Exhibit 10.1


                         EMPLOYMENT AGREEMENT


     THIS EMPLOYMENT AGREEMENT made as of the 23rd day of June, 1998
by and between WLR FOODS, INC. (WLR), a Virginia corporation, and
JAMES L. KEELER (Keeler) who agree and bind themselves as follows:

     1.   Term.  This Employment Agreement shall commence on June 27,
1998, and shall terminate at the end of the fiscal year ending in
2001.

     2.   Position.  Keeler shall serve as President and Chief
Executive Officer of WLR for the first two years of this three year
contract on a full time basis using his best efforts and under the
direction of the Board of Directors of WLR.  The third year is
anticipated to be a transition year, and the position and duties may
be adjusted by the Board of Directors of WLR.  As an employee of WLR,
Keeler is subject to the direction of the Board of Directors of WLR,
the WLR bylaws and relevant company policies as from time to time
issued, updated or amended. 

     3.   Base Salary.  WLR shall pay Keeler a base salary during each
fiscal year of this three-year Employment Agreement.  The initial
fiscal year salary shall be $292,248.00 and is payable bi-weekly
during the term of this Employment Agreement.  In the event of the
death of Keeler while this Agreement is in full force and effect, his
personal representative shall be entitled to receive such base salary
up to the end of the last pay period in the month in which death
occurs.

          The base salary shall be reviewed annually by the WLR
Executive Compensation Committee to determine whether an increase
would be appropriate.

     4.   Bonus.  For each of the three (3) complete fiscal years of
WLR covered by this Employment Agreement, Keeler shall receive a cash
bonus calculated as follows:

               4.0 x ROE x Base Salary.

          ROE means the ratio of fiscal year profits (before taxes,
bonuses, and discretionary profit sharing) to beginning of year
equity.

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          The cash bonus shall be paid within seventy-five (75) days
of the last day of each fiscal year.

     5.   Deferred Compensation Plan.  Keeler shall be entitled to the
benefits set forth in the Deferred Compensation Agreement entered into
by Keeler and the Company dated as of the date hereof, a copy of which
is attached hereto as Exhibit A.

     6.   Continuing Health Care Coverage.  In addition to providing
health care insurance coverage for Keeler and his wife during the term
of this Agreement, consistent with coverage provided to other
executives, the Company shall provide health care insurance coverage
for Keeler and his wife for their respective lives, upon the
termination of his employment with the Company.

     7.   Miscellaneous Fringe Benefits.  During the term of this
Employment Agreement, WLR shall provide Keeler with all other fringe
benefits available to other executives of the company such as life
insurance, travel expense reimbursement and other fringes.  In
addition, WLR shall cover all expenses necessary for Keeler to
maintain professional status as a lawyer.

     8.   Vacation.  Keeler shall be entitled to four (4) weeks paid
vacation during each fiscal year of this Agreement.  Keeler will also
be entitled to all paid holidays as recognized by WLR.

     9.   Physical.  Keeler must complete an annual physical
examination during each year of the term of this Employment Agreement.

     10.  Change of Control Provision.  A Severance Agreement dated
February 4, 1994 provides for certain severance benefits to be paid
should a "Change of Control" occur as defined in that Agreement
(Severance Agreement).

     11.  Executive Succession Plan.  As part of his employment
responsibilities, Keeler agrees to work diligently with the Board of
Directors or any of its appropriate committees, to identify his
successor.  Keeler agrees to consider seriously an extension to this
Agreement if the Board determines additional time is needed to hire an
appropriate successor.

     12.  Early Termination of Employment Agreement.  If this
Agreement is (i) terminated by the Board of Directors of WLR prior to
the end of the three-year term for any reason other than death or
Disability as defined in the Severance Agreement, or (ii) terminated
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by Keeler based on his reasonable judgment that there has been an
adverse change in his status as an executive officer of WLR during the
third year of this Employment Agreement, all the benefits to be paid
to Keeler as set forth in this Employment Agreement shall continue to
be paid during the remaining term of the Agreement as if he were still
fully employed.

