<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 17, 1999
Registration No. 33-
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
MORGAN'S FOODS, INC.
(Exact name of registrant as specified in its charter)
OHIO 34-0562210
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
24200 CHAGRIN BLVD., SUITE 126,
BEACHWOOD, OHIO 44122
(Address of Principal Executive Offices) (Zip Code)
-----------------
MORGAN'S FOODS, INC.
NONQUALIFIED STOCK OPTION PLAN FOR EXECUTIVES AND MANAGERS
AND
KEY EMPLOYEES NONQUALIFIED STOCK OPTION PLAN
(Full title of the plans)
-----------------
KENNETH L. HIGNETT
SECRETARY
MORGAN'S FOODS, INC.
24200 CHAGRIN BLVD., SUITE 126
BEACHWOOD, OHIO 44122
(Name and address of agent for service)
(216) 360-7500
(Telephone number, including area code, of agent for service)
-----------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===============================================================================================================
Proposed Proposed
Title of securities Amount to be maximum offering maximum aggregate Amount of
to be registered registered (1) price per share offering price (2) registration fee
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Shares,
no par value 436,500 (2) $1,673,250 $466
===============================================================================================================
</TABLE>
(1) Also includes an indeterminable number of additional shares that may
become issuable pursuant to the anti-dilution provisions of the
employee benefit plans described herein.
(2) Estimated in accordance with Rules 457(c) and 457(h)(1) solely for the
purpose of determining the registration fee. The fee with respect to
291,000 of the shares registered herein is based on $3.6875, the
average of the high and low sale prices on November 15, 1999, of the
registrant's common shares as reported on the American Stock Exchange,
and the fee with respect to the remaining 145,500 shares is based on
$4.125, the exercise price of options granted for such shares.
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
The Common Shares registered by Morgan's Foods, Inc. (the "Company")
pursuant to this Registration Statement will be issued under the Company's
Nonqualified Stock Option Plan for Executives and Managers or the Company's Key
Employees Nonqualified Stock Option Plan (the "Plans").
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The documents listed in (a) through (c) below are incorporated by
reference in this Registration Statement. All documents filed by the Company
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act
of 1934 (the "Exchange Act") subsequent to the date of the filing of this
Registration Statement and prior to the filing of a post-effective amendment
which indicates that all securities registered hereunder have been sold, or
which de-registers all securities then remaining unsold, shall be deemed to be
incorporated by reference in this Registration Statement and to be a part hereof
from the date of the filing of such documents.
(a) The Company's Annual Report on Form 10-K for the year
ended February 28, 1999.
(b) All other reports filed by the Company pursuant to
Section 13(a) or 15(d) of the Exchange Act since the
Annual Report on Form 10-K referenced above.
(c) The description of the Company's Common Shares as
contained in a registration statement filed under the
Exchange Act including any amendment or report filed
for the purpose of updating such description.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Code of Regulations of the Company provides for indemnification of
its directors and officers.
The Company is permitted by its Code of Regulations and the Ohio
General Corporation Law to maintain insurance on behalf of its directors and
officers against any loss arising from any claim asserted against them in such
capacities, subject to certain exclusions.
ITEM 8. EXHIBITS.
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------ ----------------------
<S> <C>
10(a) Nonqualified Stock Option Plan for Executives and Managers
10(b) Key Employees Nonqualified Stock Option Plan
4(a) Articles of Incorporation of Morgan's Foods, Inc. (1)
4(b) Code of Regulations of Morgan's Foods, Inc. (1)
5 Opinion of Baker & Hostetler LLP as to legality of the Common Shares being registered
23(a) Consent of Deloitte & Touche LLP
23(b) Consent of Baker & Hostetler LLP (included in Opinion filed as Exhibit 5 hereto)
24(a) Power of Attorney (Registrant)
24(b) Power of Attorney (Directors and Officers)
- ---------------------------
</TABLE>
(1) Filed as an exhibit to the Company's Form 10-K for the 1992 fiscal year
(File No. 0-3833) and incorporated herein by reference.
II-2
<PAGE> 3
ITEM 9. UNDERTAKINGS.
The Company hereby undertakes:
(1) To file, during any period in which offers or sales of the
registered securities are being made, a post-effective amendment to this
Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933 (the "Act");
(ii) to reflect in the Prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement, provided that, notwithstanding the
foregoing, any increase or decrease in the volume of securities offered
(if the total dollar value of the securities offered would not exceed
that which was registered) and any deviation from the low or high and
of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20
percent change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement; and
(iii) to include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
provided, however, that the undertakings set forth in paragraphs (1)(i) and
(1)(ii) above do not apply if the registration statement is on Form S-3 or Form
F-3 and the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the Company pursuant
to Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the Act,
each such post-effective amendment shall be deemed to be a new Registration
Statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
The Company hereby undertakes that, for purposes of determining any
liability under the Act, each filing of the Company's annual report pursuant to
Section 13(a) or Section 15(d) of the Act (and, where applicable, each filing of
any employee benefit plan's annual report pursuant to Section 15(d) of the
Exchange Act) that is incorporated by reference in the Registration Statement
shall be deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers, and controlling persons of the Company
pursuant to the provisions described under Item 6 above or otherwise, the
Company has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is therefore unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted by any
such director, officer or controlling person in connection with the securities
registered hereunder, the Company will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
undersigned registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Cincinnati, State of Ohio, on November 17, 1999.
MORGAN'S FOODS, INC.
By: *
--------------------------------------
James J. Liguori
President and Chief Operating Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed on November 17, 1999, by the following
persons in the capacities indicated below.
