<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
ENVIRODYNE INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
N/A
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
[LOGO] Suite 190
701 Harger Road
Oak Brook, Illinois 60521
(708) 575-2400
Fax: (708) 571-0959
April 7, 1995
Dear Stockholder:
You are cordially invited to attend the 1995 Annual Meeting of Stockholders
of Envirodyne Industries, Inc., which will be held on Wednesday, May 10, 1995,
at 9:00 a.m. local time, at Bank of America Illinois, 231 South LaSalle Street,
21st Floor, Chicago, Illinois. In addition to the matters to be acted upon at
the meeting, which are described in the attached Notice of Annual Meeting of
Stockholders and Proxy Statement, a report will be given with respect to the
operations of Envirodyne.
Whether or not you plan to attend the meeting, please complete, date, sign
and return the enclosed proxy card in the accompanying envelope as promptly as
possible to ensure that your shares are represented and voted in accordance with
your wishes.
Very truly yours,
[SIG]
DONALD P. KELLY
Chairman of the Board, President
and Chief Executive Officer
<PAGE> 3
ENVIRODYNE INDUSTRIES, INC.
701 HARGER ROAD, SUITE 190
OAK BROOK, ILLINOIS 60521
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 10, 1995
To the Stockholders of Envirodyne Industries, Inc.:
NOTICE IS HEREBY GIVEN that the 1995 Annual Meeting of Stockholders (the
"Meeting") of Envirodyne Industries, Inc., a Delaware corporation ("Envirodyne"
or the "Company"), will be held on Wednesday, May 10, 1995, at 9:00 a.m. local
time, at Bank of America Illinois, 231 South LaSalle Street, 21st Floor,
Chicago, Illinois, for the following purposes:
(1) To elect eight directors to serve until the 1996 Annual Meeting of
Stockholders and until their successors are duly elected and qualified;
(2) To ratify the Company's 1993 Stock Option Plan;
(3) To ratify the appointment of Coopers & Lybrand L.L.P. as the Company's
independent accountants for the fiscal year ended December 28, 1995;
and
(4) To transact such other business as may properly come before the Meeting
or any adjournment or postponement thereof.
The Board of Directors of the Company has set the close of business on
March 22, 1995 as the record date (the "Record Date") for the Meeting. Only
holders of Envirodyne's common stock, $.01 par value, at the close of business
on the Record Date are entitled to notice of, and to vote at, the Meeting. The
stock transfer books of the Company will not be closed following the Record
Date. For a period of ten days prior to the Meeting, a complete list of
stockholders entitled to vote at the Meeting will be available for examination
at the Company's offices during normal business hours by any Envirodyne
stockholder for purposes related to the Meeting.
You are cordially invited to attend the Meeting. Whether or not you plan to
attend the Meeting in person, please complete, date and sign the accompanying
proxy card and return it promptly in the enclosed envelope to ensure that your
shares are represented and voted in accordance with your wishes. You may revoke
your proxy by following the procedures set forth in the accompanying Proxy
Statement. If you so choose, you may still vote in person at the Meeting even
though you previously submitted your proxy.
By order of the Board of Directors
[SIG TO COME]
STEPHEN M. SCHUSTER
Vice President, Secretary and
General Counsel
Oak Brook, Illinois
April 7, 1995
<PAGE> 4
ENVIRODYNE INDUSTRIES, INC.
701 HARGER ROAD, SUITE 190
OAK BROOK, ILLINOIS 60521
---------------------
PROXY STATEMENT
---------------------
GENERAL INFORMATION
This Proxy Statement and the accompanying proxy card are being furnished in
connection with the solicitation of proxies by and on behalf of the Board of
Directors (the "Board of Directors") of Envirodyne Industries, Inc., a Delaware
corporation ("Envirodyne" or the "Company"), for use at the 1995 Annual Meeting
of Stockholders of the Company to be held on Wednesday, May 10, 1995, at 9:00
a.m. local time, at Bank of America Illinois, 231 South LaSalle Street, 21st
Floor, Chicago, Illinois, and at any adjournment or postponement thereof (the
"Meeting"). This Proxy Statement and the accompanying proxy card will be mailed
to the holders of Envirodyne's common stock, $.01 par value (the "Common
Stock"), on or about April 7, 1995.
PURPOSE OF THE MEETING
Stockholders of the Company represented at the Meeting will consider and
vote upon (i) the election of eight directors to serve until the 1996 Annual
Meeting of Stockholders of the Company and until their successors are duly
elected and qualified, (ii) the ratification of the Company's 1993 Stock Option
Plan, (iii) the ratification of the appointment of Coopers & Lybrand L.L.P. as
the Company's independent accountants for the fiscal year ended December 28,
1995, and (iv) such other business as may properly come before the Meeting. The
Company is not aware of any other business to be presented for consideration at
the Meeting.
VOTING RIGHTS AND QUORUM
The record date set by the Board of Directors for the determination of
stockholders entitled to notice of, and to vote at, the Meeting was the close of
business on March 22, 1995 (the "Record Date"). Only holders of record of Common
Stock at the close of business on the Record Date are entitled to vote at the
Meeting. As of the Record Date, there were 13,515,000 shares of Common Stock
issued and outstanding. The presence, in person or by proxy, of the holders of a
majority of the shares of Common Stock entitled to vote at the Meeting is
necessary to constitute a quorum for the conduct of business at the Meeting.
A proxy submitted by a stockholder may indicate that all or a portion of
the shares represented by such proxy are not being voted by such stockholder
with respect to a particular matter. This could occur, for example, when a
broker is not permitted to vote stock held in street name on certain matters in
the absence of instructions from the beneficial owner of the stock. The shares
subject to any such proxy which are not being voted with respect to a particular
matter (the "non-voted shares") will be considered shares not present and
entitled to vote on such matter, although such shares may be considered present
and entitled to vote for other purposes and will count for purposes of
determining the presence of a quorum.
In the election of directors, each share is entitled to cast one vote for
each director to be elected; cumulative voting is not permitted. For all matters
except the election of directors, each share is entitled to one vote. Directors
are elected by a plurality of the votes cast by the holders of shares of Common
Stock at a meeting at which a quorum is present. Therefore, withholding
authority to vote for a director and non-voted shares with respect to the
election of directors will not affect the outcome of the election of directors.
Each of the other proposals requires the affirmative vote of a majority of the
votes cast. An abstention with respect to each such matter has the legal effect
of a vote against such matter, and non-voted shares with respect to each such
matter will not affect the determination of whether such matter is approved.
<PAGE> 5
PROXY SOLICITATION
This proxy solicitation is being made by and on behalf of the Board of
Directors. The cost of soliciting proxies and preparing the proxy materials will
be borne by the Company. In order to ensure that sufficient shares of Common
Stock are represented at the meeting, the Company has retained the services of
Georgeson & Co., Inc. to assist it in soliciting proxies for a fee of $5,000
plus reimbursement of out-of-pocket expenses. In addition, the Company will
request securities brokers, custodians, nominees and fiduciaries to forward
solicitation material to the beneficial owners of stock held of record by them
and will reimburse them for their reasonable out-of-pocket expenses in
forwarding such solicitation material. In addition to solicitation of proxies by
Georgeson & Co., Inc., proxies may be solicited personally or by telephone or
telegram by directors, officers and employees of the Company or its subsidiaries
without additional compensation to them.
The Board of Directors has selected Donald P. Kelly and F. Edward Gustafson
to act as proxies with full power of substitution. Unless otherwise directed in
the accompanying proxy, the persons named therein will vote FOR the election of
the eight director nominees listed below, FOR the ratification of the 1993 Stock
Option Plan and FOR the ratification of the appointment of Coopers & Lybrand
L.L.P. as the Company's independent accountants for the fiscal year ended
December 28, 1995. As to any other business which may properly come before the
Meeting, they will vote in accordance with their best judgment, although the
Company does not presently know of any such other business. Any stockholder
executing a proxy may revoke the proxy at any time before it is voted by filing
with the Secretary of the Company a revoking instrument or a duly executed proxy
bearing a later date. Any stockholder may attend the Meeting and vote in person
whether or not the stockholder has previously given a proxy.
ELECTION OF DIRECTORS
The entire Board of Directors of the Company will be elected to hold office
until the 1996 Annual Meeting of Stockholders of the Company and until their
successors are duly elected and qualified. All of the nominees other than Avram
A. Glazer and Malcolm I. Glazer are currently directors of the Company whose
term will expire at the Meeting and who have agreed to serve if elected. Avram
A. Glazer and Malcolm I. Glazer have been nominated by the Board of Directors
and have agreed to serve if elected. If any nominee is not available for
election at the Meeting, the proxy will be voted for an alternate nominee to be
selected by the Board of Directors (unless the stockholder executing such proxy
withholds authority to vote for the election of directors) or the Board of
Directors may elect not to fill the vacancy and to reduce the number of
directors. The Board of Directors believes that all of its present nominees will
be available for election at the Meeting and will serve if elected.
2
<PAGE> 6
Nominees for Director. The following information has been provided by the
respective nominees for election to the Board of Directors.
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION
- ------------------------------ --- ----------------------------------------------------
<S> <C> <C>
Robert N. Dangremond 52 Mr. Dangremond has been a principal with Jay Alix &
Associates, a consulting and accounting firm
specializing in corporate restructurings and
turnaround activities, since August 1989. Mr.
Dangremond was Chairman of the Board, President and
Chief Executive Officer of AM International, Inc., a
provider of graphics arts equipment, supplies and
services, from February 1993 to September 1994. From
1981 through 1989, Mr. Dangremond was the Chief
Financial Officer and Treasurer of the Leach &
Garner Company. Mr. Dangremond is also a director of
Standard Brands Paint Company, a manufacturer and
retailer of paints and related items, Barry's
Jewelers, a jewelry retailer, and AM International,
Inc. Mr. Dangremond has served as a director of the
Company since 1993.
Avram A. Glazer 34 Mr. Avram A. Glazer has been employed by, and worked
on behalf of, Malcolm I. Glazer and a number of
entities owned and controlled by Malcolm I. Glazer,
for more than the past nine years, with his
principal responsibilities including identifying,
implementing, monitoring and disposing of Malcolm I.
Glazer's investment interests, including serving as
a Vice President of First Allied Corporation ("First
Allied"), an investment company, since 1985. He has
served as the President and Chief Executive Officer
of Zapata Corporation ("Zapata"), a natural gas
company, since March 1995. He is also a director of
Zapata. He also serves as a director of Houlihan's
Restaurant Group, Inc. ("Houlihan's"), a restaurant
holding company, and Specialty Equipment Companies,
Inc. ("Specialty"), a restaurant equipment
manufacturer. Avram A. Glazer is the son of Malcolm
I. Glazer, who is a nominee for election to the
Board of Directors.
Malcolm I. Glazer 66 Mr. Malcolm I. Glazer has been a self-employed
private investor, whose diversified portfolio
consists of investments in television broadcasting,
restaurants, health care, banking, real estate,
stock and corporate bonds, for more than the past
nine years. He has been President and Chief
Executive Officer of First Allied since 1984. He is
Chairman of the Board of Zapata and Chairman of the
Board of Houlihan's. He also serves as a director of
Specialty. Malcolm I. Glazer is the father of Avram
A. Glazer, who is a nominee for election to the
Board of Directors.
</TABLE>
3
<PAGE> 7
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION
- ------------------------------ --- ----------------------------------------------------
<S> <C> <C>
F. Edward Gustafson 53 Mr. Gustafson has been Executive Vice President and
Chief Operating Officer of the Company since May
1989. Mr. Gustafson was President of Viskase
Corporation, a wholly-owned subsidiary of the
Company, from February 1990 to August 1994. Mr.
Gustafson has also served as Executive Vice
President and Chief Operating Officer of D.P. Kelly
& Associates, L.P. ("DPK"), a management services
and private investment firm, since November 1988.
Mr. Gustafson previously held the positions of Vice
President of Beatrice Companies, Inc.; President of
E-II Food Specialties Inc.; Executive Vice President
of Beatrice U.S. Food Inc.; and President of the
Consumer Healthcare Division of Miles Inc. Mr.
Gustafson has served as a director of the Company
since 1993.
Michael E. Heisley 57 Mr. Heisley has for more than five years been the
Chief Executive Officer of Heico Acquisitions,
through which Mr. Heisley has interests in various
manufacturing companies. Mr. Heisley is also a
director of Capsonic Group, Inc.; Pettibone
Corporation; Heico, Inc.; Davis Wire Corp.; Tom's
Foods, Inc.; Robertson CECO, Inc.; and Nutri/System,
Inc. Mr. Heisley has served as a director of the
Company since 1993.
Donald P. Kelly 73 Mr. Kelly has been Chairman of the Board, President
and Chief Executive Officer of the Company since May
1989. Mr. Kelly has also served as President and
Chief Executive Officer of DPK since November 1988.