     13.  Complete Agreement.  This Agreement expresses the entire
understanding between the parties and may not be modified except in
writing signed by the parties.  This Agreement supercedes all previous
contracts of employment.

     14.  Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Virginia,
where it is made and to be performed.  It sets forth the entire
agreement between the parties concerning the subject matter thereof,
and any amendment or discharge will be made only in writing.  This
Agreement will bind and benefit the parties and their legal
representatives and successors.

          WITNESS the following signatures and seals.

          IN WITNESS WHEREOF, WLR Foods, Inc. has caused this writing
to be signed in its name and on its behalf as thereunto duly
authorized.

                    _/s/ James L. Keeker___________ (SEAL)
                         JAMES L. KEELER


                         WLR FOODS, INC.


                    By:  _/s/ Wliiam H. Groseclose, Jr._
                              WILLIAM H. GROSECLOSE, JR.


                    By:  _/s/Stephen W. Custer___________
                         STEPHEN W. CUSTER


                    By:  _/s/ Charles W. Wampler, Jr.____
                         CHARLES W. WAMPLER, JR.

                         Chairman of the Board
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Exhibit A

                    DEFERRED COMPENSATION AGREEMENT


          This Deferred Compensation Agreement made as of the 23rd day
of June, 1998 by and between WLR FOODS, INC. (WLR), a Virginia
corporation, and JAMES L. KEELER (Keeler) who agree and bind
themselves as follows:

     1.   Preamble.  WLR and Keeler entered into a Deferred
Compensation Agreement dated July 4, 1993, which Agreement was amended
on February 4, 1994, and on June 27, 1995, and restated on June 27,
1997.  WLR and Keeler desire to continue and extend such Agreement. 
The 1993 Deferred Compensation Agreement was preceded by a five-year
Deferred Compensation Agreement dated March 1, 1988.  

     2.   Annual Determination of Deferred Bonus Amount.  Within
seventy-five (75) days of the last day of each fiscal year, commencing
with the year ending June 27, 1998 and continuing until the last day
of the fiscal year ending in 2001, WLR shall determine the increase,
if any, in the book value of the shareholder's equity of WLR (Book
Value) as of the last day of each fiscal year (the Determination
Date).  The Bonus Fund accrued as of June 28, 1997 (including the 1997
fiscal year Deferred Bonus Amount), both deferred compensation and
accrued interest, totaled $1,481,185.25.

     3.   Book Value Determination.  WLR shall direct its independent
accounting firm to undertake the calculation of Book Value based on
consolidated balance sheets of WLR and its subsidiaries using
consistent practices and excluding any momentary increase in equity
arising out of the acquisition of other entities or the issuance of
additional stock, or any momentary decrease in equity arising out of
the sale of a subsidiary or division, or the redemption of outstanding
stock.  Generally, Book Value increases or decreases should arise as a
function of earnings, cash dividends and losses, if any, and not
significant corporate transactions such as acquisitions, divestitures,
redemptions and stock issuances.

     4.   Bonuses.  Each fiscal year of WLR commencing the year ending
June 27, 1998, and ending in 2001, WLR shall allocate, as of the
Determination Date, an amount equal to one and one-half percent (1-1/2%)
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of the increase, if any, in Book Value from the prior Determination
Date to the current Determination Date to a book reserve account (the
Bonus Fund).  The Bonus Fund shall accrue interest at a rate equal to
the Company's average cost of funds for permanent financing in effect
on the last day of the Company's fiscal year for the following fiscal
year, as adjusted from year to year (the Interest Rate).  Interest
shall compound monthly and shall accrue on the Bonus Fund until paid.

          The Bonus Fund in no event will decrease (for example, no
decrease in the Bonus Fund shall occur if in any fiscal year the Book
Value decreases) other than by reason of payment to Keeler as set
forth in Section 5 below.

          If Keeler voluntarily terminates his employment with WLR
during the first two fiscal years of this Agreement, then no bonus
amount shall be allocated for the year in which the termination of
employment occurs.  If for any other reason Keeler is not employed on
any Determination Date, then the allocation of the Bonus Fund shall be
prorated.

