<PAGE> 1
As filed with the Securities and Exchange Commission on June 6, 1994.
Registration No. 33-___________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_____________
THE MORNINGSTAR GROUP INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 75-2217488
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
5956 SHERRY LANE, SUITE 1100
DALLAS, TEXAS 75225-6522
(214) 360-4777
(Address, Including Zip Code, and Telephone Number,
including Area Code, of Registrant's Principal Executive Offices)
1994 INCENTIVE AND NONSTATUTORY STOCK OPTION PLAN
AND STOCK OPTION AGREEMENT DATED APRIL 14, 1994
BETWEEN REGISTRANT AND C. DEAN METROPOULOS
(Full Title of Plan)
TRACY L. NOLL
THE MORNINGSTAR GROUP INC.
5956 SHERRY LANE, SUITE 1100
DALLAS, TEXAS 75225-6522
(214) 360-4777
(Name and Address, Including Zip Code,
and Telephone Number, Including Area Code, of Agent For Service)
Copies to:
R. SCOTT COHEN
WEIL, GOTSHAL & MANGES
100 CRESCENT COURT, SUITE 1300
DALLAS, TEXAS 75201
(214) 746-7700
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===========================================================================================================================
Proposed Maximum Proposed Maximum
Title of Each Class of Securities to Amount to be Offering Price Per Aggregate Offering Amount of
be Registered Registered Unit Price Registration Fee
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 850,000 $7.50 $6,375,000 $2,198
===========================================================================================================================
</TABLE>
(1) Pursuant to Rule 416(a), there are also being registered an
indeterminate amount of additional shares of Common Stock as may
become issuable as a result of stock splits, stock dividends or
similar transactions.
(2) In accordance with sections (c) and (h)(1) of Rule 457, calculated on
the basis of the average of the high and low prices of the Common
Stock as reported on the NASDAQ-National Market System on May 31,
1994.
================================================================================
<PAGE> 2
PART II.
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.
The following documents are incorporated by reference in this
Registration Statement:
(a) The Registrant's Annual Report on Form 10-K, dated March 17,
1994, filed with the Securities and Exchange Commission under the Securities
Exchange Act of 1934 for the year ended December 31, 1993.
(b) All other reports filed by the Registrant pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 since the end of the
fiscal year covered by the annual report referred to in (a) above.
(c) The description of the Registrant's Common Stock which is
contained in the Registrant's Registration Statement on Form 8-A filed under
Section 12 of the Securities Exchange Act of 1934 on March 13, 1992 (File No.
0-19934), including any amendment or reports filed for the purpose of updating
such descriptions.
All documents subsequently filed by the Registrant pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934,
prior to the filing of a post-effective amendment to this Registration
Statement which indicates that all of the shares of common stock offered have
been sold or which deregisters all of such shares 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 filing of such documents. Any statement
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Registration Statement to the
extent that a statement contained herein or in any other subsequently filed
document modifies or supersedes such statement. Any such statement so modified
or superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
John P. Clarson, General Counsel of the Registrant, owns 8,355 shares
of Common Stock of the Registrant (including presently exercisable options to
purchase options to purchase 5,383 shares of Common Stock of the Registrant).
II-1
<PAGE> 3
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant is incorporated in Delaware. Under Section 145 of the
General Corporation Law of the State of Delaware, a Delaware corporation has
the power, under specified circumstances, to indemnify its directors, officers,
employees, and agents in connection with actions, suits, or proceedings brought
against them by a third party or in the right of the corporation, by reason of
the fact that they were or are such directors, officers, employees, or agents,
against expenses incurred in any action, suit or proceeding. Article IX of the
Restated Certificate of Incorporation of the Registrant provides for mandatory
indemnification of directors and officers to the fullest extent permitted by
Section 145 of the General Corporation Law of the State of Delaware.
Section 102(b)(7) of the General Corporation Law of the State of
Delaware provides that a certificate of incorporation may contain a provision
eliminating or limiting the personal liability of a director to the corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
director provided that such provision shall not eliminate or limit the
liability of a director (i) for any breach of the director's duty of loyalty to
the corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 (relating to liability for unauthorized acquisitions or
redemptions of, or dividends on, capital stock) of the Delaware General
Corporation Law, or (iv) for any transaction from which the director derived an
improper personal benefit. Article IX of the Registrant's Certificate of
Incorporation contains such a provision.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended (the "Act") may be permitted to directors,
officers and controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant 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 Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered the
Registrant 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 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.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
II-2
<PAGE> 4
ITEM 8. EXHIBITS.
4.1 Restated Certificate of Incorporation of the Registrant, defining the
rights of holders of its Common Stock (incorporated by reference to
exhibit 3(a) of the Registrant's Annual Report on Form 10-K, dated
March 12, 1993, filed with the Securities and Exchange Commission
under the Securities Exchange Act of 1934 for the year ended December
31, 1992 (File No. 0-19934)).
4.2 The 1994 Incentive and Nonstatutory Stock Option Plan.*
4.3 Stock Option Agreement, dated April 14, 1994 between Registrant and C.
Dean Metropoulos.*
5. Opinion of John P. Clarson, General Counsel of the Registrant, as to
the validity of the issuance of the Common Stock registered hereby.*
24.1 Consent of John P. Clarson, General Counsel of the Registrant
(incorporated in opinion filed as Exhibit 5).
24.2 Consent of Arthur Andersen & Co., independent public accountants.*
25. Power of Attorney (see pages II-5 and 6 of the Registration
Statement).
__________________
* Filed herewith
ITEM 9. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
Registration Statement 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;
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, 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;
II-3
<PAGE> 5
(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.
(b) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of the Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to Section 15(d) of
the Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(h) See Item 6.
II-4
<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
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 Dallas and the State of Texas, on the 2nd day of
June, 1994.
THE MORNINGSTAR GROUP INC.