<TABLE>
<CAPTION>
Signature Title
- --------- -----
<S> <C>
* Chairman of the Board and Chief Executive Officer; and
- ------------------------------------ Director
Leonard R. Stein-Sapir
* President and Chief Operating Officer; and Director
- ------------------------------------
James J. Liguori
* Senior Vice President; Chief Financial Officer;
- ------------------------------------ Secretary; and Director
Kenneth L. Hignett
* Director
- ------------------------------------
Richard A. Arons
* Director
- ------------------------------------
Lawrence S. Dolin
* Director
- ------------------------------------
Steven S. Kaufman
* Director
- ------------------------------------
Bernard Lerner
</TABLE>
* William Appleton, by signing his name hereto, does sign this
Registration Statement on behalf of the persons indicated above
pursuant to powers of attorney duly executed by such persons and filed
as exhibits to this Registration Statement.
By: /s/ William Appleton
-----------------------------------
William Appleton, Attorney-in-Fact
II-4
<PAGE> 5
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
------ -------------------
<S> <C>
10(a) Nonqualified Stock Option Plan for Executives and Managers
10(b) Key Employees Nonqualified Stock Option Plan
4(a) Articles of Incorporation of Morgan's Foods, Inc. (1)
4(b) Code of Regulations of Morgan's Foods, Inc. (1)
5 Opinion of Baker & Hostetler LLP as to legality of the Common Shares being registered
23(a) Consent of Deloitte & Touche LLP
23(b) Consent of Baker & Hostetler LLP (included in Opinion filed as Exhibit 5 hereto)
24(a) Power of Attorney (Registrant)
24(b) Power of Attorney (Directors and Officers)
- ---------------------------
</TABLE>
(1) Filed as an exhibit to the Company's Form 10-K for the 1992 fiscal year
(File No. 0-3833) and incorporated herein by reference.
II-5
<PAGE> 1
Exhibit 5
---------
November 17, 1999
Morgan's Foods, Inc.
6690 Beta Drive
Mayfield Village, Ohio 44143
Gentlemen:
As counsel for Morgan's Foods, Inc., an Ohio corporation (the
"Company"), we are familiar with the Company's Nonqualified Stock Option Plan
for Executives and Managers and its Key Employees Nonqualified Stock Option Plan
(collectively, the "Plans") and the registration under the Securities Act of
1933 on Form S-8 of the 436,500 Common Shares, without par value, of the Company
(the "Shares") reserved for issuance under the Plans.
Based upon our examination of the Plans and such other documents as we
have deemed relevant hereto, we are of the opinion that the Shares, when issued
and paid for pursuant to the Plans, will be validly issued and outstanding, and
fully paid and nonassessable.
We hereby consent to the filing of this opinion as Exhibit No. 5 to the
Registration Statement on Form S-8 relating to the Shares.
Very truly yours,
Baker & Hostetler LLP
<PAGE> 1
EXHIBIT 10(a)
-------------
MORGAN'S FOODS, INC.
NONQUALIFIED STOCK OPTION PLAN FOR EXECUTIVES AND MANAGERS
1. PURPOSE. The plan shall be known as the Morgan's Foods, Inc.
Nonqualified Stock Option Plan for Executives and Managers (the "Plan"). The
purpose of the Plan shall be to promote the long-term growth and profitability
of Morgan's Foods, Inc. (the "Company") by granting non-qualified stock options
to certain senior executive officers of the Company to provide them with
incentives to improve shareholder values and contribute to the success of the
Company.
2. DEFINITIONS.
(a) "CAUSE" means the occurrence of one of the following:
(i) Conviction for a felony or for any crime or offense lesser
than a felony involving the property of the Company or a subsidiary.
(ii) Conduct that has caused demonstrable and serious injury to
the Company or a subsidiary, monetary or otherwise, as evidenced by a final
determination of a court or governmental agency of competent jurisdiction in
effect after exhaustion or lapse of all rights of appeal.
(iii) Gross dereliction of duty or other grave misconduct, as
determined by the Company.
(b) A "CHANGE IN CONTROL" shall be deemed to have occurred if and when
(a) any person (as such term is defined in Section 13(d) of the Exchange Act),
corporation or other entity, which theretofore beneficially owned securities
representing less than twenty-one percent of the voting power of the Company in
the election of directors, acquires, in a transaction or series of transactions,
outstanding securities of the Company which, when added to the voting power
previously held by such person, corporation or other entity, entitles such
person to exercise more than twenty-one percent of the total voting power of the
Company in the election of directors (the formation of a syndicate or group of
existing shareholders not being deemed to constitute such an acquisition); (b)
the Board of Directors (or, if approval of the Board of Directors is not
required as a matter of law, the shareholders of the Company) shall approve (1)
any consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which Common Shares would be
converted into cash, securities or other property, other than a merger of the
Company in which the holders of Common Shares immediately prior to the merger
have the same proportionate ownership of common shares of the surviving
corporation immediately after the merger, or (2) any sale, lease, exchange, or
other transfer (in one transaction or a series of related transactions) of all,
or substantially all, of the assets of the Company, or (3) the adoption of any
plan or proposal for the liquidation or dissolution of the Company; or (c) any
person (as such term is defined in Section 13(d) of the Exchange Act),
corporation or other entity other than the Company shall make a tender or
exchange offer to acquire any Common Shares or securities convertible into
Common Shares for cash, securities or any other consideration if, after giving
effect to the acquisition of all Common Shares or securities sought pursuant to
such offer, such person, corporation or other entity would become the
"beneficial owner" (as such term is defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of twenty-one percent or more of the outstanding
Common Shares (calculated as provided in paragraph (d) of such Rule 13d-3 in the
case of rights to acquire Common Shares); provided, that at least ten percent of
such Common Shares or securities sought pursuant to such offer is acquired.
page 1 of 6
<PAGE> 2
(c) "COMPETITION" is deemed to occur if a participant who has
terminated employment subsequently obtains a position as a full-time or
part-time employee, as a member of the board of directors, or as a consultant or
advisor with or to, or acquires an ownership interest in excess of five percent
(5%) of, a corporation, partnership, firm or other entity that engages in any of
the businesses of the Company with which the participant was involved in a
management role at any time during the last five years of his employment with
the Company or any subsidiary.