Previously, Mr. Kelly was Chairman of Beatrice
Company; Chairman and Chief Executive Officer of
E-II Holdings Inc.; Chairman and Chief Executive
Officer of BCI Holdings Corporation; President of
Kelly, Briggs & Associates; and Chairman, President
and Chief Executive Officer of Esmark, Inc. Mr.
Kelly has served as a director of the Company since
1989.
Gregory R. Page 43 Mr. Page has been President of North American Beef
Operations of Cargill, Inc., a multi-national trader
and processor of foodstuffs and other commodities,
since February 1992, and has prior thereto held
various other positions with Cargill, Inc. Mr. Page
has served as a director of the Company since 1993.
Mark D. Senkpiel 42 Mr. Senkpiel has for more than five years been
Investment Director of the Investment Management
Division of Allstate Life Insurance Company. Mr.
Senkpiel has served as a director of the Company
since 1993.
</TABLE>
On January 7, 1993, Envirodyne and its major domestic subsidiaries filed
petitions under Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy
Code"). On December 31, 1993, Envirodyne and the debtor subsidiaries consummated
a plan of reorganization and emerged from bankruptcy.
Mr. Dangremond was appointed Chairman of the Board, President and Chief
Executive Officer of AM International, Inc. ("AMI") in connection with
turnaround consulting services provided to AMI by Jay Alix & Associates, of
which Mr. Dangremond is a principal. On May 17, 1993, AMI filed a petition under
4
<PAGE> 8
Chapter 11 of the Bankruptcy Code. On September 29, 1993, a plan of
reorganization was confirmed with respect to AMI.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held seven meetings and took action by written
consent in lieu of meetings on four occasions in 1994. During 1994, each of the
directors participated in at least 75% of the total number of such meetings of
the Board of Directors and meetings of committees of the Board of Directors on
which he served.
The Board of Directors has established the following standing committees:
Audit Committee. The principal responsibilities and authority of the Audit
Committee are to review and recommend to the Board of Directors the selection of
the Company's independent accountants; to review with the independent
accountants the scope and results of the annual audit engagement and the system
of internal accounting controls; and to direct and supervise special audit
inquiries. The current members of the Audit Committee are Michael E. Heisley,
Chairman, and Mark D. Senkpiel. The Audit Committee held four meetings in 1994.
Compensation and Nominating Committee. The principal responsibilities and
authority of the Compensation and Nominating Committee are to review and approve
certain matters involving executive compensation; to review and approve grants
of stock options and stock appreciation rights under the Company's incentive
plans; to review and recommend adoption of or revisions to compensation plans
and policies; and to review and make recommendations to the Board of Directors
regarding such matters as the size and composition of the Board of Directors,
criteria for director nominations, director candidates and such other related
matters as the Board of Directors may request from time to time. The
Compensation and Nominating Committee will consider director nominations by the
Company's stockholders. Any such nomination should be addressed to: Corporate
Secretary, Envirodyne Industries, Inc., 701 Harger Road, Suite 190, Oak Brook,
Illinois 60521. The current members of the Compensation and Nominating Committee
are Robert N. Dangremond, Chairman, and Gregory R. Page. The Compensation and
Nominating Committee held two meetings in 1994.
The Board of Directors may from time to time establish other committees to
assist it in the discharge of its responsibilities.
SECURITY OWNERSHIP
The following table and notes set forth as of April 5, 1995 the beneficial
ownership, as defined by the regulations of the Securities and Exchange
Commission (the "Commission"), of Common Stock held by (a) each person or group
of persons known to the Company to beneficially own more than 5% of the
outstanding shares of Common Stock, (b) each director and director nominee of
the Company, (c) each executive officer of the Company listed in the Summary
Compensation Table below and (d) all executive officers and directors of the
Company as a group. All information is taken from or based upon ownership
filings made by such persons with the Commission or upon information provided by
such persons to the Company.
<TABLE>
<CAPTION>
AMOUNT AND
NAME AND ADDRESS OF NATURE OF BENEFICIAL PERCENT
BENEFICIAL OWNER OWNERSHIP OF CLASS
- ----------------------------------------------- -------------------- --------
<S> <C> <C>
Malcolm I. Glazer.............................. 4,189,298(1) 31.0%
The Malcolm I. Glazer Trust
1482 South Ocean Boulevard
Palm Beach, Florida 33480
IDS Financial Corporation...................... 1,514,825(2) 11.2%
IDS Tower 10
Minneapolis, Minnesota 55440
</TABLE>
5
<PAGE> 9
<TABLE>
<CAPTION>
AMOUNT AND
NAME AND ADDRESS OF NATURE OF BENEFICIAL PERCENT
BENEFICIAL OWNER OWNERSHIP OF CLASS
- ----------------------------------------------- -------------------- --------
<S> <C> <C>
Cargill Financial Services Corporation......... 1,363,343(3) 10.1%
6000 Clearwater Drive
Minnetonka, Minnesota 55343
Donald P. Kelly................................ 1,437,997(4)(5) 10.5%
701 Harger Road, Suite 190
Oak Brook, Illinois 60521
James D. Bennett............................... 973,529(6) 7.2%
Restructuring Capital Associates L.P.
450 Park Avenue
New York, New York 10022
F. Edward Gustafson............................ 717,398(5)(7) 5.3%
701 Harger Road, Suite 190
Oak Brook, Illinois 60521
J. S. Corcoran................................. 685,084(5)(8) 5.1%
701 Harger Road, Suite 190
Oak Brook, Illinois 60521
Robert N. Dangremond........................... 0 --
Avram A. Glazer................................ 0 --
Michael E. Heisley............................. 0 --
Gregory R. Page................................ 2,000 --
Stephen M. Schuster............................ 17,094(9) --
Mark D. Senkpiel............................... 2,000 --
All directors and executive officers of the
Company as a group (8 persons)............... 1,495,451(4)(5)(6)(7)(8)(9)(10) 11.0%
</TABLE>
- ---------------
Footnotes:
(1) The shares are owned by the Malcolm I. Glazer Trust (the "Glazer Trust"),
with respect to which Mr. Glazer is the sole trustee and, during his
lifetime, the sole beneficiary. Pursuant to Amendment No. 4 dated February
9, 1995 ("Amendment No. 4") to Schedule 13D, Mr. Glazer and the Glazer
Trust reported that the Glazer Trust had sold 4,189,298 shares of Common
Stock to Lazard Freres & Co. ("Lazard"), but that Lazard representatives
had contacted a representative of the Glazer Trust and suggested that
Lazard intended to breach its agreement to accept delivery of and pay for
the shares. Amendment No. 4 further stated that the Glazer Trust had
informed Lazard that it expected Lazard to comply strictly with its
contractual obligation to purchase the shares. Subsequent negotiations
among the parties have not led to a closing of the purchase and sale, and
although the Glazer Trust is reserving its rights with respect to the
agreement, it is not presently seeking specific enforcement of the purchase
and sale.
(2) American Express Company ("American Express"), whose address is American
Express Tower, World Financial Center, New York, New York 10285, is the
parent of IDS Financial Corporation ("IDS Financial") and may therefore be
deemed to be the beneficial owner of securities owned by IDS Financial.
American Express disclaims ownership of the Common Stock owned by IDS
Financial. The ownership indicated includes 727,116 shares owned by IDS
Extra Income Fund, Inc., whose address is IDS Tower 10, Minneapolis,
Minnesota 55440. IDS Extra Income Fund, Inc. is advised by IDS Financial.
(3) The ownership indicated includes 931,678 shares owned by Cargill Financial
Services Corporation ("CFSC"), 318,053 shares owned by Minnetonka Limited
Fund, L.P. ("MLFLP") and 113,612 shares
6
<PAGE> 10
owned by GAM-CARGILL Minnetonka Fund Inc. ("GAM"). A subsidiary of CFSC
acts as the general partner of MLFLP and as the investment advisor to GAM.
(4) The ownership indicated includes 181,266 shares owned by Mr. Kelly directly
and 462,012 shares owned by 701 Partners L.P., an Illinois limited
partnership of which Mr. Kelly is the general partner. The address of 701
Partners L.P. is 701 Harger Road, Suite 190, Oak Brook, Illinois 60521. 701
Partners also owns 111,658 warrants ("Warrants") to purchase Common Stock
at an exercise price of $17.25 per share, which are assumed to have been
exercised for purposes of disclosing the ownership indicated.
(5) The ownership indicated includes 12,434 shares owned by D.P. Kelly &
Associates, L.P. ("DPK") of which Messrs. Corcoran, Gustafson and Kelly are
principals and officers. The general partner of DPK is C&G Management
Company, Inc. ("C&G Management"), which is owned by Messrs. Corcoran,
Gustafson and Kelly. The address of DPK and C&G Management is 701 Harger
Road, Suite 190, Oak Brook, Illinois 60521. DPK also owns 4,105 Warrants,
which are assumed to have been exercised for purposes of disclosing the
ownership indicated. The ownership indicated includes 666,522 shares owned
by Volk Enterprises, Inc. ("Volk"), whose address is 1230-1232 South
Avenue, Turlock, California 95380. Volk is controlled by Volk Holdings L.P.
("Volk Holdings"), whose general partner is Wexford Partners I L.P.
("Wexford Partners"). The general partner of Wexford Partners is Wexford
Corporation ("Wexford Corp."), which is owned by Messrs. Corcoran,
Gustafson and Kelly. The address for each of Volk Holdings, Wexford
Partners and Wexford Corp. is 701 Harger Road, Suite 190, Oak Brook,
Illinois 60521.
(6) The ownership indicated includes 738,184 shares owned by Bennett
Restructuring Fund, L.P., whose address is 450 Park Avenue, New York, New
York 10022, and 235,345 shares held by managed accounts over which Mr.
Bennett and Restructuring Capital Associates, L.P. ("RCA") have investment
discretion. RCA is the general partner of Bennett Restructuring Fund, L.P.
The general partner of RCA is Bennett Capital Corporation, of which Mr.
Bennett is the sole shareholder.
(7) The ownership indicated includes 19,224 shares owned directly by Mr.
Gustafson and 3,619 shares owned by Mr. Gustafson's spouse. Mr. Gustafson
also owns 11,494 Warrants, which are assumed to have been exercised for
purposes of disclosing the ownership indicated.
(8) The ownership indicated includes 1,367 shares owned directly by Mr.
Corcoran. Mr. Corcoran also owns 656 Warrants, which are assumed to have
been exercised for purposes of disclosing the ownership indicated.
(9) The ownership indicated includes 15,094 shares owned directly by Mr.
Schuster and 2,000 shares owned by Mr. Schuster's spouse. Mr. Schuster has
been granted 22,850 options under the Company's 1993 Stock Option Plan. The
grant is conditioned upon stockholder approval of the 1993 Stock Option
Plan, and the shares underlying the option grant have not been included in
the ownership indicated.
(10) The ownership indicated does not include options to purchase an aggregate
of 12,000 shares of Common Stock which, subject to ratification of the 1993
Stock Option Plan by the stockholders, will be granted to non-employee
directors as of the date of the Meeting.
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's officers, directors and persons who own more than 10% of
the Company's outstanding Common Stock to file initial reports of ownership and
reports of changes in ownership of Common Stock with the Commission. The initial
reports of ownership of the Common Stock for the Company's officers and
directors were filed late; however, based upon a review of relevant filings and
written representations from the Company's officers and directors, the Company
believes that all subsequent required filings by such persons have been made on
a timely basis. The Company believes that IDS Financial Corporation and its
parent American Express Company have not filed reports of ownership pursuant to
Section 16(a) of the Exchange Act.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Compensation of Directors. Each director who is not an officer of the
Company received an annual retainer of $20,000 in 1994 and a fee of $1,000 for
each attended meeting of the Board of Directors. Chairmen of committees of the
Board of Directors received an annual retainer of $1,500 in 1994. Directors also
received
7
<PAGE> 11
a fee for each attended meeting of a committee of the Board of Directors of
$1,000 ($500 in the case of committee meetings occurring immediately before or
after meetings of the full Board of Directors). Directors who are officers of
the Company do not receive compensation in their capacity as members of the
Board of Directors. Subject to ratification of the Company's 1993 Stock Option
Plan by the stockholders, each non-employee director of the Company will be
granted options to purchase shares of Common Stock in accordance with the terms
of such plan. All options granted will constitute non-qualified stock options.
See "Ratification of 1993 Stock Option Plan" for further discussion.
Compensation Committee Interlocks and Insider Participation. The
Compensation and Nominating Committee of the Board of Directors consists of
Messrs. Dangremond and Page, each of whom is a non-employee director of the
Company. Mr. Page is the President of North American Beef Operations of Cargill,
Inc. In fiscal 1994, Viskase Corporation, a wholly-owned subsidiary of the
Company, had sales of $14,779,000 made in the ordinary course and on
arm's-length terms to Cargill, Inc. and its affiliates. Cargill Financial
Services Corporation is the beneficial owner of 10.1% of the Company's
outstanding Common Stock.
