Exhibit 99(c)
WLR FOODS AGAINST TYSON FOODS
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF VIRGINIA, HARRISONBURG DIVISION
WLR FOODS, INC., Plaintiff, v. TYSON FOODS, INC., Defendant
COMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF
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Plaintiff WLR Foods, Inc. ("WLR"), by its undersigned attorneys, for its
complaint, upon knowledge with respect to itself and its own acts and upon
information and belief as to all other matters, alleges:
I. NATURE OF ACTION
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1. This action seeks a declaration that WLR's Shareholder Protection Rights
Agreement (the "Rights Plan"), adopted on February 4, 1994, is valid and was
duly adopted in full conformance with applicable law and that any rights to
be issued pursuant to the Rights Plan (the "Right(s)") are valid, binding and
legally enforceable under state and federal law.
2. This action also seeks a declaration that Article 14, Va. Code section
13.1-725, et seq., and Article 14.1, Va. Code Section 13.1-728.1, et seq., of
Virginia's Stock Corporation Act (collectively the "Articles") are
constitutional under the Virginia and the United States Constitutions and
valid under any other applicable law. The Articles were adopted by the
Commonwealth of Virginia as a means of protecting Virginia corporations and
their shareholders.
II. JURISDICTION
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3. This Court has jurisdiction over this matter pursuant to 28 U.S.C.
Section 1331, 28 U.S.C. Section 1332 (a) (1) and 28 U.S.C. Section 2201.
III. PARTIES
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4. WLR is a Virginia corporation with its principal executive offices in
Rockingham County, Virginia. Shares of WLR's common stock are publicly
traded on the NASDAQ National Market System.
5. Defendant Tyson Foods, Inc. ("Tyson") is a Delaware corporation with its
principal executive offices in Springdale, Arkansas.
IV. CLAIMS
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6. By letter dated January 24, 1994, Tyson proposed to WLR's board of
directors a merger of WLR and Tyson (or a subsidiary of Tyson) pursuant to
which the shareholders of WLR would receive $30.00 in cash for each of their
WLR shares (a copy of the letter is attached hereto as Exhibit A and is
incorporated by reference). In that letter, Tyson stated, among other
things, that the proposal was contingent upon WLR's board of directors not
using what Tyson termed any "Poison Pills" or other "Anti-Takeover" measures
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to "obstruct a merger." This language indicates that Tyson believes a basis
may exist for challenging the validity of measures such as the Rights Plan.
7. Tyson's January 24, 1994 letter also made its acquisition proposal
contingent upon the WLR board of directors taking necessary action to prevent
the Virginia Stock Corporation Act from being an "impediment" to the proposed
merger. This condition to Tyson's proposed acquisition indicates that Tyson
believes a basis may exist for challenging the validity of provisions of
Virginia's Stock Corporation Act ("Stock Corporation Act"), including the
Articles.
8. By letter dated February 6, 1994, WLR rejected Tyson's January 24, 1994
acquisition proposal (a copy of the letter is attached hereto as Exhibit B
and is incorporated by reference).
A. Articles 14 and 14.1 Of Virginia's Stock
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Corporation Act Are Constitutional
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9. Article 14 of the Stock Corporation Act ("Article 14") prohibits a
corporation from engaging in certain transactions including mergers, with an
"interested shareholder" for three years from the date that the person is
determined by the corporation's board of directors to be an "interested
shareholder." An "interested shareholder" is defined by Article 14 to be,
among other things, the beneficial owner of more than ten percent of any
class of outstanding voting shares of the corporation.
10. Article 14 provides for certain exceptions from the requirements of the
Article, including an exception for transactions approved by a majority of
the disinterested directors of the corporation or two-thirds of the voting
shares (other than those shares beneficially owned by the interested
shareholder).
11. Article 14.1 of the Stock Corporation Act ("Article 14.1") limits the
voting rights of the shares of a corporation acquired, directly or
indirectly, in a "control share acquisition." A "control share acquisition"
is defined by Article 14.1 to be the direct or indirect acquisition of
sufficient shares to give the owner various specified levels of voting power
in connection with the election of directors of the corporation.
12. Article 14.1 provides for certain exceptions from its requirements.
For instance, the corporation's board of directors may take certain actions,
under specified procedures and conditions, that will remove the acquisition
from the limitations imposed by Article 14.1. In addition, any acquiring
person may request that the corporation call a special meeting of the
shareholders for the purpose of considering the voting rights to be granted
shares acquired or to be acquired in the control share acquisition.
13. Articles 14 and 14.1 were adopted by the Commonwealth of Virginia as a
means of protecting Virginia corporations and their shareholders and do not
conflict with either the Virginia or the United States Constitutions or any
other applicable law.