(d) "DISABILITY" means a permanent and total disability as defined in
Section 72(m)(7) of the Internal Revenue Code of 1986, as amended (the "Code").
(e) "FAIR MARKET VALUE" of the Common Shares of the Company shall
mean, with respect to the date in question, the average of the high and low
prices of the Common Shares as reported on the American Stock Exchange, or if
there were no sales of Common Shares on that day, the next preceding day on
which there were sales, or if the Company's Common Shares are not traded on such
exchange, or otherwise traded publicly, the value determined, in good faith, by
the Option Committee (as defined herein).
(f) "RETIREMENT" means termination of one's employment with the
approval of the Board of Directors of the Company.
(g) "SUBSIDIARY" and "SUBSIDIARIES" mean a corporation or corporations
of which outstanding shares representing fifty percent or more of the combined
voting power of such corporation or corporations are owned directly or
indirectly by the Company.
3. ADMINISTRATION. The Plan shall be administered by a committee consisting
of at least two directors of the Company (the "Option Committee"). Members of
the Option Committee shall be such directors of the Company as are permitted by
applicable laws and regulations. Subject to the provisions of the Plan, the
Option Committee shall be authorized to (i) select persons to participate in the
Plan, (ii) determine the form and substance of grants made under the Plan to
each participant, and the conditions and restrictions, if any, subject to which
such grants will be made, (iii) interpret the Plan and (iv) adopt, amend, or
rescind such rules and regulations for carrying out the Plan as it may deem
appropriate. Decisions of the Option Committee on all matters relating to the
Plan shall be in the Option Committee's sole discretion and shall be conclusive
and binding on all parties, including the Company, its shareholders, and the
participants in the Plan. The validity, construction, and effect of the Plan and
any rules and regulations relating to the Plan shall be determined in accordance
with applicable federal and state laws and rules and regulations promulgated
pursuant thereto.
4. SHARES AVAILABLE FOR THE PLAN. Subject to adjustment as provided in
Section 10, an aggregate of 145,500 Common Shares of the Company (hereinafter
the "shares") may be issued pursuant to the Plan. Such shares may be unissued or
treasury shares. If any grant under the Plan expires or terminates unexercised,
becomes unexercisable or is forfeited as to any shares, such unpurchased or
forfeited shares shall thereafter be available for further grants under the
Plan.
5. PARTICIPATION. Participation in the Plan shall be limited to executives
and managers selected by the Option Committee. Nothing in the Plan or in any
grant thereunder shall confer any right on an employee to continue in the employ
of the Company or any subsidiary or shall interfere in any way with the right of
the Company to terminate an employee at any time.
page 2 of 6
<PAGE> 3
Nonqualified stock options may be granted to such persons and for such
number of shares as the Option Committee shall determine (such individuals to
whom grants are made being herein called "optionees" or "grantees" as the case
may be). A grant made hereunder in any one year to an eligible person shall
neither guarantee nor preclude a further grant to such person in that year or
subsequent years.
The maximum number of shares with respect to which options may be
granted to any single individual in any one calendar year shall not exceed
60,000 shares.
6. OPTIONS. Options granted pursuant hereto shall take such form as the
Option Committee shall determine, subject to the following terms and conditions.
(a) PRICE. The price per share deliverable upon the exercise of each
option ("exercise price") shall not be less than 100% of the Fair Market Value
of the shares on the date the option is granted.
(b) CASH EXERCISE. An Option may be exercised in whole or in part upon
payment of the exercise price of the shares to be acquired. Payment shall be
made in cash or, in the discretion of the Option Committee, in shares acquired
by the participant more than six months prior to the exercise of such option, or
a combination of cash and such shares. The Fair Market Value of such shares
tendered on exercise of options shall be determined on the date of exercise.
(c) CASHLESS EXERCISE. An Option may be exercised in whole or in part
upon delivery to the Secretary of the Company of an irrevocable written notice
of exercise. The date on which such notice is received by the Secretary shall be
the date of exercise of the option, provided that within three business days of
the delivery of such notice the funds to pay for exercise of the option are
delivered to the Company by a broker acting on behalf of the optionee either in
connection with the sale of the shares underlying the option or in connection
with the making of a margin loan to the optionee to enable payment of the
exercise price of the option. In connection with the foregoing, the Company will
provide a copy of the notice of exercise of the option to the aforesaid broker
upon receipt by the Secretary of such notice and will deliver to such broker,
within three business days of the delivery of such notice to the Company, a
certificate or certificates (as requested by the broker) representing the number
of shares underlying the option that have been sold by such broker for the
optionee.
