of the Code) at the time that the
amount of such excess is finally determined.
(viii) The Gross-up Payment or portion thereof provided for in
paragraph (vii) above shall be paid not later than the thirtieth (30th)
day following payment of any amounts under paragraphs (iii) and (iv) of
Section 5; provided, however, that if the amount of such Gross-up
Payment or portion thereof cannot be finally determined on or before
such day, the Company shall pay to you on such day an estimate, as
determined in good faith by the Company, of the minimum amount of such
payments and shall pay the remainder of such payments (together with
interest at the rate provided in Section 1274(b)(2)(B) of the Code) as
soon as the amount thereof can be determined, but in no event later than
the forty-fifth (45th) day after payment of any amounts under paragraphs
(iii) and (iv) of Section 5. In the event that the amount of the
estimated payments exceeds the amount subsequently determined to have
been due, such excess shall constitute a loan by the Company to you,
payable on the fifth (5th) day after demand by the Company (together
<PAGE>83
with interest at the rate provided in Section 1274(b)(2)(B) of the
Code).
6. Successors; Binding Agreement.
(i) The Company will seek, by written request at least five (5) business
days prior to the time a Person becomes a Successor (as hereinafter
defined), to have such Person, by agreement in form and substance
satisfactory to you, assent to the fulfillment of the Company's
obligations under this Agreement. Failure of such Person to furnish
such assent by the later of (a) three (3) business days prior to the
time such Person becomes a Successor or (b) two (2) business days after
such Person receives a written request to so assent shall constitute
Good Reason for termination by you of your employment if a Change in
Control of the Company occurs or has occurred. For purposes of this
Agreement, "Successor" shall mean any Person that succeeds to, or has
the practical ability to control (either immediately or with the passage
of time), the Company's business directly, by merger or consolidation,
or indirectly, by purchase of the Company's Voting Securities or
otherwise.
(ii) This Agreement shall inure to the benefit of and be enforceable by
your personal legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If you should
die while any amount would still be payable to you hereunder if you had
continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to your
devisee, legatee or other designee or, if no such designee exists, to
your estate.
(iii) For purposes of this Agreement, the "Company" shall include any
subsidiary of the Company and any corporation or other entity which is
the surviving or continuing entity in respect of any merger,
consolidation or form of business combination in which the Company
ceases to exist; provided, however, for purposes of determining whether
a Change in Control has occurred herein, the term "Company" shall refer
to WLR Foods, , Inc. or its successor(s).
7. Fees and Expenses; Mitigation.
(i) The Company shall reimburse you, on a current basis, for all
reasonable legal fees and related expenses incurred by you in connection
with the Agreement following a Change in Control of the Company,
including without limitation, (a) all such fees and expenses, if any,
incurred in contesting or disputing any termination of your employment
or incurred by you in seeking advice with respect to the matters set
forth in Section 8 hereof or (b) your seeking to obtain or enforce any
right or benefit provided by this Agreement, in each case, regardless of
whether or not your claim is upheld by a court of competent
jurisdiction; provided, however, you shall be required to repay any such
amounts to the Company to the extent that a court issues a final and
non-appealable order setting forth the determination that the position
taken by you was frivolous or advanced by you in bad faith.
<PAGE>84
(ii) You shall not be required to mitigate the amount of any payment the
Company becomes obligated to make to you in connection with this
Agreement, by seeking other employment or otherwise.
8. Taxes. Subject to the provisions of Section 5(vii), all payments to
be made to you under this Agreement will be subject to required
withholding of federal, state and local income and employment taxes.
9. Survival. The respective obligations of, and benefits afforded to,
the Company and you as provided in Sections 5, 6(ii), 7, 8, 12 and 14 of
this Agreement shall survive termination of this Agreement.
10. Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by
United States registered mail, return receipt requested, postage prepaid
and addressed, in the case of the Company, to the address set forth on
the first page of this Agreement or, in the case of the undersigned
employee, to the address set forth below his signature, provided that
all notices to the Company shall be directed to the attention of the
Chairman of the Board or President of the Company, with a copy to the
Secretary of the Company, or to such other address as either party may
have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon receipt.
11. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such modification, waiver or discharge is
agreed to in a writing signed by you and the Chairman of the Board or
President of the Company. No waiver by either party hereto at any time
of any breach by the other party hereto of, or of compliance with, any
condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party
which are not expressly set forth in this Agreement.
12. Governing Law and Venue. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the
Commonwealth of Virginia. Venue for any proceeding related to the
performance or interpretation of this Agreement, or in any way arising
out of this Agreement, shall be either the Circuit Court of Rockingham
County, Virginia, or the United States District Court for the Western
District of Virginia, Harrisonburg Division.
13. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement, which shall remain in full force and
effect.
14. Employee's Commitment. You agree that subsequent to your period of
employment with the Company, you will not at any time communicate or
disclose to any unauthorized person, without the written consent of the
Company, any proprietary processes of the Company or other confidential
information concerning its business, affairs, products, suppliers or
<PAGE>85
customers which, if disclosed, would have a material adverse effect upon
the business or operations of the Company, apply to the extent that the
aforesaid matters (a) are disclosed in circumstances where you are
legally required to do so or (b) become generally known to, and
available for use by, the public otherwise than by your wrongful act or
omission.
15. Related Agreements. To the extent that any provision of any other
agreement between the Company and you shall limit, qualify or be
inconsistent with any provision of this Agreement, then for purposes of
this Agreement, while the same shall remain in force, the provision of
such other agreement shall be deemed to have been superseded, and to be
of no force or effect, as if such other agreement had been formally
amended to the extent necessary to accomplish such purpose.
Notwithstanding the effect of the preceding sentence, the conditional
Employment Agreement, renewed on June 26, 1992 between the Company and
you is hereby cancelled and shall be of no force or effect.
If this letter correctly sets forth our agreement on the subject matter
hereof, kindly sign and return to the Company the enclosed copy of this
letter which will then constitute our agreement on this subject.
Sincerely,
WLR Foods, Inc.
By___/s/ Herman D. Mason____
Herman D. Mason, Chair
Executive Compensation Committee
WLR Foods, Inc.
Agreed to this 4th day of February, 1994.
_____/s/ John J. Broaddus____
John J. Broaddus
<PAGE>86
EXHIBIT 10.8
February 4, 1994
V. Eugene Misner
Vice President of Live Production
Wampler-Longacre, Inc.
P.O. .Box 7275
Broadway, Virginia 22815
Dear Mr. Misner:
WLR Foods, Inc., a Virginia corporation (the "Company"), considers the
establishment and maintenance of a sound and vital management to be
essential to protecting and enhancing the best interests of the Company
and its shareholders. In this connection, the Company recognizes that,
as is the case with many publicly held corporations, the possibility of
a Change in Control (as defined herein) may arise and that such
possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of management
personnel to the detriment of the Company and its shareholders.