Summary of Cash and Certain Other Compensation of Executive Officers. The
Summary Compensation Table below provides certain summary information concerning
cash compensation paid by the Company during 1994, 1993 and 1992 for services
rendered by the Company's Chief Executive Officer and each of the other
executive officers of the Company whose total annual salary and bonus exceeded
$100,000 in 1994. For additional information, including a description of the
Amended and Restated Management Services Agreement dated as of December 31, 1993
between the Company and DPK, see "Certain Relationships and Related
Transactions."
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
------------------------------ ---------------------
OTHER
ANNUAL ALL OTHER
COMPEN- COMPEN-
NAME AND SALARY BONUS SATION OPTIONS SATION
PRINCIPAL POSITION YEAR ($) ($) $(1) (#)(2) ($)(3)
- ----------------------------------- ---- ------- ------ ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Donald P. Kelly 1994 450,000 -- 48,125 -- 472
Chairman of the Board, President 1993 450,000 -- -- -- 472
and Chief Executive Officer 1992 450,000 -- 202,771 -- 469
F. Edward Gustafson 1994 390,000 -- 61,496 -- 16,203
Executive Vice President and 1993 390,000 -- 110,370 -- 10,976
Chief Operating Officer 1992 390,000 -- 140,503 -- 9,724
J. S. Corcoran 1994 390,000 -- 78,072 -- 472
Executive Vice President 1993 390,000 -- 85,186 -- 472
and Chief Financial Officer 1992 390,000 -- 81,287 -- 469
Stephen M. Schuster 1994 151,375 63,261 -- 22,850 6,197
Vice President, Secretary 1993 144,750 47,406 -- -- 6,320
and General Counsel(4) 1992 138,125 46,437 -- -- 6,136
</TABLE>
- ---------------
Footnotes:
(1) In 1994 and 1992 Mr. Kelly was reimbursed for personal travel expenses in
the amounts of $40,500 and $193,579, respectively. In 1994 and 1993 Mr.
Gustafson was reimbursed $33,503 and $31,543, respectively, for payment of
income taxes (gross ups) on certain benefits and in 1993 had personal use
of a Company auto at an aggregate incremental cost to the Company of
$50,000. In 1992 Mr. Gustafson was reimbursed for personal travel expenses
in the amount of $86,291. In 1994 Mr. Corcoran was reimbursed $30,092 for
payment of income taxes (gross ups) on certain benefits. In 1994 and 1993
Mr. Corcoran had personal use of a Company auto at an aggregate incremental
cost to the Company of $30,861 and $33,000, respectively. Mr. Corcoran was
reimbursed for personal travel expenses in the amounts of $30,780 and
$33,870 in 1993 and 1992, respectively.
(2) Incentive stock options were granted on May 27, 1994 under the 1993 Stock
Option Plan. The grant is conditioned upon the approval of the 1993 Stock
Option Plan by the Company's stockholders.
8
<PAGE> 12
(3) All Other Compensation consists primarily of the Company's contributions
pursuant to defined contribution plans. In 1994, Mr. Gustafson and Mr.
Schuster received $12,750 and $5,963, respectively, with respect to such
Company contributions.
(4) Mr. Schuster is eligible for payments under the Envirodyne Management
Incentive Plan. Bonus payments are determined based upon the Company's
overall financial performance and the individual's performance. Cash
bonuses under the Management Incentive Plan are earned with respect to the
year indicated and paid in the following year.
Stock Option Grants. The following table provides information concerning
the grant of stock options to Mr. Schuster under the Company's 1993 Stock Option
Plan during fiscal 1994. Messrs. Kelly, Gustafson and Corcoran are not eligible
to participate in the 1993 Stock Option Plan. No stock appreciation rights
("SARs") have been granted under the 1993 Stock Option Plan.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERCENT OF POTENTIAL REALIZABLE
NUMBER OF TOTAL VALUE AT ASSUMED
SECURITIES OPTIONS ANNUAL RATES OF STOCK
UNDERLYING GRANTED TO PRICE APPRECIATION
OPTIONS EMPLOYEES EXERCISE OR BASE FOR OPTION TERM(3)
GRANTED IN FISCAL PRICE EXPIRATION ---------------------
NAME (#)(1) YEAR ($/SHARE)(2) DATE 5%($) 10%($)
- ------------------------------- ---------- ---------- ---------------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Stephen M. Schuster............ 22,850 5.7% 5.0625 05/27/04 72,749 184,361
</TABLE>
- ---------------
(1) This grant provided that one-third of the options would become exercisable
on the first anniversary of the date of grant and an additional one-third
of the options would become exercisable on the second and third
anniversaries, respectively, of the date of grant, subject to the
acceleration of exercisability upon the occurrence of certain events. Such
an acceleration event occurred in November 1994. See "Ratification of 1993
Stock Option Plan." The grant is conditioned upon the approval of the 1993
Stock Option Plan by the Company's stockholders.
(2) Exercise price is equal to the market value of the Common Stock on the
grant date, calculated as the average of the closing bid and asked
prices on such date as reported on the National Association of Securities
Dealers Automated Quotation System.
(3) The potential realizable value is based on the term of the option at the
date of grant (10 years). It is calculated by assuming that the stock price
on the date of grant appreciates at the indicated annual rate, compounded
annually for the entire term, and that the option is exercised and sold on
the last day of the option term for the appreciated stock price. These
amounts represent certain assumed rates of appreciation only. Actual gains,
if any, on stock option exercises and on the sale of shares of Common Stock
acquired upon exercise are dependent on the future performance of the
Common Stock and overall stock market conditions. There can be no assurance
that the amounts reflected in this table will be achieved.
Stock Option Exercises and Holdings. The following table provides
information concerning the exercise of options by Mr. Schuster during the last
fiscal year and the value of unexercised options held as of December 29, 1994.
Messrs. Kelly, Gustafson and Corcoran are not eligible to participate in the
1993 Stock Option Plan. No SARs have been granted under the 1993 Stock Option
Plan.
AGGREGATED OPTION EXERCISES IN 1994 AND DECEMBER 29, 1994 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING VALUE OF
SHARES UNEXERCISED UNEXERCISED
ACQUIRED OPTIONS AT OPTIONS AT
ON VALUE 12/29/94(#) 12/29/94($)
EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
- ----------------------------------------------- -------- -------- ------------- -------------
<S> <C> <C> <C> <C>
Stephen M. Schuster............................ -- -- -0-/22,850 -0-/-0-
</TABLE>
9
<PAGE> 13
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation and Nominating Committee (the "Committee") of the
Company's Board of Directors presents the following report on executive
compensation. The Committee is composed of directors who are neither officers
nor employees of the Company, its subsidiaries or affiliates and who are not
eligible to participate in any of the employee benefit plans administered by it.
The compensation of Messrs. Kelly, Gustafson and Corcoran is governed by
the terms of the Amended and Restated Management Services Agreement (the
"Amended Management Services Agreement") dated as of December 31, 1993 between
the Company and DPK, which provides for the annual payment by the Company to DPK
of $2,000,000, payable in management fees and salaries, and the reimbursement of
expenses. The salaries disclosed in the Summary Compensation Table above
received by Messrs. Kelly, Gustafson and Corcoran represent the portion of the
$2,000,000 payment elected by Messrs. Kelly, Gustafson and Corcoran to be taken
in the form of salaries. The allocation of salaries among Messrs. Kelly,
Gustafson and Corcoran has been designated jointly by Messrs. Kelly, Gustafson
and Corcoran. The overall $2,000,000 was established in the context of the
Company's plan of reorganization ("Plan of Reorganization"), consummated on
December 31, 1993, under Chapter 11 of the Bankruptcy Code through negotiations
between the principals of DPK and representatives of the Official Bondholder
Committee in the Company's bankruptcy case. For additional information on the
Amended Management Services Agreement, see "Certain Relationships and Related
Transactions." For other executives, the Committee periodically evaluates the
base compensation and bonus of such executives in light of generally prevailing
compensation levels of similarly situated companies known to Committee members
through their business experience and principal occupations.
In addition to base salary, the principal components of the Company's total
compensation program include annual cash bonuses under the Management Incentive
Plan based primarily on the financial performance of the Company's operating
units and secondarily on individual performance, awards under the Long-Term
Growth Plan which consist of cash awards that vest if the employee remains
employed by the Company for a period of two years following the year for which
the award is granted, and grants of incentive awards in the form of stock
options under the Company's 1993 Stock Option Plan. Messrs. Kelly, Gustafson and
Corcoran do not participate in these plans. In addition, employees receiving
incentive awards under the 1993 Stock Option Plan are generally not eligible to
participate in the Long-Term Growth Plan. Grants made by the Committee in 1994
are reported in the Option Grants In Last Fiscal Year table set forth above.
Compensation and Nominating
Committee
ROBERT N. DANGREMOND (Chairman)
GREGORY R. PAGE
10
<PAGE> 14
PERFORMANCE GRAPH
Set forth below is a graph comparing the quarterly change in the cumulative
total stockholder return of the Common Stock against the cumulative total return
of the NASDAQ Non-Financial Services Index and a peer group of plastic film
manufacturing or food packaging companies consisting of A.E.P. Industries, Inc.,
Atlantis Group, Inc., Ball Corporation, Bemis Company, Inc., Carlisle Plastics
Inc., Liqui-Box Corp., Sealed Air Corp. and Sealright Co., Inc. for the period
commencing December 31, 1993, which, for financial reporting purposes, was the
date that the Common Stock was distributed to stockholders pursuant to
Envirodyne's Plan of Reorganization, and ending December 29, 1994. The graph
assumes an investment of $100 on December 31, 1993 and the reinvestment of
dividends and other distributions to stockholders.
CUMULATIVE TOTAL RETURN
BASED ON REINVESTMENT OF $100 BEGINNING DECEMBER 31, 1993
<TABLE>
<CAPTION>
NASDAQ
ENVIRODYNE NON-FINAN-
MEASUREMENT PERIOD INDUSTRIES, CIAL COMPA- PEER GR OUP
(FISCAL YEAR COVERED) INC. NIES INDEX INDEX
<S> <C> <C> <C>
DEC-93 100 100 100
MAR-94 68 95 95
JUN-94 42 88 94
SEP-94 55 97 103
DEC-94 39 96 108
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
DPK currently provides corporate management services to the Company under
the Amended Management Services Agreement. The initial term of the Amended
Management Services Agreement expires December 31, 1995. After the initial term,
the Amended Management Services Agreement extends for successive one-year
periods unless otherwise canceled upon one year's prior notice. The Amended
Management Services Agreement may be terminated at any time by the Company with
a severance payment equal to 12 months' compensation thereunder. The Amended
Management Services Agreement provides for the payment of $2,000,000, payable in
management fees and salaries, the reimbursement of expenses and the payment of
an annual bonus of up to $1,000,000 tied to the Company's earnings in comparison
to the projections set forth in the disclosure statement relating to the Plan of
Reorganization. For fiscal 1994, the Company paid DPK $770,000 for services
provided under the Amended Management Services Agreement. Messrs. Kelly,
Gustafson and Corcoran, executive officers and limited partners in DPK, received
directly from the Company combined annual salaries of $1,230,000 as executive
officers of the Company.
In fiscal 1994, the Company made payments of $560,000 to an affiliate of
DPK for the use of a jet aircraft on an as-needed basis. The usage charge is
based upon an hourly rate comparable to that which would be charged by a
non-affiliated company for use of a chartered corporate aircraft. During fiscal
1994 the Company purchased products in the ordinary course and on arm's-length
terms from affiliates of DPK in the amount of
11
<PAGE> 15
$1,367,000. During fiscal 1994, the Company sublet office space from DPK for
which it paid $151,000 in rent. The rent is comparable to that which would be
charged to a non-affiliated company for use of this office space.
In ARTRA GROUP Incorporated v. Salomon Brothers Holding Company Inc,
Salomon Brothers Inc, D.P. Kelly & Associates, L.P., Donald P. Kelly, Charles K.
Bobrinskoy, James L. Massey, William Rifkind and Michael Zimmerman, Case No. 93
A 1616, United States Bankruptcy Court for the Northern District of Illinois,
Eastern Division (the "Bankruptcy Court"), ARTRA GROUP Incorporated ("ARTRA")
alleges breach of fiduciary duty and tortious inference in connection with the
negotiation and consummation of the Plan of Reorganization. In ARTRA GROUP
Incorporated v. Salomon Brothers Holding Company Inc, Salomon Brothers Inc, D.P.
Kelly & Associates, L.P., Donald P. Kelly, Charles K. Bobrinskoy and Michael
Zimmerman, Case No. 93 L 2198, Circuit Court of the Eighteenth Judicial Circuit,
DuPage County, Illinois, ARTRA alleges negligence, breach of fiduciary duty,
fraudulent misrepresentation and deceptive business practices in connection with
the 1989 acquisition of Envirodyne by Emerald Acquisition Corporation. The
plaintiff seeks damages in the total amount of $136,200,000 plus interest and
punitive damages of $408,600,000. DPK and Mr. Kelly have asserted common law and
contractual rights of indemnity against Envirodyne for attorneys' fees, costs
and any ultimate liability relating to the claims set forth in the complaints.