By: /s/ Tracy L. Noll
Tracy L. Noll
Vice President and Chief
Financial Officer
Each person whose signature to this Registration Statement appears
below hereby appoints C. Dean Metropoulos, Tracy L. Noll and John P. Clarson,
and each of them, any one of whom may act without the joinder of any of the
others, as his attorney-in-fact to sign on his behalf individually and in the
capacity stated below and to file all post-effective amendments to this
Registration Statement, which amendments may make such changes in and additions
to this Registration Statement as such attorney-in-fact may deem necessary or
appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ C. Dean Metropoulos Director, President and Chief Executive June 2, 1994
C. Dean Metropoulos Officer (Principal Executive Officer of
the Registrant)
/s/ Clifford L. Marquart Director, Executive Vice President and June 2, 1994
Clifford L. Marquart Chief Operating Officer
/s/ Tracy L. Noll Vice President and Chief Financial June 2, 1994
Tracy L. Noll Officer (Principal Financial Officer and
Principal Accounting Officer of the
Registrant)
</TABLE>
II-5
<PAGE> 7
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ John R. Muse Director June 2, 1994
John R. Muse
/s/ Charles W. Tate Director June 2, 1994
Charles W. Tate
/s/ Jack W. Evans Director June 2, 1994
Jack W. Evans
/s/ Jim L. Turner Director June 2, 1994
Jim L. Turner
/s/ Arnold L. Chavkin Director June 2, 1994
Arnold L. Chavkin
</TABLE>
II-6
<PAGE> 8
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Page
- ------- ----
<S> <C>
4.1 Restated Certificate of Incorporation of the Registrant, defining
the rights of holders of its Common Stock (incorporated by
reference to exhibit 3(a) of the Registrant's Annual Report on
Form 10-K, dated March 12, 1993, filed with the Securities and
Exchange Commission under the Securities Exchange Act of 1934 for
the year ended December 31, 1992 (File No. 0-19934)).
4.2 The 1994 Incentive and Nonstatutory Stock Option Plan.*
4.3 Stock Option Agreement, dated April 14, 1994 between Registrant
and C. Dean Metropoulos.*
5. Opinion of John P. Clarson, General Counsel of the Registrant, as
to the validity of the issuance of the Common Stock registered
hereby.*
24.1 Consent of John P. Clarson, General Counsel of the Registrant
(incorporated in opinion filed as Exhibit 5).
24.2 Consent of Arthur Andersen & Co., independent public accountants.*
25. Power of Attorney (see pages II-5 and 6 of the Registration
Statement).
</TABLE>
____________________
* Filed herewith
<PAGE> 1
EXHIBIT 4.2
THE MORNINGSTAR GROUP INC.
1994 INCENTIVE AND NONSTATUTORY STOCK OPTION PLAN
1. Purpose.
The Morningstar Group Inc., a Delaware corporation (herein, together
with its successors, referred to as the Company"), by means of this 1994
Incentive and Nonstatutory Stock Option Plan (the "Plan"), desires to afford
certain individuals and key employees of the Company and any parent corporation
or subsidiary corporation thereof now existing or hereafter formed or acquired
(such parent and subsidiary corporations sometimes referred to herein as
"Related Entities") who are responsible for the continued growth of the Company
an opportunity to acquire a proprietary interest in the Company, and thus to
create in such persons an increased interest in and a greater concern for the
welfare of the Company and any Related Entities. As used in the Plan, the
terms "parent corporation" and "subsidiary corporation" shall mean,
respectively, a corporation within the definition of such terms contained in
Sections 424(e) and 424(f), respectively, of the Internal Revenue Code of 1986,
as amended (the "Code").
The stock options described in Sections 6 and 7 (the "Options"), and
the shares of Common Stock (as hereinafter defined) acquired pursuant to the
exercise of such Options are a matter of separate inducement and are not in
lieu of any salary or other compensation for services.
2. Administration.
The Plan shall be administered by the Option Committee, or any
successor thereto, of the Board of Directors of the Company (the "Board of
Directors"), or by any other committee appointed by the Board of Directors to
administer this Plan (the "Committee"); provided, the entire Board of Directors
may act as the Committee if it chooses to do so. The number of individuals
that shall constitute the Committee shall be determined from time to time by a
majority of all the members of the Board of Directors, and, unless that
majority of the Board of Directors determines otherwise, shall be no less than
two individuals. A majority of the Committee shall constitute a quorum (or if
the Committee consists of only two members, then both members shall constitute
a quorum), and subject to the provisions of Section 5, the acts of a majority
of the members present at any meeting at which a quorum is present, or acts
approved in writing by all members of the Committee, shall be the acts of the
Committee. Whenever the Company shall have a class of equity securities
registered pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), each member of the Committee shall be required to
be (i) a "disinterested person" within the meaning of Rule 16b-3, as amended
("Rule 16b-3"), or other applicable rules under Section 16(b) of the Exchange
Act and (ii) an "outside director" within the meaning of Section 162(m)(4)(C)
of the Code and any regulations promulgated thereunder (hereinafter,
collectively "Section 162"), and the Committee shall administer the Plan so as
to comply at all times with the Exchange Act and Section 162.
The members of the Committee shall serve at the pleasure of the Board
of Directors, which shall have the power, at any time and from time to time, to
remove members from or add members to the Committee. Removal from the
Committee may be with or without cause. Any individual serving as a member of
the Committee shall have the right to resign from membership in the Committee
by written notice to the Board of Directors. The Board of Directors, and not
the remaining members of the Committee, shall have the power and authority to
fill vacancies on the Committee, however caused. The Board of Directors shall
promptly fill any vacancy that causes the number of members of the Committee to
be below two or, if the Company has a class of equity securities registered
pursuant to Section 12 of the Exchange Act, any other number that Rule 16b-3 or
Section 162 may require from time to time.
<PAGE> 2
3. Shares Available.
Subject to the adjustments provided in Section 9, the maximum
aggregate number of shares of Common Stock, par value $0.01 per share, of the
Company ("Common Stock") which may be granted for all purposes under the Plan
shall be 250,000 shares. If, for any reason, any shares as to which Options
have been granted cease to be subject to purchase thereunder, including the
expiration of such Option, the termination of such Option prior to exercise, or
the forfeiture of such Option, such shares shall thereafter be available for
grants to such individual or other individuals under the Plan. Options granted
under the Plan may be fulfilled in accordance with the terms of the Plan with
(i) authorized and unissued shares of the Common Stock, (ii) issued shares of
such Common Stock held in the Company's treasury, or (iii) issued shares of
Common Stock reacquired by the Company in each situation as the Board of
Directors or the Committee may determine from time to time.
4. Eligibility and Bases of Participation.
Grants of Incentive Options (as hereinafter defined) and Non-Qualified
Options (as hereinafter defined) may be made under the Plan, subject to and in
accordance with Section 6, to Key Employees. As used herein, the term "Key
Employee" shall mean any employee of the Company or any Related Entity,
including officers and directors of the Company or any Related Entity who are
also employees of the Company or any Related Entity, who are regularly employed
on a salaried basis and who are so employed on the date of such grant, whom the
Committee identifies as having a direct and significant effect on the
performance of the Company or any Related Entity.
