1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 6)
ENVIRODYNE INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, par value $0.01 per share
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(Title of Class of Securities)
294037205
- --------------------------------------------------------------------------------
(CUSIP Number)
Joseph L. von Rosenberg III
Executive Vice President, General Counsel and Corporate Secretary
ZAPATA CORPORATION
1717 St. James Place, Suite 550
Houston, Texas 77056
(713) 940-6100
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
April 29, 1997
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
Page 1 of 5 Pages
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INTRODUCTORY NOTE.
This Amendment No. 6 to Schedule 13D is being filed on behalf of
Zapata Corporation, a Delaware corporation ("Zapata"), to supplement certain
information set forth in the Schedule 13D relating to securities of Envirodyne
Industries, Inc. (the "Issuer") originally filed by Zapata on August 17, 1995,
as amended by Amendments No. 1, 2, 3, 4 and 5 to Schedule 13D filed on June 21,
1996, March 10, 1997, March 31, 1997, April 18, 1997 and April 23, 1997,
respectively.
ITEM 4. PURPOSE OF TRANSACTION
Item 4 to the Schedule 13D is hereby supplemented as follows:
On April 29, 1997, Zapata filed definitive proxy materials in opposition
to a solicitation by the Issuer's Board of Directors for the 1997 Annual
Meeting of Stockholders of the Issuer (the "1997 Annual Meeting"). Zapata's
definitive proxy materials contain information regarding Zapata's solicitation
of proxies (i) to elect Malcolm I. Glazer, Avram A. Glazer and Robert V.
Leffler, Jr. to the Board of Directors of the Issuer at the 1997 Annual Meeting
and (ii) for a proposal recommending that the Board of Directors of the Issuer
take appropriate action to redeem as soon as practicable the rights issued
under the Rights Agreement between the Issuer and Harris Trust & Savings Bank
dated as of June 26, 1996 (the "Rights Plan") or otherwise terminate the Rights
Plan and not implement any other stockholder rights plan without a binding vote
of the Issuer's stockholders. Zapata's definitive proxy materials relating to
the 1997 Annual Meeting are attached hereto as Exhibit 99.5, and the
information included in the definitive materials under the captions "Annual
Meeting Proposals -- Proposal 3" and "Possible Acquisition by Zapata of
Additional Common Stock or Merger or Other Business Combination with the
Company" is incorporated herein by reference.
On April 23, 1997, the Issuer filed a complaint against Zapata, Malcolm
I. Glazer and Avram A. Glazer in the United States District Court for the
Northern District of Illinois, Eastern Division, alleging violations of Section
13(d) of the Exchange Act. A copy of the complaint is attached to this
Amendment No. 6 to Schedule 13D as Exhibit 99.6.
Page 2 of 5 Pages
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ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit Number Document Description
-------------- --------------------
99.5 Definitive Proxy Materials filed by
Zapata Corporation for use in
soliciting proxies for the 1997
Annual Meeting
99.6 Complaint for Declaratory and
Injunctive Relief filed by Envirodyne
Industries, Inc. against Zapata
Corporation, Malcolm I. Glazer and
Avram A. Glazer in the United States
District Court for the Northern
District of Illinois, Eastern
Division
Page 3 of 5 Pages
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After reasonable inquiry and to the best of the undersigned's
knowledge and belief, the undersigned certifies that the information set forth
in this statement is true, complete and correct.
Date: April 29, 1997.
ZAPATA CORPORATION
By: /s/ JOSEPH L. VON ROSENBERG III
---------------------------------
Joseph L. von Rosenberg III
Executive Vice President,
General Counsel and Corporate
Secretary
Page 4 of 5 Pages
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EXHIBIT INDEX
Exhibit Number Document Description
-------------- --------------------
99.5 Definitive Proxy Materials filed by
Zapata Corporation for use in
soliciting proxies for the 1997
Annual Meeting
99.6 Complaint for Declaratory and
Injunctive Relief filed by Envirodyne
Industries, Inc. against Zapata
Corporation, Malcolm I. Glazer and
Avram A. Glazer in the United States
District Court for the Northern
District of Illinois, Eastern
Division
Page 5 of 5 Pages
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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
ENVIRODYNE INDUSTRIES, INC.
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(Name of Registrant as Specified in its Charter)
ZAPATA CORPORATION
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i) 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:
---------------------------------------------------------------
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ZAPATA CORPORATION
1717 St. James Place, Suite 550
Houston, Texas 77056
(713) 940-6100
-------------------------
PROXY STATEMENT
In Opposition to Solicitation by the Board of Directors of
ENVIRODYNE INDUSTRIES, INC.
-------------------------
ANNUAL MEETING OF STOCKHOLDERS OF
ENVIRODYNE INDUSTRIES, INC.
To be held on May 16, 1997
To Fellow Stockholders of Envirodyne:
This Proxy Statement and the accompanying BLUE proxy card are
being furnished by Zapata Corporation, a Delaware corporation ("Zapata"), to
stockholders of Envirodyne Industries, Inc., a Delaware corporation (the
"Company"), in connection with the solicitation of proxies by Zapata for use at
the Annual Meeting of Stockholders of the Company (the "Annual Meeting") to be
held on Friday, May 16, 1997, at 9:00 a.m., local time, at Sidley & Austin, One
First National Plaza, 55th Floor Conference Center, Chicago, Illinois, and at
any adjournment or postponement thereof. The principal executive offices of
the Company are located at 701 Harger Road, Suite 190, Oak Brook, Illinois
60521. This Proxy Statement and the enclosed BLUE proxy card are being sent to
stockholders by Zapata on or about April 29, 1997.
For the Annual Meeting, Zapata is soliciting proxies in
support of:
1. The election of the following three nominees of
Zapata (the "Zapata Nominees") to serve as directors until the next Annual
Meeting and until their successors are elected and qualified:
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Malcolm I. Glazer, Avram A. Glazer and Robert V.
Leffler, Jr.;
2. The ratification of the appointment of Coopers &
Lybrand L.L.P. as the Company's independent accountants for the fiscal year
ending December 25, 1997; and
3. A proposal recommending that the Board of Directors
of the Company take appropriate action to redeem as soon as practicable the
rights issued under the Rights Agreement between the Company and Harris Trust &
Savings Bank dated as of June 26, 1996 (the "Rights Plan") or otherwise
terminate the Rights Plan and not implement any other stockholder rights plan
without a binding vote of the Company's stockholders.
As reported in the Notice of Annual Meeting of Stockholders
and Proxy Statement filed by the Company (the "Company Proxy Statement") with
the Securities and Exchange Commission on April 18, 1997, the record date (the
"Record Date") for the Annual Meeting is March 21, 1997. Only stockholders of
record as of the close of business on the Record Date will be entitled to
notice of and to vote at the Annual Meeting. According to the Company Proxy
Statement, as of the close of business on the Record Date there were
outstanding 14,552,233 shares of the Company's common stock, par value $0.01
per share ("Common Stock"). Each share of Common Stock is entitled to one vote
on all matters to come before the Annual Meeting. The Company has no other
class of voting securities outstanding.
Shares of Common Stock cannot be voted at the Annual Meeting
unless the holder thereof is present in person or represented by proxy. When
the accompanying BLUE proxy card is properly executed and returned, the shares
represented thereby will be voted as specified thereon. If no specification
has been given in a proxy and authority to vote has not been withheld, the
shares represented thereby will be voted: "FOR" the Zapata Nominees, "FOR" the
ratification of the appointment of Coopers & Lybrand L.L.P. as the independent
accountants for the Company for the 1997 fiscal year and "FOR" the proposal
recommending that the Board of Directors redeem the rights issued under or
otherwise terminate the Rights Plan. As to any other matters as may properly
come before the Annual Meeting, the persons named as proxies on the enclosed
BLUE proxy card will vote in accordance with their judgment on such matters
pursuant to discretionary authority. See "Voting and Proxy Procedures" below.
TO ELECT THE ZAPATA NOMINEES TO THE COMPANY'S BOARD OF
DIRECTORS AND TO VOTE IN FAVOR OF THE PROPOSAL RECOMMENDING THAT THE BOARD OF
DIRECTORS TAKE ACTION TO REDEEM THE RIGHTS ISSUED UNDER OR OTHERWISE TERMINATE
THE STOCKHOLDERS RIGHTS PLAN, PLEASE SIGN, MARK, DATE AND PROMPTLY RETURN THE
ENCLOSED BLUE PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE. ONLY YOUR
LATEST DATED AND SIGNED PROXY WILL COUNT AT THE ANNUAL MEETING.
ZAPATA URGES YOU NOT TO SIGN ANY PROXY CARD SENT TO YOU BY THE
COMPANY. IF YOU HAVE ALREADY DONE SO, YOU MAY REVOKE YOUR PROXY
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BY DELIVERING A LATER DATED BLUE PROXY CARD TO ZAPATA IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
If you have any questions or need assistance in voting your
shares or in changing your vote please contact Zapata at (713) 940-6100 or our
solicitation agent:
GEORGESON & COMPANY INC.
Wall Street Plaza
New York, New York 10005
Toll Free (800) 223-2064
or
Bankers and Brokerage
Firms please call collect:
(212) 440-9800
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ANNUAL MEETING PROPOSALS
PROPOSAL 1:
APPROVAL OF THE ZAPATA NOMINEES
FOR ELECTION AS DIRECTORS AT THE ANNUAL MEETING
According to the Company Proxy Statement, the Board of
Directors voted at a meeting held on March 19, 1997 to reduce the number of
directors from seven to five members upon the expiration of the current term of
directors. The terms of the seven incumbent directors will expire at the
Annual Meeting. The Board of Directors is soliciting proxies in favor of the
election of five incumbent Directors (excluding incumbent directors Malcolm I.
Glazer and Avram A. Glazer) as nominees for election as directors to serve
until the 1998 Annual Meeting of Stockholders of the Company and until their
successors are duly elected and qualified. Zapata proposes that the three
Zapata Nominees (including incumbent directors Malcolm I. Glazer and Avram A.
Glazer) be elected as directors of the Company, to serve until the next Annual
Meeting and until their successors shall have been duly elected and qualified.