During fiscal 1994, the Company advanced a total of $118,000 to DPK and Mr.
Kelly with respect to defense costs in the Bankruptcy Court proceeding, based
upon DPK's undertaking to repay such funds in the event it is ultimately
determined that DPK is not entitled to indemnification.
In fiscal 1994, Viskase Corporation, a wholly-owned subsidiary of the
Company, had sales of $14,779,000 to Cargill, Inc. and its affiliates. Such
sales were made in the ordinary course and on arm's-length terms. Cargill
Financial Services Corporation is the beneficial owner of 10.1% of the Company's
outstanding Common Stock, and Gregory R. Page, President of North American Beef
Operations of Cargill, Inc., is a director of the Company.
RATIFICATION OF 1993 STOCK OPTION PLAN
The 1993 Stock Option Plan (the "1993 Plan") was created on December 31,
1993 pursuant to the Plan of Reorganization. The 1993 Plan authorizes the
issuance of up to 650,000 shares for issuance pursuant to stock options and
stock appreciation rights ("SARs"). With the exception of Messrs. Kelly,
Gustafson and Corcoran, all employees of the Company (approximately 4,900), and
each non-employee director of the Company, are eligible to participate in the
1993 Plan. In order to ensure that transactions pursuant to the 1993 Plan are
entitled to the benefits of the exemption from Section 16(b) of the Exchange Act
by virtue of Rule 16b-3 thereunder, the Company is submitting the 1993 Plan for
the approval of the Company's stockholders. In addition, in order to ensure that
grants of stock options may be eligible for treatment as incentive stock options
pursuant to applicable regulations under the Internal Revenue Code of 1986 (the
"Code"), the Board of Directors of the Company has adopted and ratified, as of
April 6, 1995, the 1993 Plan and the option grants thereunder. The following is
a summary of the 1993 Plan (as amended and restated through April 6, 1995), a
complete copy of which is attached as Appendix A. The summary is qualified in
its entirety by reference to Appendix A.
ADMINISTRATION
The 1993 Plan is administered by the Compensation and Nominating Committee
(the "Committee") of the Board of Directors. Each of the members of the
Committee is a "disinterested director" within the meaning of Rule 16b-3 under
the Exchange Act. The Committee shall from time to time designate the employees
of the Company who shall be granted incentive awards under the 1993 Plan and the
amount and type of such incentive awards. The Committee shall have full
authority to administer the 1993 Plan, including authority to interpret and
construe any provision thereof and the terms of any incentive award issued
thereunder and to adopt such rules and regulations for administering the 1993
Plan as it may deem necessary. Decisions of the Committee shall be final and
binding on all parties, provided that such decisions reflect compliance with the
terms and provisions of the 1993 Plan.
12
<PAGE> 16
TYPES OF AWARDS
The 1993 Plan provides for the grant of incentive stock options,
non-qualified stock options and SARs. The exercise price of an incentive stock
option may not be less than the fair market value of the Common Stock on the
date of grant. The exercise price of a non-qualified option shall be such price
as the Committee shall determine. Each incentive award shall vest with respect
to one-third of the shares covered thereby on each of the first, second and
third anniversaries, respectively, of the date of grant, subject to earlier
exercisability upon the occurrence of certain events. No incentive award shall
be exercisable after the expiration of ten years from the date of its grant. The
type and amount of awards, the time when made, the term, the exercise price, the
exercise provisions, the method of payment and any other terms of the award will
be determined by the Committee at the time of grant, subject to the express
provisions of the 1993 Plan. Awards which are not yet exercisable will be
accelerated upon any "change in control" of the Company, as defined in the 1993
Plan. In November 1994, the Malcolm I. Glazer Trust made purchases of Common
Stock through which its ownership of Common Stock surpassed 20% of the Company's
outstanding Common Stock, thereby causing a "change in control" and an
acceleration of exercisability of the options granted prior to the occurrence of
the change in control. In the event that the employment of a participant with
the Company terminates for any reason other than disability, retirement, cause
or death, options and SARs granted to such participant that are exercisable at
the time of such termination shall generally remain exercisable for a period of
sixty days following such termination. If the employment terminates because of
disability, retirement or death, exercisable options and SARs shall generally
remain exercisable for a period of one year following the date of termination.
In the event of termination of employment for cause, all of the participant's
options and SARs shall expire on the date of termination.
NON-EMPLOYEE DIRECTOR OPTIONS
On the date of the Meeting, non-employee directors will automatically be
granted non-qualified options to purchase 2,000 shares of Common Stock at an
option exercise price per share equal to the fair market value of a share of
Common Stock on the date of grant. On the date of each subsequent annual meeting
of stockholders, non-employee directors will automatically be granted
non-qualified options to purchase 1,000 shares of Common Stock at an option
exercise price per share equal to the fair market value of a share of Common
Stock on the date of grant. Such options will be exercisable in part or in full
on and after the date of grant and will expire ten years after the date of
grant. If a non-employee director ceases to be a director of the Company for any
reason, each option held by such holder shall be exercisable for a period of
three months after the date of such holder's ceasing to be a director or until
the expiration of the term of such option, whichever period is shorter.
STOCK SUBJECT TO THE 1993 PLAN
The amount of Common Stock underlying awards under the 1993 Plan may not
exceed 650,000 shares in the aggregate (subject to anti-dilution adjustments).
Shares underlying awards that expire or terminate unexercised are thereafter
available for further grants. The closing bid price of the Common Stock on April
5, 1995 was $4.125 per share.
TERM AND AMENDMENT
The 1993 Plan was adopted pursuant to the Plan of Reorganization on
December 31, 1993. No awards may be made under the 1993 Plan after May 28, 2004.
The Board of Directors may at any time suspend or discontinue the 1993 Plan or
revise or amend it in any respect whatsoever, except that without approval of
the stockholders no revision or amendment shall increase the number of shares of
Common Stock that may be issued under the 1993 Plan (except pursuant to
anti-dilution adjustments), materially increase the benefits accruing to
individuals holding incentive awards granted pursuant to the 1993 Plan or
materially modify the requirements as to eligibility for participation in the
1993 Plan.
13
<PAGE> 17
ADJUSTMENT PROVISIONS
The number of shares of Common Stock covered by each outstanding option or
SAR, and the number of shares of Common Stock which are then available under the
1993 Plan, as well as the price per share covered by each outstanding option or
SAR will be proportionately adjusted for any increase or decrease in the number
of issued shares of Common Stock resulting from a stock split, the payment of a
stock dividend with respect to the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company.
GRANT INFORMATION
The following table sets forth the incentive stock option grants that have
been made pursuant to the 1993 Plan. These grants are conditioned upon the
approval of the 1993 Plan by the Company's stockholders. The exercise price with
respect to all such grants was the fair market value of the Common Stock on the
date of the grant. Eligible officers and employees to be selected for incentive
awards under the 1993 Plan in the future will vary from year to year. It is
accordingly not currently possible to determine incentive awards that will be
made in the future.
NEW PLAN BENEFITS
1993 STOCK OPTION PLAN
<TABLE>
<CAPTION>
DOLLAR NUMBER
NAME AND POSITION(1) VALUE($) OF OPTIONS
------------------------------------------------------------------ -------- ----------
<S> <C> <C>
Donald P. Kelly................................................... -- 0
Chairman of the Board, President
and Chief Executive Officer
F. Edward Gustafson............................................... -- 0
Executive Vice President
and Chief Operating Officer
J. S. Corcoran.................................................... -- 0
Executive Vice President
and Chief Financial Officer
Stephen M. Schuster............................................... -- 22,850
Vice President, Secretary
and General Counsel
Executive Officer Group (4 persons)............................... -- 22,850
Non-Executive Director Group(2) (6 persons)....................... -- 12,000
Non-Executive Officer Employee Group(3) (21 persons).............. -- 366,070
</TABLE>
- ---------------
(1) Messrs. Kelly, Gustafson and Corcoran are not eligible to participate in the
1993 Plan.
(2) On the date of the Meeting, non-employee directors will automatically be
granted options to purchase 2,000 shares of Common Stock at an option
exercise price per share equal to the fair market value of a share of
Common Stock on the date of grant. On the date of each subsequent annual
meeting of stockholders, non-employee directors will automatically be
granted options to purchase 1,000 shares of Common Stock at an option
exercise price per share equal to the fair market value of a share of
Common Stock on the date of grant.
(3) A total of 414,020 options have been granted under the 1993 Plan. 13,100
options have been terminated in accordance with their terms.
14
<PAGE> 18
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of the United States federal income tax
consequences of awards made under the 1993 Plan.
Stock Options. A participant will not recognize any income upon the grant
of a stock option. A participant will recognize compensation taxable as ordinary
income (and subject to income tax withholding) upon exercise of a non-qualified
stock option equal to the excess of the fair market value of the shares
purchased over their exercise price, and the Company will be entitled to a
corresponding deduction. A participant will not recognize income (except for
purposes of the alternative minimum tax) upon exercise of an incentive stock
option. If the shares acquired by exercise of an incentive stock option are held
for the longer of two years from the date the option was granted and one year
from the date it was exercised, any gain or loss arising from a subsequent
disposition of such shares will be taxed as long-term capital gain or loss, and
the Company will not be entitled to any deduction. If, however, such shares are
disposed of within the above-described period, then in the year of such
disposition the participant will recognize compensation taxable as ordinary
income equal to the excess of the lesser of (i) the amount realized upon such
disposition and (ii) the fair market value of such shares on the date of
exercise over the exercise price, and the Company will be entitled to a
corresponding deduction.
SARs. A participant will not recognize any taxable income upon the grant of
SARs. A participant will recognize compensation taxable as ordinary income (and
subject to income tax withholding) upon exercise of an SAR equal to the fair
market value of any shares delivered and the amount of cash paid by the Company
upon such exercise, and the Company will be entitled to a corresponding
deduction.
Section 162(m) of the Code. Section 162(m) of the Code generally limits to
$1 million the amount that a publicly held corporation is allowed each year to
deduct for the compensation paid to each of the corporation's chief executive
officer and the corporation's other four most highly compensated officers.
Compensation under the 1993 Plan with respect to options and SARs granted at not
less than fair market value (at least through the Company's 1997 annual meeting
of stockholders) is not expected to be subject to the $1 million deduction limit
under Section 162(m) of the Code.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
RATIFICATION OF THE 1993 PLAN.
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Coopers & Lybrand L.L.P. has been appointed by the Board of
Directors as the Company's independent accountants for the fiscal year ended
December 28, 1995. Representatives of Coopers & Lybrand L.L.P. are expected to
attend the Meeting. They will have an opportunity to make a statement if they
desire to do so, and will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
RATIFICATION OF COOPERS & LYBRAND L.L.P. AS THE COMPANY'S INDEPENDENT
ACCOUNTANTS FOR THE FISCAL YEAR ENDED DECEMBER 28, 1995.
OTHER MATTERS
The Board of Directors knows of no other business to be presented for
consideration at the Meeting. If any other matters properly come before the
Meeting, the persons designated as proxies in the enclosed proxy card will vote
on such matters in accordance with their best judgment.
STOCKHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
Stockholders may submit proposals on matters appropriate for stockholder
action at the Company's annual stockholder meetings, consistent with rules
adopted by the Commission. Such proposals must be received by the Company not
later than December 9, 1995 to be considered for inclusion in the proxy
statement and form of proxy relating to the 1996 Annual Meeting of Stockholders.
Any such proposals should
15
<PAGE> 19
be addressed to: Corporate Secretary, Envirodyne Industries, Inc., 701 Harger
Road, Suite 190, Oak Brook, Illinois 60521.
1994 ANNUAL REPORT ON FORM 10-K
A copy of the Company's 1994 Annual Report on Form 10-K (the "Form 10-K"),
as filed with the Commission, is included as part of the Company's 1994 Annual
Report which accompanied this Proxy Statement. Additional copies of the Form
10-K are available to stockholders without charge on request in writing to the
following address: Envirodyne Industries, Inc., 701 Harger Road, Suite 190, Oak
Brook, Illinois 60521.
ENVIRODYNE INDUSTRIES, INC.
Oak Brook, Illinois
April 7, 1995
16
<PAGE> 20
APPENDIX A
ENVIRODYNE INDUSTRIES, INC. 1993 STOCK OPTION PLAN
(AS AMENDED AND RESTATED THROUGH APRIL 6, 1995)
1. PURPOSE OF THE PLAN
This Envirodyne Industries, Inc. 1993 Stock Option Plan is intended to
promote the interests of the Company by providing the employees of the Company,
who are largely responsible for the management, growth and protection of the
business of the Company, with incentives and rewards to encourage them to
continue in the employ of the Company and by attracting and retaining
well-qualified directors.