Grants of Non-Qualified Options may be made, subject to and in
accordance with Section 7, to any Eligible Non-Employee. As used herein, the
term "Eligible Non-Employee" shall mean any person or entity of any nature
whatsoever, specifically including an individual, a firm, a company, a
corporation, a partnership, a trust, or other entity (collectively, a
"Person"), that the Committee designates as eligible for a grant of Options
pursuant to this Plan because such Person performs bona fide consulting,
advisory, or other services for the Company or any Related Entity (other than
services in connection with the offer or sale of securities in a
capital-raising transaction) and the Board of Directors or the Committee
determines that the Person has a direct and significant effect on the financial
development of the Company or any Related Entity.
The adoption of this Plan shall not be deemed to give any Person a
right to be granted any Options.
5. Authority of Committee.
Subject to and not inconsistent with the express provisions of the
Plan, the Code and, if applicable, Rule 16b-3 and Section 162, the Committee
shall have plenary authority to:
a. determine the Key Employees and Eligible Non-Employees to whom
Options shall be granted, the time when such Options shall be
granted, the number of Options, the purchase price or exercise
price of each Option, the period(s) during which such Options
shall be exercisable (whether in whole or in part), the
restrictions to be applicable to Options and all other terms
and provisions thereof (which need not be identical);
b. require, as a condition to the granting of any Option, that
the Person receiving such Option agree not to sell or
otherwise dispose of such Option, any Common Stock acquired
pursuant to such Option, or any other "derivative security"
(as defined by Rule 16a-1(c) under the Exchange Act) for a
period of six months following the later of (i) the date of
the grant of such Option or (ii) the date when the exercise
price of such Option is fixed if such exercise price is not
fixed at the date of grant of such Option, or for such other
period as the Committee may determine;
<PAGE> 3
c. provide an arrangement through registered broker-dealers
whereby temporary financing may be made available to an
optionee by the broker-dealer, under the rules and regulations
of the Board of Governors of the Federal Reserve, for the
purpose of assisting the optionee in the exercise of an
Option, such authority to include the payment by the Company
of the commissions of the broker-dealer;
d. provide the establishment of procedures for an optionee (i) to
have withheld from the total number of shares of Common Stock
to be acquired upon the exercise of an Option (other than an
Incentive Option) that number of shares having a Fair Market
Value (as defined in Section 17) which, together with such
cash as shall be paid in respect of fractional shares, shall
equal the Option exercise price, and (ii) to exercise a
portion of an Option by delivering that number of shares of
Common Stock already owned by such optionee having an
aggregate Fair Market Value which shall equal the partial
Option exercise price and to deliver the shares thus acquired
by such optionee in payment of shares to be received pursuant
to the exercise of additional portions of such Option, the
effect of which shall be that such optionee can in sequence
utilize such newly acquired shares in payment of the exercise
price of the entire Option, together with such cash as shall
be paid in respect of fractional shares; provided, however,
that in the case of an Incentive Option, no shares shall be
used to pay the exercise price unless such shares were not
acquired through the exercise of an Incentive Option or, if so
acquired, have been held for more than two years since the
grant of such Option and for more than one year since the
exercise of such Option;
e. provide (in accordance with Section 12 or otherwise) the
establishment of a procedure whereby a number of shares of
Common Stock or other securities may be withheld from the
total number of shares of Common Stock or other securities to
be issued upon exercise of an Option (other than an Incentive
Option) to meet the obligation of withholding for income,
social security and other taxes incurred by an optionee upon
such exercise or required to be withheld by the Company or a
Related Entity in connection with such exercise;
f. prescribe, amend, modify and rescind rules and regulations
relating to the Plan;
g. make all determinations permitted or deemed necessary,
appropriate or advisable for the administration of the Plan,
interpret any Plan or Option provision, perform all other
acts, exercise all other powers, and establish any other
procedures determined by the Committee to be necessary,
appropriate, or advisable in administering the Plan or for the
conduct of the Committee's business. Any act of the
Committee, including interpretations of the provisions of the
Plan or any Option and determinations under the Plan or any
Option shall be final, conclusive and binding on all parties.
The Committee may delegate to one or more of its members, or to one or
more agents, such administrative duties as it may deem advisable, and the
Committee or any Person to whom it has delegated duties as aforesaid may employ
one or more Persons to render advice with respect to any responsibility the
Committee or such Person may have under the Plan; provided, however, that
whenever the Company has a class of equity securities registered under Section
12 of the Exchange Act, the Committee may not delegate any duties to a member
of the Board of Directors who, if elected to serve on the Committee, would not
qualify as a "disinterested person" to administer the Plan as contemplated by
Rule 16b-3, as amended, or other applicable rules under the Exchange Act, or as
an "outside director" pursuant to Section 162. The Committee may employ
attorneys, consultants, accountants, or other Persons and the Committee, the
Company, and its officers and directors shall be entitled to rely upon the
advice, opinions, or valuations of any such Persons. No member or agent of the
Committee shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan and all
<PAGE> 4
members and agents of the Committee shall be fully protected by the Company in
respect of any such action, determination or interpretation.
6. Stock Options for Key Employees.
Subject to the express provisions of this Plan, the Committee shall
have the authority to grant incentive stock options pursuant to Section 422 of
the Code ("Incentive Options"), to grant non-qualified stock options (options
which do not qualify under Section 422 of the Code) ("Non-Qualified Options"),
and to grant both types of Options to Key Employees. No Incentive Option shall
be granted pursuant to this Plan after the earlier of ten years from the date
of adoption of the Plan or ten years from the date of approval of the Plan by
the stockholders of the Company. Notwithstanding anything in this Plan to the
contrary, Incentive Options may be granted only to Key Employees. The terms
and conditions of the Options granted under this Section 6 shall be determined
from time to time by the Committee; provided, however, that the Options granted
under this Section 6 shall be subject to all terms and provisions of the Plan
(other than Section 7), including the following:
a. Option Exercise Price. The Committee shall establish the
Option exercise price at the time any Option is granted at
such amount as the Committee shall determine, which shall not
in any event be less than the par value per share for each
share of Common Stock issuable upon exercise of such Option;
provided, that, in the case of an Incentive Option or an
Option intended to qualify under Section 162, such price shall
be not less than the Fair Market Value per share of Common
Stock at the date the Option is granted; and provided,
further, that in the case of an Incentive Option granted to a
person who, at the time such Incentive Option is granted, owns
shares of the Company or any Related Entity which possess more
than 10% of the total combined voting power of all classes of
shares of the Company or of any Related Entity, the option
exercise price shall not be less than 110% of the Fair Market
Value per share of Common Stock at the date the Option is
granted. The Option exercise price shall be subject to
adjustment in accordance with the provisions of Section 10 of
the Plan.