Accordingly, the Board of Directors of the Company (the "Board") has
determined that appropriate steps should be taken to reinforce and
encourage the continued attention and dedication of members of the
Company's management to their assigned duties without distraction in
circumstances arising from the possibility of a Change in Control of the
Company. In particular, the Board believes it important, should the
Company or its shareholders receive a proposal for transfer of control
of the Company, that you be able to assess and advise the Board whether
such proposal would be in the best interests of the Company and its
shareholders and to take such other action regarding such proposal as
the Board might determine to be appropriate, without being influenced by
the uncertainties of your own situation.
In order to induce you to remain in the employ of the Company, this
letter agreement ("Agreement"), which has been approved by the Board,
sets forth the severance benefits which the Company agrees will be
provided to you in the event your employment with the Company is
terminated subsequent to a Change in Control of the Company under the
circumstances described below.
<PAGE>87
1. Agreement to Provide Services; Right to Terminate.
(i) Except as otherwise provided in paragraph (ii) below, the Company or
you may terminate your employment at any time following a "Change in
Control" as defined herein, subject to the Company's providing the
benefits hereinafter specified in accordance with the terms hereof.
(ii)In the event a Person (as hereinafter defined) makes an offer which,
if accepted by the Company and subsequently consummated, would
constitute a Change in Control, you agree that you will not leave the
employ of the Company (other than as a result of Disability or upon
Retirement, as such terms are hereinafter defined) and will render the
services contemplated in the recitals to this Agreement until such
Change in Control offer has been abandoned or terminated or a Change in
Control has occurred. For the purposes of this Agreement, Retirement
shall mean a termination of your employment by you on or after you have
reached age sixty-five (65) and have completed at least five (5) years
of service for the Company (including any service for a predecessor of
the Company where such prior service is recognized by the Company for
the purpose of awarding other benefits). For purposes of this Section
1, "years of service" shall be defined as in the WLR Profit Sharing and
Salary Savings Plan.
2. Term of Agreement. This Agreement shall commence on the date hereof
and shall continue in effect until December 31, 1994; provided, however,
that commencing on January 1, 1995 and each January 1 thereafter, the
term of this Agreement shall automatically be extended for one (1)
additional year unless at least ninety (90) days prior to such January
1st date, the Company or you shall have given notice that this Agreement
shall not be extended; and provided, further, that, notwithstanding the
delivery of any such notice, this Agreement shall continue in effect for
a period of twenty-four (24) months after a Change in Control, if such
Change in Control shall have occurred while this Agreement is in effect.
Notwithstanding anything in this Section 2 to the contrary, this
Agreement shall terminate if you or the Company terminate your
employment prior to a Change in Control of the Company.
3. Change in Control. For the purpose of this Agreement, a "Change in
Control" shall mean:
(i) The acquisition by any individual, entity or group (within the
meaning of Section 13 (d) (3) or 14 (d) (2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of twenty percent (20%) or more of either the then
outstanding shares of common stock of the Company (the "Outstanding
Company Common Stock") or the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally
in the election of directors (the "Outstanding Company Voting
Securities"); provided, however, that in no event may the following
acquisitions constitute a Change in Control: (a) any acquisition
directly from the Company (excluding an acquisition by virtue of the
exercise of a conversion privilege), (b) any acquisition by the Company,
(c) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by
the Company, (d) any acquisition by any corporation pursuant to a
<PAGE>88
reorganization, merger or consolidation, if, following such
reorganization, merger or consolidation, the conditions described in
clauses (a), (b) and (c) of paragraph (iii) of this Section 3 are
satisfied, or (e) any sale or other disposition of all or substantially
all of the assets of the Company, if , following such sale or other
disposition, the conditions described in (1), (2) and (3) of paragraph
(iv) of this Section 3 are satisfied; or
(ii) Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming
a director subsequent to the date hereof whose election, or nomination
for election by the Company's shareholders, was approved by a vote of at
least seventy-five percent (75%) of the directors then comprising the
Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of
either an actual or threatened election contest (as such terms are used
in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or
other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board; or
(iii) Approval by the shareholders of the Company of a reorganization,
merger or consolidation, unless, in each case following such
reorganization, merger or consolidation, (a) more than sixty percent
(60%) of, respectively, the then outstanding shares of common stock of
the corporation resulting from such reorganization, merger or
consolidation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in the
election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities immediately prior
to such reorganization, merger or consolidation in substantially the
same proportions as their ownership immediately prior to such
reorganization, merger or consolidation, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, as the case may
be, (b) no Person (excluding the Company, any employee benefit plan (or
related trust) of the Company or a corporation resulting from such
reorganization, merger or consolidation) beneficially owns, directly or
indirectly, thirty-nine percent (39%) or more of, respectively, the then
outstanding shares of common stock of the corporation resulting from
such reorganization, merger or consolidation or the combined voting
power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors, and (c) at
least a majority of the members of the board of directors of the
corporation resulting from such reorganization, merger or consolidation
were members of the Incumbent Board at the time of the execution of the
initial agreement providing for such reorganization, merger or
consolidation; or
(iv) Approval by the shareholders of the Company of (a) a complete
liquidation or dissolution of the Company or (b) the sale or other
disposition of all or substantially all of the assets of the Company,
other than to a corporation with respect to which following such sale or
other disposition, (1) more than sixty percent (60%) of, respectively,
<PAGE>89
the then outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is
then beneficially owned, directly or indirectly, by all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such sale or other
disposition in substantially the same proportion as their ownership,
immediately prior to such sale or other disposition, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities, as the
case may be, (2) no Person (excluding the Company and any employee
benefit plan (or related trust) of the Company or such corporation)
beneficially owns, directly or indirectly, thirty-nine percent (39%) or
more of, respectively, the then outstanding shares of common stock of
such corporation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in the
election of directors and (3) at least a majority of the members of the
board of directors of such corporation were members of the Incumbent
Board at the time of the execution of the initial agreement or action of
the Board providing for such sale or other disposition of assets of the
Company.
(v) Notwithstanding anything in the paragraphs (i) - (iv) of this
Section 3 to the contrary, no Change in Control shall be deemed to have
occurred for purposes of this Agreement by virtue of any transaction
which results in you, or a group of Persons which includes you,
acquiring, directly or indirectly, twenty percent (20%) or more of the
combined voting power of the Company's Voting Securities.
4. Termination Following Change in Control. If any of the events
described in Section 3 hereof constituting a Change in Control of the
Company shall have occurred, you shall be entitled to the benefits
provided in Section 5 hereof upon the termination of your employment
with the Company within twenty-four (24) months after such Change in
Control, unless such termination is (a) because of your death, (b) by
the Company for Cause or Disability or (c) by you other than for Good
Reason (as all such capitalized terms are hereinafter defined).