(d) TERMS OF OPTIONS. The term during which each option may be
exercised shall be determined by the Option Committee but in no event shall an
option be exercisable in whole or in part in less than six months from the date
of grant. All rights to purchase shares pursuant to an option shall, unless
sooner terminated, expire at the date designated by the Option Committee. The
Option Committee shall determine the date on which each option shall become
exercisable and may provide that an option shall become exercisable in
installments. The shares constituting each installment may be purchased in whole
or in part at any time after such installment becomes exercisable, subject to
such minimum exercise requirement as is designated by the Option Committee. The
Option Committee may accelerate the time at which any option may be exercised in
whole or in part. Unless otherwise provided herein, an optionee may exercise an
option only if he or she is, and has continuously been since the date the option
was granted, an employee of the Company or any subsidiary. Prior to the exercise
of the option and delivery of the shares represented thereby, the optionee shall
have no rights to any dividends or be entitled to any voting rights on any
shares represented by outstanding options.
page 3 of 6
<PAGE> 4
(e) TERMINATION OF EMPLOYMENT; CHANGE IN CONTROL. If a participant
ceases to be an employee of the Company or any subsidiary due to death or
Disability, each of his options shall become fully vested and exercisable and
shall remain so until its expiration date.
If a participant ceases to be an employee of the Company or any
subsidiary upon the occurrence of his Retirement, each of his options granted
prior to Retirement shall become fully vested and exercisable and shall remain
so until its expiration date, provided that the participant does not engage in
Competition unless he receives written consent to do so from the Board.
If a participant ceases to be an employee of the Company or any
subsidiary due to Cause, all of his options shall be forfeited.
If a participant ceases to be an employee of the Company or any
subsidiary for any reason other than death, Disability, Retirement or Cause,
each of his options that was exercisable on the date of termination shall remain
exercisable for, and shall otherwise terminate at the end of, a period of 90
days after the date of termination of employment, but in no event after its
expiration date; provided that the participant does not engage in Competition
during such 90-day period unless he receives written consent to do so from the
Board. All of such participant's options that were not exercisable on the date
of such termination shall be forfeited.
Notwithstanding anything to the contrary herein, if a participant
ceases to be an employee of the Company or any subsidiary, for any reason other
than Cause, the Option Committee at its sole discretion may accelerate the
vesting of any option so that it will become fully vested and exercisable as of
the date of such participant's termination of employment.
If there is a Change in Control of the Company, each outstanding
option will become fully vested and exercisable as of the date of the Change in
Control.
7. WITHHOLDING OF TAXES. The Company may require, as a condition to any
grant under the Plan or to the delivery of certificates for shares issued
hereunder, that the grantee pay to the Company, in cash, any federal, state or
local taxes of any kind required by law to be withheld with respect to any grant
or any delivery of shares. The Option Committee, in its sole discretion, may
permit participants to pay such taxes through the withholding of shares
otherwise deliverable to such participant in connection with such grant or the
delivery to the Company of shares otherwise acquired by the participant. The
Fair Market Value of shares withheld by the Company or tendered to the Company
for the satisfaction of tax withholding obligations under this section shall be
determined on the date such shares are withheld or tendered. The Company, to the
extent permitted or required by law, shall have the right to deduct from any
payment of any kind (including salary or bonus) otherwise due to a grantee any
federal, state or local taxes of any kind required by law to be withheld with
respect to any grant or to the delivery of shares under the Plan, or to retain
or sell without notice a sufficient number of the shares to be issued to such
grantee to cover any such taxes.
8. WRITTEN AGREEMENT. Each person to whom a grant is made under the Plan
shall enter into a written agreement with the Company that shall contain such
provisions, consistent with the provisions of the Plan, as may be established by
the Option Committee.
9. LISTING AND REGISTRATION. If the Option Committee determines that the
listing, registration, or qualification upon any securities exchange or under
any law of shares subject to any option is necessary or desirable as a condition
of, or in connection with, the granting of same or the issue or purchase of
shares thereunder, no such option may be exercised in whole or in part or no
shares issued
page 4 of 6
<PAGE> 5
unless such listing, registration or qualification is effected free of any
conditions not acceptable to the Option Committee.
10. ADJUSTMENTS. In the event of a reorganization, recapitalization, stock
split, stock dividend, combination of shares, merger, consolidation,
distribution of assets, or any other change in the corporate structure or shares
of the Company, the Option Committee shall make such adjustments as it deems
appropriate in the number and kind of shares reserved for issuance under the
Plan, in the number and kind of shares covered by grants made under the Plan,
and in the exercise price of outstanding options. In the event of any merger,
consolidation or other reorganization in which the Company is not the surviving
or continuing corporation, all options that were granted hereunder and that are
outstanding on the date of such event shall be assumed by the surviving or
continuing corporation.
11. TERMINATION AND MODIFICATION OF THE PLAN. The Board of Directors may
modify or terminate the Plan and from time to time may suspend, and if
suspended, may reinstate any or all of the provisions of the Plan, except that
no modification, suspension or termination of the Plan may, without the consent
of the grantee affected, alter or impair any grant previously made under the
Plan. With the consent of the grantee affected thereby, the Option Committee may
amend or modify the grant of any outstanding option in any manner to the extent
that the Option Committee would have had the authority to make such grant as so
modified or amended, including without limitation to change the date or dates as
of which an option becomes exercisable. The Option Committee shall be authorized
to make minor or administrative modifications to the Plan as well as
modifications to the Plan that may be dictated by requirements of federal or
state laws applicable to the Company or that may be authorized or made desirable
by such laws.
12. COMMENCEMENT DATE; TERMINATION DATE. The date of commencement of the
Plan shall be April 2, 1999. Unless previously terminated, the Plan shall
terminate at the close of business on April 1, 2009.