b. Payment. The price per share of Common Stock with respect to
each Option exercise shall be payable at the time of such
exercise. Such price shall be payable in cash or by any other
means acceptable to the Committee, including delivery to the
Company of shares of Common Stock owned by the optionee or by
the delivery or withholding of shares pursuant to a procedure
created pursuant to Section 5.d. of the Plan (but, with
respect to Incentive Options, subject to the limitations
described in such Section 5.d.). Shares delivered to or
withheld by the Company in payment of the Option exercise
price shall be valued at the Fair Market Value of the Common
Stock on the day preceding the date of the exercise of the
Option.
c. Continuation of Employment. Except as otherwise provided in
subsections 6(e) and 6(f) of the Plan, each Incentive Option
shall require the optionee to remain in the continuous employ
of the Company or any Related Entity from the date of grant of
the Incentive Option until no more than three months prior to
the date of exercise of the Incentive Option.
d. Exercisability of Stock Option. Subject to Section 8, each
Option shall be exercisable in one or more installments as the
Committee may determine at the time of the grant. No Option
by its terms shall be exercisable after the expiration of ten
years from the date of grant of the Option, unless, as to any
Non-Qualified Option, otherwise expressly provided in such
Option; provided, however, no Incentive Option shall be
exercisable after the expiration of ten years from the date
such Option is granted; and provided, further, that no
Incentive Option granted to a person who, at the time such
Option is
<PAGE> 5
granted, owns stock of the Company, or any Related Entity,
possessing more than 10% of the total combined voting power of
all classes of stock of the Company, or any Related Entity,
shall be exercisable after the expiration of five years from
the date such Option is granted.
e. Death. If any optionee's employment with the Company or a
Related Entity terminates due to the death of such optionee,
the estate of such optionee, or a Person who acquired the
right to exercise such Option by bequest or inheritance or by
reason of the death of the optionee, shall have the right to
exercise such Option in accordance with its terms at any time
and from time to time within one year after the date of death
unless a longer or shorter period is expressly provided in
such Option or established by the Committee pursuant to
Section 8 (but in no event after the expiration date of such
Option).
f. Disability. If the employment of any optionee terminates
because of his Disability (as defined in Section 17), such
optionee or his legal representative shall have the right to
exercise the Option in accordance with its terms at any time
and from time to time within one year after the date of such
termination unless a longer or shorter period is expressly
provided in such Option or established by the Committee
pursuant to Section 8, (but not after the expiration date of
the Option); provided, however, that in the case of an
Incentive Option, the optionee or his legal representative
shall in any event be required to exercise the Incentive
Option within one year after termination of the optionee's
employment due to his Disability.
g. Other Termination of Employment. If the employment of an
optionee with the Company or a Related Entity terminates for
any reason other than those specified in subsections 6(e) and
(f) above, such optionee shall have the right to exercise his
Option in accordance with its terms, within 30 days after the
date of such termination, unless a longer or shorter period is
expressly provided in such Option or established by the
Committee pursuant to Section 8 (but not after the expiration
date of the Option); provided, that, except as otherwise
provided in subsections 6(e) and 6(f), no Incentive Option
shall be exercisable more than three months after such
termination; and, provided, further, that, unless the Option
expressly provides otherwise, if such optionee's employment
was terminated by the Company or any Related Entity for Good
Cause (as defined below), or if the optionee voluntarily
terminates employment without the consent of the Company or
any Related Entity, such optionee shall immediately forfeit
all rights under his Option except as to the shares of stock
already purchased. The determination that there exists Good
Cause for termination shall be made by the Option Committee
(unless otherwise agreed to in writing by the Company and the
optionee).
h. Maximum Exercise. The aggregate Fair Market Value of stock
(determined at the time of the grant of the Option) with
respect to which Incentive Options are exercisable for the
first time by an optionee during any calendar year under all
plans of the Company and any Related Entity shall not exceed
$100,000.
i. Maximum Number of Options to be Issued to a Key Employee. The
maximum number of shares of Common Stock with respect to which
Options may be granted to any Key Employee or Eligible
Non-Employee hereunder is 225,000 (including any Options which
are cancelled or expire).
<PAGE> 6
7. Stock Option Grants to Eligible Non-Employees.
Subject to the express provisions of this Plan, the Committee shall
have the authority to grant Non-Qualified Options to Eligible Non-Employees;
provided, however, that whenever the Company has any class of equity securities
registered pursuant to Section 12 of the Exchange Act, no Eligible Non-Employee
then serving on the Committee (or such other committee then administering the
Plan) shall be granted Options hereunder if the grant of such Options would
cause such Eligible Non-Employee to no longer be a "disinterested person" as
set forth in Section 2 hereof or an "outside director" pursuant to Section 162.
The terms and conditions of the Options granted under this Section 7 shall be
determined from time to time by the Committee; provided, however, that the
Options granted under this Section 7 shall be subject to all terms and
provisions of the Plan (other than Section 6), including the following:
a. Option Exercise Price. The Committee shall establish the
Option exercise price at the time any Non-Qualified Option is
granted at such amount as the Committee shall determine, which
shall not in any event be less than the par value per share
for each share of Common Stock issuable upon exercise of such
Option. The Option exercise price shall be subject to
adjustment in accordance with the provisions of Section 9 of
the Plan.
b. Payment. The price per share of Common Stock with respect to
each Option exercise shall be payable at the time of such
exercise. Such price shall be payable in cash or by any other
means acceptable to the Committee, including delivery to the
Company of shares of Common Stock owned by the optionee or by
the delivery or withholding of shares pursuant to a procedure
created pursuant to Section 5.d. of the Plan. Shares delivered
to or withheld by the Company in payment of the Option
exercise price shall be valued at the Fair Market Value of the
Common Stock on the day preceding the date of the exercise of
the Option.
c. Exercisability of Stock Option. Subject to Section 8, each
Option shall be exercisable in one or more installments as the
Committee may determine at the time of the grant. No Option
shall be exercisable after the expiration of ten years from
the date of grant of the Option, unless otherwise expressly
provided in such Option.