(i) Disability. Termination by the Company of your employment based on
"Disability" shall mean termination because of your absence from your
duties with the Company on a full time basis for one hundred eighty
(180) consecutive days as a result of your incapacity due to physical or
mental illness, unless within thirty (30) days after Notice of
Termination (as hereinafter defined) is given to you following such
absence, you shall have returned to the full time performance of your
duties.
(ii) Cause. Termination by the Company of your employment for "Cause"
shall mean termination upon (a) the willful and continued failure by you
to perform substantially your duties with the Company (other than any
such failure resulting from your incapacity due to physical or mental
illness) after a written demand for substantial performance is delivered
to you by the Chairman of the Board or President of the Company which
specifically identifies the manner(s) in which such executive believes
that you have not substantially performed your duties, or (b) the
willful engaging by you in illegal conduct which is materially and
<PAGE>90
demonstrably injurious to the Company. For purposes of this paragraph
(ii), no act, or failure to act, on your part shall be considered
"willful" unless done, or failed to be done, by you in bad faith and
without reasonable belief that your action or omission was in, or not
opposed to, the best interests of the Company. Any act or failure to
act based upon authority given pursuant to a resolution duly adopted by
the Board or based upon the advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, by you in good
faith and in the best interests of the Company. It is also expressly
understood that your attention to matters not directly related to the
business of the Company shall not provide a basis for termination for
Cause so long as the Board has approved your engagement in such
activities. Notwithstanding the foregoing, you shall not be deemed to
have been terminated for Cause unless and until there shall have been
delivered to you a copy of a resolution duly adopted by the affirmative
vote of not less than three-quarters of the entire membership of the
Board at a meeting of the Board called and held for such purpose (after
reasonable notice to you and an opportunity for you, together with your
counsel, to be heard before the Board), finding that in the good faith
opinion of the Board you were guilty of the conduct set forth above in
clauses (a) or (b) of this paragraph (ii) and specifying the particulars
thereof in detail.
(iii) Good Reason. Termination by you of your employment for "Good
Reason" shall mean termination based on:
(A) a determination by you, in your reasonable judgment, that there has
been an adverse change in your status or position(s) as an executive
officer of the Company as in effect immediately prior to the Change in
Control, including, without limitation, any adverse change in your
status or position as a result of a diminution in your duties or
responsibilities (other than, if applicable, any such change directly
attributable to the fact that the Company is no longer publicly owned)
or the assignment to you of any duties or responsibilities which are
inconsistent with such status or position(s), or any removal of you
from, or any failure to reappoint or reelect you to, such positions(s)
(except in connection with the termination of your employment for Cause
or Disability or as a result of your death or by you other than for Good
Reason);
(B) a reduction by the Company in your base salary as in effect
immediately prior to the Change in Control;
(C) the failure by the Company to continue in effect any Plan (as
hereinafter defined) in which you are participating at the time of the
Change in Control of the Company (or Plans providing you with at least
substantially similar benefits) other than as a result of the normal
expiration of any such Plan in accordance with its terms as in effect at
the time of the Change in Control, or the taking of any action, or the
failure to act, by the Company which would adversely affect your
continued participation in any of such Plans on at least as favorable a
basis to you as is the case on the date of the Change in Control or
which would materially reduce your benefits in the future under any of
such Plans or deprive you of any material benefit enjoyed by you at the
time of the Change in Control;
<PAGE>91
(D) the failure by the Company to provide and credit you with the number
of paid vacation days to which you are then entitled in accordance with
the Company's normal vacation policy as in effect immediately prior to
the Change in Control;
(E) the Company's requiring you to be based at any office that is
greater than thirty (30) miles from where your office is located
immediately prior to the Change in Control except for required travel on
the Company's business to an extent substantially consistent with the
business travel obligations which you undertook on behalf of the Company
prior to the Change in Control;
(F) the failure by the Company to obtain from any Successor (as
hereinafter defined) the assent to this Agreement contemplated by
Section 6 hereof;
(G) any purported termination by the Company of your employment which is
not effected pursuant to a Notice of Termination satisfying the
requirements of paragraph (iv) below (and, if applicable, paragraph (ii)
above); and for purposes of this Agreement, no such purported
termination shall be effective; or
(H) any refusal by the Company to continue to allow you to attend to
matters or engage in activities not directly related to the business of
the Company which, prior to the Change in Control, you were permitted by
the Board to attend to or engage in.
For purposes of this Agreement, "Plan" shall mean any compensation plan
such as the Company Incentive Bonus Plan or any employee benefit plan
such as a thrift, pension, profit sharing, medical, disability,
accident, life insurance plan or a relocation plan or policy or any
other plan, program or policy of the Company intended to benefit
employees, except for the Company Restated Long-Term Incentive Plan.
(iv) Notice of Termination. Any purported termination by the Company or
by you following a Change in Control shall be communicated by written
Notice of Termination to the other party hereto. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall
indicate the specific termination provision in this Agreement relied
upon.
(v) Date of Termination. "Date of Termination" following a Change in
Control shall mean (a) if your employment is to be terminated for
Disability, thirty (30) days after Notice of Termination is given
(provided that you shall not have returned to the performance of your
duties on a full-time basis during such thirty (30) day period), (b) if
your employment is to be terminated by the Company for Cause or by you
pursuant to Sections 4(iii)(F) or 6 hereof or for any other Good Reason,
the date specified in the Notice of Termination, (c) if your employment
is to be terminated by the Company for any reason other than Cause, the
date specified in the Notice of Termination, which in no event shall be
a date earlier than ninety (90) days after the date on which a Notice of
Termination is given, unless an earlier date has been expressly agreed
to by you in writing either in advance of, or after, receiving such
Notice of Termination, or (d) if your employment is terminated on
account of your death, the day after your death. In the case of
<PAGE>92
termination of your employment by the Company for Cause, if you have not
previously expressly agreed in writing to the termination, then within
thirty (30) days after receipt by you of the Notice of Termination with
respect thereto, you may notify the Company that a dispute exists
concerning the termination, in which event the Date of Termination shall
be the date set either by mutual written agreement of the parties or by
such court having the matter before it. During the pendency of any such
dispute, the Company will continue to pay you your full compensation in
effect just prior to the time the Notice of Termination is given and
until the dispute is resolved. However, if such court issues a final
and non-appealable order finding that the Company had Cause to terminate
you then you must return all compensation paid to you after the Date of
Termination specified in the Notice of Termination previously received
by you.
5. Compensation Upon Termination or During Disability; Other Agreements.
(i) During any period following a Change in Control of the Company that
you fail to perform your duties as a result of incapacity due to
physical or mental illness, you shall continue to receive your base
salary at the rate then in effect and any benefits or awards under any
Plans shall continue to accrue during such period, to the extent not
inconsistent with such Plans, until your employment is terminated
pursuant to and in accordance with paragraphs 4(iv) - 4(v) hereof.
Thereafter, your benefits shall be determined in accordance with the
Plans then in effect.
