<PAGE>1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(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 61
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This Form 10-Q/A is being filed to reflect the following:
1 .Page 15 of Item 5 of Part II Other Information has been revised
to reflect an additional word as marked on page 15.
2. Amendments 2 through 5 reflect the deletion of a phrase from
the prior filing on pages 54A, 67A, 80A and 93A, respectively, of
Exhibit 10.5, Exhibit 10.6, Exhibit 10.7 and Exhibit 10.8.
<PAGE>3 Amendment 1, Page 12A
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
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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
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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>6 Page 15A
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-
clerical 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"
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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
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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.
<PAGE>9 Amendment 2, Exhibit 10.5 Page, 47A
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
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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>11 Page 49A
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>12 Page 50A
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>13 Page 51A
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>14 Page 52A
(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>15 Page 53A
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>16 Page 54A
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.
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>17 Page 55A
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>18 Page 56A
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
atisfactory to you, assent to the fulfillment of the Company's
obligations under this Agreement. Failure of such Person to furnish
<PAGE>19 Page 57A
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>20 Page 58A
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>21 Page 59A
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>22 Amendment 3, Exhibit 10.6, Page 60A
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>23 Page 61A
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>24 Page 62A
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>25 Page 63A
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>26 Page 64A
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>27 Page 65A
(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>28 Page 66A
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>29 Page 67A
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.
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>30 Page 68A
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>31 Page 69A
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>32 Page 70A
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>33 Page 71A
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>34 Page 72A
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>35 Amendment 4, Exhibit 10.7, Page 73A
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>36 Page 74A
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>37 Page 75A
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>38 Page 76A
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>39 Page 77A
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>40 Page 78A
(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>41 Page 79A
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>42 Page 80A
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.
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>43 Page 81A
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>44 Page 82A
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>45 Page 83A
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>46 Page 84A
(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>47 Page 85A
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>48 Amendment 5, Exhibit 10.8, Page 86A
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>49 Page 87A
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>50 Page 88A
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>51 Page 89A
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>52 Page 90A
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>53 Page 91A
(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>54 Page 92A
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>55 Page 93A
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;
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>56 Page 94A
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>57 Page 95A
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>58 Page 96A
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>59 Page 97A
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>60 Page 98A
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>61 SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report is signed this 18th 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