d. Death. If the retention by the Company or any Related Entity
of the services of any Eligible Non-Employee terminates
because of his death, the estate of such optionee, or a Person
who acquired the right to exercise such Option by bequest or
inheritance or by reason of the death of the optionee, shall
have the right to exercise such Option in accordance with its
terms, at any time and from time to time within one year after
the date of death unless a longer or shorter period is
expressly provided in such Option or established by the
Committee pursuant to Section 8 (but in no event after the
expiration date of such Option).
e. Disability. If the retention by the Company or any Related
Entity of the services of any Eligible Non-Employee terminates
because of his Disability, such optionee or his legal
representative shall have the right to exercise the Option in
accordance with its terms at any time and from time to time
within one year after the date of the optionee's termination
unless a longer or shorter period is expressly provided in
such Option or established by the Committee pursuant to
Section 8 (but not after the expiration of the Option).
f. Other Termination of Relationship. If the retention by the
Company or any Related Entity of the services of any Eligible
Non-Employee terminates for any reason other than those
specified in subsections 7(d) and (e) above, such optionee
shall have the right
<PAGE> 7
to exercise his or its Option in accordance with its terms
within 30 days after the date of such termination, unless a
longer or shorter period is expressly provided in such Option
or established by the Committee pursuant to Section 8 (but not
after the expiration date of the Option); provided, that, in
the case of an Eligible Non- Employee serving as a director of
the Company or of any Related Entity, unless the Committee
provides otherwise, if the optionee is removed from office for
cause by action of the stockholders in accordance with the
by-laws of the Company or such Related Entity, as applicable,
and the General Corporation Law of the State of Delaware or if
such optionee voluntarily terminates his service without the
consent of the Company or any Related Entity, then such
optionee shall immediately forfeit his rights under his Option
except as to the shares of stock already purchased.
g. Ineligibility for Other Grants. Any Eligible Non-Employee who
receives an Option pursuant to this Section 7 shall be
ineligible to receive any Options under any other Section of
the Plan.
8. Change of Control.
If a Change of Control shall occur, or if the Company shall enter into
an agreement providing for a Change of Control, the Committee may declare any
or all Options outstanding under the Plan to be exercisable in full at such
time or times as the Committee shall determine, notwithstanding the express
provisions of such Options. Each Option accelerated by the Committee in
connection with a Change of Control pursuant to the preceding sentence shall
terminate, notwithstanding any express provision thereof or any other provision
of the Plan, on such date (not later than the stated expiration date) as the
Committee shall determine.
9. Adjustment of Shares.
Unless otherwise expressly provided in a particular Option, in the
event that, by reason of any merger, consolidation, combination, liquidation,
reorganization, recapitalization, stock dividend, stock split, split-up,
split-off, spin-off, combination of shares, exchange of shares or other like
change in capital structure of the Company (collectively, a "Reorganization"),
the Common Stock is substituted, combined, or changed into any cash, property,
or other securities, or the shares of Common Stock are changed into a greater
or lesser number of shares of Common Stock, the number and/or kind of shares
and/or interests subject to an Option and the per share price or value thereof
shall be appropriately adjusted by the Committee to give appropriate effect to
such Reorganization. Any fractional shares or interests resulting from such
adjustment shall be eliminated. Notwithstanding the foregoing, (i) each such
adjustment with respect to an Incentive Option shall comply with the rules of
Section 424(a) of the Code, and (ii) in no event shall any adjustment be made
which would render any Incentive Option granted hereunder other than an
"incentive stock option" for purposes of Section 422 of the Code.
In the event the Company is not the surviving entity of a
Reorganization and, following such Reorganization, any optionee will hold
Options issued pursuant to this Plan which have not been exercised, cancelled,
or terminated in connection therewith, the Company shall cause such Options to
be assumed (or cancelled and replacement Options issued) by the surviving
entity or a Related Entity.
10. Assignment or Transfer.
Except as otherwise expressly provided in any Nonqualified Option, no
Option granted under the Plan or any rights or interests therein shall be
assignable or transferable by an optionee except by will or the laws of descent
and distribution, and during the lifetime of an optionee, Options granted to
him or her hereunder shall be exercisable only by the optionee or, in the event
that a legal representative has been appointed in connection with the
Disability of an optionee, such legal representative.
<PAGE> 8
11. Compliance with Securities Laws.
The Company shall not in any event be obligated to file any
registration statement under the Securities Act or any applicable state
securities law to permit exercise of any Option or to issue any Common Stock in
violation of the Securities Act or any applicable state securities law. Each
optionee (or, in the event of his death or, in the event a legal representative
has been appointed in connection with his Disability, the Person exercising the
Option) shall, as a condition to his right to exercise any Option, deliver to
the Company an agreement or certificate containing such representations,
warranties and covenants as the Company may deem necessary or appropriate to
ensure that the issuance of shares of Common Stock pursuant to such exercise is
not required to be registered under the Securities Act or any applicable state
securities law.
Certificates for shares of Common Stock, when issued, may have
substantially the following legend, or statements of other applicable
restrictions, endorsed thereon, and may not be immediately transferable:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES LAWS. THE SHARES MAY NOT BE OFFERED
FOR SALE, SOLD, PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF
UNTIL THE HOLDER HEREOF PROVIDES EVIDENCE SATISFACTORY TO THE
ISSUER (WHICH, IN THE DISCRETION OF THE ISSUER, MAY INCLUDE AN
OPINION OF COUNSEL SATISFACTORY TO THE ISSUER) THAT SUCH
OFFER, SALE, PLEDGE, TRANSFER OR OTHER DISPOSITION WILL NOT
VIOLATE APPLICABLE FEDERAL OR STATE LAWS.
This legend shall not be required for shares of Common Stock issued
pursuant to an effective registration statement under the Securities Act and in
accordance with applicable state securities laws.
12. Withholding Taxes.
By acceptance of the Option, the optionee will be deemed to (i) agree
to reimburse the Company or Related Entity by which the optionee is employed
for any federal, state, or local taxes required by any government to be
withheld or otherwise deducted by such corporation in respect of the optionee's
exercise of all or a portion of the Option; (ii) authorize the Company or any
Related Entity by which the Grantee is employed to withhold from any cash
compensation paid to the optionee or in the optionee's behalf, an amount
sufficient to discharge any federal, state, and local taxes imposed on the
Company, or the Related Entity by which the optionee is employed, and which
otherwise has not been reimbursed by the optionee, in respect of the optionee's
exercise of all or a portion of the Option; and (iii) agree that the Company
may, in its discretion, hold the stock certificate to which the optionee is
entitled upon exercise of the Option as security for the payment of the
aforementioned withholding tax liability, until cash sufficient to pay that
liability has been accumulated, and may, in its discretion, effect such
withholding by retaining shares issuable upon the exercise of the Option having
a Fair Market Value on the date of exercise which is equal to the amount to be
withheld.