(ii) If your employment is terminated for Cause following a Change in
Control of the Company, the Company shall pay to you your base salary
through the Date of Termination at the rate in effect just prior to the
time a Notice of Termination is given plus any benefits or awards
(including both the cash and stock components) which pursuant to the
terms of any Plans have been earned or become payable, but which have
not yet been paid to you. Thereupon the Company shall have no further
obligations to you under this Agreement.
(iii) Subject to Section 8 hereof, if, within twenty-four (24) months
after a Change in Control of the Company has occurred, your employment
by the Company is terminated other than on account of your death and is
terminated (a) by the Company other than for Cause or Disability or (b)
by you for Good Reason, then the Company shall pay to you, no later than
the fifth (5th) day following the Date of Termination, without regard to
any contrary provisions of any Plan, the following:
(A) your base salary through the Date of Termination at the rate in
effect just prior to the time a Notice of Termination is given plus any
benefits or awards (including both the cash and stock components) which
pursuant to the terms of any Plans have been earned or become payable,
but which have not yet been paid to you (including amounts which
previously had been deferred at your request);
(B) an amount in cash equal to one and one-half (1.5) times the sum of
(i) the higher of (a) your annual base salary on the Date of Termination
or (b) your annual base salary in effect immediately prior to the Change
in Control plus (ii) an amount equal to the average of the bonuses
awarded to you in each of the three previous years; provided, however,
<PAGE>93
that in no event shall the payment required under this clause (B) exceed
the average of the amount if this Section B were deemed to apply to the
Vice President of Sales and Marketing and the Vice President of Plant
Operations of the Company.
For the purposes of this Agreement, the term "base salary" shall include
any amounts deducted by the Company with respect to you or for your
account pursuant to Sections 125 and 401(k) of the Internal Revenue Code
of 1986, as amended (the "Code").
(iv) If, within twenty-four (24) months after a Change in Control of the
Company has occurred, your employment by the Company is terminated for
any reason other than retirement, the Company shall pay to you, on the
date specified below, an amount ("Spread") in cash equal to the
Termination Fair Market Value (as hereinafter defined) less the exercise
price of all options which were granted to you pursuant to the Company's
Restated Long-Term Incentive Plan or any Plan succeeding thereto, and
which shall not become exercisable prior to (a) the end of the one (1)
year period immediately following the Date of Termination if your
employment is terminated on account of your death, or (b) the end of the
third (3rd) month following the Date of Termination if your employment
is terminated for any reason other than death. The Company shall make
such payment upon the fifth (5th) day following such Date of
Termination; provided, however, that if you terminate your employment
during the Window Period, then such payment shall be made on the earlier
of your death or the first (1st) day of the seventh (7th) month
following such Date of Termination.
For the purposes of this Agreement, the "Termination Fair Market Value"
shall be the higher of (a) the highest price of the Company's stock as
quoted on the NASDAQ, or any other exchange complying with the
requirements of the Securities and Exchange Act of 1934, as amended,
within the period beginning ninety (90) days prior to the Date of
Termination and ending upon such Date of Termination, and (b) the
highest price of the Company's stock as quoted on the NASDAQ, or any
other exchange complying with the requirements of the Securities and
Exchange Act of 1934, as amended, within the period beginning ninety
(90) days prior to a Change of Control and ending upon the date of a
Change of Control.
(v) If, within twenty-four (24) months after a Change in Control of the
Company has occurred, your employment by the Company is terminated
(a) by the Company other than for Cause or Disability, or (b) by you for
Good Reason, then the Company shall maintain in full force and effect,
for the continued benefit of you and your dependents for a period
terminating on the earliest of (a) one and one-half (1.5) years after
the Date of Termination or (b) the commencement date of equivalent
benefits from a new employer, insured and self-insured employee welfare
benefit Plans in which you were entitled to participate immediately
prior to the Date of Termination, provided that your continued
participation is possible under the general terms and provisions of such
Plans (and any applicable funding media) and you continue to pay an
amount equal to your regular contribution under such Plans for such
participation. If one and one-half (1.5) years after the Termination
Date, you have not previously received, nor are then receiving,
equivalent benefits from a new employer, the Company shall offer you
<PAGE>94
continuation coverage under COBRA as prescribed under Section 4980B of
the Code. At the expiration of such continuation coverage (or, if COBRA
continuation coverage is not applicable to the Plan, then upon the
expiration of the one and one-half (1.5) year period beginning on the
Termination Date) the Company shall arrange, at its sole cost and
expense, to enable you to convert you and your dependents' coverage
under such plans to individual policies and programs upon the same terms
as employees of the Company may apply for such conversions. In the
event that your participation in any such Plan is barred, the Company,
at its sole cost and expense, shall arrange to have issued for the
benefit of you and your dependents individual policies of insurance
providing benefits substantially similar (on an after-tax basis) to
those which you otherwise would have been entitled to receive under such
Plans pursuant to this paragraph (v) or, if such insurance is not
available at a reasonable cost to the Company, the Company shall
otherwise provide you and your dependents with equivalent benefits (on
an after-tax basis). You shall not be required to pay any premiums or
other charges in an amount greater than that which you would have paid
in order to participate in such Plans.
(vi) Except as specifically provided in paragraph (v) above, the amount
of any payment provided for in this Section 5 shall not be reduced,
offset or subject to recovery by the Company by reason of any
compensation earned by you as the result of employment by another
employer after the Date of Termination, or otherwise.
(vii) In the event that you become entitled to the payments provided by
paragraphs (iii) and (iv) of Section 5 hereof (the "Agreement
Payments"), if any of the Agreement Payments will be subject to the tax
(the "Excise Tax") imposed by Section 4999 of the Code (or any similar
tax that may hereafter be imposed), the Company shall pay to you at the
time specified in paragraph (viii) below an additional amount (the
"Gross-up Payment") such that the net amount retained by you, after
deduction of any Excise Tax on the Total Payments (as hereinafter
defined) and any federal, state and local income tax and Excise Tax upon
the Gross-up Payment provided for by this paragraph (vii), but before
deduction for any federal, state or local income tax on the Agreement
Payments, shall be equal to the sum of (a) the Total Payments and (b) an
amount equal to the product of any deductions disallowed because of the
inclusion of the Gross-up Payment in your adjusted gross income and the
highest applicable marginal rate of federal income taxation for the
calendar year in which the Gross-up Payment is to be made.