Because the number of directors to be elected at the Annual
Meeting is set at five and Zapata is soliciting proxies in favor of only three
persons to serve as directors, the proxy holders on the enclosed BLUE proxy
card cannot vote for more than three directors at the Annual Meeting.
Accordingly, if you vote by returning the enclosed BLUE proxy card solicited by
Zapata, you will not be able to cast votes for the full number of directors to
be elected. Zapata is proposing only three nominees because a full slate of
five nominees not approved by specified members of Board of Directors would
result in the occurrence of a "change of control" for purposes of certain debt
covenants of the Company. See "Possible Acquisition by Zapata of Additional
Common Stock or Merger or other Business Combination with the Company" below.
In addition, election of a full slate of five nominees without approval by a
majority of "Continuing Directors" could, under the terms of the Rights Plan,
leave the Company with no means of redeeming or amending the Rights. See
"Annual Meeting Proposals -- Proposal 3" below. If all three Zapata Nominees
are elected to serve as directors, the remaining two seats are likely to be
filled by nominees of the Board of Directors. However, there can be no
assurance that any elected nominee of the Board of Directors would serve on the
Company's Board of Directors with the Zapata Nominees.
The name, business address, present principal occupation or
employment and employment history of each of the Zapata Nominees is set forth
below. Such information has been furnished by the respective nominees. Each
of the Zapata Nominees, if elected, will hold office until the 1998 Annual
Meeting of Stockholders and until his successor has been elected and qualified
or until his earlier death, resignation or removal. Each of the Zapata
Nominees has consented to serve as a director, if elected. While Zapata does
not expect that any of the Zapata Nominees will be unable to stand for
election, in the event that one or more of the Zapata Nominees become
unavailable to serve, shares represented by the accompanying BLUE proxy card
will be voted for a substitute candidate or candidates selected by Zapata or
the proxy holders.
ZAPATA NOMINEES FOR DIRECTOR
MALCOLM I. GLAZER, age 68, has served as a director of the
Company since May 1995. Mr. Glazer is a self-employed private investor, whose
diversified portfolio consists of investments in television broadcasting,
restaurants, restaurant equipment, food services equipment, health care,
banking, real estate, stocks, government securities and corporate bonds. He is
also the owner of the Tampa Bay Buccaneers, a National Football League
franchise. Mr. Glazer has been President and Chief Executive Officer of First
Allied Corporation ("First Allied"), an investment company, since 1984. He has
served as a director of Zapata since July 1993, has been the Chairman of the
Board of Directors of Zapata since July 1994 and served as President and Chief
Executive Officer of Zapata from August 1994 until March 1995. He currently
serves as the Chairman of the Board of Houlihan's Restaurant Group, Inc., a
restaurant holding company ("Houlihan's"), and a director of Specialty
Equipment Companies, Inc., a food services equipment manufacturer
("Specialty"). Malcolm I. Glazer is the father of Avram A. Glazer. His
business address is 1482 South Ocean Boulevard, Palm Beach, Florida 33480.
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AVRAM A. GLAZER, age 36, has served as a director of the
Company since May 1995, and a member of the Audit Committee of the Board of
Directors of the Company since January 1997. Mr. Glazer has served as the
President and Chief Executive Officer of Zapata since March 1995. Prior to
that time, Mr. Glazer was employed by, and worked on behalf of, Malcolm I.
Glazer and a number of entities owned and controlled by Malcolm I. Glazer,
including Florida Management Office, TV Management Office, Farmington Mobile
Home Park, Inc., Century Development Corporation d/b/a/ KGNS Laredo and
Canandaigua Mobile Park. Mr. Glazer has served as Vice President of First
Allied since 1985. He has served as a director of Zapata since July 1993, and
also is a director of Houlihan's and Specialty. Avram A. Glazer is the son of
Malcolm I. Glazer. His business address is 18 Stoney Clover Lane, Pittsford,
New York 14534.
ROBERT V. LEFFLER, Jr., age 51, has served as owner of the
Leffler Agency, an advertising and marketing/public relations firm based in
Baltimore, Maryland that specializes in sports, rental real estate and medical
areas, for more than the past five years. Among the clients of the Leffler
Agency are the Tampa Bay Buccaneers owned by Malcolm I. Glazer. Mr. Leffler
has served as a director of Zapata since May 1995. His business address is
2607 North Charles St., Baltimore, Maryland 21218.
Zapata expects the Zapata Nominees, if elected, to receive
such compensation as is provided to non-employee Directors of the Company
under its established compensation arrangements. The established compensation
arrangements for directors (including incumbent directors Malcolm I. Glazer and
Avram A. Glazer) during 1996, as described in the Company Proxy Statement,
consisted of the following:
Each director who was not an officer of the Company received
an annual retainer of $20,000 in 1996 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 1996. Directors also received 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 were officers of the Company did
not receive compensation in their capacity as members of the
Board of Directors. On May 10, 1995 (the date of the
Company's 1995 Annual Meeting of Stockholders), each non-
employee director of the Company received a non-qualified
stock option to purchase 2,000 shares of Common Stock at an
option exercise price equal to the fair market value of the
Common Stock on the date of grant in accordance with the terms
of the Envirodyne Industries, Inc. 1993 Stock Option Plan, as
amended and restated. Pursuant to this Plan, on the date of
the 1996 Annual Meeting of Stockholders, non-employee
directors were granted an additional stock option to purchase
1,000 shares of Common Stock at an option exercise price equal
to the fair market value of the Common Stock on the date of
the grant. Pursuant to the Company's Non-Employee Directors'
Compensation Plan, non-employee directors of the Company may
elect to receive their director fees in the form of shares of
Common Stock. The number of shares received is based on the
average of the closing bid and asked price of the
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Common Stock on the business day preceding the date the
Common Stock is issued. All of the non-employee directors
elected to receive their director fees in the form of shares
of Common Stock for 1996.
ZAPATA STRONGLY ENCOURAGES YOU TO VOTE FOR EACH OF THE ZAPATA
NOMINEES LISTED ABOVE ON THE ENCLOSED BLUE PROXY CARD.
PROPOSAL 2:
RATIFICATION OF APPOINTMENT OF COOPERS & LYBRAND L.L.P. AS THE COMPANY'S
INDEPENDENT ACCOUNTANTS FOR THE 1997 FISCAL YEAR
As set forth in the Company Proxy Statement, at the Annual
Meeting, the stockholders will be asked to vote on a proposal to ratify the
appointment of Coopers & Lybrand L.L.P. as the independent accountants for the
Company for the fiscal year ending December 25, 1997. According to the Company
Proxy Statement, representatives of Coopers & Lybrand L.L.P. are expected to be
present at the Annual Meeting and will have an opportunity to respond to
appropriate questions and make a statement if they so desire. The accompanying
BLUE proxy card will be voted in accordance with your instructions on such
matter. You may vote for ratification of the appointment of Coopers & Lybrand
L.L.P. as the independent accountants or vote against or abstain from voting on
ratification of Coopers & Lybrand L.L.P. by marking the appropriate box on the
BLUE proxy card. If no marking is made, you will be deemed to have given a
direction to vote the shares represented by the BLUE proxy card FOR the
ratification of the appointment of Coopers & Lybrand L.L.P.
PROPOSAL 3:
RECOMMENDATION THAT THE COMPANY'S BOARD OF DIRECTORS TAKE APPROPRIATE ACTION TO
REDEEM AS SOON AS PRACTICABLE THE RIGHTS ISSUED UNDER THE RIGHTS PLAN OR
OTHERWISE TERMINATE THE RIGHTS PLAN AND NOT IMPLEMENT ANY OTHER STOCKHOLDER
RIGHTS PLAN WITHOUT A BINDING VOTE OF THE COMPANY'S STOCKHOLDERS
Zapata strongly encourages you to vote in favor of the
proposal recommending that the Board of Directors of the Company take
appropriate action to redeem as soon as practicable the rights (the "Rights")
issued under the Rights Plan or otherwise terminate the Rights Plan and not
implement any other stockholder rights plan without a binding vote of the
Company's stockholders. Proposal 3 is a recommendation to the Company's Board of
Directors that, if approved, will not be binding on the Board of Directors.
On June 26, 1996, the Company's Board of Directors (Messrs.
Malcolm I. Glazer and Avram A. Glazer dissenting), without stockholder
approval, adopted the Rights Plan, a type of anti-takeover device commonly
known as a "poison pill." In a June 26, 1996 press release, the Company stated
that the adoption of the Rights Plan followed the announcement by Zapata that
Zapata had raised its ownership of Common Stock to approximately 40.6% of the
shares outstanding. The press release further stated that "[w]hile the Company
has been and continues to be prepared to carefully consider good faith offers
to acquire the Company, the Board believes that
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the Rights Plan will enhance the Board's ability to negotiate the best price
possible, on behalf of all the Company's stockholders, should a change of
control occur. The Rights Plan is designed, among other things, to prevent an
acquiror from gaining control of the Company without offering a fair price to
all of the Company's stockholders." The terms of the Rights Plan effectively
preclude Zapata from becoming the beneficial owner of shares of Common Stock if
its aggregate beneficial ownership would equal or exceed 41% of the outstanding
shares of Common Stock (except pursuant to a tender or exchange offer for all
outstanding shares of Common Stock on terms approved by a majority of the
directors of the Company not representatives of or affiliated with Zapata).
If the Rights are redeemed, Zapata would be able to acquire
beneficial ownership of additional shares of Common Stock above the 41%
ownership threshold set by the Rights Plan. Zapata intends to continue to
evaluate the possibility of acquiring additional shares of Common Stock and
desires the opportunity to make such acquisitions without being effectively
precluded from doing so by the terms of the Rights Plan. Such purchases of
Common Stock by Zapata could include transactions in the open market or
privately negotiated transactions not involving an offer to all stockholders of
the Company. If Zapata obtains ownership of shares of Common Stock exceeding
50% of the outstanding shares of Common Stock entitled to vote, Zapata will be
the beneficial owner of Common Stock having sufficient voting power to
determine the outcome of any action taken by the stockholders of the Company
(including action by written consent without a meeting), except for any vote
prior to August 16, 1997 on certain "business combinations" within the meaning
of Section 203 of the Delaware General Corporation Law. See "Possible
Acquisition by Zapata of Additional Common Stock or Merger or Other Business
Combination with the Company" below.