13. Costs and Expenses.
The costs and expenses of administering the Plan shall be borne by the
Company and shall not be charged against any Option nor to any employee
receiving an Option.
14. Funding of Plan.
<PAGE> 9
The Plan shall be unfunded. The Company shall not be required to make
any segregation of assets to assure the payment of any Option under the Plan.
15. Other Incentive Plans.
The adoption of the Plan does not preclude the adoption by appropriate
means of any other incentive plan for employees.
16. Effect on Employment.
Nothing contained in the Plan or any agreement related hereto or
referred to herein shall affect, or be construed as affecting, the terms of
employment of any Key Employee except to the extent specifically provided
herein or therein. Nothing contained in the Plan or any agreement related
hereto or referred to herein shall impose, or be construed as imposing, an
obligation on (i) the Company or any Related Entity to continue the employment
of any Key Employee, and (ii) any Key Employee to remain in the employ of the
Company or any Related Entity.
17. Definitions.
In addition to the terms specifically defined elsewhere in the Plan,
as used in the Plan, the following terms shall have the respective meanings
indicated:
a. "Affiliate" shall mean, as to any Person, a Person that
directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control
with, such Person.
b. "Board of Directors" shall have the meaning set forth in
Section 2 hereof.
c. "Change of Control" shall mean the first to occur of the
following events: (i) 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 to any Person or group of related Persons for purposes
of Section 13(d) of the Exchange Act (a "Group"), other than
to Hicks, Muse & Co. Incorporated or any of its Affiliates or
their employees, officers, and directors (the "HMC Group");
(ii) a majority of the Board of Directors of the Company or
shall consist of Persons who are not Continuing Directors; or
(iii) the acquisition by any Person or Group (other than the
HMC Group) of the power, directly or indirectly, to vote or
direct the voting of securities having more than 50% of the
ordinary voting power for the election of directors of the
Company.
d. "Code" shall have the meaning set forth in Section 1 hereof.
e. "Committee" shall have the meaning set forth in Section 2
hereof.
f. "Common Stock" shall have the meaning set forth in Section 3
hereof.
g. "Company" shall have the meaning set forth in Section 1 hereof.
h. "Continuing Director" shall mean, as of the date of
determination, any Person who (i) was a member of the Board of
Directors of the Company on the date of adoption of this Plan,
(ii) was nominated for election or elected to the Board of
Directors of the Company with the affirmative vote of a
majority of the Continuing Directors who were members of such
Board of Directors at the time of such nomination or election,
or (iii) is a member of the HMC Group.
<PAGE> 10
i. "Disability" shall mean permanent disability as defined under
the appropriate provisions of the long-term disability plan
maintained for the benefit of employees of the Company or any
Related Entity who are regularly employed on a salaried basis
unless another meaning shall be agreed to in writing by the
Committee and the optionee; provided, however, that in the
case of an Incentive Option "disability" shall have the
meaning specified in Section 22(e)(3) of the Code.
j. "Eligible Non-Employee" shall have the meaning set forth in
Section 3 hereof.
k. "Exchange Act" shall have the meaning set forth in Section 2
hereof.
l. "Fair Market Value" shall, as it relates to the Common Stock,
mean the average of the high and low prices of such Common
Stock as reported on the principal national securities
exchange on which the shares of Common Stock are then listed
on the date specified herein, or if there were no sales on
such date, on the next preceding day on which there were
sales, or if such Common Stock is not listed on a national
securities exchange, the last reported bid price in the
over-the-counter market, or if such shares are not traded in
the over-the-counter market, the per share cash price for
which all of the outstanding Common Stock could be sold to a
willing purchaser in an arms length transaction (without
regard to minority discount, absence of liquidity, or transfer
restrictions imposed by any applicable law or agreement) at
the date of the event giving rise to a need for a
determination. Except as may be otherwise expressly provided
in a particular Option, Fair Market Value shall be determined
in good faith by the Committee.
m. "Good Cause" shall mean (unless another definition is agreed
to in writing by the Company and the optionee) termination by
action of the Board of Directors because of: (A) the
optionee's conviction of, or plea of nolo contendere to, a
felony or a crime involving moral turpitude; (B) the
optionee's personal dishonesty, incompetence, willful
misconduct, willful violation of any law, rule, or regulation
(other than minor traffic violations or similar offenses) or
breach of fiduciary duty which involves personal profit; (C)
the optionee's commission of material mismanagement in the
conduct of his duties as assigned to him by the Board of
Directors or the President of the Company; (D) the optionee's
willful failure to execute or comply with the policies of the
Company or his stated duties as established by the Board of
Directors or the President of the Company, or intentional
failure to perform his stated duties; or (E) substance abuse
or addiction on the part of the optionee.
n. "Grantor" has the meaning set forth in Section 9 hereof.
o. "Incentive Options" shall have the meaning set forth in
Section 6 hereof.
p. The term "including" when used herein shall mean "including,
but not limited to".
q. "Key Employee" shall have the meaning set forth in Section 3
hereof.
r. "Non-Qualified Options" shall have the meaning set forth in
Section 6 hereof.
s. "Options" shall have the meaning set forth in Section 1 hereof.
t. "Person" shall have the meaning set forth in Section 3 hereof.
u. "Plan" shall have the meaning set forth in Section 1 hereof.
<PAGE> 11
v. "Related Entities" shall have the meaning set forth in Section
1 hereof.
w. "Reorganization" shall have the meaning set forth in Section 9
hereof.
x. "Rule 16b-3" shall have the meaning set forth in Section 3
hereof.
y. "Section 162" shall have the meaning set forth in Section 2
hereof.
18. Amendment of Plan.
The Board of Directors shall have the right to amend, modify, suspend
or terminate the Plan at any time; provided, that no amendment shall be made
which shall increase the total number of shares of the Common Stock which may
be issued and sold pursuant to Options granted under the Plan or decrease the
minimum Option exercise price in the case of an Incentive Option, or modify the
provisions of the Plan relating to eligibility with respect to Incentive
Options unless such amendment is made by or with the approval of the
stockholders. The Board of Directors shall be authorized to amend the Plan and
the Options granted thereunder (i) to qualify as "incentive stock options"
within the meaning of Section 422 of the Code, (ii) to comply with Rule 16b-3
(or any successor rule) under the Exchange Act or (iii) to comply with Section
162 of the Code (or any successor law) and the regulations (including any
temporary regulations) promulgated thereunder. No amendment, modification,
suspension or termination of the Plan shall alter or impair any Options
previously granted under the Plan, without the consent of the holder thereof.