14. In its January 24, 1994 letter, Tyson states that its proposal is
contingent on WLR's board of directors taking action "necessary to prevent
the Virginia Corporation Act from being an impediment to the proposed merger"
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and the board of directors not using the Act to "disadvantage Tyson in the
purchase of" WLR's stock. Thus, rather than viewing and respecting the
Articles as a measure by the Commonwealth of Virginia to protect Virginia
corporations and their shareholders, Tyson apparently believes them to be an
"impediment" and "disadvantage" to its acquisition efforts.
B. WLR'S Shareholder Rights Plan Is Valid
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15. At a meeting held on February 4, 1994, WLR's board of directors adopted
the Rights Plan. In adopting the plan, the board of directors and each of
its members acted in good faith, in conformity with fiduciary and other
duties, and conducted a reasonable investigation which included receiving the
advice of the company's management and legal and financial advisors.
16. Pursuant to the Rights Plan, among other provisions, the board of
directors declared a dividend distribution of one Right for each outstanding
share of the Company's common stock (the "Common Stock"). The occurrence of
certain events, including commencement of a tender offer for acquisition of
at least 15% of WLR's common stock, entitles the holder of each Right to
purchase one-hundredth of a share of WLR Participating Preferred Stock at a
price set by the board of directors in consultation with the Company's
financial advisers (the "Exercise Price"). The Participating Preferred
Stock would be designed so that each one-hundredth of a share has economic
and voting terms similar to those of one share of Common Stock.
17. If any person acquires 15% or more of the outstanding Common Stock (the
"Flip-in trigger"), then:
(i) Rights owned by the person acquiring such stock or transferees thereof
will automatically be void; and
(ii) each other Right will automatically become a right to buy, for the
Exercise Price, that number of shares of Common Stock or Participating
Preferred Stock having a market value of twice the Exercise Price.
The Rights may be redeemed by the board of directors, at any time until a
Flip-in trigger has occurred, at a Redemption Price of $0.01 per Right.
18. WLR believes and alleges that the Rights Plan is valid and lawful and
was duly adopted in full conformance with applicable law, and that its
adoption was a legitimate exercise of business judgment by WLR's board of
directors, and not otherwise contrary to Virginia state law and federal laws.
The Rights Plan is binding in all respects, valid and enforceable.
19. Based on the language of Tyson's January 24, 1994 letter, WLR believes
and alleges that the defendant or persons or entities acting in concert with
them or on their behalf will contest (a) the constitutionality or validity
otherwise of Articles 14 and 14.1 and (b) the validity of the Rights Plan and
the Rights. Thus, an actual controversy exists between the parties to this
action which is within the power of this Court to determine pursuant to 28
U.S.C. Sections 2201-2202. This Court's determination of the issues
presented herein will afford relief from uncertainty and insecurity with
respect to rights, status, and legal relations between the parties.
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20. Without a declaratory judgment, WLR and its shareholders will be
deprived of the assurance that (a) Articles 14 and 14.1 are applicable to
Tyson's efforts to acquire the corporation and (b) the Rights Plan was
validly adopted and the Rights thereunder exercisable.
21. WLR has no adequate remedy at law as to matters which require
injunctive relief.
WHEREFORE, plaintiff hereby requests that the Court enter a judgment:
a. Declaring that Articles 14 and 14.1 of the Virginia Stock Corporation
Act , are valid, lawful and binding under both the Virginia and the United
States Constitutions and any other applicable laws.
b. Declaring that:
(i) the Rights Plan and the Rights are valid, lawful and binding;
(ii) the Rights Plan was adopted in full compliance with the laws of the
Commonwealth of Virginia and any other applicable law; and
(iii) the Rights distributed pursuant thereto will be valid and enforceable.
c. Temporarily, preliminarily and permanently enjoining defendant, its
affiliates, subsidiaries, officers, directors, and all others acting in
concert with them or on their behalf, from bringing any action in any other
court (a) challenging the constitutionality and validity of Articles 14 and
14.1 of the Virginia Stock Corporation Act; (b) attacking any aspect of the
Rights Plan, including the Plan's adoption under Virginia or in regard to any
other applicable law; and/or (c) otherwise relating to or involving Tyson's
proposal to acquire WLR and the response to that proposal by WLR and/or its
directors, officers or agents, under state law and/or federal law.
d. Awarding to WLR and against defendant, costs, and disbursements of this
action, including reasonable attorneys fees, if permitted by law; and
e. Granting such further relief to WLR as may be just and proper under the
circumstances.
Douglas L. Guynn
VSB No. 19748
Wharton, Aldhizer & Weaver
A Professional Limited
Liability Company
100 South Mason Street
Harrisonburg, Virginia 22801
(703) 434-0316
Attorneys for Plaintiff
OF COUNSEL:
William R. Norfolk
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
(212) 558-4000
Dated February 6, 1994
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