13. TRANSFERABILITY. No option or right thereunder may be assigned or
transferred by an optionee except by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order (as defined in
the Code or the Employee Retirement Income Security Act of 1974, as amended);
provided, however, that the Option Committee may permit any optionee to transfer
such option during his lifetime to one or more members of his family, to one or
more trusts for the benefit of one or more members of his family, or to a
partnership or partnerships of members of his family, provided that no
consideration is paid for the transfer. The Option Committee may permit in its
discretion transfers of nonqualified options to other persons or entities, as
permitted by applicable law. The transferee of such option shall be subject to
all restrictions, terms and conditions applicable to such option prior to its
transfer, except that the option shall not be further transferable inter vivos
by the transferee. The Option Committee may impose on any such transferable
option and on the shares to be issued upon the exercise of such option such
limitations and conditions as the Option Committee deems appropriate.
14. CONSTRUCTION OF THE PLAN. The validity, construction, interpretation,
administration and effect of the Plan and of its rules and regulations, and
rights relating to the Plan, shall be determined solely in accordance with the
laws of Ohio.
15. GOVERNMENT AND OTHER REGULATIONS. The obligation of the Company with
respect to options granted hereunder shall be subject to all applicable laws,
rules and regulations and such approvals by any governmental agencies as may be
required, including, without limitation, the effectiveness of any registration
statement required under the Securities Act of 1933, and the rules and
page 5 of 6
<PAGE> 6
regulations of any securities exchange on which the Common Shares may be listed.
For so long as the Common Shares are registered under the Exchange Act, the
Company shall use its reasonable efforts to comply with any legal requirements
(a) to maintain a registration statement in effect under the Securities Act of
1933 with respect to all Common Shares that may be issued under the Plan, and
(b) to file in a timely manner all reports required to be filed by it under the
Exchange Act.
16. NON-EXCLUSIVITY. The adoption of the Plan by the Board of Directors
shall not be construed as creating any limitations on the power of the Board of
Directors to adopt such other incentive arrangements as it may deem desirable
including, without limitation, the granting of stock options and the awarding of
stock and cash otherwise than under the Plan, and such arrangements may be
either generally applicable or applicable only in specific cases.
page 6 of 6
<PAGE> 1
EXHIBIT 10(b)
-------------
MORGAN'S FOODS, INC.
KEY EMPLOYEES NONQUALIFIED STOCK OPTION PLAN
1. PURPOSE. The plan shall be known as the Morgan's Foods, Inc. Key
Employees Nonqualified Stock Option Plan (the "Plan"). The purpose of the Plan
shall be to promote the long-term growth and profitability of Morgan's Foods,
Inc. (the "Company") and its subsidiaries by granting non-qualified stock
options to certain executive officers and other key employees of the Company and
its subsidiaries to provide them with incentives to improve shareholder values
and contribute to the success of the Company and by enabling the Company to
attract, retain and reward the best available persons for positions of
substantial responsibility.
2. DEFINITIONS.
(a) "CAUSE" means the occurrence of one of the following:
(i) Conviction for a felony or for any crime or offense lesser
than a felony involving the property of the Company or a subsidiary.
(ii) Conduct that has caused demonstrable and serious injury to
the Company or a subsidiary, monetary or otherwise, as evidenced by a final
determination of a court or governmental agency of competent jurisdiction in
effect after exhaustion or lapse of all rights of appeal.
(iii) Gross dereliction of duty or other grave misconduct, as
determined by the Company.
(b) A "CHANGE IN CONTROL" shall be deemed to have occurred if and when
(a) any person (as such term is defined in Section 13(d) of the Exchange Act),
corporation or other entity, which theretofore beneficially owned securities
representing less than twenty-one percent of the voting power of the Company in
the election of directors, acquires, in a transaction or series of transactions,
outstanding securities of the Company which, when added to the voting power
previously held by such person, corporation or other entity, entitles such
person to exercise more than twenty-one percent of the total voting power of the
Company in the election of directors (the formation of a syndicate or group of
existing shareholders not being deemed to constitute such an acquisition); (b)
the Board of Directors (or, if approval of the Board of Directors is not
required as a matter of law, the shareholders of the Company) shall approve (1)
any consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which Common Shares would be
converted into cash, securities or other property, other than a merger of the
Company in which the holders of Common Shares immediately prior to the merger
have the same proportionate ownership of common shares of the surviving
corporation immediately after the merger, or (2) any sale, lease, exchange, or
other transfer (in one transaction or a series of related transactions) of all,
or substantially all, of the assets of the Company, or (3) the adoption of any
plan or proposal for the liquidation or dissolution of the Company; or (c) any
person (as such term is defined in Section 13(d) of the Exchange Act),
corporation or other entity other than the Company shall make a tender or
exchange offer to acquire any Common Shares or securities convertible into
Common Shares for cash, securities or any other consideration if, after giving
effect to the acquisition of all Common Shares or securities sought pursuant to
such offer, such person, corporation or other entity would become the
"beneficial owner" (as such term is defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of twenty-one percent or more of the outstanding
Common Shares (calculated as provided in paragraph (d) of such Rule 13d-3 in the
case of rights to
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<PAGE> 2
acquire Common Shares); provided, that at least ten percent of such Common
Shares or securities sought pursuant to such offer is acquired.
(c) "COMPETITION" is deemed to occur if a participant who has
terminated employment subsequently obtains a position as a full-time or
part-time employee, as a member of the board of directors, or as a consultant or
advisor with or to, or acquires an ownership interest in excess of five percent
(5%) of, a corporation, partnership, firm or other entity that engages in any of
the businesses of the Company with which the participant was involved in a
management role at any time during the last five years of his or her employment
with the Company or any subsidiary.