2. DEFINITIONS
As used in the Plan, the following definitions apply to the terms indicated
below:
(a) "Board of Directors" shall mean the Board of Directors of Envirodyne.
(b) "Cause," when used in connection with the termination of a
Participant's employment with the Company, shall mean the termination of the
Participant's employment by the Company on account of (i) the willful and
continued failure by the Participant substantially to perform his duties and
obligations (other than any such failure resulting from his incapacity due to
physical or mental illness) or (ii) the willful engaging by the Participant in
gross misconduct which could reasonably be expected to be materially and
demonstrably injurious to the Company. For purposes of this Section 2(b), no
act, or failure to act, on a Participant's part shall be considered "willful"
unless done, or omitted to be done, by the Participant in bad faith and without
reasonable belief that his action or omission was in the best interests of the
Company.
(c) "Change in Control" shall mean any of the following:
(i) any Person (an "Acquiring Person") becomes the "beneficial owner"
(as such term is defined in Rule 13d-3 promulgated under the Exchange Act,
a "Beneficial Owner"), directly or indirectly, of securities of Envirodyne
representing 20% or more of the combined voting power of Envirodyne's then
outstanding securities, other than beneficial ownership by a Participant,
the Company, any employee benefit plan of the Company or any person or
entity organized, appointed or established pursuant to the terms of any
such benefit plan;
(ii) Envirodyne's stockholders approve an agreement to merge or
consolidate Envirodyne with another corporation, or an agreement providing
for the sale of substantially all of the assets of Envirodyne to one or
more corporations, in any case other than with or to a corporation 50% or
more of which is controlled by, or is under common control with,
Envirodyne; or
(iii) during any two-year period, individuals who at the date on which
the period commences constitute a majority of the Board of Directors cease
to constitute a majority thereof for any reason; provided, however, that a
director who was not a director at the beginning of such period shall be
deemed to have satisfied the two-year requirement if such director was
elected by, or on the recommendation of, at least a majority of the
directors who were directors at the beginning of such period (either
actually or by prior operation of this provision), other than any director
who is so approved in connection with any actual or threatened contest for
election to positions on the Board of Directors.
The Committee may, in its absolute discretion, define the term Change in Control
to mean, with respect to any Incentive Award, the occurrence of other events in
addition to those described in clauses (i) - (iii) of this Section 2(c).
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(e) "Committee" shall mean the Stock Option Committee of the Board of
Directors or such other committee as the Board of Directors shall appoint from
time to time to administer the Plan.
(f) "Common Stock" shall mean Envirodyne's common stock, $.01 par value per
share.
A-1
<PAGE> 21
(g) "Company" shall mean Envirodyne and each of its Subsidiaries.
(h) "Disability" shall mean a condition entitling a Participant to benefits
under the long-term disability policy maintained by the Company and applicable
to him.
(i) "Envirodyne" shall mean Envirodyne Industries, Inc., a Delaware
corporation, and its successors.
(j) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(k) the "Fair Market Value" of a share of Common Stock with respect to any
day shall be (i) the average of the high and low sales prices on such day of a
share of Common Stock as reported on the principal securities exchange on which
shares of Common Stock are then listed or admitted to trading or (ii) if not so
reported, the average of the closing bid and ask prices on such day as reported
on the National Association of Securities Dealers Automated Quotation System or
(iii) if not so reported, as furnished by any member of the National Association
of Securities Dealers, Inc. selected by the Committee. In the event that the
price of a share of Common Stock shall not be so reported, the Fair Market Value
of a share of Common Stock shall be determined by the Committee in its absolute
discretion.
(l) "Incentive Award" shall mean an Option, LSAR, Tandem SAR or Stand-Alone
SAR granted pursuant to the terms of the Plan.
(m) "Incentive Stock Option" shall mean an Option which is an "incentive
stock option" within the meaning of Section 422 of the Code and which is
identified as an Incentive Stock Option in the agreement by which it is
evidenced.
(n) "LSAR" shall mean a limited stock appreciation right which is granted
pursuant to the provisions of Section 7 hereof and which relates to an Option.
Each LSAR shall be exercisable only upon the occurrence of a Change in Control
and only in the alternative to the exercise of its related Option.
(o) "Non-Employee Director" shall mean any director of Envirodyne who is
not an officer or employee of Envirodyne or any Subsidiary.
(p) "Non-Qualified Stock Option" shall mean an Option which is not an
Incentive Stock Option and which is identified as a Non-Qualified Stock Option
in the agreement by which it is evidenced.
(q) "Option" shall mean an option to purchase shares of Common Stock of
Envirodyne granted pursuant to Section 6 or Section 11 hereof. Each Option shall
be identified as either an Incentive Stock Option or a Non-Qualified Stock
Option in the agreement by which it is evidenced.
(r) "Participant" shall mean an employee of the Company (or a Non-Employee
Director) to whom an Incentive Award is granted pursuant to the Plan, and upon
his death, his successors, heirs, executors and administrators, as the case may
be; provided, that J.S. Corcoran, F. Edward Gustafson and Donald P. Kelly shall
not be Participants.
(s) "Person" shall mean a "person," as such term is used in Sections 13(d)
and 14(d) of the Exchange Act.
(t) "Plan" shall mean this Envirodyne Industries, Inc. 1993 Stock Option
Plan, as it may be amended from time to time.
(u) "Retirement" shall mean the termination of the employment of a
Participant with the Company on or after (i) the first date on which the
Participant has both attained age 55 and completed 5 years of service with the
Company or (ii) the date on which the Participant attains age 65.
(v) "Securities Act" shall mean the Securities Act of 1933, as amended.
(w) "Stand-Alone SAR" shall mean a stock appreciation right granted
pursuant to Section 9 hereof which is not related to any Option.
(x) "Subsidiary" shall mean any "subsidiary corporation" of Envirodyne
within the meaning of Section 425(f) of the Code.
A-2
<PAGE> 22
(y) "Tandem SAR" shall mean a stock appreciation right granted pursuant to
Section 8 hereof which is related to an Option. Each Tandem SAR shall be
exercisable only to the extent its related Option is exercisable and only in the
alternative to the exercise of its related Option.
3. STOCK SUBJECT TO THE PLAN
Under the Plan, the Committee may grant to Participants (i) Options, (ii)
LSARs, (iii) Tandem SARs and (iv) Stand-Alone SARs. Subject to adjustment as
provided in Section 10 hereof, the Committee may grant Options and Stand-Alone
SARs under the Plan to Participants under the Plan with respect to a number of
shares of Common Stock that in the aggregate does not exceed 650,000 shares. The
grant of an LSAR or Tandem SAR shall not reduce the number of shares of Common
Stock with respect to which Options or Stand-Alone SARs may be granted pursuant
to the Plan.
In the event that any outstanding Option or Stand-Alone SAR expires,
terminates or is cancelled for any reason (other than pursuant to Sections
7(b)(2) or 8(b)(3) hereof), the shares of Common Stock subject to the
unexercised portion of such Option or Stand-Alone SAR shall again be available
for grants under the Plan. In the event that an outstanding Option is cancelled
pursuant to Sections 7(b)(2) or 8(b)(3) hereof by reason of the exercise of an
LSAR or a Tandem SAR, the shares of Common Stock subject to the cancelled
portion of such Option shall not again be available for grants under the Plan.
Shares of Common Stock issued under the Plan may be either newly issued
shares or treasury shares, at the discretion of the Committee.
4. ADMINISTRATION OF THE PLAN
The Plan shall be administered by a Committee of the Board of Directors
consisting of two or more persons, each of whom shall be a "disinterested
person" within the meaning of Rule 16b-3 promulgated under Section 16 of the
Exchange Act. The Committee shall from time to time designate the employees of
the Company who shall be granted Incentive Awards and the amount and type of
such Incentive Awards.
The Committee shall have full authority to administer the Plan, including
authority to interpret and construe any provision of the Plan and the terms of
any Incentive Award issued under it and to adopt such rules and regulations for
administering the Plan as it may deem necessary. Decisions of the Committee
shall be final and binding on all parties, provided that such decisions reflect
compliance with the terms and provisions of this Plan.
The Committee may, in its absolute discretion, accelerate the date on which
any Option or Stand-Alone SAR granted under the Plan becomes exercisable or,
subject to Section 6(c)(1) and Section 9(c)(1) hereof, extend the term of any
Option or Stand-Alone SAR granted under the Plan. In addition, the Committee may
in its absolute discretion grant Incentive Awards to Participants on the
condition that such Participants surrender to the Committee for cancellation
such other Incentive Awards (including, without limitation, Incentive Awards
with higher exercise prices) as the Committee specifies. Notwithstanding Section
3 herein, prior to the surrender of such other Incentive Awards, Incentive
Awards granted pursuant to the preceding sentence of this Section 4 shall not
count against the limits set forth in such Section 3.
The determination of whether an authorized leave of absence, or absence in
military or government service, shall constitute termination of employment shall
be made by the Committee.
No member of the Committee shall be liable for any action, omission, or
determination relating to the Plan, and Envirodyne shall indemnify and hold
harmless each member of the Committee and each other director or employee of the
Company to whom any duty or power relating to the administration or
interpretation of the Plan has been delegated against any cost or expense
(including counsel fees) or liability (including any sum paid in settlement of a
claim with the approval of the Committee) arising out of any action, omission or
determination relating to the Plan, unless, in any case, such action, omission
or determination was taken or made by such member, director or employee in bad
faith and without reasonable belief that it was in the best interests of the
Company.
A-3
<PAGE> 23
5. ELIGIBILITY
The persons who shall be eligible to receive Incentive Awards pursuant to
the Plan shall be such employees of the Company who are largely responsible for
the management, growth and protection of the business of the Company (including
without limitation officers of Envirodyne, whether or not they are directors of
Envirodyne, but excluding J.S. Corcoran, F. Edward Gustafson and Donald P.
Kelly) as the Committee shall select from time to time. Non-Employee Directors
shall be eligible to participate in the Plan in accordance with Section 11.
6. OPTIONS
The Committee may grant Options pursuant to the Plan to Participants, which
Options shall be evidenced by agreements in such form as the Committee shall
from time to time approve. Options shall comply with and be subject to the
following terms and conditions:
(a) Identification of Options
All Options granted under the Plan shall be clearly identified in the
agreement evidencing such Options as either Incentive Stock Options or as
Non-Qualified Stock Options.
(b) Exercise Price
The exercise price of any Non-Qualified Stock Option granted under the Plan
shall be such price as the Committee shall determine on the date on which such
Non-Qualified Stock Option is granted; provided, that such price may not be less
than the minimum price required by law. The exercise price of any Incentive
Stock Option granted under the Plan shall be not less than 100% of the Fair
Market Value of a share of Common Stock on the date on which such Incentive
Stock Option is granted.
(c) Term and Exercise of Options
(1) Each Option shall become exercisable with respect to one-third of the
number of shares of Common Stock subject to such Option upon the first
anniversary of the date on which such Option is granted and with respect to an
additional one-third of the number of shares of Common Stock subject thereto on
each subsequent anniversary of such date. Subject to the immediately preceding
sentence, each Option shall be exercisable on such date or dates, during such
period and for such number of shares of Common Stock as shall be determined by
the Committee on the day on which such Option is granted and set forth in the
Option agreement with respect to such Option; provided, however, that no Option
shall be exercisable after the expiration of ten years from the date such Option
was granted; and, provided, further, that each Option shall be subject to
earlier termination, expiration or cancellation as provided in the Plan or in
the agreement evidencing such Option.
(2) Each Option shall be exercisable in whole or in part; provided, that no
partial exercise of an Option shall be for an aggregate exercise price of less
than $1,000. The partial exercise of an Option shall not cause the expiration,
termination or cancellation of the remaining portion thereof.
(3) An Option shall be exercised by delivering notice to Envirodyne's
principal office, to the attention of its Chief Financial Officer, no less than
three business days in advance of the effective date of the proposed exercise.
Such notice shall specify the number of shares of Common Stock with respect to
which the Option is being exercised and the effective date of the proposed
exercise and shall be signed by the Participant. The Participant may withdraw
such notice at any time prior to the close of business on the business day
immediately preceding the effective date of the proposed exercise. Payment for
shares of Common Stock purchased upon the exercise of an Option shall be made on
the effective date of such exercise either (i) in cash, by certified check, bank
cashier's check or wire transfer or (ii) subject to the approval of the
Committee, in shares of Common Stock owned by the Participant and valued at
their Fair Market Value on the effective date of such exercise, or partly in
shares of Common Stock with the balance in cash, by certified check, bank
cashier's check or wire transfer. Any payment in shares of Common Stock shall be
effected by the delivery of such shares to the Chief Financial Officer of
Envirodyne, duly endorsed in blank or accompanied by stock
A-4
<PAGE> 24
powers duly executed in blank, together with any other documents and evidences
as the Chief Financial Officer of Envirodyne shall require from time to time.