If Zapata acquires beneficial ownership of more than 50% of
the Common Stock, the Company may be required, under the terms of instruments
governing certain of its outstanding debt, to redeem such debt at the option of
the respective holders at a premium. The Company has stated that such
redemption could result in an additional cost to the Company of up to $18
million. See "Possible Acquisition by Zapata of Additional Common Stock or
Merger or Other Business Combination with the Company" below.
The Rights Plan provides that the Board of Directors may
redeem the Rights at an exercise price of $.001 per Right (subject to
adjustment in certain circumstances), payable in cash or shares of Common
Stock. The Rights Plan also provides, however, that a decision to redeem the
Rights requires the concurrence of a majority of the Continuing Directors (as
defined in the Rights Plan). The definition of Continuing Director in the
Rights Plan generally includes directors of the Company who either were members
of the Board of Directors on June 26, 1996 or subsequently become members of
the Board of Directors if their nomination for election or election is approved
by a majority of the Continuing Directors. The definition, however, excludes,
among others, a director of the Company who, together with certain affiliates
and associates, is the beneficial owner of 35% or more of the Common Stock then
outstanding. As a result of this exclusion, Malcolm I. Glazer and Avram A.
Glazer currently are not considered to be Continuing Directors and the Zapata
Nominees, if elected, will likewise not be considered Continuing Directors.
Under the terms of the
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Rights Plan, a Zapata Nominee, if elected, would therefore be excluded from the
group of directors whose concurrence is necessary to redeem the Rights or to
amend the Rights Plan and whose recommendation or approval is necessary in order
for persons who subsequently become directors to be Continuing Directors. Zapata
believes that the provisions of the Rights Plan relating to Continuing Directors
create an impediment to a change in composition of the Board of Directors that
the Company's stockholders may desire because such provisions place certain
members of the Company's existing Board of Directors (and successors approved by
them) in a position to prevent new directors not approved by such members (or
successors) from participating in any decision to redeem or amend the Rights.
If, for example, the Company's stockholders voted to elect directors that do not
include any Continuing Directors, a situation would be created in which the
Rights could not, in accordance with the terms of the Rights Plan, be redeemed
or amended, regardless of whether such action would be in the best interests of
the Company and its stockholders. In addition, Zapata believes that the
elements of the definition of Continuing Director and related provisions which
discriminate against its existing ownership position are unfair and invalid.
Zapata has filed a lawsuit against the Company and certain of its directors in
the United States District Court for the Southern District of Texas, Houston
Division. The lawsuit, among other things, seeks to invalidate the provisions of
the Rights Plan relating to Continuing Directors so that any action now required
to be approved by Continuing Directors may be taken by action of the Board of
Directors. See "Possible Acquisition by Zapata of Additional Common Stock or
Merger or Other Business Combination with the Company -- Certain Litigation."
If the three Zapata Nominees are elected, they will constitute
a majority of the five-member Board of Directors. The combination of the
recommended redemption of the Rights and the election of the Zapata Nominees
may facilitate Zapata's ability to undertake transactions described under
"Possible Acquisition by Zapata of Additional Common Stock or Merger or Other
Business Combination with the Company" below.
ZAPATA STRONGLY ENCOURAGES YOU TO VOTE IN FAVOR OF THE
PROPOSAL RECOMMENDING THAT THE COMPANY'S BOARD OF DIRECTORS TAKE ACTION TO
REDEEM THE RIGHTS ISSUED UNDER OR OTHERWISE TERMINATE THE RIGHTS PLAN.
OTHER PROPOSALS
Except as set forth above, Zapata is not aware of any
proposals to be brought before the Annual Meeting. Should other proposals be
properly brought before the Annual Meeting, the persons named on the BLUE proxy
card will vote on such proposals in accordance with their judgment pursuant to
discretionary authority.
For a description of the voting and proxy solicitation
procedures, see "Voting and Proxy Procedures" and "Proxy Solicitation" below.
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10
POSSIBLE ACQUISITION BY ZAPATA OF
ADDITIONAL COMMON STOCK OR MERGER
OR OTHER BUSINESS COMBINATION WITH THE COMPANY
The purpose of Zapata's initial acquisition of Common Stock in
August 1995 was to make an investment which would be the first step in a
proposed transformation of Zapata away from the energy business and into
food-related businesses. Zapata recently has announced its intention to change
from its previous strategy of repositioning into food-related businesses to a
new multi-industry strategy that includes expansion with various businesses as
appropriate opportunities arise. Zapata intends to continue to evaluate the
possibility of acquiring additional shares of Common Stock from time to time in
the open market or in privately negotiated transactions or proposing a merger or
other business combination with the Company but has not formulated any proposed
terms for, or decided to pursue, any such transaction. See "Annual Meeting
Proposals--Proposal 3" above for information regarding the effect of the Rights
on Zapata's ability to acquire additional shares of Common Stock. Redemption of
the Rights or termination of the Rights Plan would facilitate Zapata's ability
to increase its level of ownership of Common Stock.
Election of the three Zapata Nominees would result in
representatives of Zapata constituting a majority of the five-member Board of
Directors of the Company. Zapata does not have any plans to change the
executive management of the Company and is generally satisfied with the
performance of the Company's executive management. A majority of the members
of the Board of Directors would be in a position to cause the Company to enter
into a merger agreement or other business combination transaction, subject to
any requisite vote of the Company's stockholders. Zapata does not, however,
intend to enter into any agreement for a merger or other business combination
transaction between Zapata and the Company unless the agreement is approved by
a committee of the Company's Board of Directors consisting entirely of persons
not representatives of, or otherwise affiliated with, Zapata and an opinion
from a nationally recognized investment banking firm is received to the effect
that the terms of such transaction are fair to the Company's stockholders from
a financial point of view. Depending on Zapata's level of ownership of Common
Stock, Zapata might be in a position to exercise sufficient voting power to
cause any requisite vote of the stockholders of the Company required in
connection with such a transaction to be obtained. See "Annual Meeting
Proposals -- Proposal 3."
The Company has outstanding debt that contains provisions
giving the respective holders the right to require the Company to repurchase
the debt upon the occurrence of a "change of control." A change of control
under these provisions would occur if (i) any person is or becomes the
beneficial owner of more than 50% of the Common Stock or (ii) during any period
of two calendar years, individuals who at the beginning of such period
constituted the Board of Directors of the Company (together with any new or
replacement directors whose election by the stockholders of the Company was
approved by a vote of a majority of the directors of the Company then still in
office who were either directors of the Company at the beginning of such
two-year period or whose election or nomination was previously so approved)
cease for any reason to constitute a majority of the Board of Directors then in
office. The Company has stated that if a change of control were to occur under
these provisions, the Company would be required to repay
- 9 -
11
early up to approximately $380 million principal amount of debt at an
additional cost to the Company of up to $18 million. Zapata does not believe
that election of the Zapata Nominees would cause a change of control within the
meaning of the relevant provisions in the Company's debt instruments to be
deemed to occur because after the election of the Zapata Nominees a majority of
the members of the Company's Board of Directors would continue to consist of
persons who were members of the Board of Directors (or new or replacement
directors meeting the qualifications set forth in the definition of change of
control) at the beginning of the relevant two-year period. If Zapata were to
become the beneficial owner of more than 50% of the Common Stock such a change
of control would be deemed to occur. In deciding whether to acquire additional
Common Stock that would cause its beneficial ownership to exceed 50% of the
Common Stock, Zapata would expect to consider relevant factors, including the
terms on which debt required to be repurchased by the Company could be
refinanced. Zapata has given preliminary consideration to a possible
refinancing of the Company's debt that would be required to be repurchased or
repaid in the event of a change of control, including preliminary consultation
with a financial advisor regarding the ability of the Company to refinance the
debt. Zapata believes that the debt (including the additional amount that would
be required to be paid as a result of the occurrence of a change of control)
could be refinanced but can provide no assurance to that effect. Zapata has not
performed or received any analysis regarding the costs or other specific terms
of a possible refinancing and can provide no assurance as to the terms on which
such a refinancing could be accomplished, or the time that would be required.
In addition to the adverse impact of the additional amount (above principal and
accrued interest) that would be required to be paid as a result of a change of
control, an adverse impact on the Company could result if the terms of any
such refinancing involved higher interest rates, less favorable payment
schedules, more restrictive covenants or other terms less favorable than those
applicable to the existing debt. Zapata would expect to undertake an analysis
of the terms on which the Company could accomplish such a refinancing, and the
time that would be required, prior to taking any action that would result in
the occurrence of a change of control under the debt instruments. Zapata does
not intend to take action that would result in the occurrence of a change of
control as defined in the debt instruments unless it has reasonable assurance
that any required refinancing would be available prior to the time the Company
is required to repurchase or repay the debt under the change of control
provisions.
CERTAIN LITIGATION
On April 18, 1997, Zapata filed a complaint against the Company and certain
of its directors in the United States District Court for the Southern District
of Texas, Houston, Division. In the complaint, as amended, Zapata alleges that
the Company's proxy materials for use at the Annual Meeting inappropriately
attempt to use the discretionary authority permitted by rules under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), to defeat
Proposal 3 because the proxy card proposed to be used by the Board of Directors
in soliciting proxies for the Annual Meeting fails to offer stockholders the
opportunity to state how they wish to vote on Proposal 3. The amended complaint
seeks injunctive relief against the use of discretionary authority to vote
proxies against Proposal 3. Zapata also alleges in the amended complaint that
the Company has violated Exchange Act rules governing proxy solicitations as a
result of, among other things, discrepancies between certain solicitation
materials filed with the Securities and Exchange Commission and those
disseminated to the public. In the amended complaint, Zapata also seeks to
invalidate provisions of the Rights Plan requiring certain matters to be
approved by Continuing Directors with the result that any action now required to
be approved by Continuing Directors could instead be taken by action of the
Board of Directors. In addition, Zapata requests declaratory relief with respect
to its filings with the Securities and Exchange Commission pursuant to Section
13(d) of the Exchange Act regarding the Company's securities and pursuant to
Section 14(a) of the Exchange Act regarding solicitation of proxies for use at
the Annual Meeting.