     5.   Payment.  The Bonus Fund shall be paid in lump sum or in
such installments as WLR may permit, as Keeler may elect from time to
time in writing delivered to WLR, commencing on January 2 of the year
following the calendar year in which Keeler retires as an employee of
WLR. Keeler may change his distribution election at any time prior to
the commencement of distribution of the Bonus Fund, provided that no
such election shall be effective until six (6) months following
receipt by WLR.  In the absence of an election to the contrary,
Keeler's Bonus Fund shall be payable in sixty (60) consecutive monthly
installments on the second day of each month, commencing on January 2
following the calendar year in which Keeler retires as an employee of
WLR.

          The installment payments shall be determined on each July 2
during the term of the payout by dividing the Bonus Fund, plus the
projected interest calculated by using the Interest Rate over the
remaining term of the payout, by the number of remaining installment
payments.  The last installment shall be adjusted for any increase or
decrease in the Interest Rate for the last payout year.

          If Keeler dies before the entire Bonus Fund has been
distributed, then WLR shall continue to pay the installments to his
designated beneficiary in accordance with the distribution election in
effect at the time of his death.
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          The term "beneficiary" shall mean any person or trust, or
combination thereof, last designated by Keeler in writing and filed
with WLR by Keeler during his lifetime on a Nomination of Beneficiary
form provided by WLR.  Any such designation or designations of
beneficiary shall be revocable at any time or times without the
consent of any beneficiary, by written designations of beneficiaries
made by Keeler and similarly filed with WLR during his lifetime.  In
the absence of or failure of designated beneficiaries, the personal
representative of Keeler shall be his beneficiary.

     6.   Financing of Benefits.  All benefits under the Plan shall be
provided out of the general assets of WLR at the time such benefits
are to be made.  No specific amounts, therefore, shall be set aside in
advance.

     7.   Not a Contract of Employment. This Agreement shall not be
deemed to constitute a contract of employment between the parties, nor
shall any provision restrict the right of WLR to discharge Keeler, or
restrict the right of Keeler to terminate his employment.

     8.   Restriction on Alienation.  It is agreed that neither Keeler
nor any other payee hereunder shall have any right to commute, sell,
assign, transfer or otherwise convey the right to receive any payments
hereunder, which payments and the right thereto are expressly declared
to be nonassignable and nontransferable, and in the event of any
attempted assignment or transfer, this Agreement shall terminate and
WLR shall have no further liability hereunder.

     9.   Change of Control.  The Company has entered into a Severance
Agreement with Keeler dated February 4, 1994, a copy of which is
attached hereto as Exhibit A.  Should a "Change of Control" occur as
defined in the Severance Agreement then all the Bonus Fund and funds,
if any, deferred by Keeler in the Company's 1995 Nonqualified Deferred
Compensation Agreement shall be transferred to the Trust dated October
24, 1995, entered into by and between the Company and First Union
National Bank of Virginia, a copy of which Trust is attached hereto as
Exhibit B.

     10.  Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Virginia,
where it is made and to be performed.  It sets forth the entire
agreement between the parties concerning the subject matter thereof,
and any amendment or discharge will be made only in writing.  This
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Agreement will bind and benefit the parties and their legal
representatives and successors.

          This Agreement shall be executed in duplicate, each copy of
which when so executed and delivered shall be an original, but both
copies shall, together, constitute one and the same instrument.
          WITNESS the following signature and seal.

          IN WITNESS WHEREOF, WLR Foods, Inc. has caused this writing
to be signed in its name and on its behalf as thereunto duly
authorized.

                    _/s/ James L. Keeler_______ (SEAL)
                         JAMES L. KEELER

                         WLR FOODS, INC.

               By:  _/s/ William H. Groseclose, Jr._
                         WILLIAM H. GROSECLOSE

               By:  _/s/ Stephen W. Custer__________
                         STEPHEN W. CUSTER

               Members of the Executive Compensation Committee

               By:  _/s/ Charles W. Wampler, Jr.____
                         CHARLES W. WAMPLER, JR.

                         Chairman of the Board
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