For purposes of determining whether any of the Agreement Payments will
be subject to the Excise Tax and the amount of such Excise Tax, (a) any
other payments or benefits received or to be received by you in
connection with a Change in Control of the Company or your termination
of employment (whether pursuant to the terms of this Agreement or any
other plan, arrangement or agreement with the Company, any Person whose
actions result in a Change in Control of the Company or any person
affiliated with the Company or such person) (which, together with the
Agreement Payments, shall constitute the "Total Payments") shall be
treated as "parachute payments" within the meaning of Section 280G(b)(2)
of the Code, and all "excess parachute payments" within the meaning of
Section 280G(b)(1) of the Code shall be treated as subject to the Excise
Tax, unless in the opinion of tax counsel selected by the Company's
<PAGE>95
independent auditors such other payments or benefits (in whole or in
part) do not constitute parachute payments, or such excess parachute
payments (in whole or in part) represent reasonable compensation for
services actually rendered within the meaning of Section 280G(b)(4) of
the Code in excess of the base amount within the meaning of
Section 280G(b)(3) of the Code, or are otherwise not subject to the
Excise Tax; (b) the amount of the Total Payments which shall be treated
as subject to the Excise Tax shall be equal to the lesser of (1) the
total amount of the Total Payments or (2) the amount of excess parachute
payments within the meaning of Section 280G(b)(1) of the Code (after
applying clause (a), above); and (c) the value of any non-cash benefits
or any deferred payment or benefit shall be determined by the Company's
independent auditors in accordance with the principles of
Sections 280G(d)(3) and (4) of the Code.
For purposes of determining the amount of the Gross-up Payment, you
shall be deemed to (a) pay federal income taxes at the highest marginal
rate of federal income taxation for the calendar year in which the
Gross-up Payment is to be made, (b) pay the applicable state and local
income taxes at the highest marginal rate of taxation for the calendar
year in which the Gross-up Payment is to be made, net of the maximum
reduction in federal income taxes which could be obtained from deduction
of such state and local taxes (determined without regard to limitations
on deductions based upon the amount of your adjusted gross income), and
(c) have otherwise allowable deductions for federal income tax purposes
at least equal to those disallowed because of the inclusion of the
Gross-up Payment in your adjusted gross income. In the event that the
Excise Tax is subsequently determined to be less than the amount taken
into account hereunder at the time the Gross-up Payment is made, you
shall repay to the Company at the time that the amount of such reduction
in Excise Tax is finally determined, the portion of the Gross-up Payment
attributable to such reduction (plus the portion of the Gross-up Payment
attributable to the Excise Tax and federal state and local income tax
imposed on the portion of the Gross-up Payment being repaid by you if
such repayment results in a reduction in Excise Tax and/or a federal and
state and local income tax deduction), plus interest on the amount of
such repayment at the rate provided in Section 1274(b)(2)(B) of the
Code. In the event that the Excise Tax is determined to exceed the
amount taken into account hereunder at the time the Gross-up Payment is
made (including by reason of any payment the existence or amount of
which cannot be determined at the time of the Gross-up Payment), the
Company shall make an additional Gross-up Payment in respect of such
excess (plus any interest payable with respect to such excess at the
rate provided in Section 1274(b)(2)(B) of the Code) at the time that the
amount of such excess is finally determined.
(viii) The Gross-up Payment or portion thereof provided for in
paragraph (vii) above shall be paid not later than the thirtieth (30th)
day following payment of any amounts under paragraphs (iii) and (iv) of
Section 5; provided, however, that if the amount of such Gross-up
Payment or portion thereof cannot be finally determined on or before
such day, the Company shall pay to you on such day an estimate, as
determined in good faith by the Company, of the minimum amount of such
payments and shall pay the remainder of such payments (together with
interest at the rate provided in Section 1274(b)(2)(B) of the Code) as
<PAGE>96
soon as the amount thereof can be determined, but in no event later than
the forty-fifth (45th) day after payment of any amounts under paragraphs
(iii) and (iv) of Section 5. In the event that the amount of the
estimated payments exceeds the amount subsequently determined to have
been due, such excess shall constitute a loan by the Company to you,
payable on the fifth (5th) day after demand by the Company (together
with interest at the rate provided in Section 1274(b)(2)(B) of the
Code).
6. Successors; Binding Agreement.
(i) The Company will seek, by written request at least five (5) business
days prior to the time a Person becomes a Successor (as hereinafter
defined), to have such Person, by agreement in form and substance
satisfactory to you, assent to the fulfillment of the Company's
obligations under this Agreement. Failure of such Person to furnish
such assent by the later of (a) three (3) business days prior to the
time such Person becomes a Successor or (b) two (2) business days after
such Person receives a written request to so assent shall constitute
Good Reason for termination by you of your employment if a Change in
Control of the Company occurs or has occurred. For purposes of this
Agreement, "Successor" shall mean any Person that succeeds to, or has
the practical ability to control (either immediately or with the passage
of time), the Company's business directly, by merger or consolidation,
or indirectly, by purchase of the Company's Voting Securities or
otherwise.
(ii) This Agreement shall inure to the benefit of and be enforceable by
your personal legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If you should
die while any amount would still be payable to you hereunder if you had
continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to your
devisee, legatee or other designee or, if no such designee exists, to
your estate.
(iii) For purposes of this Agreement, the "Company" shall include any
subsidiary of the Company and any corporation or other entity which is
the surviving or continuing entity in respect of any merger,
consolidation or form of business combination in which the Company
ceases to exist; provided, however, for purposes of determining whether
a Change in Control has occurred herein, the term "Company" shall refer
to WLR Foods, , Inc. or its successor(s).
7. Fees and Expenses; Mitigation.
(i) The Company shall reimburse you, on a current basis, for all
reasonable legal fees and related expenses incurred by you in connection
with the Agreement following a Change in Control of the Company,
including without limitation, (a) all such fees and expenses, if any,
incurred in contesting or disputing any termination of your employment
or incurred by you in seeking advice with respect to the matters set
forth in Section 8 hereof or (b) your seeking to obtain or enforce any
right or benefit provided by this Agreement, in each case, regardless of
whether or not your claim is upheld by a court of competent
<PAGE>97
jurisdiction; provided, however, you shall be required to repay any such
amounts to the Company to the extent that a court issues a final and
non-appealable order setting forth the determination that the position
taken by you was frivolous or advanced by you in bad faith.
(ii) You shall not be required to mitigate the amount of any payment the
Company becomes obligated to make to you in connection with this
Agreement, by seeking other employment or otherwise.
8. Taxes. Subject to the provisions of Section 5(vii), all payments to
be made to you under this Agreement will be subject to required
withholding of federal, state and local income and employment taxes.
9. Survival. The respective obligations of, and benefits afforded to,
the Company and you as provided in Sections 5, 6(ii), 7, 8, 12 and 14 of
this Agreement shall survive termination of this Agreement.
10. Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by
United States registered mail, return receipt requested, postage prepaid
and addressed, in the case of the Company, to the address set forth on
the first page of this Agreement or, in the case of the undersigned
employee, to the address set forth below his signature, provided that
all notices to the Company shall be directed to the attention of the
Chairman of the Board or President of the Company, with a copy to the
Secretary of the Company, or to such other address as either party may
have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon receipt.
11. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such modification, waiver or discharge is
agreed to in a writing signed by you and the Chairman of the Board or
President of the Company. No waiver by either party hereto at any time
of any breach by the other party hereto of, or of compliance with, any
condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party
which are not expressly set forth in this Agreement.
12. Governing Law and Venue. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the
Commonwealth of Virginia. Venue for any proceeding related to the
performance or interpretation of this Agreement, or in any way arising
out of this Agreement, shall be either the Circuit Court of Rockingham
County, Virginia, or the United States District Court for the Western
District of Virginia, Harrisonburg Division.
13. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement, which shall remain in full force and
effect.
<PAGE>98
14. Employee's Commitment. You agree that subsequent to your period of
employment with the Company, you will not at any time communicate or
disclose to any unauthorized person, without the written consent of the
Company, any proprietary processes of the Company or other confidential
information concerning its business, affairs, products, suppliers or
customers which, if disclosed, would have a material adverse effect upon
the business or operations of the Company, taken as a whole; it being
understood, however, that the obligations under this Section 14 shall
not apply to the extent that the aforesaid matters (a) are disclosed in
circumstances where you are legally required to do so or (b) become
generally known to, and available for use by, the public otherwise than
by your wrongful act or omission.
15. Related Agreements. To the extent that any provision of any other
agreement between the Company and you shall limit, qualify or be
inconsistent with any provision of this Agreement, then for purposes of
this Agreement, while the same shall remain in force, the provision of
such other agreement shall be deemed to have been superseded, and to be
of no force or effect, as if such other agreement had been formally
amended to the extent necessary to accomplish such purpose.
Notwithstanding the effect of the preceding sentence, the conditional
Employment Agreement, renewed on June 26, 1992 between the Company and
you is hereby cancelled and shall be of no force or effect.
If this letter correctly sets forth our agreement on the subject matter
hereof, kindly sign and return to the Company the enclosed copy of this
letter which will then constitute our agreement on this subject.
Sincerely,
WLR Foods, Inc.
By______/s/ Herman D. Mason___
Herman D. Mason, Chair
Executive Compensation Committee
WLR Foods, Inc.
Agreed to this 4th day of February, 1994.
_____/s/ V. Eugene Misner____
V. Eugene Misner
<PAGE>99
EXHIBIT 10.9
DEFERRED COMPENSATION AGREEMENT
This Deferred Compensation Agreement ("Agreement") is made this ______
day of February, 1994, by and between WLR FOODS, INC., a Virginia
corporation ("WLR") and CHARLES W. WAMPLER, Jr.("Wampler").
R E C I T A L S:
1. Wampler has been employed by WLR in various capacities since 1936 and
during this period has rendered many valuable services to WLR.
2. Contemporaneous with the execution of this Agreement, Wampler has
submitted his resignation as an employee of WLR.
3. In recognition of past services, WLR desires to provide Wampler with
deferred compensation as provided herein.
NOW, THEREFORE, in consideration of services performed in the past and
other good and valuable consideration, the receipt of which is hereby
acknowledged, it is agreed as followed:
1. WLR agrees that effective upon Wampler's retirement from service with
WLR, WLR shall maintain in full force and effect for the continued
benefit of Wampler and his spouse for their lifetime all employee
welfare benefits plans in which Wampler was entitled to participate
immediately prior to his retirement, provided that such continued
participation is possible under the general terms and provisions of such
plan (and any applicable funding media) and that Wampler continues to
pay an amount equal to his regular contribution under such plan(s) for
such participation. If such continuing participation is no longer
possible under the general terms and provisions of such plan(s), WLR,
at its sole cost and expense, shall arrange to have issued for the
benefit of Wampler and his spouse, individual policies of insurance
providing benefits substantially similar (on an after-tax basis) to
those which Wampler would have otherwise been entitled to receive under
such plan(s) or, if such insurance is not available at a reasonable cost
to WLR, WLR shall otherwise provide Wampler and his spouse with
equivalent benefits (on an after-tax basis). Wampler shall not be
required to pay any premiums or other charges in an amount greater than
which he would have paid in order to participate in such plan(s) as an
active employee.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf as thereunto duly authorized
WITNESS the following signature and seal.
WLR FOODS, INC.
By:____/s/ James L. Keeler______
President
_____/s/ Charles W. Wampler, Jr.____
CHARLES W. WAMPLER, Jr.
<PAGE>100
EXHIBIT 10.10
DEFERRED COMPENSATION AGREEMENT
This Deferred Compensation Agreement ("Agreement") is made this ______
day of February, 1994, by and between WLR FOODS, INC., a Virginia
corporation ("WLR") and HERMAN D. MASON ("Mason").
R E C I T A L S:
1. Mason has been employed by WLR in various capacities since 1959 and
during this period has rendered many valuable services to WLR.
2. Contemporaneous with the execution of this Agreement, Mason has
submitted his resignation as an employee of WLR.
3. In recognition of past services, WLR desires to provide Mason with
deferred compensation as provided herein.
NOW, THEREFORE, in consideration of services performed in the past and
other good and valuable consideration, the receipt of which is hereby
acknowledged, it is agreed as followed:
1. WLR agrees that effective upon Mason's retirement from service with
WLR, WLR shall maintain in full force and effect for the continued
benefit of Mason and his spouse for their lifetime all employee welfare
benefits plans in which Mason was entitled to participate immediately
prior to his retirement, provided that such continued participation is
possible under the general terms and provisions of such plan (and any
applicable funding media) and that Mason continues to pay an amount
equal to his regular contribution under such plan(s) for such
participation. If such continuing participation is no longer possible
under the general terms and provisions of such plan(s), WLR, at its
sole cost and expense, shall arrange to have issued for the benefit of
Mason and his spouse, individual policies of insurance providing
benefits substantially similar (on an after-tax basis) to those which
Mason would have otherwise been entitled to receive under such plan(s)
or, if such insurance is not available at a reasonable cost to WLR, WLR
shall otherwise provide Mason and his spouse with equivalent benefits
(on an after-tax basis). Mason shall not be required to pay any
premiums or other charges in an amount greater than which he would have
paid in order to participate in such plan(s) as an active employee.
2. To the extent that any provision of any other agreement between WLR
and Mason shall limit, qualify or be inconsistent with any provisions
herein, then for purposes of this Agreement, while the same shall remain
in force, the inconsistent provisions of such other agreement shall be
deemed to have been superseded and be of no force or effect.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf as thereunto duly authorized
WITNESS the following signature and seal.
<PAGE>101
WLR FOODS, INC.
By:______/s/James L. Keeler_____
President
______/s/ Herman D. Mason____
HERMAN D. MASON
<PAGE>
<PAGE>102
EXHIBIT 10.11
DEFERRED COMPENSATION AGREEMENT
This Deferred Compensation Agreement ("Agreement") is made this 4th
day of February, 1994, by and between WLR FOODS, INC., a Virginia
corporation ("WLR") and GEORGE E. BRYAN ("Bryan").