(4) Certificates for shares of Common Stock purchased upon the exercise of
an Option shall be issued in the name of the Participant and delivered to the
Participant as soon as practicable following the effective date on which the
Option is exercised.
(5) During the lifetime of a Participant, each Option granted to him shall
be exercisable only by him. No Option shall be assignable or transferable
otherwise than by will or by the laws of descent and distribution.
(d) Limitations on Grant of Incentive Stock Options
(1) The aggregate Fair Market Value of shares of Common Stock with respect
to which "incentive stock options" (within the meaning of Section 422 of the
Code) are exercisable for the first time by a Participant during any calendar
year under the Plan and any other stock option plan of the Company (or any
"subsidiary" of Envirodyne as such term is defined in Section 425 of the Code)
shall not exceed $100,000. Such Fair Market Value shall be determined as of the
date on which each such incentive stock option is granted. In the event that the
aggregate Fair Market Value of shares of Common Stock with respect to such
incentive stock options exceeds $100,000, then Incentive Stock Options granted
hereunder to such Participant shall, to the extent and in the order required by
regulations promulgated under the Code (or any other authority having the force
of regulations), automatically be deemed to be Non-Qualified Stock Options, but
all other terms and provisions of such Incentive Stock Options shall remain
unchanged. In the absence of such regulations (and authority), or in the event
such regulations (or authority) require or permit a designation of the options
which shall cease to constitute incentive stock options, Incentive Stock Options
shall, to the extent of such excess and in the order in which they were granted,
automatically be deemed to be Non-Qualified Stock Options, but all other terms
and provisions of such Incentive Stock Options shall remain unchanged.
(2) No Incentive Stock Option may be granted to an individual if, at the
time of the proposed grant, such individual owns stock possessing more than ten
percent of the total combined voting power of all classes of stock of Envirodyne
or any of its "subsidiaries" (within the meaning of Section 425 of the Code),
unless (i) the per share exercise price of such Incentive Stock Option is at
least one hundred and ten percent of the Fair Market Value of a share of Common
Stock at the time such Incentive Stock Option is granted and (ii) such Incentive
Stock Option is not exercisable after the expiration of five years from the date
such Incentive Stock Option is granted.
(e) Effect of Termination of Employment
(1) In the event that the employment of a Participant with the Company
shall terminate for any reason other than Disability, Retirement, Cause or death
(i) Options granted to such Participant, to the extent that they were
exercisable at the time of such termination, shall remain exercisable until the
sixtieth (60th) day following such termination, on which date they shall expire,
and (ii) Options granted to such Participant, to the extent that they were not
exercisable at the time of such termination, shall expire at the close of
business on the date of such termination; provided, however, that no Option
shall be exercisable after the expiration of its term.
(2) In the event that the employment of a Participant with the Company
shall terminate on account of the Disability, Retirement or death of the
Participant, such Participant shall be entitled to exercise, at any time or from
time to time until the first anniversary of such termination, Options granted to
him hereunder to the extent that such Options were exercisable at the time of
such termination or would have become exercisable had his employment continued
until the first anniversary of such termination; provided, however, that no
Option shall be exercisable after the expiration of its term.
(3) In the event of the termination of a Participant's employment for
Cause, all outstanding Options granted to such Participant shall expire at the
commencement of business on the date of such termination; provided, however,
that no Participant shall be deemed to have been terminated for Cause during the
two year period following any Change in Control.
A-5
<PAGE> 25
(4) In addition to any other acceleration of exercisability provided under
this Plan, an Option shall be deemed to be exercisable on the date of the
termination of the employment of a Participant with the Company to the extent
that the Committee so provides in writing, provided that such acceleration
occurs prior to the first anniversary of such termination of employment.
(f) Consequences Upon Change in Control
Upon the occurrence of a Change in Control, each Option granted under the
Plan and outstanding at such time shall become fully and immediately exercisable
and shall remain exercisable until its expiration, termination or cancellation
pursuant to the terms of the Plan. Options that are granted at such time as
there is a pre-existing Acquiring Person shall not be fully and immediately
exercisable pursuant to the preceding sentence unless and until there occurs a
later Change in Control (including without limitation the existence of a new
Acquiring Person).
(g) Cash Bonuses and Loans
(1) The Committee may, in its absolute discretion, grant to any Participant
a cash bonus in an amount determined by the Committee to enable the Participant
to pay any federal, state or local income taxes arising out of the exercise of
an Option.
(2) The Committee may, in its absolute discretion, provide a loan to any
Participant in an amount determined by the Committee to enable the Participant
to pay (i) any federal, state or local income taxes arising out of the exercise
of an Option or (ii) the exercise price with respect to any Option. Any such
loan (i) shall be for such term and at such rate of interest as the Committee
may determine, (ii) shall be evidenced by a promissory note in a form determined
by the Committee and executed by the Participant and (iii) shall be subject to
such other terms and conditions as the Committee may determine.
7. LIMITED STOCK APPRECIATION RIGHTS
The Committee may grant in connection with any Option granted hereunder one
or more LSARs relating to a number of shares of Common Stock less than or equal
to the number of shares of Common Stock subject to the related Option. An LSAR
may be granted at the same time as, or subsequent to the time that, its related
Option is granted. Each LSAR shall be evidenced by an agreement in such form as
the Committee shall from time to time approve. Each LSAR granted hereunder shall
be subject to the following terms and conditions:
(a) Benefit Upon Exercise
(1) The exercise of an LSAR relating to a Non-Qualified Stock Option with
respect to any number of shares of Common Stock shall entitle the Participant to
a cash payment, for each such share, equal to the excess of (i) the greatest of
(A) the highest price per share of Common Stock paid in the Change in Control in
connection with which such LSAR became exercisable, (B) the Fair Market Value of
a share of Common Stock on the date of such Change in Control and (C) the Fair
Market Value of a share of Common Stock on the effective date of such exercise
over (ii) the exercise price of the related Option. Such payment shall be paid
as soon as practicable, but in no event later than the expiration of five
business days after the effective date of such exercise.
(2) The exercise of an LSAR relating to an Incentive Stock Option with
respect to any number of shares of Common Stock shall entitle the Participant to
a cash payment, for each such share, equal to the excess of (i) the Fair Market
Value of a share of Common Stock on the effective date of such exercise over
(ii) the exercise price of the related Option. Such payment shall be paid as
soon as practicable, but in no event later than the expiration of five business
days after the effective date of such exercise.
(b) Term and Exercise of LSARs
(1) An LSAR shall be exercisable only during the period commencing on the
first day following the occurrence of a Change in Control and terminating on the
expiration of ninety days after such date. Notwithstanding the immediately
preceding sentence, in the event that an LSAR held by any Participant who
A-6
<PAGE> 26
is or may be subject to the provisions of Section 16(b) of the Exchange Act
becomes exercisable prior to the expiration of six months following the date on
which it is granted, then the LSAR shall also be exercisable during the period
commencing on the first day immediately following the expiration of such six
month period and terminating on the expiration of ninety days following such
date. Notwithstanding anything else herein, an LSAR relating to an Incentive
Stock Option may be exercised with respect to a share of Common Stock only if
the Fair Market Value of such share on the effective date of such exercise
exceeds the exercise price relating to such share. Notwithstanding anything else
herein, an LSAR may be exercised only if and to the extent that the Option to
which it relates is exercisable.
(2) The exercise of an LSAR with respect to a number of shares of Common
Stock shall cause the immediate and automatic cancellation of the Option to
which it relates with respect to an equal number of shares. The exercise of an
Option, or the cancellation, termination or expiration of an Option (other than
pursuant to this Section 7(b)(2)), with respect to a number of shares of Common
Stock, shall cause the cancellation of the LSAR related to it with respect to an
equal number of shares.
(3) Each LSAR shall be exercisable in whole or in part; provided, that no
partial exercise of an LSAR shall be for an aggregate exercise price of less
than $1,000. The partial exercise of an LSAR shall not cause the expiration,
termination or cancellation of the remaining portion thereof.
(4) During the lifetime of a Participant, each LSAR granted to him shall be
exercisable only by him. No LSAR shall be assignable or transferable otherwise
than by will or by the laws of descent and distribution and otherwise than
together with its related Option.
(5) An LSAR shall be exercised by delivering notice to Envirodyne's
principal office, to the attention of its Chief Financial Officer, no less than
three business days in advance of the effective date of the proposed exercise.
Such notice shall specify the number of shares of Common Stock with respect to
which the LSAR is being exercised and the effective date of the proposed
exercise and shall be signed by the Participant. The Participant may withdraw
such notice at any time prior to the close of business on the business day
immediately preceding the effective date of the proposed exercise.
8. TANDEM STOCK APPRECIATION RIGHTS
The Committee may grant in connection with any Option granted hereunder one
or more Tandem SARs relating to a number of shares of Common Stock less than or
equal to the number of shares of Common Stock subject to the related Option. A
Tandem SAR may be granted at the same time as, or subsequent to the time that,
its related Option is granted. Each Tandem SAR shall be evidenced by an
agreement in such form as the Committee shall from time to time approve. Tandem
SARs shall comply with and be subject to the following terms and conditions:
(a) Benefit Upon Exercise
(1) The exercise of a Tandem SAR with respect to any number of shares of
Common Stock prior to the occurrence of a Change in Control shall entitle a
Participant to (i) a cash payment, for each such share, equal to the excess of
(A) the Fair Market Value of a share of Common Stock on the effective date of
such exercise over (B) the exercise price of the related Option, (ii) the
issuance or transfer to the Participant of a number of shares of Common Stock
which on the date of the exercise of the Tandem SAR have a Fair Market Value
equal to such excess or (iii) a combination of cash and shares of Common Stock
in amounts equal to such excess, all as determined by the Committee in its
discretion. Such payment, transfer or issuance shall occur as soon as
practicable, but in no event later than the expiration of five business days,
after the effective date of such exercise.
(2) The exercise of a Tandem SAR with respect to any number of shares of
Common Stock upon or after the occurrence of a Change in Control shall entitle a
Participant to a cash payment, for each such share, (A) in the case of a Tandem
SAR relating to a Non-Qualified Stock Option, equal to the excess of (i) the
greater of (x) the highest price per share of Common Stock paid in connection
with such Change in Control, (y) the Fair Market Value of a share of Common
Stock on the date of such Change in Control and (z) the Fair Market Value of a
share of Common Stock on the effective date of such exercise over (ii) the
exercise
A-7
<PAGE> 27
price of the related Option and (B) in the case of a Tandem SAR relating to an
Incentive Stock Option, equal to the excess of (i) the Fair Market Value of a
share of Common Stock on the date of such exercise over (ii) the exercise price
of the related Option. Such payment shall occur as soon as practicable, but in
no event later than the expiration of five business days, after the effective
date of such exercise.
(b) Term and Exercise of Tandem SAR
(1) A Tandem SAR shall be exercisable at the same time and to the same
extent (on a proportional basis, with any fractional amount being rounded down
to the nearest whole number) as its related Option. Notwithstanding the
immediately preceding sentence, (i) a Tandem SAR shall not be exercisable at any
time that an LSAR related to the Option to which the Tandem SAR is related is
exercisable and (ii) a Tandem SAR relating to an Incentive Stock Option may be
exercised with respect to a share of Common Stock only if the Fair Market Value
of such share on the effective date of such exercise exceeds the exercise price
relating to such share.
(2) Notwithstanding the first sentence of Section 8(b)(1) hereof, the
Committee may, in its absolute discretion, grant one or more Tandem SARs which
shall not become exercisable unless and until the Participant to whom such
Tandem SAR is granted is, in the determination of the Committee, subject to
Section 16(b) of the Exchange Act and which shall cease to be exercisable if and
at the time that the Participant ceases, in the determination of the Committee,
to be subject to such Section 16(b).
(3) The exercise of a Tandem SAR with respect to a number of shares of
Common Stock shall cause the immediate and automatic cancellation of its related
Option with respect to an equal number of shares. The exercise of an Option, or
the cancellation, termination or expiration of an Option (other than pursuant to
this Section 8(b)(3)), with respect to a number of shares of Common Stock shall
cause the automatic and immediate cancellation of its related Tandem SARs to the
extent that the number of shares of Common Stock subject to such Option after
such exercise, cancellation, termination or expiration is less than the number
of shares subject to such Tandem SARs. Such Tandem SARs shall be cancelled in
the order in which they became exercisable.
(4) Each Tandem SAR shall be exercisable in whole or in part; provided,
that no partial exercise of a Tandem SAR shall be for an aggregate exercise
price of less than $1,000. The partial exercise of a Tandem SAR shall not cause
the expiration, termination or cancellation of the remaining portion thereof.
(5) During the lifetime of a Participant, each Tandem SAR granted to him
shall be exercisable only by him. No Tandem SAR shall be assignable or
transferable otherwise than by will or by the laws of descent and distribution
and otherwise than together with its related Option.