On April 23, 1997, the Company filed an action against Zapata, Malcolm
I. Glazer and Avram A. Glazer in the United States District Court for the
Northern District of Illinois, Eastern Division, alleging violations of
Section 13(d) of the Exchange Act by virtue of, among other things, Zapata's not
amending its Schedule 13D with respect to securities of the Company to reflect
Zapata's plan and intent to seek control of the Board of Directors and
allegedly to cause the Company to engage in transactions with Malcolm I. Glazer
and companies in which he has an interest and use control of the Board of
Directors to operate the Company as a controlled subsidiary for the defendants'
personal benefit, without paying a control premium to the Company's
stockholders. The Company's complaint seeks declaratory and injunctive relief
including, among other things, an order enjoining Zapata from voting any
securities of the Company at the Annual Meeting.
- 10 -
12
VOTING AND PROXY PROCEDURES
At the Annual Meeting, five directors are to be elected for the
ensuing year to hold office until the next Annual Meeting and until the election
and qualification of their successors. Zapata is soliciting your proxy in
support of the election of the three Zapata Nominees as directors of the
Company. Because the number of directors to be elected at the Annual Meeting is
set at five and Zapata is soliciting proxies in favor of only three persons to
serve as directors, the proxy holders on the enclosed BLUE proxy card cannot
vote for more than three directors at the Annual Meeting. Accordingly, if you
vote by returning the enclosed BLUE proxy card solicited by Zapata, you will not
be able to cast votes for the full number of directors to be elected. Zapata is
proposing only three nominees because a full slate of five nominees not approved
by specified members of Board of Directors would result in the occurrence of a
"change of control" for purposes of certain debt covenants of the Company. See
"Possible Acquisition by Zapata of Additional Common Stock or Merger or other
Business Combination with the Company" above. In addition, election of a full
slate of five nominees without approval by a majority of "Continuing Directors"
could, under the terms of the Rights Plan, leave the Company with no means of
redeeming or amending the Rights. See "Annual Meeting Proposals--Proposal 3"
above. If all three Zapata Nominees are elected to serve as directors, the
remaining two seats are likely to be filled by nominees of the Board of
Directors. However, there can be no assurance that any elected nominee of the
Board of Directors would serve on the Company's Board of Directors with the
Zapata Nominees.
The Company's Board of Directors has set March 21, 1997 as the
Record Date for determining those stockholders who will be entitled to notice
of and to vote at the Annual Meeting. According to the Company Proxy
Statement, as of the Record Date there were 14,552,233 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 Annual Meeting
is necessary to constitute a quorum for the conduct of business at the Annual
Meeting.
As stated in the Company Proxy Statement, in the election of
directors, each share of Common Stock is entitled to cast one vote for each
director to be elected. Cumulative voting is not permitted. Nominees for
director receiving the affirmative vote of a plurality of shares of Common
Stock present in person or by proxy and entitled to vote at the Annual Meeting
will be elected as directors. For all matters except the election of
directors, each share of Common Stock is entitled to one vote. The affirmative
vote of a majority of Common Stock present in person or by proxy and entitled
to vote at the Annual Meeting is required for each of the other matters
submitted to the stockholders for approval or ratification. A "broker
non-vote" is a vote withheld by a broker on a particular matter in accordance
with stock exchange rules because the broker has not received instructions from
the customer for whose account the shares are held. Abstentions, directions to
withhold authority and broker non-votes will be treated as present for
determining a quorum. Abstentions, directions to withhold authority and broker
non-votes will have no effect on the election of directors. On all other
matters, abstentions will have the effect of a negative vote, and broker
non-votes will have no effect.
- 11 -
13
Shares of Common Stock cannot be voted at the Annual Meeting
unless the holder thereof is present or represented by proxy. IN ORDER FOR
YOUR VIEWS TO BE REPRESENTED AT THE ANNUAL MEETING, PLEASE SIGN, MARK AND DATE
THE ENCLOSED BLUE PROXY CARD AND RETURN IT TO GEORGESON & COMPANY INC. IN
THE ENCLOSED ENVELOPE IN TIME TO BE VOTED AT THE ANNUAL MEETING. When the
accompanying BLUE proxy card is properly executed and returned, the shares
represented thereby will be voted as specified thereon. If no specification
has been given in a proxy and authority to vote has not been withheld, the
shares represented thereby will be voted: "FOR" the Zapata Nominees, "FOR" the
ratification of the appointment of Coopers & Lybrand L.L.P. as the independent
accountants for the Company for the 1997 fiscal year and "FOR" the proposal
recommending that the Board of Directors take action to redeem the Rights
issued under or otherwise terminate the Rights Plan. IT IS UNDERSTOOD THAT IF
YOU SIGN WITHOUT OTHERWISE MARKING THE BLUE PROXY CARD, YOU WISH TO VOTE THE
SHARES HELD BY YOU AS RECOMMENDED BY ZAPATA ON ALL MATTERS TO BE ACTED UPON AT
THE ANNUAL MEETING.
Only stockholders of record at the close of business on the
Record Date will be entitled to notice of and to vote at the Annual Meeting.
If you were a stockholder of record on the Record Date, you will retain your
voting rights for the Annual Meeting even if you sell your shares after the
Record Date. ACCORDINGLY, IT IS IMPORTANT THAT YOU VOTE THE SHARES HELD BY YOU
ON THE RECORD DATE, OR GRANT A PROXY TO VOTE SUCH SHARES ON THE BLUE PROXY
CARD, EVEN IF YOU SELL SUCH SHARES AFTER THE RECORD DATE.
ANY STOCKHOLDER GIVING A PROXY HAS THE RIGHT TO REVOKE IT AT
ANY TIME PRIOR TO ITS EXERCISE BY (1) DELIVERING A WRITTEN, DATED REVOCATION OF
SUCH PROXY OR (2) DELIVERING A LATER DATED PROXY OR (3) BY VOTING IN PERSON AT
THE ANNUAL MEETING.
A revocation may be in any written form validly signed by the
record holder as long as it clearly states that the proxy previously given is
no longer effective and it is executed and delivered prior to the time that the
action authorized by the executed proxy is taken. The revocation may be
delivered to (i) Zapata Corporation, 1717 St. James Place, Suite 550, Houston,
Texas 77056, Attention: Joseph L. von Rosenberg III; (ii) Georgeson & Company
Inc., Wall Street Plaza, New York, New York 10005; or (iii) to Envirodyne
Industries, Inc., 701 Harger Road, Suite 190, Oak Brook, Illinois 60521,
Attention: Corporate Secretary. Although a revocation or later dated proxy
delivered only to the Company will be effective to revoke a previously executed
proxy, Zapata requests that if a revocation or later dated proxy is delivered
to the Company, a photocopy of the revocation or later dated proxy also be
delivered to Zapata or Georgeson & Company Inc., at the address set forth
above, so that Zapata will be aware of such revocation.
If any of your shares are held in the name of a brokerage
firm, bank, bank nominee or other institution on the Record Date, only it can
vote such shares and only upon receipt of your
- 12 -
14
specific instructions. Accordingly, please contact the person responsible for
your account and instruct that person to execute on your behalf the BLUE proxy
card.
PROXY SOLICITATION
Proxies will be solicited by mail, advertisement, telephone,
telegram, facsimile and/or personal solicitation by directors, officers or
regular employees of Zapata. No such persons shall receive additional
compensation for such solicitation. In addition, Zapata has retained Georgeson
& Company Inc. to aid in the solicitation of proxies and to solicit proxies
from brokers, bank nominees, institutional holders and registered holders.
Zapata has agreed to pay Georgeson a fee of $40,000, plus out-of-pocket
expenses. Zapata has also agreed to indemnify Georgeson against certain
liabilities. Approximately 25 persons will be used by Georgeson in its
solicitation efforts, which may also be made by mail, advertisement, telephone,
telegram, facsimile and in person.
Zapata anticipates that a total of approximately $285,000
will be spent in connection with this solicitation. Actual expenditures may
vary materially from the estimate, however, as many of the expenditures cannot
be readily predicted. To date, expenses not in excess of $200,000 have been
incurred in connection with the solicitation. The entire expense of preparing,
assembling, printing and mailing this Proxy Statement and any other soliciting
materials and the cost of soliciting proxies will initially be borne by Zapata.
If the Zapata Nominees are elected, Zapata intends to request reimbursement
from the Company for these expenses. This request will not be submitted to a
vote of the Company's stockholders. Banks, brokerage houses and other
custodians, nominees and fiduciaries will be required to forward the Proxy
Statement and other solicitation material to the beneficial owners of the
shares they hold of record, and Zapata will reimburse them for their reasonable
out-of-pocket expenses.
Certain information about Zapata, the Zapata Nominees and the
other "participants" in the proxy solicitation (the "Participants") is set
forth in the attached Schedule I.
PLEASE SIGN, MARK, DATE AND PROMPTLY RETURN THE ENCLOSED BLUE
PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE TO ELECT THE ZAPATA NOMINEES
AND TO RECOMMEND THAT THE BOARD OF DIRECTORS OF THE COMPANY TAKE ACTION TO
REDEEM THE RIGHTS ISSUED UNDER OR OTHERWISE TERMINATE THE RIGHTS PLAN.
- 13 -
15
OWNERSHIP OF COMPANY SHARES
See the Company Proxy Statement for information regarding
shares of Common Stock held by the Company's directors, nominees, management
and other 5% stockholders. Schedule II hereto sets forth certain information
relating to the shares beneficially owned by the Participants.
STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Information concerning the date by which proposals of
stockholders intended to be presented at the 1998 Annual Meeting of
Stockholders of the Company must be received by the Company for inclusion in
the Company's proxy statement and form of proxy for that meeting is contained
in the Company Proxy Statement under the heading "Stockholder Proposals for
1998 Annual Meeting" and is incorporated herein by reference.
Except as otherwise noted, the information concerning the
Company contained in this Proxy Statement has been taken from or is based upon
documents and records on file with the Securities and Exchange Commission and
other publicly available information. Although Zapata does not have any
knowledge that would indicate that any statements contained herein based upon
such documents and records are untrue, Zapata does not take any responsibility
for the accuracy or completeness of the information contained in such documents
and records, or for any failure by the Company to disclose events that may have
occurred and may affect the significance or accuracy of any such information
but which are unknown to Zapata.