R E C I T A L S:
1. Bryan has been employed by WLR in various capacities since 1959
and during this period has rendered many valuable services to WLR.
2. Contemporaneous with the execution of this Agreement, Bryan has
submitted his resignation as an employee of WLR.
3. In recognition of past services, WLR desires to provide Bryan
with deferred compensation as provided herein.
NOW, THEREFORE, in consideration of services performed in the past
and other good and valuable consideration, the receipt of which is
hereby acknowledged, it is agreed as followed:
1. WLR agrees that effective upon Bryan's retirement from service
with WLR, WLR shall maintain in full force and effect for the continued
benefit of Bryan and his spouse for their lifetime all employee welfare
benefits plans in which Bryan was entitled to participate immediately
prior to his retirement, provided that such continued participation is
possible under the general terms and provisions of such plan (and any
applicable funding media) and that Bryan continues to pay an amount
equal to his regular contribution under such plan(s) for such
participation. If such continuing participation is no longer possible
under the general terms and provisions of such plan(s), WLR, at its
sole cost and expense, shall arrange to have issued for the benefit of
Bryan and his spouse, individual policies of insurance providing
benefits substantially similar (on an after-tax basis) to those which
Bryan would have otherwise been entitled to receive under such plan(s)
or, if such insurance is not available at a reasonable cost to WLR, WLR
shall otherwise provide Bryan and his spouse with equivalent benefits
(on an after-tax basis). Bryan shall not be required to pay any
premiums or other charges in an amount greater than which he would have
paid in order to participate in such plan(s) as an active employee.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf as thereunto duly authorized
WITNESS the following signature and seal.
WLR FOODS, INC.
By:___/s/ James L. Keeler_____
President
____/s/ George E. Bryan____
GEORGE E. BRYAN
<PAGE>103
EXHIBIT 10.12
DEFERRED COMPENSATION AGREEMENT
This Deferred Compensation Agreement ("Agreement") is made this 4th day
of February, 1994, by and between WLR FOODS, INC., a Virginia
corporation ("WLR") and WILLIAM D. WAMPLER ("Wampler").
R E C I T A L S:
1. Wampler has been employed by WLR in various capacities since 1959
and during this period has rendered many valuable services to WLR.
2. Contemporaneous with the execution of this Agreement, Wampler has
submitted his resignation as an employee of WLR.
3. In recognition of past services, WLR desires to provide Wampler with
deferred compensation as provided herein.
NOW, THEREFORE, in consideration of services performed in the past and
other good and valuable consideration, the receipt of which is hereby
acknowledged, it is agreed as followed:
1. WLR agrees that effective upon Wampler's retirement from service
with WLR, WLR shall maintain in full force and effect for the continued
benefit of Wampler and his spouse for their lifetime all employee
welfare benefits plans in which Wampler was entitled to participate
immediately prior to his retirement, provided that such continued
participation is possible under the general terms and provisions of such
plan (and any applicable funding media) and that Wampler continues to
pay an amount equal to his regular contribution under such plan(s) for
such participation. If such continuing participation is no longer
possible under the general terms and provisions of such plan(s), WLR,
at its sole cost and expense, shall arrange to have issued for the
benefit of Wampler and his spouse, individual policies of insurance
providing benefits substantially similar (on an after-tax basis) to
those which Wampler would have otherwise been entitled to receive under
such plan(s) or, if such insurance is not available at a reasonable cost
to WLR, WLR shall otherwise provide Wampler and his spouse with
equivalent benefits (on an after-tax basis). Wampler shall not be
required to pay any premiums or other charges in an amount greater than
which he would have paid in order to participate in such plan(s) as an
active employee.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf as thereunto duly authorized
WITNESS the following signature and seal.
WLR FOODS, INC.
By:_____/s/ James L. Keeler______
President
_____/s/ William D. Wampler___
WILLIAM D. WAMPLER
<PAGE>104
EXHIBIT 99.1
WLR FOODS DIRECTORS UNANIMOUSLY REJECT TYSON'S OFFER
Broadway, Virginia, February 6, 1994 - The board of directors of WLR
Foods, Inc. (NASDAQ: WLRF) has unanimously rejected an unsolicited
proposal from Tyson Foods Inc. to negotiate the purchase of WLR Foods
for $30 per share.
In a letter to shareholders today, Charles W. Wampler, Jr., chairman of
the board of WLR Foods, and James L. Keeler, president and chief
executive officer, stated, "The board believes it is in the best long-
term interests of WLR Foods and its shareholders for the company to
remain independent."
An additional letter sent to shareholders today outlined the adoption of
a Shareholder Protection Rights Plan. The letter, which was signed by
Chairman Charles W. Wampler Jr., on behalf of the board, was accompanied
by a "Summary of Shareholder Protection Rights Plan."
WLR Foods is a fully integrated provider of high quality turkey and
chicken products primarily under the Wampler-Longacre label and retail
ice under the Cassco label. The company exports to more than 40
countries and has processing operations in Virginia, West Virginia and
Pennsylvania, close to its major mid-Atlantic markets.
###
(Copies of three letters and the Summary of Shareholder Protection
Rights Plan are enclosed --four pages, total, including this one.)
<PAGE>105
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 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 sizeable 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, its shareholders and
other constituencies.
Sincerely,
__/s/__Charles W. Wampler, Jr.
Charles W. Wampler, Jr.
Chairman, Board of Directors
WLR Foods, Inc.
<PAGE>106
February 6, 1994
Dear Fellow Shareholders:
As you are aware, the Board of Directors of WLR Foods, Inc. recently
received an unsolicited proposal from Tyson Foods, Inc. to negotiate the
purchase of WLR Foods, Inc. for $30 per share. The Board, after
receiving advice from its management and professional advisors,
carefully considered this proposal and voted unanimously to reject it.
The Board believes it is in the best long-term interests of WLR Foods
and its shareholders for the company to remain independent.
WLR Foods is just now positioned for impressive growth as we enter a
strong economy and a favorable poultry market. Our company has recently
completed a significant investment program in its facilities. We are
not interested in handing over to anyone the harvest of all our work
which belongs to our shareholders and which we are just beginning to
see.
One of WLR Foods greatest strengths is its close relations with
employees, producers, customers and suppliers. These relationships have
helped build our company into a major force in the poultry industry and,
together with recent investments in our facilities, will boost WLR Foods
to even greater prominence in the years ahead. Many of these
constituencies already have had the opportunity to associate with Tyson
Foods. They nave not done so. The believe, as we do, that the best
corporate citizens are those whose management lives in, and is a part
of, the communities where its facilities are. Our management lives
right where most of our facilities are--not in Arkansas.
Let me assure you that the Board of Directors will take any action it
believes is appropriate and necessary to protect our shareholders. We
are committed to preserving our company's promising future for our
entire WLR Foods family.