(6) A Tandem SAR shall be exercised by delivering notice to Envirodyne's
principal office, to the attention of its Chief Financial Officer, no less than
three business days in advance of the effective date of the proposed exercise.
Such notice shall specify the number of shares of Common Stock with respect to
which the Tandem SAR is being exercised and the effective date of the proposed
exercise and shall be signed by the Participant. The Participant may withdraw
such notice at any time prior to the close of business on the business day
immediately preceding the effective date of the proposed exercise.
9. STAND-ALONE STOCK APPRECIATION RIGHTS
The Committee may grant Stand-Alone SARs pursuant to the Plan, which
Stand-Alone SARs shall be evidenced by agreements in such form as the Committee
shall from time to time approve. Stand-Alone SARs shall comply with and be
subject to the following terms and conditions:
(a) Exercise Price
The exercise price of any Stand-Alone SAR granted under the Plan shall be
determined by the Committee at the time of the grant of such Stand-Alone SAR.
A-8
<PAGE> 28
(b) Benefit Upon Exercise
The exercise of a Stand-Alone SAR with respect to any number of shares of
Common Stock prior to the occurrence of a Change in Control shall entitle a
Participant to (i) a cash payment, for each such share, equal to the excess of
(A) the Fair Market Value of a share of Common Stock on the effective date of
such exercise over (B) the exercise price of the Stand-Alone SAR, (ii) the
issuance or transfer to the Participant of a number of shares of Common Stock
which on the date of the exercise of the Stand-Alone SAR have a Fair Market
Value equal to such excess or (iii) a combination of cash and shares of Common
Stock in amounts equal to such excess, all as determined by the Committee in its
absolute discretion. The exercise of a Stand-Alone SAR with respect to any
number of shares of Common Stock upon or after the occurrence of a Change in
Control shall entitle a Participant to a cash payment, for each such share,
equal to the excess of (i) the greater of (A) the highest price per share of
Common Stock paid in connection with such Change in Control, (B) the Fair Market
Value of a share of Common Stock on the date of such Change in Control and (C)
the Fair Market Value of a share of Common Stock on the effective date of such
exercise over (ii) the exercise price of the Stand-Alone SAR. Such payment,
transfer or issuance shall occur as soon as practicable, but in no event later
than five business days, after the effective date of the exercise.
(c) Term and Exercise of Stand-Alone SARs
(1) Each Stand-Alone SAR shall become exercisable with respect to one-third
of the number of shares of Common Stock subject to each such Stand-Alone SAR
upon the first anniversary of the date on which such Stand-Alone SAR is granted
and with respect to an additional one-third of the number of shares of Common
Stock subject thereto on each subsequent anniversary of such date. Subject to
the immediately preceding sentence, each Stand-Alone SAR shall be exercisable on
such date or dates, during such period and for such number of shares of Common
Stock as shall be determined by the Committee and set forth in the Stand-Alone
SAR agreement with respect to such Stand-Alone SAR; provided, however, that no
Stand-Alone SAR shall be exercisable after the expiration of ten years from the
date such Stand-Alone SAR was granted; and, provided, further, that each
Stand-Alone SAR shall be subject to earlier termination, expiration or
cancellation as provided in the Plan or in the agreement evidencing such
Stand-Alone SAR.
(2) Each Stand-Alone SAR may be exercised in whole or in part; provided,
that no partial exercise of a Stand-Alone SAR shall be for an aggregate exercise
price of less than $1,000. The partial exercise of a Stand-Alone SAR shall not
cause the expiration, termination or cancellation of the remaining portion
thereof.
(3) A Stand-Alone SAR shall be exercised by delivering notice to
Envirodyne's principal office, to the attention of its Chief Financial Officer,
no less than three business days in advance of the effective date of the
proposed exercise. Such notice shall specify the number of shares of Common
Stock with respect to which the Stand-Alone SAR is being exercised and the
effective date of the proposed exercise and shall be signed by the Participant.
The Participant may withdraw such notice at any time prior to the close of
business on the business day immediately preceding the effective date of the
proposed exercise.
(4) During the lifetime of a Participant, each Stand-Alone SAR granted to
him shall be exercisable only by him. No Stand-Alone SAR shall be assignable or
transferable otherwise than by will or by the laws of descent and distribution.
(d) Effect of Termination of Employment
(1) In the event that the employment of a Participant with the Company
shall terminate for any reason other than Disability, Retirement, Cause or death
(i) Stand-Alone SARs granted to such Participant, to the extent that they were
exercisable at the time of such termination, shall remain exercisable until the
sixtieth (60th) day following such termination, on which date they shall expire,
and (ii) Stand-Alone SARs granted to such Participant, to the extent that they
were not exercisable at the time of such termination, shall expire at the close
of business on the date of such termination; provided, however, that no
Stand-Alone SAR shall be exercisable after the expiration of its term.
(2) In the event that the employment of a Participant with the Company
shall terminate on account of the Disability, Retirement or death of the
Participant, such Participant shall be entitled to exercise, at any
A-9
<PAGE> 29
time or from time to time until the first anniversary of such termination,
Stand-Alone SARs granted to him to the extent that they were exercisable at the
time of such termination or would have become exercisable had his employment
continued until the first anniversary of such termination; provided, however,
that no Stand-Alone SAR shall be exercisable after the expiration of its term.
(3) In the event of the termination of a Participant's employment for
Cause, all outstanding Stand-Alone SARs granted to such Participant shall expire
at the commencement of business on the date of such termination; provided,
however, that no Participant shall be deemed to have been terminated for Cause
during the two year period following any Change in Control.
(4) In addition to any other acceleration of exercisability provided under
this Plan, a Stand-Alone SAR shall be deemed to be exercisable on the date of
the termination of the employment of a Participant with the Company to the
extent the Committee so provides in writing, provided that such acceleration
occurs prior to the first anniversary of such termination of employment.
(e) Consequences Upon Change in Control
Upon the occurrence of a Change in Control, any Stand-Alone SAR granted
under the Plan and outstanding at such time shall become fully and immediately
exercisable and shall remain exercisable until its expiration, termination or
cancellation pursuant to the terms of the Plan. Stand-Alone SARs that are
granted at such time as there is a pre-existing Acquiring Person shall not be
fully and immediately exercisable pursuant to the preceding sentence unless and
until there occurs a later Change in Control (including without limitation the
existence of a new Acquiring Person).
10. ADJUSTMENT UPON CHANGES IN COMMON STOCK
(a) Shares Available for Grants
In the event of any change in the number of shares of Common Stock
outstanding by reason of any stock dividend or split, recapitalization, merger,
consolidation, combination or exchange of shares or similar corporate change,
the maximum aggregate number of shares of Common Stock with respect to which the
Committee may grant Options and Stand-Alone SARs shall be appropriately adjusted
by the Committee. In the event of any change in the number of shares of Common
Stock outstanding by reason of any other event or transaction, the Committee
may, but need not, make such adjustments in the number and class of shares of
Common Stock with respect to which Options and Stand-Alone SARs may be granted
as the Committee may deem appropriate.
(b) Outstanding Options, LSARs, Tandem SARs and Stand-Alone SARs --
Increase or Decrease in Issued Shares Without Consideration
Subject to any required action by the shareholders of Envirodyne, in the
event of any increase or decrease in the number of issued shares of Common Stock
resulting from a subdivision or consolidation of shares of Common Stock or the
payment of a stock dividend (but only on the shares of Common Stock), or any
other increase or decrease in the number of such shares effected without receipt
or payment of consideration by Envirodyne, the Committee shall proportionally
adjust the number of shares of Common Stock subject to each outstanding Option,
LSAR, Tandem SAR and Stand-Alone SAR and the exercise price per share of Common
Stock of each such Option, LSAR, Tandem SAR and Stand-Alone SAR.
(c) Outstanding Options, LSARs, Tandem SARs and Stand-Alone SARs -- Certain
Mergers
Subject to any required action by the shareholders of Envirodyne, in the
event that Envirodyne shall be the surviving corporation in any merger or
consolidation (except a merger or consolidation as a result of which the holders
of shares of Common Stock receive securities of another corporation), each
Option, LSAR, Tandem SAR and Stand-Alone SAR outstanding on the date of such
merger or consolidation shall pertain to and apply to the securities which a
holder of the number of shares of Common Stock subject to such Option, LSAR,
Tandem SAR or Stand-Alone SAR would have received in such merger or
consolidation.
A-10
<PAGE> 30
(d) Outstanding Options, LSARs, Tandem SARs and Stand-Alone SARs -- Certain
Other Transactions
In the event of (i) a dissolution or liquidation of Envirodyne, (ii) a sale
of all or substantially all of Envirodyne's assets, (iii) a merger or
consolidation involving Envirodyne in which Envirodyne is not the surviving
corporation or (iv) a merger or consolidation involving Envirodyne in which
Envirodyne is the surviving corporation but the holders of shares of Common
Stock receive securities of another corporation and/or other property, including
cash, the Committee shall, in its absolute discretion, have the power to:
(i) cancel, effective immediately prior to the occurrence of such
event, each Option (including each LSAR and Tandem-SAR related thereto) and
Stand-Alone SAR outstanding immediately prior to such event (whether or not
then exercisable), and, in full consideration of such cancellation, pay to
the Participant to whom such Option or Stand-Alone SAR was granted an
amount in cash, for each share of Common Stock subject to such Option or
Stand-Alone SAR, respectively, equal to the excess of (A) the value, as
determined by the Committee in its absolute discretion, of the property
(including cash) received by the holder of a share of Common Stock as a
result of such event over (B) the exercise price of such Option or
Stand-Alone SAR; or
(ii) provide for the exchange of each Option (including any related
LSAR or Tandem SAR) and Stand-Alone SAR outstanding immediately prior to
such event (whether or not then exercisable) for an option or a stock
appreciation right with respect to, as appropriate, some or all of the
property for which such Option or Stand-Alone SAR is exchanged and,
incident thereto, make an equitable adjustment as determined by the
Committee in its absolute discretion in the exercise price of the option or
stock appreciation right, or the number of shares or amount of property
subject to the option or stock appreciation right or, if appropriate,
provide for a cash payment to the Participant to whom such Option or
Stand-Alone SAR was granted in partial consideration for the exchange of
the Option or Stand-Alone SAR.
(e) Outstanding Options, LSARs, Tandem SARs and Stand-Alone SARs -- Other
Changes
In the event of any change in the capitalization of Envirodyne or corporate
change other than those specifically referred to in Sections 10(b), (c) or (d)
hereof, the Committee may, in its absolute discretion, make such adjustments in
the number and class of shares subject to Options, LSARs, Tandem SARs and
Stand-Alone SARs outstanding on the date on which such change occurs and in the
per share exercise price of each such Option, LSAR, Tandem SAR and Stand-Alone
SAR as the Committee may consider appropriate to prevent such change in
capitalization or other corporate change from having an adverse impact on the
Participants.
(f) No Other Rights
Except as expressly provided in the Plan, no Participant shall have any
rights by reason of any subdivision or consolidation of shares of stock of any
class, the payment of any dividend, any increase or decrease in the number of
shares of stock of any class or any dissolution, liquidation, merger or
consolidation of Envirodyne or any other corporation. Except as expressly
provided in the Plan, no issuance by Envirodyne of shares of stock of any class,
or securities convertible into shares of stock of any class, shall affect, and
no adjustment by reason thereof shall be made with respect to, the number of
shares of Common Stock subject to an Incentive Award or the exercise price of
any Option, LSAR, Tandem SAR or Stand-Alone SAR.
11. PROVISIONS RELATING TO NON-EMPLOYEE DIRECTORS
(a) Eligibility
Each Non-Employee Director shall be granted Options in accordance with this
Section 11. The Options shall be evidenced by agreements in such forms as the
Committee shall from time to time approve. All Options granted under this
Section 11 shall constitute Non-Qualified Stock Options.
A-11
<PAGE> 31
(b) Grants of Stock Options
Each Non-Employee Director shall be granted Non-Qualified Stock Options as
follows:
(1) Time of Grant
On the date of the 1995 annual meeting of stockholders of the Company, each
person who is a Non-Employee Director after such annual meeting of stockholders
shall be granted an Option to purchase 2,000 shares of Common Stock at a
purchase price per share equal to the Fair Market Value of a share of Common
Stock on the date of grant of such Option. On the date of each subsequent annual
meeting of stockholders of the Company, each person who is a Non-Employee
Director after such annual meeting of stockholders shall be granted an Option to
purchase 1,000 shares of Common Stock (which amount shall be pro-rated if such
Non-Employee Director is first elected or begins to serve as a Non-Employee
Director on a date other than the date of an annual meeting of stockholders) at
a purchase price per share equal to the Fair Market Value of a share of Common
Stock on the date of grant of such Option.