Sincerely,
ZAPATA CORPORATION
/s/ AVRAM A. GLAZER
Avram A. Glazer
President and Chief Executive Officer
April 28, 1997
YOUR PROXY IS IMPORTANT. NO MATTER HOW MANY OR HOW FEW SHARES
YOU OWN, PLEASE VOTE IN SUPPORT OF THE ELECTION OF THE ZAPATA NOMINEES AND THE
PROPOSAL RECOMMENDING THAT THE BOARD OF DIRECTORS TAKE ACTION TO REDEEM THE
RIGHTS ISSUED UNDER OR OTHERWISE TERMINATE THE RIGHTS PLAN BY SIGNING, DATING
AND MAILING THE ENCLOSED BLUE PROXY CARD. ONLY YOUR LATEST DATED PROXY COUNTS.
EVEN IF YOU HAVE ALREADY RETURNED THE BOARD'S WHITE PROXY CARD, YOU HAVE EVERY
LEGAL RIGHT TO REVOKE IT BY SIGNING, DATING AND MAILING THE ENCLOSED BLUE PROXY
CARD.
- 14 -
16
SCHEDULE I
INFORMATION ABOUT ZAPATA
AND OTHER PARTICIPANTS
The Participants currently include the Zapata Nominees and
Zapata.
ZAPATA NOMINEES
The name, business address and present occupation or
employment or business of the Zapata Nominees are described in the Proxy
Statement under "Annual Meeting Proposals -- Proposal 1 -- Zapata Nominees for
Directors." Malcolm I. Glazer and Avram A. Glazer each made one late filing,
each with respect to one transaction, with the Securities and Exchange
Commission of a report required by Section 16(a) of the Exchange Act.
ZAPATA CORPORATION
Zapata Corporation's principal business activities currently
include marine protein operations, food services operations conducted through
the Company and oil and gas operations in Bolivia. Zapata recently has
announced a new multi-industry strategy that includes expansion into various
businesses as appropriate opportunities present themselves. Zapata's principal
executive offices are located at 1717 St. James Place, Suite 550, Houston,
Texas 77056. Zapata beneficially owns 5,877,304 shares (approximately 40.4%)
of the outstanding Common Stock, of which 870,000 shares are owned of record.
Zapata has made three purchases of Common Stock in the past two years. It
purchased 4,189,298 shares of Common Stock on August 7, 1995, 818,006 shares of
Common Stock on June 19, 1996, and 870,000 shares of Common Stock on July 1,
1996. Zapata paid the purchase price for the shares it acquired on August 7,
1995 by issuing a subordinated promissory note, payable to the order of Malcolm
I. Glazer, as trustee of the Malcolm I. Glazer Trust, in the principal amount
of $18.8 million, bearing interest at the prime rate and maturing in August
1997, subject to prepayment at Zapata's option. Zapata has prepaid the entire
principal amount of and interest under the promissory note. Zapata made one
late filing with the Securities and Exchange Commission of a Form 4 required by
Section 16(a) of the Exchange Act, in connection with Zapata's June 19, 1996
purchase of Common Stock.
17
OTHER INFORMATION REGARDING THE ZAPATA NOMINEES AND ZAPATA
Except as disclosed in the Proxy Statement and in the
Schedules thereto, none of the Zapata Nominees or Zapata: (i) has any
arrangements or understandings with any person or persons with respect to
any future employment by the Company or its affiliates, or with respect
to any future transactions to which the Company or any of its affiliates
may be a party; or (ii) was a party to any contract, arrangement or
understanding with any person with respect to any securities of the Company,
including, but not limited, to joint ventures, loans or option arrangements,
puts or calls, guarantees against loss or guarantees of profit, division of
losses or profits or the giving or withholding of proxies.
Each Zapata Nominee has provided the Company with a written
consent stating his consent to being named as a Zapata Nominee and to serve as
a member of the Board of Directors of the Company, if elected. Zapata intends
to appear in person or by proxy at the meeting of stockholders to nominate the
Zapata Nominees and to bring Proposal 3 before the 1997 Annual Meeting. Certain
additional information relating to, among other things, the ownership, purchase
and sale of securities of the Company by the Participants and their respective
associates, or arrangements with respect thereto, is set forth in Schedule II
below.
Zapata beneficially owns 5,877,304 shares (approximately
40.4%) of the outstanding Common Stock. Malcolm I. Glazer is a director of
Zapata and the Company and may be deemed a beneficial owner of such shares
because he beneficially owns approximately 35.2% of the outstanding common
stock of Zapata and is the Chairman of the Board of Directors of Zapata.
Zapata understands that Malcolm I. Glazer disclaims beneficial ownership of
such shares of Common Stock. Malcolm I. Glazer also holds 5,979 shares of
Common Stock granted to him in lieu of directors' fees and currently
exercisable options to purchase 3,000 shares of Common Stock granted to him as
a non-employee director of the Company. Avram A. Glazer is a director of
Zapata and the Company and holds 5,979 shares of Common Stock granted to him in
lieu of directors' fees and currently exercisable options to purchase 3,000
shares of Common Stock granted to him as a non-employee director of the
Company. Avram A. Glazer also has an option to purchase 20,000 shares of
Zapata's common stock. Robert V. Leffler, Jr. is a director of Zapata and has
an option to purchase 13,333 shares of Zapata's common stock exercisable within
60 days. Malcolm I. Glazer is the father of Avram A. Glazer.
18
SCHEDULE II
OWNERSHIP OF AND TRANSACTIONS IN
SHARES OF THE COMPANY BY PARTICIPANTS
Based on information in the Company Proxy Statement, as of the
Record Date (March 21, 1997), there were 14,552,233 shares of Common Stock
outstanding. As of the Record Date, according to information known to Zapata,
Participants held an aggregate of 5,895,262 shares of Common Stock (excluding
currently exercisable options to purchase 3,000 shares of Common Stock held by
each of Malcolm I. Glazer and Avram A. Glazer), representing approximately
40.5% of the voting power of the outstanding Common Stock, based on the number
of outstanding shares set forth above. Based on that number, as of the Record
Date, Participants and their respective associates beneficially owned shares of
Common Stock as set forth below in the table. Unless otherwise indicated, such
persons have sole voting and investment power with respect to such shares and
all such shares were owned beneficially and of record by the person indicated.
Name and Address Number of Shares Percent
of Beneficial Owner Beneficially Owned of Class
------------------- ------------------ --------
Zapata Corporation 5,877,304 40.4%
1717 St. James Place
Suite 500
Houston, Texas 77056
Malcolm I. Glazer 5,886,283(1) 40.4%
1482 South Ocean Boulevard
Palm Beach, Florida 33480
Avram A. Glazer 8,979(2) *
Robert V. Leffler, Jr. -- --
- ---------------------
* Less than one percent of the outstanding shares of Common
Stock.
(1) The ownership indicated includes 5,877,304 shares owned by
Zapata and 3,000 currently exercisable options to purchase shares of Common
Stock granted to Mr. Glazer as a non-employee director of the Company. Mr.
Glazer may be deemed a beneficial owner of the shares held by Zapata because he
beneficially owns approximately 35.2% of the outstanding common stock of Zapata
and is the Chairman of the Board. Zapata has been informed that Mr. Glazer
disclaims beneficial ownership of such shares.
(2) The ownership indicated includes 3,000 currently exercisable
options to purchase shares of Common Stock granted to Avram A. Glazer as a
non-employee director of the Company.
II-1
19
Information regarding purchases and sales of shares of the
Common Stock by Participants since April 1, 1995 is set forth below.
Transaction Number of
Participant Transaction Date Shares
- ----------- ----------- ---- ------
Avram A. Glazer (1) 9/30/96 4,961
1/31/97 1,018
Malcolm I. Glazer (1) 9/30/96 4,961
1/31/97 1,018
Malcolm I. Glazer, as Trustee Sale 8/07/95 4,189,298(2)
of the Malcolm I. Glazer Trust
Zapata Corporation Purchase 8/07/95 4,189,298(2)
Purchase 6/19/96 818,006
Purchase 7/01/96 870,000
_____________________
(1) These shares were issued pursuant to the Company's
Non-Employee Directors' Compensation Plan, which provides that non-employee
directors may elect to receive their directors' fees in the form of shares of
Common Stock.
(2) The Malcolm I. Glazer Trust sold 4,189,298 shares of Common
Stock to Zapata on August 7, 1995. Malcolm I. Glazer was the trustee and
beneficial owner of the Malcolm I. Glazer Trust at the time of the sale of the
shares to Zapata. Zapata paid the purchase price for these shares by issuing a
subordinated promissory note, payable to the order of Malcolm I. Glazer, as
trustee of the Malcolm I. Glazer Trust, in the principal amount of $18.8
million, bearing interest at the prime rate and maturing in August 1997,
subject to prepayment at Zapata's option. Zapata has prepaid the entire amount
of principal and interest under the promissory note.
II-2
20
YOUR VOTE IS EXTREMELY IMPORTANT
Regardless of the number of shares of Common Stock you own, please
vote as recommended by Zapata by taking these simple steps:
1. Please SIGN, MARK, DATE and MAIL the enclosed BLUE proxy card in the
enclosed postage-paid envelope as soon as possible before the Annual
Meeting on May 16, 1997.
2. If you wish to vote for the Zapata Nominees, you must submit the
enclosed BLUE proxy card, even if you have already submitted the
Company's proxy card. Only your latest dated and signed proxy card
will count at the Annual Meeting.
3. If your shares are held for you in "street name" by a bank or broker,
the bank or broker may not give your proxy without your instruction.
Please call your bank or broker and instruct your representative to
vote for the Zapata Nominees on the BLUE proxy card and the proposal
recommending that the Board of Directors take action to redeem the
rights issued under or otherwise terminate the Rights Plan.
4. If you have any questions or require any additional information
concerning this Proxy Statement, please contact either:
Zapata Corporation
1717 St. James Place
Suite 550
Houston, Texas 77056
(713) 940-6100
or our solicitation agent who can also assist stockholders in voting
or changing their vote:
GEORGESON & COMPANY INC.
Wall Street Plaza
New York, New York 10005
Toll Free (800) 223-2064
or
Bankers and Brokerage
Firms please call collect:
(212) 440-9800
TIME IS SHORT. PLEASE VOTE TODAY!