19. Effective Date.
The Plan shall become effective on the date on which it is established
by the Compensation Committee and shall be void retroactively if not ratified
by the Board of Directors of the Company and if not approved by the
stockholders of the Company within twelve months of the date of ratification by
the Board of Directors.
<PAGE> 1
EXHIBIT 4.3
STOCK OPTION AGREEMENT
April 14, 1994
Mr. C. Dean Metropoulos
5880 Mountain Road
Stowe, Vermont 05672
Re: Grant of Stock Option
Dear Mr. Metropoulos:
Subject to the conditions set forth below, The Morningstar Group Inc.
(the "Company") hereby grants to you, effective as of April 14, 1994, (the
"Grant Date"), as a matter of separate inducement and not in lieu of any other
compensation for your services, the right and option to purchase (the
"Option"), in accordance with the terms and conditions set forth herein, an
aggregate of 600,000 shares (the "Option Shares") of common stock, par value
$.01 per share, of the Company at a price equal to $6.50 per share (the
"Exercise Price").
1. Vesting.
The right to purchase Option Shares pursuant to the Option shall vest
in installments during the period you are associated with the Company in the
capacity of consultant or as a member of the Company's board of directors as
follows:
(a) One-third (1/3) of the Option Shares are currently vested;
(b) An additional one-third (1/3) of the Option Shares shall vest
on December 14, 1994; and
(c) The remaining one-third (1/3) of the Option Shares shall vest
on December 14, 1995.
Notwithstanding the foregoing, the right to exercise the Option shall
immediately accrue and vest in full upon the occurrence of a Change in Control.
Should you, on any date during any Vesting Period other than the last day of
such Vesting Period, cease to be associated with the Company in the capacity of
consultant or as a member of the Company's board of directors for any reason,
then a portion of the Option Shares that would have otherwise vested on the
final day of such Vesting Period shall vest ratably for each expired month
during such Vesting Period prior to and including the month of such cessation.
No additional Option Shares shall vest subsequent to the date that you cease to
be associated with the Company in the capacity of consultant or as a member of
the Company's board of directors.
1
<PAGE> 2
For purposes of this Section 1, the following terms shall have the
meaning set forth below:
"Change in Control" shall mean the first to occur of the
following events: (i) 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 to any person or group
of related persons for purposes of Section 13(d) of the Securities
Exchange Act of 1934 (a "Group"), other than to Hicks, Muse, Tate &
Furst Incorporated or any of its affiliates or their employees,
officers, and directors (the "HMC Group"); (ii) a majority of the
board of directors of the Company shall consist of persons who are not
Continuing Directors; (iii) the acquisition by any person or Group
(other than the HMC Group) of the power, directly or indirectly, to
vote or direct the voting of securities having more than 50% of the
ordinary voting power for the election of directors of the Company; or
(iv) a Sale of the Company.
"Continuing Director" shall mean, as of the date of
determination, any person who (i) was a member of the board of
directors of the Company on the date of this agreement, (ii) was
nominated for election or elected to the board of directors of the
Company with the affirmative vote of a majority of the Continuing
Directors who were members of such board of directors at the time of
such nomination or election, or (iii) is a member of the HMC Group.
"Hicks, Muse Company" shall mean an entity in which the HMC
Group (and members of their respective families and trusts for the
primary benefit of such family members) beneficially owns more than
25% of the fully-diluted common stock or has an unrecovered investment
of $1.0 million or more.
"Marketable Securities" shall mean securities (i) of a class
or series listed or traded on the New York Stock Exchange, American
Stock Exchange, or NASDAQ National Market and (ii) which, as a matter
of law, shall at the time of acquisition be (or which at the date of
acquisition are legally committed to become within six months after
the date of acquisition) freely saleable in unlimited quantities by
the HMC Group to the public, either pursuant to an effective
registration statement under the Securities Act of 1933, as amended
(including a current prospectus which is available for delivery), or
without the necessity of such registration.
"Sale of the Company" shall mean the first to occur of (i) the
Company's ceasing to be a Hicks, Muse Company in a transaction or
series of related transactions initiated or agreed to by the HMC Group
or (ii) the consummation of a transaction or series of related
transactions initiated or agreed to by the HMC Group pursuant to which
the HMC Group receives, in respect of its shares of Company common
stock, cash and/or Marketable Securities which have an aggregate value
equal to at least 75% of the total value of all common stock of the
Company owned by the HMC Group immediately prior to such transaction,
as determined by the board of directors of the Company in good faith.
2
<PAGE> 3
"Vesting Period" shall mean each of the periods from December
15, 1993 to December 14, 1994 and from December 15, 1994 to December
14, 1995.
2. Term; Exercise.
You may exercise your option to purchase vested Option Shares in the
manner set forth herein at any time prior to the termination of the Option.
The Option will automatically, and without notice, terminate and become null
and void upon the expiration of two (2) years following the date you cease to
be associated with the Company in the capacity of consultant or as a member of
the Company's board of directors, including the termination of such association
as a result of your death or disability; provided, however, that the Option
shall in any event automatically, and without notice, terminate and become null
and void upon the tenth anniversary of the Grant Date.
Any exercise by you of the Option shall be in writing addressed to the
Secretary of the Company at its principal place of business (a copy of the form
of exercise to be used will be available upon written request to the
Secretary), and shall be accompanied by a certified or bank check to the order
of the Company in the full amount of the Exercise Price of the shares so
purchased.
3. Transferability
The Option is not transferable by you otherwise than by will or the
laws of descent and distribution and is exercisable, during your lifetime, only
by you. The Option may not be assigned, transferred (except by will or the
laws of descent and distribution), pledged or hypothecated in any way (whether
by operation of law or otherwise) and shall not be subject to execution,
attachment or similar proceeding. Any attempted assignment, transfer, pledge,
hypothecation or other disposition of the Option contrary to the provisions
hereof, and the levy of any attachment or similar proceeding upon the Option,
shall be null and void and without effect.