(d) "DISABILITY" means a permanent and total disability as defined in
Section 72(m)(7) of the Internal Revenue Code of 1986, as amended (the "Code").
(e) "FAIR MARKET VALUE" of the Common Shares of the Company shall
mean, with respect to the date in question, the average of the high and low
prices of the Common Shares as reported on the American Stock Exchange, or if
there were no sales of Common Shares on that day, the next preceding day on
which there were sales, or if the Company's Common Shares are not traded on such
exchange, or otherwise traded publicly, the value determined, in good faith, by
the Option Committee (as defined herein).
(f) "RETIREMENT" means termination of one's employment with the
approval of the Board of Directors of the Company.
(g) "SUBSIDIARY" and "SUBSIDIARIES" mean a corporation or corporations
of which outstanding shares representing fifty percent or more of the combined
voting power of such corporation or corporations are owned directly or
indirectly by the Company.
3. ADMINISTRATION. The Plan shall be administered by a committee consisting
of at least two directors of the Company (the "Option Committee"). Members of
the Option Committee shall be such directors of the Company as are permitted by
applicable laws and regulations. Subject to the provisions of the Plan, the
Option Committee shall be authorized to (i) select persons to participate in the
Plan, (ii) determine the form and substance of grants made under the Plan to
each participant, and the conditions and restrictions, if any, subject to which
such grants will be made, (iii) interpret the Plan and (iv) adopt, amend, or
rescind such rules and regulations for carrying out the Plan as it may deem
appropriate. Decisions of the Option Committee on all matters relating to the
Plan shall be in the Option Committee's sole discretion and shall be conclusive
and binding on all parties, including the Company, its shareholders, and the
participants in the Plan. The validity, construction, and effect of the Plan and
any rules and regulations relating to the Plan shall be determined in accordance
with applicable federal and state laws and rules and regulations promulgated
pursuant thereto.
4. SHARES AVAILABLE FOR THE PLAN. Subject to adjustment as provided in
Section 10, an aggregate of 291,000 Common Shares of the Company (hereinafter
the "shares") may be issued pursuant to the Plan. Such shares may be unissued or
treasury shares. If any grant under the Plan expires or terminates unexercised,
becomes unexercisable or is forfeited as to any shares, such unpurchased or
forfeited shares shall thereafter be available for further grants under the
Plan.
5. PARTICIPATION. Participation in the Plan shall be limited to those
officers and other key employees of the Company and its subsidiaries that are
selected by the Option Committee. Nothing in the Plan or in any grant thereunder
shall confer any right on an employee to continue in the employ of
page 2 of 6
<PAGE> 3
the Company or any subsidiary or shall interfere in any way with the right of
the Company to terminate an employee at any time.
Nonqualified stock options may be granted to such persons and for such
number of shares as the Option Committee shall determine (such individuals to
whom grants are made being herein called "optionees" or "grantees" as the case
may be). A grant made hereunder in any one year to an eligible person shall
neither guarantee nor preclude a further grant to such person in that year or
subsequent years.
The maximum number of shares with respect to which options may be
granted to any single individual in any one calendar year shall not exceed
100,000 shares.
6. OPTIONS. Options granted pursuant hereto shall take such form as the
Option Committee shall determine, subject to the following terms and conditions.
(a) PRICE. The price per share deliverable upon the exercise of each
option ("exercise price") shall not be less than 100% of the Fair Market Value
of the shares on the date the option is granted.
(b) CASH EXERCISE. An Option may be exercised in whole or in part upon
payment of the exercise price of the shares to be acquired. Payment shall be
made in cash or, in the discretion of the Option Committee, in shares acquired
by the participant more than six months prior to the exercise of such option, or
a combination of cash and such shares. The Fair Market Value of such shares
tendered on exercise of options shall be determined on the date of exercise.
(c) CASHLESS EXERCISE. An Option may be exercised in whole or in part
upon delivery to the Secretary of the Company of an irrevocable written notice
of exercise. The date on which such notice is received by the Secretary shall be
the date of exercise of the option, provided that within three business days of
the delivery of such notice the funds to pay for exercise of the option are
delivered to the Company by a broker acting on behalf of the optionee either in
connection with the sale of the shares underlying the option or in connection
with the making of a margin loan to the optionee to enable payment of the
exercise price of the option. In connection with the foregoing, the Company will
provide a copy of the notice of exercise of the option to the aforesaid broker
upon receipt by the Secretary of such notice and will deliver to such broker,
within three business days of the delivery of such notice to the Company, a
certificate or certificates (as requested by the broker) representing the number
of shares underlying the option that have been sold by such broker for the
optionee.
(d) TERMS OF OPTIONS. The term during which each option may be
exercised shall be determined by the Option Committee but in no event shall an
option be exercisable in whole or in part in less than six months from the date
of grant. All rights to purchase shares pursuant to an option shall, unless
sooner terminated, expire at the date designated by the Option Committee. The
Option Committee shall determine the date on which each option shall become
exercisable and may provide that an option shall become exercisable in
installments. The shares constituting each installment may be purchased in whole
or in part at any time after such installment becomes exercisable, subject to
such minimum exercise requirement as is designated by the Option Committee. The
Option Committee may accelerate the time at which any option may be exercised in
whole or in part. Unless otherwise provided herein, an optionee may exercise an
option only if he or she is, and has continuously been since the date the option
was granted, an employee of the Company or any subsidiary. Prior to the exercise
of the option and delivery of the shares represented thereby, the optionee shall
have no rights to any dividends or be entitled to any voting rights on any
shares represented by outstanding options.
page 3 of 6
<PAGE> 4
(e) TERMINATION OF EMPLOYMENT; CHANGE IN CONTROL. If a participant
ceases to be an employee of the Company or any subsidiary due to death or
Disability, each of his or her options shall become fully vested and exercisable
and shall remain so until its expiration date.