21
ENVIRODYNE INDUSTRIES, INC.
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 16, 1997
THIS PROXY IS SOLICITED BY
ZAPATA CORPORATION
The undersigned stockholder of Envirodyne Industries, Inc.
(the "Company") hereby appoints Avram A. Glazer, Joseph L. von Rosenberg III and
Robert A. Gardiner, and each of them with full power of substitution, for and in
the name of the undersigned, proxies to represent and to vote, as designated
below, all shares of common stock of Envirodyne Industries, Inc. that the
undersigned is entitled to vote if personally present at the 1997 Annual Meeting
of Stockholders of Envirodyne Industries, Inc., to be held on May 16, 1997 at
9:00 a.m., local time, at Sidley & Austin, One First National Plaza, 55th Floor,
Chicago, Illinois, and at any adjournment or postponement thereof. The
undersigned hereby revokes any previous proxies with respect to the matters
covered by this Proxy.
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH
OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT OR
POSTPONEMENT THEREOF.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE PROVIDED.
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 DEEMED TO BE A DIRECTION TO VOTE FOR PROPOSAL 1, FOR PROPOSAL 2
AND FOR PROPOSAL 3.
22
[X] Please mark
votes as in
this example.
ZAPATA RECOMMENDS A VOTE FOR PROPOSAL 1, FOR PROPOSAL 2 AND FOR PROPOSAL 3.
1. ELECTION OF DIRECTORS:
[ ] FOR all nominees except [ ] WITHHOLD AUTHORITY
as marked below for all nominees
Zapata Nominees: Malcolm I. Glazer, Avram A. Glazer
and Robert V. Leffler, Jr.
INSTRUCTION: To withhold authority to vote for election of one or more persons
nominated by Zapata, mark FOR above and print the name(s) of the person(s) with
respect to whom you wish to withhold authority in the space below.
________________________________________________________________________________
________________________________________________________________________________
2. RATIFICATION OF APPOINTMENT OF COOPERS & LYBRAND L.L.P. AS THE
COMPANY'S ACCOUNTANTS FOR THE 1997 FISCAL YEAR:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. RECOMMENDATION THAT THE BOARD OF DIRECTORS OF THE COMPANY TAKE
APPROPRIATE ACTION TO REDEEM AS SOON AS PRACTICABLE THE RIGHTS ISSUED UNDER THE
STOCKHOLDER RIGHTS PLAN ADOPTED BY THE BOARD AS OF JUNE 26, 1996 OR OTHERWISE
TERMINATE THE RIGHTS PLAN AND NOT IMPLEMENT ANY OTHER STOCKHOLDER RIGHTS PLAN
WITHOUT A BINDING VOTE OF THE COMPANY'S STOCKHOLDERS:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Please date and sign this Proxy exactly as your name
appears hereon and return this Proxy in the enclosed
postage-paid envelope.
----------------------------------------------------
(Signature)
----------------------------------------------------
(Signature, if held jointly)
----------------------------------------------------
(Title)
Dated:
----------------------------------------------
When shares are held by joint tenants, both should
sign. When signing as attorney in fact, executor,
administrator, trustee, guardian, corporate officer
or partner, please give full title as such. If a
corporation, please sign in corporate name by
President or other authorized officer. If a
partnership, please sign in partnership name by
authorized person.
1
Exhibit 99.6
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
ENVIRODYNE INDUSTRIES, INC., )
)
Plaintiff, )
)
-against- )
)
ZAPATA CORPORATION, )
MALCOLM I. GLAZER, and )
AVRAM A. GLAZER, )
)
Defendants. )
COMPLAINT FOR
DECLARATORY AND INJUNCTIVE RELIEF
Plaintiff, Envirodyne Industries, Inc. ("Envirodyne"), for its
Complaint against defendants Zapata Corporation ("Zapata"), and Malcolm L.
Glazer ("Malcolm") and Avram A. Glazer ("Avram") (collectively, the "Glazers")
alleges, upon knowledge as to itself and its own acts, and upon information and
belief as to all other matters, as follows:
JURISDICTION AND VENUE
1. This action arises under Section 13(d) of the Exchange Act
of 1934 (the "Exchange Act"), 15 U.S.C. Section 78m(d), and the rules and
regulations promulgated thereunder by the Securities and Exchange Commission
("SEC"). This Court has jurisdiction over this action pursuant to Section 27 of
the Exchange Act, 15 U.S.C. Section 78aa, as well as 28 U.S.C. Section 1331
(federal question jurisdiction).
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2. This Court has personal jurisdiction over defendants in
that they, directly or through the acts of Zapata, transact business within
this State, including business relating to Envirodyne, and have committed acts
alleged in this Complaint within this State.
3. Venue is proper in this district pursuant to Section 27 of
the Exchange Act, 15 U.S.C. Section 78aa, and 28 U.S.C. Section 1391(b) in that
a substantial part of the events or omissions giving rise to the Complaint
occurred in this district.
THE PARTIES
4. Envirodyne is a Delaware corporation with its principal
executive office in Oak Brook, Illinois. Envirodyne is a publicly traded
company.
5. Malcolm is an individual residing in Palm Beach, Florida.
He is a private investor. He is also the Chairman and a controlling shareholder
of Zapata.
6. Avram is an individual residing in Pittsford, New York. He
is Malcolm's son and the President, Chief Executive Officer, and a director of
Zapata.
7. Zapata is a Delaware corporation with its principal
executive offices in Houston, Texas. It is a publicly traded company. Any act
of Zapata is the act of the Glazers and any reference in this Complaint to an
act of Zapata is intended to include the Glazers.
BACKGROUND
8. Zapata currently owns approximately 40 percent of the
outstanding common stock of Envirodyne. Zapata acquired 31 percent of the then
outstanding shares of Envirodyne common stock in August 1995 from Malcolm, who
was the Chairman and the largest shareholder of Zapata. In June 1996, Zapata
purchased 1,688,006 additional shares of Envirodyne common stock (bringing its
Envirodyne holdings up to its current level) in brokerage and privately
negotiated
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transactions. According to the Zapata Proxy Statement dated November 13, 1996,
as of November 4, 1996, Malcolm was the beneficial owner of approximately
10,415,384 shares of Zapata stock, or approximately 35 percent of the
outstanding common stock of Zapata.
9. The Glazers are, and have been since May 1995, members of
the board of directors of Envirodyne.
10. In early January 1997, prior to the meeting of the
Envirodyne board on January 22, 1997, the Glazers had discussions with F.
Edward Gustafson ("Gustafson"), the President of Envirodyne. They informed
Gustafson that, in addition to themselves, they wanted to have three more
representatives on the Envirodyne board of directors in place of existing
directors. With such additional representation the Glazers would gain majority
control of the then seven-member Envirodyne board.
11. On February 13, 1997, the Nominating and Compensation
Committee of the board of directors of Envirodyne (the "Committee") met to
discuss the Glazers' proposal to have majority control of the board. The
directors of Envirodyne who were not members of the Committee, except for the
Glazers, attended the meeting at the invitation of the Committee.
12. On February 14, 1997, Gustafson called Malcolm, and on
February 17, 1997, Gustafson called Avram, to advise the Glazers that the
Committee had met and had directed him to inform the Glazers that no final
decision had been made concerning the Glazers' proposal, but that the Committee
considered it important that three additional directors would give the Glazers
control of the board without the payment of a control premium to the other
shareholders.
13. In these conversations, Gustafson advised the Glazers that
the board would not willingly turn control of the company over to them without
the payment of a fair control
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premium to the other shareholders. Gustafson invited the Glazers to make an
offer for the entire company and stated that, if such an offer was not
forthcoming, the Committee would ask for a three-year standstill agreement
before nominating the Glazers for reelection to the Envirodyne board. During
this conversation, Gustafson also reminded Malcolm that, in light of the
Glazers' demands, the Zapata Schedule 13D was not accurate. The Glazers told
Gustafson that they would not sign any standstill agreement and that anything
less than three new Zapata representatives on the Envirodyne board was
unacceptable.
14. On February 17, 1997, Gustafson wrote to the Glazers
confirming his earlier telephone conversations with them in which he informed
them of the Committee's meeting on February 13, 1997, and the Committee's
concerns about the Glazers' proposal to obtain control of the board without the
payment of a control premium.
15. Avram responded to Gustafson in letters dated February 27
and March 5, 1997. He denied making any demand for more Glazer directors.
16. On March 19, 1997, a meeting of the Envirodyne board of
directors took place. At that meeting the board conditionally resolved that
either (i) the board would remain at seven persons and the board would nominate
all existing directors, if Malcolm, Avram and Zapata agreed not to interfere
with or affect the composition of the board for one year; or (ii) the board
would be reduced to five members, and the board would nominate Gustafson,
Robert N. Dangremond, Michael E. Heisley, Gregory R. Page and Mark D. Senkpiel,
and not nominate Malcolm and Avram. The Glazers abstained from the vote and the
resolution passed. Consequently, the size of the Envirodyne board was reduced
from seven to five members, and the Glazers were not slated for reelection.
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17. After the board meeting on March 19, 1997, Gustafson had
further discussions with the Glazers regarding their proposal to control the
board. During one such discussion that occurred prior to March 31, 1997, the
date on which the Glazers filed Amendment No. 3 to Zapata's Schedule 13D,
Malcolm told Gustafson that resisting a 40% shareholder was futile. Malcolm
implied that he had sufficient votes to win control of the Envirodyne board.
APPLICABLE SECURITIES LAWS
18. Section 13(d) of the Exchange Act generally requires that
any person (or group acting in concert) who, after acquiring beneficial
ownership of any equity security, is the beneficial owner of more than five
percent of such security must file a Schedule 13D with the SEC within ten days
after such acquisition. Schedule 13D requires disclosure of information
relating to the background of the acquiror, the circumstances surrounding his
acquisition of the issuer's securities, the purpose(s) of the acquisition and
the acquiror's plans with respect to the issuer.
19. Item 4 of Schedule 13D requires the disclosure of the
purpose(s) of the reporting person's acquisition of the securities and any
plans or proposals that relate to, or would result in, any of the following:
an extraordinary corporate transaction, such as a merger,
reorganization, or liquidation, involving the issuer or any of its
subsidiaries;
a sale or transfer of a material amount of assets of the
issuer or any of its subsidiaries;
any change in the present board of directors or management
of the issuer, including any plans or proposals to change the number or term of
directors or to fill any existing vacancies on the board; and
any action similar to any of those enumerated above.