4. Registration
Unless there is in effect a registration statement under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
issuance of the Option Shares (and, if required, there is available for
delivery a prospectus meeting the requirements of Section 10 (a) (3) of the
Securities Act), you will, upon the exercise of the Option (i) represent and
warrant in writing to the Secretary of the Company that the Option Shares then
being purchased by you pursuant to the Option are being acquired for investment
only and not with a view to the resale or distribution thereof, (ii)
acknowledge and confirm that the Option Shares purchased may not be sold unless
registered for sale under the Securities Act or pursuant to an exemption from
such registration and (iii) agree that the certificates evidencing such Option
Shares shall bear a legend to the effect of the foregoing. The Company may
require the delivery of additional documents, including, without limitation, an
opinion of counsel, prior to the exercise of the Option.
3
<PAGE> 4
5. Withholding Taxes
By your acceptance hereof, you agree that (i) the Company, as a
condition of issuance of the Option Shares, may require the payment (through
withholding from any payment otherwise due you from the Company by requiring
the payment of cash, or otherwise) of any federal, state, local or foreign
taxes required by law to be withheld with respect to such issuance, and (ii)
the Company shall have the right to establish such other procedures as it may
determine in its sole discretion with respect to such issuances.
6. Adjustments
(a) If at any time or from time to time, the Company shall
subdivide as a whole (by reclassification, by a stock split, by a stock
dividend or otherwise) the number of shares of Company common stock then
outstanding into a greater number of shares of common stock, then (i) the
number of Option Shares that may be acquired under the unexercised portion of
the Option shall be increased proportionately and (ii) the Exercise Price for
each such Option Share shall be reduced proportionately.
(b) If at any time or from time to time, the Company shall
consolidate as a whole (by reclassification, reverse stock split, or otherwise)
the number of shares of Company common stock then outstanding into a lesser
number of shares of common stock, (i) the number of Option Shares that may be
acquired under the unexercised portion of the Option shall be decreased
proportionately and (ii) the Exercise Price for each such Option Share shall be
increased proportionately.
(c) Whenever the number of Option Shares and the Exercise Price
therefor are required to be adjusted as provided in this Section 6, the Company
shall promptly prepare and deliver to you a notice setting forth, in reasonable
detail, the event requiring adjustment, the amount of the adjustment, and the
method by which such adjustment was calculated.
7. No Rights as a Stockholder
You will have no rights as a stockholder of the Company with respect
to any shares covered by this Option until a certificate representing those
shares is issued in your name. No adjustment will be made for dividends
(ordinary or extraordinary, whether in cash or other property) or distributions
or other rights for which the record date is before the date that the
certificate is issued, except as contemplated by Section 6. Nevertheless, the
Company will inform you of any proposed merger, consolidation or similar
transaction to the same extent that the Company's stockholders are informed by
the Company of any such event or potential event.
4
<PAGE> 5
Please indicate your acceptance of all the terms and conditions of the
Option by signing and returning a copy of this Option Agreement.
Sincerely yours,
THE MORNINGSTAR GROUP INC.
By: /s/ JOHN P. CLARSON
John P. Clarson, Vice President
ACCEPTED:
/s/ C. DEAN METROPOULOS
C. Dean Metropoulos
Date: April 14, 1994
5
<PAGE> 1
EXHIBIT 5
(LOGO)
THE MORNINGSTAR GROUP
June 1, 1994
The Board of Directors
The Morningstar Group Inc.
5956 Sherry Lane
Suite 1100
Dallas, Texas 75225-6522
Gentlemen:
I am general counsel of The Morningstar Group Inc., a Delaware
corporation (the "Company"), and have advised the Company in connection with
the preparation and filing by the Company with the Securities and Exchange
Commission of a Registration Statement on Form S-8 (the "Registration
Statement") under the Securities Act of 1933, as amended, with respect to the
issuance of up to 850,000 shares of the Company's common stock, par value $.01
per share (the "Option Shares"), for issuance upon the exercise of the options
granted pursuant to the Company's 1994 Stock Option Plan and a Stock Option
Agreement between the Company and C. Dean Metropoulos (the "Option Plans").
In so acting, I have examined originals or copies, certified or
otherwise identified to my satisfaction, of the Registration Statement, the
Option Plans, and the form of stock option agreements thereunder ("Option
Agreements") and such corporate records, agreements, documents and other
instruments, and such certificates or comparable documents of public officials
and of officers and representatives of the Company, and have made such
inquiries of such officers and representatives, as I have deemed relevant and
necessary as a basis for the opinions hereinafter set forth.
In such examination, I have assumed the genuineness of all signatures,
the authenticity of all documents submitted to me as originals, the conformity
to original documents of documents submitted to me as certified or photostatic
copies and the authenticity of the originals of such latter documents. As to
all questions of fact material to this opinion that have not been independently
established, I have relied upon certificates or comparable documents of
officers and representatives of the Company.
<PAGE> 2
The Board of Directors
The Morningstar Group Inc.
June 1, 1994
Page 2
Based on the foregoing, and subject to the qualifications stated
herein, I am of the opinion that when (a) the purchase price of the Option
Shares issuable pursuant to each Option Agreement has been appropriately
determined in accordance with the terms of the Option Plans and the provisions
of the Delaware General Corporation Law (the "DGCL") (including the provisions
requiring the payment of consideration having a value not less than the par
value of such shares); (b) each such Option Agreement has been duly authorized
by the option committee in accordance with the terms of the Option Plans and
provisions of the DGCL and has been duly executed and delivered by the Company
and the optionee; and (c) such Option Shares are issued and delivered against
receipt of payment therefor in accordance with the terms of the Option Plans
and such Option Agreements, such Option Shares will be validly issued, fully
paid and nonassessable.
The opinions herein are limited to the corporate laws of the State of
Delaware, and I express no opinion as to the effect on the matters covered by
this opinion of the laws of any other jurisdiction.
This opinion is rendered solely for your benefit in connection with
the transactions described above. This opinion may not be used or relied upon
by any other person and may not be disclosed, quoted, filed with a governmental
agency or otherwise referred to without our prior written consent.
Notwithstanding the foregoing, this opinion may be filed as an exhibit to the
Registration Statement.
Sincerely yours,
/s/ JOHN P. CLARSON
John P. Clarson
General Counsel
JPC:ckb
<PAGE> 1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we herby consent to the incorporation by
reference in this registration statement of our reports dated February 11,
1994, included in, and incorporated by reference in The Morningstar Group,
Inc.'s Form 10-K for the year ended December 31, 1993, and to all references to
our firm included in this registration statement.
ARTHUR ANDERSEN & CO.
Dallas, Texas,
June 2, 1994
