-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, gfR8IYFOIIaD4ypgHVPHVN20xg1AVUIc14xC269msubsWUJMkPVBtknFHaw4m7iP xum7WXs1d4hb0G/Y6xj8cA== 0000950124-95-001055.txt : 19950414 0000950124-95-001055.hdr.sgml : 19950414 ACCESSION NUMBER: 0000950124-95-001055 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950510 FILED AS OF DATE: 19950407 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENVIRODYNE INDUSTRIES INC CENTRAL INDEX KEY: 0000033073 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] IRS NUMBER: 952677354 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 000-05485 FILM NUMBER: 95527556 BUSINESS ADDRESS: STREET 1: 701 HARGER RD STE 121 CITY: OAK BROOK STATE: IL ZIP: 60521 BUSINESS PHONE: 7085718800 FORMER COMPANY: FORMER CONFORMED NAME: MGN INC DATE OF NAME CHANGE: 19790425 DEF 14A 1 NOTICE & PROXY STATEMENT/PROXY CARD 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: - -------------------------------------------------------------------------------- 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 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 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. 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 6 Nominees for Director. The following information has been provided by the respective nominees for election to the Board of Directors.
NAME AGE PRINCIPAL OCCUPATION - ------------------------------ --- ---------------------------------------------------- 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.
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NAME AGE PRINCIPAL OCCUPATION - ------------------------------ --- ---------------------------------------------------- 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.
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 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.
AMOUNT AND NAME AND ADDRESS OF NATURE OF BENEFICIAL PERCENT BENEFICIAL OWNER OWNERSHIP OF CLASS - ----------------------------------------------- -------------------- -------- 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
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AMOUNT AND NAME AND ADDRESS OF NATURE OF BENEFICIAL PERCENT BENEFICIAL OWNER OWNERSHIP OF CLASS - ----------------------------------------------- -------------------- -------- 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%
- --------------- 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 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 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 $100,000 in 1994. For additional information, including a description of the Amended and Restated Management Services Agreement dated as of December 31, 1993 between the Company and DPK, see "Certain Relationships and Related Transactions." SUMMARY COMPENSATION TABLE
LONG-TERM ANNUAL COMPENSATION COMPENSATION AWARDS ------------------------------ --------------------- OTHER ANNUAL ALL OTHER COMPEN- COMPEN- NAME AND SALARY BONUS SATION OPTIONS SATION PRINCIPAL POSITION YEAR ($) ($) $(1) (#)(2) ($)(3) - ----------------------------------- ---- ------- ------ ------- ------- --------- 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
- --------------- 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 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 $5,963, respectively, with respect to such Company contributions. (4) Mr. Schuster is eligible for payments under the Envirodyne Management Incentive Plan. Bonus payments are determined based upon the Company's overall financial performance and the individual's performance. Cash bonuses under the Management Incentive Plan are earned with respect to the year indicated and paid in the following year. Stock Option Grants. The following table provides information concerning the grant of stock options to Mr. Schuster under the Company's 1993 Stock Option Plan during fiscal 1994. Messrs. Kelly, Gustafson and Corcoran are not eligible to participate in the 1993 Stock Option Plan. No stock appreciation rights ("SARs") have been granted under the 1993 Stock Option Plan. OPTION GRANTS IN LAST FISCAL YEAR
PERCENT OF POTENTIAL REALIZABLE NUMBER OF TOTAL VALUE AT ASSUMED SECURITIES OPTIONS ANNUAL RATES OF STOCK UNDERLYING GRANTED TO PRICE APPRECIATION OPTIONS EMPLOYEES EXERCISE OR BASE FOR OPTION TERM(3) GRANTED IN FISCAL PRICE EXPIRATION --------------------- NAME (#)(1) YEAR ($/SHARE)(2) DATE 5%($) 10%($) - ------------------------------- ---------- ---------- ---------------- ---------- ------- -------- Stephen M. Schuster............ 22,850 5.7% 5.0625 05/27/04 72,749 184,361
- --------------- (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
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 - ----------------------------------------------- -------- -------- ------------- ------------- Stephen M. Schuster............................ -- -- -0-/22,850 -0-/-0-
9 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 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
NASDAQ ENVIRODYNE NON-FINAN- MEASUREMENT PERIOD INDUSTRIES, CIAL COMPA- PEER GR OUP (FISCAL YEAR COVERED) INC. NIES INDEX INDEX 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
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 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 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 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
DOLLAR NUMBER NAME AND POSITION(1) VALUE($) OF OPTIONS ------------------------------------------------------------------ -------- ---------- 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
- --------------- (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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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. 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 ______________________________________________________
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.) -----END PRIVACY-ENHANCED MESSAGE-----