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20. A person who has filed a Schedule 13D must "promptly" file
an amendment to the Schedule 13D whenever any "material change occurs in the
facts set forth" in a Schedule 13D filing. The reporting person has an
obligation continually to review the information in its Schedule 13D filing to
ascertain whether material changes have occurred.
FACTS UNDERLYING COMPLAINT
Amendment Nos. 2, 3, and 4 to the Zapata Schedule 13D
21. As a greater than five percent owner of Envirodyne, Zapata
is required to file a Schedule 13D with the SEC, and an amendment thereto
"promptly" following a material change in the information contained in the
initial Schedule. The initial Schedule 13D was filed on August 17, 1995
(attached hereto as Exhibit A), and Amendment No. 1, reflecting an acquisition
of additional shares of Envirodyne by Zapata, was filed on June 21, 1996
(attached hereto as Exhibit B).
22. Amendment No. 2 to the Zapata Schedule 13D was filed on
March 10, 1997 (attached hereto as Exhibit C). In Item 4 of the amended
Schedule 13D Zapata denied having made any demand to nominate three Zapata
representatives to the Envirodyne board and thereby obtain control of the
board.
23. Amendment No. 3 to the Zapata Schedule 13D was filed on
March 31, 1997 (attached hereto as Exhibit D). This amendment disclosed in Item
4 that Zapata would nominate five candidates for election to the Envirodyne
board at the May 16, 1997 Annual Meeting of Shareholders.
24. Amendment No. 4 to the Zapata Schedule 13D was filed on
April 18, 1997 (attached hereto as Exhibit E). Item 4 was amended to state that
Zapata had sought to nominate five
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directors when it believed that the Envirodyne board would continue as a seven
person board, and that since the board would be reduced to five directors,
Zapata would nominate only three candidates: Malcolm, Avram and Robert V.
Leffler, Jr. Amendment No. 4 also attached as an exhibit the Preliminary Copy
of Zapata's Proxy Statement. This Exhibit was not incorporated into the amended
Item 4. The Proxy Statement contains information regarding Zapata's plans that
should have been, but was not, set forth in Item 4 of the Zapata Schedule 13D,
as amended.
Three Separate Claims
25. The first claim alleged in this Complaint is the failure
of Zapata to file promptly an amendment to its Schedule 13D after the Glazers
formed their specific intent and plan to seek control of Envirodyne's board.
This change in the Glazers' plans to control the Envirodyne board occurred no
later than early January 1997, when the Glazers proposed three additional
directors to displace three current directors. This change was material and
triggered a duty under Section 13(d) to file promptly an amendment to Schedule
13D.
26. The required disclosure was not contained in Amendment No.
2 to Zapata's Schedule 13D, filed March 10, 1997. It was not until March 31,
1997, that Zapata filed Amendment No. 3, which disclosed Zapata's plan to slate
five candidates for election as directors on the Envirodyne board. The delay in
filing an amendment from early January to, at the earliest, March 31, 1997,
violates the requirement of prompt filing in Section 13(d) and constitutes a
violation of the securities laws. Even if the disclosure in Amendment No. 3 is
sufficient, which it is not, the filing of a corrected amendment does not cure
the violation of Section 13(d).
27. The second violation also relates to Amendment No. 2. Item
4 of Amendment No. 2 was false and/or misleading in that it expressly denied
that Zapata had demanded control of
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the Envirodyne board, when in fact the plan and intention of the Glazers to
seek control was formed no later than early January 1997.
28. Amendment No. 3, which disclosed that Zapata planned to
slate five nominees for election to the Envirodyne board, is false and
misleading in that it fails to disclose the Glazers' plan to treat Envirodyne
as a controlled subsidiary of Zapata, without paying a control premium to the
other shareholders of Envirodyne, and to cause Envirodyne to engage in
transactions with Malcolm or companies such as Zapata in which he has a
substantial interest.
29. Amendment No. 4 is false and misleading in that, like
Amendment No. 3, it fails to describe the Glazers' plans with respect to their
control of Envirodyne.
The Glazers' Past and Present Takeover Tactics
30. The plans and intentions of the Glazers are matters solely
within their personal knowledge. The best evidence of their plans and
intentions regarding Envirodyne is the Glazers' past and present business
practices.
31. Malcolm's strategy during the 1980s was to buy a
substantial number of shares of a company's stock and then suggest that he
would sell off parts of the company if he gained control. The price of the
company's stock would rise and Malcolm would then sell his shares at a premium,
sometimes directly to the company, a practice known as "greenmail."
32. Malcolm purchased stock in Consolidated Rail Corporation,
Formica Corporation and Harley-Davidson, Inc. ("Harley-Davidson"). He has been
accused of engaging in greenmail with each of these companies.
33. Several shareholder actions have been filed against
Malcolm and his associates. Harley-Davidson charged that Malcolm made false and
misleading statements to the
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SEC, the Federal Trade Commission, and the media. The request for injunctive
relief was denied, but the district court judge wrote that, "it seems almost
undisputed that some inaccuracies have existed in the Glazers' [Schedule] 13D
filings," and that "Harley-Davidson has made a convincing argument that the
Glazers are engaging in nonproductive speculation." Harley-Davidson, Inc. v.
Glazer, Civ. A. No. 89-C-1308 (EDWI) (order dated February 28, 1990).
Takeover of Zapata
34. Malcolm obtained control of Zapata's board by acquiring a
substantial interest in the company, and threatening to wage a proxy fight with
the goal of obtaining three board seats and to terminate Zapata's existing
shareholder rights plans. The Glazers took control of Zapata, without paying a
control premium, and they have operated Zapata in total disregard for the
rights of its other shareholders.
35. Numerous similarities exist between the process by which
Malcolm acquired control of Zapata and the process by which Malcolm is
attempting to gain control over Envirodyne. Zapata presents a close parallel to
the Glazers' present actions and plans with respect to Envirodyne. The Glazers'
current conduct after gaining control of the Zapata board is a clear indicator
of how they would operate if they gained control of Envirodyne's board.
36. In July 1992, Malcolm acquired approximately 38.8 percent
of the stock of Zapata in several transactions. Later that month, Malcolm
increased his Zapata common stock holdings to approximately 41 percent of the
then outstanding stock of Zapata. Subsequently, Malcolm's Zapata holdings were
diluted to its present level as a result of a financial transaction consummated
by Zapata in May 1993, which Malcolm unsuccessfully sought to have enjoined by
the Delaware Chancery Court. Glazer v. Zapata, 658 A.2d 176 (Del. Ch. May 14,
1993).
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37. Malcolm threatened a proxy battle for three seats on
Zapata's eight-member board. He settled for control of two seats and the
termination of Zapata's stockholder rights plan. Malcolm then nominated himself
and Avram to Zapata's board of directors. They were elected to the board in
1993. In April 1994, the board voted to reduce its size from eight to seven
effective immediately and from seven to six effective as of the date of the
1995 Annual Stockholders Meeting. In July 1994, Malcolm became Chairman of the
board. In August 1994, Avram became President and Chief Executive Officer of
Zapata. At this time, Malcolm allegedly controlled six of the seven votes on
the Zapata board. In December 1994, Malcolm nominated two of his long-time
associates to fill the two vacant seats on the Zapata board. In 1995 the Zapata
board reduced its size from seven to six directors, with the result that
Malcolm then controlled all of the seats on the board.
38. Malcolm quickly began to take charge of the operation and
management of Zapata. In March 1995, Malcolm appointed Avram, then 34 years of
age, President and Chief Executive Officer of Zapata. Zapata's shareholders
have alleged that Malcolm "personally determined who would become or remain
officers, employees or consultants to Zapata or its subsidiaries," and that he
forced two directors to resign. Harwin v. Glazer, Civ. A. No. 14988 (Del. Ch.)
(filed May 7, 1996) at Paragragh 6 ("Harwin Compl.").
39. While Malcolm publicly proclaimed that the Zapata
management was "great," and promised to keep the then current management in
place, it was reported that Malcolm wanted the chief operating officer out so
he could implement his own strategy, and that he jettisoned management and
their business strategy. The Glazers changed the nature and the business of
Zapata from a natural gas company to a company without a business purpose other
than to support Malcolm's business endeavors.
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Sale of Malcolm's Envirodyne Shares to Zapata
40. The pattern of using Zapata to engage in self-dealing
began in early 1995 when Malcolm, after unsuccessfully trying to sell his 31
percent interest in Envirodyne to a third party, caused Zapata to buy his
interest in Envirodyne. At the time of this transaction, Malcolm was the
Chairman and a 35 percent stockholder of Zapata.
41. Zapata's shareholders brought an action claiming that
Zapata paid too high a price for the Envirodyne shares and that Malcolm caused
Zapata to buy his Envirodyne stock to help finance his $192 million purchase of
the Tampa Bay Buccaneers. At the time of Zapata's purchase of Malcolm's
interest in Envirodyne, Malcolm's holdings largely consisted of "illiquid"
restricted stock. Harwin Compl. at Paragraghs 11, 13, 18, 20. The sale of his
Envirodyne shares to Zapata substantially benefitted Malcolm.
42. Two Zapata directors allegedly refused to vote for
Zapata's purchase of Malcolm's Envirodyne stock and it was reported that they
were forced off the board.
Proposed Merger of Zapata and Houlihan's, Another Glazer Company
43. The next instance of self-dealing came in June 1996. It
involved Zapata's proposed acquisition of Houlihan's Restaurant Group, Inc.
("Houlihan's"), a company of which Malcolm was a 73 percent owner. At this time
Zapata was a natural gas company and Houlihan's was a food service and
restaurant company. Zapata agreed to pay an estimated $8 per share in cash and
stock for Houlihan's. This represented a 30 percent premium over the pre-deal
price of Houlihan's shares. It was reported that Malcolm would make about $58.6
million, of which $22 million would be cash, for his interest in Houlihan's as
a result of the transaction he proposed.