(2) Option Period and Exercisability
Each Option granted under this Section 11 shall be exercisable in part or
in full at any time after the grant thereof, provided that such Option shall
expire 10 years after its date of grant or on such earlier date as hereafter
provided. An exercisable Option, or portion thereof, may be exercised in whole
or in part only with respect to whole shares of Common Stock. Options granted
under this Section 11 shall be exercisable in accordance with the procedures set
forth in Sections 6(c)(2) through 6(c)(5).
(c) Termination of Directorship
If the holder of an Option granted under this Section 11 ceases to be a
director of the Company for any reason, each such Option held by such
Participant shall be exercisable for a period of three months after the date of
such Participant's ceasing to be a director or until the expiration of the term
of such Option, whichever period is shorter.
12. RIGHTS AS A STOCKHOLDER
No person shall have any rights as a stockholder with respect to any shares
of Common Stock covered by or relating to any Incentive Award granted pursuant
to this Plan until the date of the issuance of a stock certificate with respect
to such shares. Except as otherwise expressly provided in Section 10 hereof, no
adjustment to any Incentive Award shall be made for dividends or other rights
for which the record date occurs prior to the date such stock certificate is
issued.
13. NO SPECIAL EMPLOYMENT RIGHTS; NO RIGHT TO INCENTIVE AWARD
Nothing contained in the Plan or any Incentive Award shall confer upon any
Participant any right with respect to the continuation of his employment by the
Company or interfere in any way with the right of the Company, subject to the
terms of any separate employment or other agreement to the contrary, at any time
to terminate such employment or to increase or decrease the compensation of the
Participant from the rate in existence at the time of the grant of an Incentive
Award.
No person shall have any claim or right to receive an Incentive Award
hereunder, and the Committee's granting of an Incentive Award to a Participant
at any time shall neither require the Committee to grant an Incentive Award to
such Participant or any other Participant or other person at any other time nor
preclude the Committee from making subsequent grants to such Participant or any
other Participant or other person.
14. SECURITIES AND OTHER MATTERS
(a) Envirodyne shall be under no obligation to effect the registration
pursuant to the Securities Act of any shares of Common Stock to be issued
hereunder or to effect similar compliance under any state laws. Notwithstanding
anything herein to the contrary, Envirodyne shall not be obligated to cause to
be issued or delivered any certificates evidencing shares of Common Stock
pursuant to the Plan unless and until
A-12
<PAGE> 32
Envirodyne is advised by its counsel that the issuance and delivery of such
certificates is in compliance with all applicable laws, regulations of
governmental authority and the requirements of any securities exchange on which
shares of Common Stock are traded. The Committee may require, as a condition of
the issuance and delivery of certificates evidencing shares of Common Stock
pursuant to the terms hereof, that the recipient of such shares make such
covenants, agreements and representations, and that such certificates bear such
legends, as the Committee, in its sole discretion, deems necessary or desirable.
(b) The exercise of any Option granted hereunder shall only be effective at
such time as counsel to Envirodyne shall have determined that the issuance and
delivery of shares of Common Stock pursuant to such exercise is in compliance
with all applicable laws, regulations of governmental authority and the
requirements of any securities exchange on which shares of Common Stock are
traded. Envirodyne may, in its sole discretion, defer the effectiveness of any
exercise of an Option granted hereunder in order to allow the issuance of shares
of Common Stock pursuant thereto to be made pursuant to registration or an
exemption from registration or other methods for compliance available under
federal or state securities laws. Envirodyne shall inform the Participant in
writing of its decision to defer the effectiveness of the exercise of an Option
granted hereunder. During the period that the effectiveness of the exercise of
an Option has been deferred, the Participant may, by written notice, withdraw
such exercise and obtain the refund of any amount paid with respect thereto.
(c) Envirodyne may, in its sole discretion, defer the effectiveness of any
exercise of a Tandem SAR or a Stand-Alone SAR granted hereunder to the extent
that the payment of cash by Envirodyne to the Participant upon such exercise
would violate or otherwise conflict with any agreement to which Envirodyne is a
party or by which Envirodyne is bound. Envirodyne shall inform the Participant
in writing of its decision to defer the effectiveness of the exercise of a
Tandem SAR or Stand-Alone SAR granted hereunder. During the period that the
effectiveness of the exercise of a Tandem SAR or Stand-Alone SAR has been
deferred, the Participant may, by written notice, withdraw such exercise.
15. WITHHOLDING TAXES
(a) Cash Remittance
Whenever shares of Common Stock are to be issued upon the exercise of an
Option, Envirodyne shall have the right to require the Participant to remit to
Envirodyne in cash an amount sufficient to satisfy federal, state and local
withholding tax requirements, if any, attributable to such exercise prior to the
delivery of any certificate or certificates for such shares. In addition, upon
the exercise of an LSAR, Tandem SAR or Stand-Alone SAR, Envirodyne shall have
the right to withhold from any cash payment required to be made pursuant thereto
an amount sufficient to satisfy the federal, state and local withholding tax
requirements, if any, attributable to such exercise.
(b) Stock Remittance
At the election of the Participant, subject to the approval of the
Committee, when shares of Common Stock are to be issued upon the exercise of an
Option, the Participant may tender to Envirodyne a number of shares of Common
Stock determined by such Participant, the Fair Market Value of which at the
tender date the Committee determines to be sufficient to satisfy the federal,
state and local withholding tax requirements, if any, attributable to such
exercise or grant and not greater than the Participant's estimated total
federal, state and local tax obligations associated with such exercise or grant.
Such election shall satisfy the Participant's obligations under Section 15(a)
hereof, if any.
(c) Stock Withholding
At the election of the Participant, subject to the approval of the
Committee, when shares of Common Stock are to be issued upon the exercise of an
Option, Envirodyne shall withhold a number of such shares, the Fair Market Value
of which at the exercise date the Committee determines to be sufficient to
satisfy the federal, state and local withholding tax requirements, if any,
attributable to such exercise or grant and is not greater than the Participant's
estimated total federal, state and local tax obligations associated with such
exercise or grant. Such election shall satisfy the Participant's obligations
under Section 15(a) hereof, if any.
A-13
<PAGE> 33
(d) Participants Subject to Section 16(b)
With respect to any Participant who is subject to the provisions of Section
16(b) of the Exchange Act and who has not made an election pursuant to Section
83(b) of the Code, upon the expiration of six-months following the Participant's
exercise of an Option, the Participant shall remit to Envirodyne in cash an
amount sufficient to satisfy federal, state and local withholding tax
requirements, if any, attributable to such exercise prior to the delivery of any
certificate or certificates for such shares, unless the Participant has made an
election pursuant to Section 15(b) or (c) hereof, in which case the Participant
shall tender a number of shares prior to such delivery, or Envirodyne shall
withhold a number of shares, respectively, determined pursuant to such
Paragraph.
(e) Timing and Method of Elections
Notwithstanding any other provisions of the Plan, a Participant who is
subject to Section 16(b) of the Exchange Act may not make either of the
elections described in Sections 15(b) and (c) hereof prior to the expiration of
six months after the date on which the applicable Option was granted, except in
the event of the death or Disability of the Participant. A Participant who is
subject to Section 16(b) of the Exchange Act may not make such elections other
than (i) during the 10-day window period beginning on the third business day
following the date of release for publication of Envirodyne's quarterly and
annual summary statements of sales and earnings and ending on the twelfth
business day following such date or (ii) at least six months prior to the date
as of which the income attributable to the exercise of such Option is recognized
under the Code. Such elections shall be irrevocable and shall be made by the
delivery to Envirodyne's principal office, to the attention of its Chief
Financial Officer, of a written notice signed by the Participant.
16. AMENDMENT OF THE PLAN
The Board of Directors may at any time suspend or discontinue the Plan or
revise or amend it in any respect whatsoever; provided, however, that without
approval of the shareholders no revision or amendment shall (i) except as
provided in Section 10 hereof, increase the number of shares of Common Stock
that may be issued under the Plan, (ii) materially increase the benefits
accruing to individuals holding Incentive Awards granted pursuant to the Plan or
(iii) materially modify the requirements as to eligibility for participation in
the Plan.
17. NO OBLIGATION TO EXERCISE
The grant to a Participant of an Option, LSAR, Tandem SAR or Stand-Alone
SAR shall impose no obligation upon such Participant to exercise such Option,
LSAR, Tandem SAR or Stand-Alone SAR.
18. TRANSFERS UPON DEATH
Upon the death of a Participant, outstanding Incentive Awards granted to
such Participant may be exercised only by the executors or administrators of the
Participant's estate or by any person or persons who shall have acquired such
right to exercise by will or by the laws of descent and distribution. No
transfer by will or the laws of descent and distribution of any Incentive Award,
or the right to exercise any Incentive Award, shall be effective to bind
Envirodyne unless the Committee shall have been furnished with (a) written
notice thereof and with a copy of the will and/or such evidence as the Committee
may deem necessary to establish the validity of the transfer and (b) an
agreement by the transferee to comply with all the terms and conditions of the
Incentive Award that are or would have been applicable to the Participant and to
be bound by the acknowledgments made by the Participant in connection with the
grant of the Incentive Award.
19. EXPENSES AND RECEIPTS
The expenses of the Plan shall be paid by Envirodyne. Any proceeds received
by Envirodyne in connection with any Incentive Award will be used for general
corporate purposes.
A-14
<PAGE> 34
20. FAILURE TO COMPLY
In addition to the remedies of Envirodyne elsewhere provided for herein,
failure by a Participant to comply with any of the terms and conditions of the
Plan or the agreement executed by such Participant evidencing an Incentive
Award, unless such failure is remedied by such Participant within ten days after
having been notified of such failure by the Committee, shall be grounds for the
cancellation and forfeiture of such Incentive Award, in whole or in part, as the
Committee, in its absolute discretion, may determine.
21. EFFECTIVE DATE AND TERM OF PLAN
The Plan was adopted pursuant to the First Amended Joint Plan of
Reorganization as Twice Modified of Envirodyne and certain of its subsidiaries
dated December 15, 1993, which was substantially consummated on December 31,
1993 (the "Plan of Reorganization"). No grants may be made under the Plan after
May 27, 2004. The grant of each Option, LSAR, Tandem SAR or Stand-Alone SAR to
any Participant who is subject to Section 16(b) of the Exchange Act is subject
to the approval of the Plan by the shareholders of Envirodyne to the extent
required by Rule 16b-3 promulgated under such Section, and no Option, LSAR,
Tandem SAR or Stand-Alone SAR granted to any such Participant shall be
exercisable prior to the receipt of such approval, if required, unless, in
either case, (i) such Participants are entitled to rely on the exemption
provided by such Rule 16b-3, or any successor thereto, in connection with such
grants notwithstanding the absence of such shareholder approval or (ii) the
solicitation of plan acceptances with respect to the Plan of Reorganization
satisfies the shareholder approval requirement of Section 16(b) of the Exchange
Act and Rule 16b-3 promulgated thereunder.
A-15
<PAGE> 35
PLEASE MARK YOUR
[X] VOTES AS IN THIS
EXAMPLE.
PROXY CARD THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL
NOMINEES LISTED AND FOR PROPOSALS 2 AND 3 THIS PROXY WHEN
PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR ALL NOMINEES LISTED AND FOR PROPOSALS 2 AND 3.
<TABLE>
<S><C>
FOR WITHHELD FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
1. Election of 2. Ratification of 1993 3. Ratification of
Directors / / / / Stock Option Plan / / / / / / Appointment of / / / / / /
(See Reverse) Independent
For, except vote WITHHELD from the following nominee(s): Accountants
______________________________________________________
</TABLE>
SIGNATURE(S)___________________________________________DATE_______________
PLEASE SIGN AND DATE HERE AND RETURN IN ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
P ENVIRODYNE INDUSTRIES, INC. PROXY SOLICITED BY THE BOARD OF DIRECTORS
R 701 HARGER ROAD, SUITE 190 FOR THE ANNUAL MEETING OF STOCKHOLDERS
O OAK BROOK, ILLINOIS 60521 MAY 10, 1995
X
Y Donald P. Kelly and F. Edward Gustafson, or either of them individually and
each of them with power of substitution, are hereby appointed Proxies of the
C undersigned to vote all shares of Common Stock of Envirodyne Industries, Inc.
A owned on the record date by the undersigned at the Annual Meeting of
R Stockholders to be held on May 10, 1995, or any adjournment thereof, upon
D such business as may properly come before the meeting, including the items
on the reverse side of this form as set forth in the Notice of Annual
Meeting of Stockholders and Proxy Statement, dated April 7, 1995.
Election of Directors, Nominees:
Robert N. Dangremond, Avram A. Glazer,
Malcolm I. Glazer, F. Edward Gustafson,
Michael E. Heisley, Donald P. Kelly,
Gregory R. Page, Mark D. Senkpiel
(Shares cannot be voted unless this Proxy Card is signed and returned, or
other specific arrangements are made to have the shares represented at the
meeting.)