Thank you for your many expressions of support over the past several
days. We are very proud of our loyal shareholder base. Your Board
appreciates, and feels the responsibility of, that loyalty. We will
continue to act in what we believe is your best interest. As we will
greatly appreciate your continued support.
Sincerely,
___/s/___Charles W. Wampler, Jr. ___/s/___James L. Keeler
Charles W. Wampler, Jr. James L. Keeler
Chairman, Board of Directors President and Chief Executive Officer
<PAGE>107
February 6, 1994
Dear Fellow Shareholders:
On February 4, 1994, at the time it unanimously rejected an unsolicited
proposal to negotiate the purchase of WLR Foods, Inc. for $30 per share,
your Board of Directors adopted a Shareholder Protection Rights Plan.
This letter briefly describes the Rights Plan and the Board's reasons
for adopting it.
The Rights Plan was adopted was give WLR Foods sufficient time to
consider appropriate responses to unsolicited tender offers, as well as
to protect shareholders against attempts to acquire control of the
Company by means of "creeping" accumulation of shares in the open
market, a two-tier tender offer, an offer at less than a full and fair
price or other prevalent takeover tactics which the Board believes are
not in your best interests.
More than 1,000 U.S. corporations have considered it prudent, in light
of the takeover environment, to adopt shareholder protection plans
similar to the Rights Plan.
the Rights Plan is not intended to and will not prevent a takeover of
the Company at a full and fair price. However, it may cause substantial
dilution to a person or group that acquires 15% or more of the Company's
common stock unless the Rights are first redeemed by the Board of
Directors.
The Rights Plan does not in any way weaken the Company's financial
strength or interfere with its business plans. The issuance of the
Rights has no dilutive effect, will not affect reported earnings per
share, is not taxable to the Company or you and will not change the way
in which the Company's shares are traded.
The Rights should not interfere with any merger or other business
combination that is in the best interests of the Company and its
shareholders, since the Rights generally may be redeemed by the Company
at $0.01 per Right in cash prior to the day after it is announced that
a person or group has acquired 15% or more of the Company's common
stock.
A summary of the terms of the Rights Plan is attached. The summary is
not complete and is qualified in its entirety by the Rights Agreement,
a copy of which can be obtained free of charge from the Company by
contacting Delbert L. Seitz at P.O. Box 7000, Broadway, Virginia 22815.
In adopting the Rights Plan, the Board has expressed its confidence in
the Company's future and the Board's determination that you, the
shareholders, be given every opportunity to participate fully in that
future.
On behalf of the Board of Directors,
______/s/___Charles W. Wampler, Jr.
Charles W. Wampler, Jr.
Chairman, Board of Directors.
<PAGE>108
WLR FOODS, INC.
SUMMARY OF SHAREHOLDER PROTECTION RIGHTS PLAN
Distribution and Transfer of Rights; Rights Certificates: The Board has
declared a dividend of one Right for each share of Common Stock
outstanding on February 14, 1994. Prior to the Separation Time referred
to below, the Rights will be evidenced by and trade with the Common
Stock and will not be exercisable. After the Separation Time, the
Company will mail Rights Certificates to shareholders and the Rights
will become transferable apart from the Common Stock.
Separation Time: Rights will separate from the Common Stock and become
exercisable following the earlier of (i) the date of the Flip-In Trigger
referred to below or (ii) the tenth business day (or such later date as
the Board may decide) after any person commences a tender offer that
would result in such person holding a total of 15% or more of the Common
Stock.
Exercise of Rights: After the Separation Time, each Right will entitle
the holder to purchase, for an Exercise Price of $68, Participating
Preferred Stock designed to have economic and voting terms similar to
those of one share of Common Stock.
"Flip-In" Trigger: Upon announcement that any person has acquired 15%
or more of the outstanding Common Stock, then:
(i) Rights owned by the person acquiring such stock (an "Acquiring
Person") or transferees thereof will automatically become void; and
(ii) each other Right will automatically become 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.
Exchange Option: If any person acquires between 15% and 50% of the
outstanding Common Stock, the Board may, in lieu of allowing Rights to
be exercised, require each outstanding Right to be exchanged for one
share of Common Stock or Participating Preferred Stock designed to have
economic and voting terms similar to those of one share of Common Stock.
"Flip-over" Trigger: After an Acquiring Person has become such, the
Company may not consolidate or merge with, or sell 50% or more of its
assets or earning power to, any person (a "Flip-Over Transaction or
Event") if at the time of such merger or sale (or agreement to do any of
the foregoing) the Acquiring Person controls the Board of Directors and,
in the case of a merger, will receive different treatment than all other
shareholders unless proper provision is made so that each Right would
thereafter become a right to buy, for the Exercise Price, that number of
shares of common stock of such other person having a market value of
twice the Exercise Price.
Redemption: The Rights may be redeemed by the Board, at any time until
a "Flip-In" Trigger has occurred, at a Redemption Price of $0.01 per
Right.
<PAGE>109
Power to Amend: The Board may amend the Plan in any respect until a
"Flip-In" Trigger has occurred. Thereafter, the Board may amend the
Plan in any respect not materially adverse to Rights holders generally.
Expiration: The Rights will expire no later than ten years from the
date of their issuance.
<PAGE>110
EXHIBIT 99.2
Broadway, Virginia, February 7, 1994----The board of directors of WLR
Foods, Inc. (NASDAQ: WLRF) as part of its response to an unsolicited
offer from Tyson Foods Inc. to purchase WLR Foods has unanimously
adopted a Shareholder Rights Protection Plan.
In a letter to shareholders dated February 6, WLR Foods outlined its
reasons for the plan's adoption. The letter, which was signed by
Chairman Charles W. Wampler Jr., on behalf of the board, was accompanied
by a "Summary of Shareholder Rights Protection Plan." (Copies of the
letter and summary of rights are attached.)
WLR Foods is a fully integrated provider of high quality turkey and
chicken products primarily under the Wampler-Longacre label and retail
ice under the Cassco label. The company exports to more than 40
countries and has processing operations in Virginia, West Virginia and
Pennsylvania, close to its major mid-Atlantic markets.
<PAGE>111
EXHIBIT 99.3
Broadway, Virginia, February 9, 1994----WLR Foods, Inc. (NASDAQ: WLRF)
has filed an action seeking a ruling from the U.S. District Court,
Harrisonburg Division, concerning the validity of its recently adopted
Shareholder Protection Rights Plan and the constitutionality of portions
of the Virginia Stock Corporation Act. The action follows a recent
decision by WLR Foods board of directors to unanimously reject an
unsolicited offer by Tyson Foods Inc. to purchase the company.
WLR Foods is a fully integrated provider of high quality turkey and
chicken products primarily under the Wampler-Longacre label and retail
ice under the Cassco label. The company exports to more than 40
countries and has processing operations in Virginia, West Virginia and
Pennsylvania, close to its major mid-Atlantic markets.