If a participant ceases to be an employee of the Company or any
subsidiary upon the occurrence of his or her Retirement, each of his or her
options granted prior to Retirement shall become fully vested and exercisable
and shall remain so until its expiration date, provided that the participant
does not engage in Competition unless he receives written consent to do so from
the Board.
If a participant ceases to be an employee of the Company or any
subsidiary due to Cause, all of his or her options shall be forfeited.
If a participant ceases to be an employee of the Company or any
subsidiary for any reason other than death, Disability, Retirement or Cause,
each of his or her options that was exercisable on the date of termination shall
remain exercisable for, and shall otherwise terminate at the end of, a period of
90 days after the date of termination of employment, but in no event after its
expiration date; provided that the participant does not engage in Competition
during such 90-day period unless he or she receives written consent to do so
from the Board. All of such participant's options that were not exercisable on
the date of such termination shall be forfeited.
Notwithstanding anything to the contrary herein, if a participant
ceases to be an employee of the Company or any subsidiary, for any reason other
than Cause, the Option Committee at its sole discretion may accelerate the
vesting of any option so that it will become fully vested and exercisable as of
the date of such participant's termination of employment.
If there is a Change in Control of the Company, each outstanding
option will become fully vested and exercisable as of the date of the Change in
Control.
7. WITHHOLDING OF TAXES. The Company may require, as a condition to any
grant under the Plan or to the delivery of certificates for shares issued
hereunder, that the grantee pay to the Company, in cash, any federal, state or
local taxes of any kind required by law to be withheld with respect to any grant
or any delivery of shares. The Option Committee, in its sole discretion, may
permit participants to pay such taxes through the withholding of shares
otherwise deliverable to such participant in connection with such grant or the
delivery to the Company of shares otherwise acquired by the participant. The
Fair Market Value of shares withheld by the Company or tendered to the Company
for the satisfaction of tax withholding obligations under this section shall be
determined on the date such shares are withheld or tendered. The Company, to the
extent permitted or required by law, shall have the right to deduct from any
payment of any kind (including salary or bonus) otherwise due to a grantee any
federal, state or local taxes of any kind required by law to be withheld with
respect to any grant or to the delivery of shares under the Plan, or to retain
or sell without notice a sufficient number of the shares to be issued to such
grantee to cover any such taxes.
8. WRITTEN AGREEMENT. Each person to whom a grant is made under the Plan
shall enter into a written agreement with the Company that shall contain such
provisions, consistent with the provisions of the Plan, as may be established by
the Option Committee.
9. LISTING AND REGISTRATION. If the Option Committee determines that the
listing, registration, or qualification upon any securities exchange or under
any law of shares subject to any option is necessary or desirable as a condition
of, or in connection with, the granting of same or the issue
page 4 of 6
<PAGE> 5
or purchase of shares thereunder, no such option may be exercised in whole or in
part or no shares issued unless such listing, registration or qualification is
effected free of any conditions not acceptable to the Option Committee.
10. ADJUSTMENTS. In the event of a reorganization, recapitalization, stock
split, stock dividend, combination of shares, merger, consolidation,
distribution of assets, or any other change in the corporate structure or shares
of the Company, the Option Committee shall make such adjustments as it deems
appropriate in the number and kind of shares reserved for issuance under the
Plan, in the number and kind of shares covered by grants made under the Plan,
and in the exercise price of outstanding options. In the event of any merger,
consolidation or other reorganization in which the Company is not the surviving
or continuing corporation, all options that were granted hereunder and that are
outstanding on the date of such event shall be assumed by the surviving or
continuing corporation.
11. TERMINATION AND MODIFICATION OF THE PLAN. The Board of Directors may
modify or terminate the Plan and from time to time may suspend, and if
suspended, may reinstate any or all of the provisions of the Plan, except that
no modification, suspension or termination of the Plan may, without the consent
of the grantee affected, alter or impair any grant previously made under the
Plan. With the consent of the grantee affected thereby, the Option Committee may
amend or modify the grant of any outstanding option in any manner to the extent
that the Option Committee would have had the authority to make such grant as so
modified or amended, including without limitation to change the date or dates as
of which an option becomes exercisable. The Option Committee shall be authorized
to make minor or administrative modifications to the Plan as well as
modifications to the Plan that may be dictated by requirements of federal or
state laws applicable to the Company or that may be authorized or made desirable
by such laws.
12. COMMENCEMENT DATE; TERMINATION DATE. The date of commencement of the
Plan shall be April 2, 1999. Unless previously terminated, the Plan shall
terminate at the close of business on April 1, 2009. Notwithstanding the
foregoing, the Plan shall be null and void unless it is approved at the 1999
annual meeting of the shareholders of the Company.
13. TRANSFERABILITY. No option or right thereunder may be assigned or
transferred by an optionee except by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order (as defined in
the Code or the Employee Retirement Income Security Act of 1974, as amended);
provided, however, that the Option Committee may permit any optionee to transfer
such option during his or her lifetime to one or more members of his or her
family, to one or more trusts for the benefit of one or more members of his or
her family, or to a partnership or partnerships of members of his or her family,
provided that no consideration is paid for the transfer. The Option Committee
may permit in its discretion transfers of nonqualified options to other persons
or entities, as permitted by applicable law. The transferee of such option shall
be subject to all restrictions, terms and conditions applicable to such option
prior to its transfer, except that the option shall not be further transferable
inter vivos by the transferee. The Option Committee may impose on any such
transferable option and on the shares to be issued upon the exercise of such
option such limitations and conditions as the Option Committee deems
appropriate.