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44. Once again, Zapata shareholders brought an action for
injunctive relief, naming Malcolm, individual members of the board, and Zapata
as defendants. Pasternak v. Glazer, (Civ. A. No. 15206) (Del. Ch.) (filed May
31, 1996) ("Pasternak Compl."). The complaint alleged that the book value, fair
market value and liquidation value of Zapata stock exceeded the proposed share
price Zapata intended to pay for Houlihan's and was "grossly unfair." Pasternak
v. Glazer, 1996 Del. Ch. LEXIS 121 (Del. Ch. September 24, 1996) (appeal
filed).
45. The shareholders claimed that the price of $8 per share
for the Houlihan's stock was excessive because, in an arm's-length transaction,
Houlihan's stockholders would receive less than $6 per share. Pasternak Compl.
at Paragraghs 15-18.
46. The Houlihan's transaction provided another vehicle for
Malcolm to cash out an otherwise illiquid investment, finance Malcolm's
investment in a National Football League team, and obtain greater control over
Zapata. Plaintiffs contended that defendants breached their duties of loyalty
and candor and committed waste of Zapata's corporate assets, and that Malcolm
was "the primary beneficiary of the transaction." Pasternak Compl. at
Paragraghs 20, 28, 32, 35.
47. The Delaware Chancery Court enjoined the Houlihan merger.
Soon thereafter Malcolm caused Zapata to abandon the merger.
Zapata Proposes a Self-Tender,
Including Three Million of Malcolm's Shares
48. After the collapse of the Houlihan's merger, Zapata
announced a self-tender offer for up to 15 million and a minimum of 10 million
of its shares at $4.50 per share. Malcolm intended to sell three million of his
Zapata shares back to Zapata in the self tender. At that time Zapata's book
value was reported to be $5.30 per share.
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49. The Zapata shareholders again sued to enjoin the
transaction, which they termed an "unfair" offer. Hawley Opportunity Fund v.
Glazer, Civ. A. No. 15474 (Del. Ch.) (filed January 22, 1997) at Paragraghs 1-2
("Hawley Compl."). Plaintiffs contended that the offer failed to disclose
material facts, contained materially misleading partial disclosures, and was
deliberately structured to increase Malcolm's equity ownership percentage from
35 percent to as much as 57 percent.
50. The Hawley plaintiffs alleged that the defendants breached
their duties of loyalty and fair dealing by structuring the offer to increase
Malcolm's percentage of equity ownership in Zapata, and by timing the offer to
take advantage of the probability that Envirodyne, 40 per cent of which is
owned by Zapata, would substantially increase in value. Hawley Compl. at
Paragraghs 18, 22-23. The self-tender occurred after Viskase Corporation, a
wholly owned subsidiary of Envirodyne, had won a $102 million judgment, which
could be trebled. A total judgment of more than $320 million is sought by
Envirodyne. Zapata's share of such a judgment would be $130 million. Post-trial
motions are still pending and the Viskase judgment is not yet final.
51. On or about February 17, 1997, Michael Heisley Sr., a
large shareholder of Envirodyne and a member of the Envirodyne board
("Heisley"), through his investment firm, made an unsolicited bid for 50.1
percent or more of Zapata shares at $5.50 per share. This offer valued Zapata
at about $165 million, and exceeded Zapata's self-tender offer price by 22
percent.
52. On February 24, 1997, Zapata announced the termination of
its self-tender offer. In addition, Zapata reported that it would hire an
investment banking firm to evaluate the Heisley offer. In contrast, Zapata did
not indicate that it had retained a financial advisor to evaluate its own self-
tender offer.
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53. On or about March 25, 1997, the Zapata board, controlled
by Malcolm, announced that it had rejected the Heisley offer, even though it
was $1.00 per share higher than the proposed self-tender price, and decided not
to sell or liquidate the company.
54. On or about March 25, 1997, Zapata announced that it would
abandon its recent "redirection" into the food services industry, a reference
to the proposed merger with Houlihan's, and instead focus on a "new multi-
industry strategy that includes expansion into various businesses as
appropriate opportunities present themselves." PR Newswire, March 25, 1997.
Zapata's Current Stock Repurchase Plan
55. On or about March 25, 1997, Zapata announced that the
board of directors, controlled by the Glazers, had authorized a stock
repurchase of up to five million shares of its common stock. If Zapata
repurchased all five million shares, Malcolm's ownership interest in Zapata
would increase to approximately 42.3 percent.
The Glazers' Actions Regarding Zapata
and Envirodyne in January--March 1997
56. During the months of January through March 1997, there was
substantial interplay between the Glazers' activities with respect to Zapata
and to Envirodyne:
Early January The Glazers inform Gustafson that they desire three more
directors on Envirodyne board.
January 14 Malcolm causes Zapata to commence a self-tender for 10 to 15
million shares at $4.50 per share. Malcolm would tender three
million shares. The self-tender offer was scheduled to close on
February 20.
January 22 The Glazers again tell Gustafson that they want three more
directors on Envirodyne's board.
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February 17 Zapata announces that it has received a counter-offer from
Heisley to buy Zapata for $5.50 per share, 22 percent more than
Zapata's self-tender price.
February 17 Gustafson writes to Malcolm and Avram informing them that the
Envirodyne board would not willingly hand over control of the
board to them and that if they want control they should make an
offer for the entire company at a fair premium.
February 24 Malcolm causes the Zapata board to withdraw Zapata's self-tender
offer at $4.50 per share.
February 27 Avram responds to Gustafson's letter and denies making a demand
to obtain three additional Glazer-nominated directors on the
Envirodyne board.
March 5 Avram responds again to Gustafson's letter and again denies
making any demand for control of the Envirodyne board.
March 10 Malcolm causes Zapata to file Amendment No. 2 to the initial
Envirodyne Schedule 13D, denying making any demand for control of
the Envirodyne board.
March 19 The Envirodyne board passes a resolution to conditionally reduce
the board to five members if Zapata would not agree to enter into
a standstill agreement with Envirodyne. After the board meeting,
Malcolm and Avram meet with Gustafson and again discuss Malcolm's
intent to control the Envirodyne board and the board's objections
to control passing to the Glazers without payment of a fair
control premium.
March 25 Malcolm causes Zapata to announce that it would refocus its
business away from the food services industry. The redirection is
a result of Malcolm's failed effort to have Zapata buy
Houlihan's, 73 percent owned by Malcolm, for $8 per share, which
had been enjoined by the Delaware Chancery Court.
March 25 Malcolm causes Zapata to announce a stock buy-back program for
five million shares of Zapata stock, which, if
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successful, would substantially increase Malcolm's percentage
ownership of Zapata. Malcolm also causes Zapata to announce that
it has rejected Heisley's counter-offer of $5.50 per share.
March 31 The Glazers cause Zapata to file Amendment No. 3 to the initial
Envirodyne Schedule 13D, announcing its intention to slate five
directors for election to the board of Envirodyne and to bring a
proposal before the 1997 Annual Meeting recommending that the
board redeem its shareholder rights plan.
IRREPARABLE HARM TO ENVIRODYNE
57. Envirodyne and its shareholders (other than defendants)
are being immediately and irreparably injured as a result of defendants'
violations of Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder by the SEC. Among other things, Envirodyne's public
shareholders and the investing public are being denied, and will continue to be
denied, material information to which they are entitled pursuant to the federal
securities laws, and which is necessary to make informed decisions with respect
to the acquisition or disposition of Envirodyne, and the market for
Envirodyne's shares is being and will continue to be manipulated.
58. Between the period from at least early January to March
31, 1997, the Glazers gave the market false information, specifically that the
Glazers had not sought control of the Envirodyne board. Shareholders and
investors would have considered the Glazers' intent to seek control of the
Envirodyne board material information because of the Glazers' reputation, their
history of self-dealing practices at Zapata, and the number of lawsuits the
Glazers' activities have generated.
59. Defendants' failure to comply with Section 13(d) is,
moreover, inimical and contrary to the public interest.
60. Envirodyne has no adequate remedy at law.
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COUNT I
61. Plaintiff realleges all of its allegations in paragraphs 1
through 55. The defendants have violated Section 13(d) of the Exchange Act by
failing to file promptly an amendment to the Zapata Schedule 13D disclosing
their plan and intent to seek control of the Envirodyne board.
COUNT II
62. Plaintiff realleges all of its allegations in paragraphs 1
through 55. The defendants have violated Section 13(d) of the Exchange Act by
filing a false and misleading Amendment No. 2 to the Zapata Schedule 13D and
denying the Glazers' demand to obtain control of the Envirodyne board.
COUNT III
63. Plaintiff realleges all of its allegations in paragraphs 1
through 55. The defendants have violated Section 13(d) of the Exchange Act by
filing false and misleading Amendments Nos. 2, 3 and 4 to the Zapata Schedule
13D, by failing to disclose the Glazers' plan and intent, inter alia, to cause
Envirodyne to engage in transactions with Malcolm and companies in which he has
an interest, and use their control of the Envirodyne board to operate
Envirodyne as a controlled subsidiary for their personal benefit, all without
paying a control premium to the Envirodyne shareholders.
RELIEF REQUESTED
WHEREFORE, plaintiff, Envirodyne, respectfully requests that this
Court:
declare that defendants failed to promptly file an amendment to
Zapata's Schedule 13D when at the latest, in early January 1997,
there was a material change in their plan and intention regarding
control of the Envirodyne board;
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declare that Amendment Nos. 2, 3, and 4 to Zapata's Schedule 13D
are false or misleading, in violation of Section 13(d) of the
Exchange Act;
enter an order enjoining Zapata from voting any securities of
Envirodyne at the 1997 Annual Meeting of Envirodyne's
shareholders;
enjoin defendants from any further violation of Section 13(d) of
the Exchange Act and the rules and regulations promulgated
thereunder; and
award Envirodyne such other and further relief as the Court deems
just and equitable under the circumstances.
Dated: April 23, 1997
Chicago, Illinois
Respectfully submitted,
/s/ SUSAN GETZENDANNER
-----------------------------
Susan Getzendanner
Michael S. Terrien
Nancy S. Eisenhauer
Paul J. Huff
Skadden, Arps, Slate,
Meagher & Flom (Illinois)
333 West Wacker Drive
Suite 2100
Chicago, Illinois 60606
(312) 407-0700
Attorneys for Plaintiff
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