14. CONSTRUCTION OF THE PLAN. The validity, construction, interpretation,
administration and effect of the Plan and of its rules and regulations, and
rights relating to the Plan, shall be determined solely in accordance with the
laws of Ohio.
15. GOVERNMENT AND OTHER REGULATIONS. The obligation of the Company with
respect to options granted hereunder shall be subject to all applicable laws,
rules and regulations and such
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<PAGE> 6
approvals by any governmental agencies as may be required, including, without
limitation, the effectiveness of any registration statement required under the
Securities Act of 1933, and the rules and regulations of any securities exchange
on which the Common Shares may be listed. For so long as the Common Shares are
registered under the Exchange Act, the Company shall use its reasonable efforts
to comply with any legal requirements (a) to maintain a registration statement
in effect under the Securities Act of 1933 with respect to all Common Shares
that may be issued under the Plan, and (b) to file in a timely manner all
reports required to be filed by it under the Exchange Act.
16. NON-EXCLUSIVITY. Neither the adoption of the Plan by the Board of
Directors nor the submission of the Plan to the shareholders of the Company for
approval shall be construed as creating any limitations on the power of the
Board of Directors to adopt such other incentive arrangements as it may deem
desirable including, without limitation, the granting of stock options and the
awarding of stock and cash otherwise than under the Plan, and such arrangements
may be either generally applicable or applicable only in specific cases.
page 6 of 6
<PAGE> 1
Exhibit 23(a)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Morgan's Foods, Inc. on Form S-8 of our report dated May 26, 1999, appearing in
the Annual Report on Form 10-K of Morgan's Foods, Inc. for the year ended
February 28, 1999.
DELOITTE & TOUCHE LLP
Cleveland, Ohio
November 17, 1999
<PAGE> 1
Exhibit 24(a)
-------------
POWER OF ATTORNEY
-----------------
Morgan's Foods, Inc., an Ohio corporation (the "Company"), which
proposes to file with the Securities and Exchange Commission, under the
provisions of the Securities Act of 1933, a registration statement on Form S-8
or other form registering under the Securities Act of 1933 (and Rule 415 of such
Act, if appropriate) the Company's Common Shares in connection with the exercise
of options under the Company's Nonqualified Stock Option Plan for Executives and
Managers and its Key Employees Nonqualified Stock Option Plan, hereby
constitutes and appoints Kenneth L. Hignett and William Appleton, and each of
them, as the attorney of the Company, with full power of substitution and
resubstitution, for and in the name, place and stead of the Company, to sign and
file the proposed registration statement and any and all amendments and exhibits
thereto, and any and all applications and other documents to be filed with the
Securities and Exchange Commission pertaining to such interests and securities
or such registration, with full power and authority to do and perform any and
all acts and things whatsoever requisite to be done in the premises, hereby
ratifying and approving the acts of such attorney or any such substitute.
IN WITNESS WHEREOF, Morgan's Foods, Inc. has caused this power of
attorney to be signed on its behalf by the undersigned in Cleveland, Ohio, on
October 29, 1999.
MORGAN'S FOODS, INC.
By: /s/ Leonard R. Stein-Sapir
-----------------------------------------------
Leonard R. Stein-Sapir, President
and Chief Executive Officer
<PAGE> 1
EXHIBIT 24(b)
-------------
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, THAT: Each of the undersigned officers
and directors of Morgan's Foods, Inc., an Ohio corporation (the "Company") has
made, constituted and appointed, and by this instrument does make, constitute
and appoint, William Appleton, Leonard R. Stein-Sapir, and Kenneth L. Hignett,
any of whom may act, with full power of substitution and re-substitution, to
affix for such person and in such person's name, place and stead, in any and all
capacities as attorney-in-fact, such person's signature to any Registration
Statement on Form S-8 or other form registering under the Securities Act of 1933
(and Rule 415 of such Act, if appropriate) the Company's Common Shares in
connection with the exercise of options under the Company's Nonqualified Stock
Option Plan for Executives and Managers and its Key Employees Nonqualified Stock
Option Plan, and to any and all amendments, post-effective amendments,
supplements and exhibits to such Registration Statements, and to any and all
applications and other documents pertaining thereto, giving and granting to each
such attorney-in-fact full power and authority to do and perform every act and
thing whatsoever requisite and necessary to be done in and about the premises,
as fully as such person might or could do if personally present, and hereby
ratifying and confirming all that each of such attorneys-in-fact or any such
substitute shall lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, this Power of Attorney has been signed in the
capacities indicated below on October 29, 1999.
<TABLE>
<S> <C>
/s/ Leonard R. Stein-Sapir /s/ James J. Liguroi
- ------------------------------------------------- -----------------------------------------------------
Leonard R. Stein-Sapir James J. Liguroi
Chairman of the Board of Directors and Chief President and Chief Operating Officer and
Executive Officer a Director
/s/ Kenneth L. Hignett /s/ Richard A. Arons
- ------------------------------------------------- -----------------------------------------------------
Kenneth L. Hignett Richard A. Arons
Senior Vice President, Chief Financial Officer, Director
Secretary and a Director
/s/ Lawrence S. Dolin /s/ Steven S. Kaufman
- ------------------------------------------------- -----------------------------------------------------
Lawrence S. Dolin Steven S. Kaufman
Director Director
/s/ Bernard Lerner
- -------------------------------------------------
Bernard Lerner
Director
</TABLE>
