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EXHIBIT 2
CERTIFICATE OF AMENDMENT
TO THE
AMENDED ARTICLES OF INCORPORATION
OF
MORGAN'S FOODS, INC.
James J. Liguori, President, and Kenneth L. Hignett,
Secretary, of Morgan's Foods, Inc., an Ohio corporation (the "Company"), do
hereby certify that at a meeting of the Board of Directors of the Company held
on April 8, 1999, the following resolution to amend the Amended Articles of
Incorporation, as amended, of the Company was adopted pursuant to the authority
granted by Section 1701.70(B)(1) of the Ohio Revised Code:
RESOLVED, that the Amended Articles of Incorporation, as
amended, of the Company be, and they hereby are, amended by adding at the end of
Division B of Article FOURTH a new Section 5 that reads as follows:
SECTION 5. SERIES A PREFERRED SHARES.
(a) DESIGNATION AND AMOUNT. Of the 1,000,000 authorized
Preferred Shares, without par value, 100,000 are designated as a series
designated as "Series A Preferred Shares" (the "Series A Preferred Shares"). The
Series A Preferred Shares have the express terms set forth in this Division as
being applicable to all Preferred Shares as a class and, in addition, the
following express terms applicable to all Series A Preferred Shares as a series
of Preferred Shares. The number of Series A Preferred Shares may be increased or
decreased by resolution of the Board of Directors and by the filing of a
certificate of amendment pursuant to the provisions of the General Corporation
Law of the State of Ohio stating that such increase or reduction has been so
authorized; however, no decrease shall reduce the number of Series A Preferred
Shares to a number less than that of the Series A Preferred Shares then
outstanding plus the number of Series A Preferred Shares issuable upon exercise
of outstanding rights, options or warrants or upon conversion of outstanding
securities issued by the Company.
(b) DIVIDENDS AND DISTRIBUTIONS.
(1)(i) Subject to the rights of the holders of any series of
preferred shares (or any similar shares) ranking prior to the Series A
Preferred Shares with respect to dividends, the holders of Series A
Preferred Shares, in preference to the holders of Common Shares and of
any other junior shares, will be entitled to receive, when, as and if
declared by the Board of Directors out of funds legally available for
the purpose, quarterly dividends payable in cash on the fifteenth day
of March, June, September and December in each year (each such date
being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the first
issuance of a Series A Preferred Share or fraction thereof, in an
amount per share (rounded to the nearest cent) equal to the greater of
(a) $1.00 or (b) subject to the provisions for adjustment hereinafter
set forth, 1,000 times the aggregate per share amount of all cash
dividends, and 1,000 times the aggregate per share amount (payable in
kind) of all
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noncash dividends or other distributions other than a dividend payable
in Common Shares or a subdivision of the outstanding Common Shares (by
reclassification or otherwise), declared on the Common Shares after the
immediately preceding Quarterly Dividend Payment Date, or, with respect
to the first Quarterly Dividend Payment Date, after the first issuance
of any Series A Preferred Share or fraction thereof. The multiple of
cash and noncash dividends declared on the Common Shares to which
holders of the Series A Preferred Shares are entitled, which is 1,000
initially but which will be adjusted from time to time as hereinafter
provided, is hereinafter referred to as the "Dividend Multiple." If the
Company at any time after April 8, 1999 (the "Rights Declaration
Date"): (i) declares or pays any dividend on the Common Shares payable
in Common Shares, or (ii) effects a subdivision or combination or
consolidation of the outstanding Common Shares (by reclassification or
otherwise than by payment of a dividend in Common Shares) into a
greater or lesser number of Common Shares, then in each such case the
Dividend Multiple thereafter applicable to the determination of the
amount of dividends that holders of Series A Preferred Shares are
entitled to receive will be the Dividend Multiple applicable
immediately prior to that event multiplied by a fraction, the numerator
of which is the number of Common Shares outstanding immediately after
that event and the denominator of which is the number of Common Shares
that were outstanding immediately prior to that event.
(ii) Notwithstanding anything else contained in this paragraph
(1), the Company shall, out of funds legally available for that
purpose, declare a dividend or distribution on the Series A Preferred
Shares as provided in this paragraph (1) immediately after it declares
a dividend or distribution on the Common Shares (other than a dividend
payable in Common Shares); but if no dividend or distribution has been
declared on the Common Shares during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly Dividend
Payment Date, a dividend of $1.00 per share on the Series A Preferred
Shares shall nevertheless accrue on such subsequent Quarterly Dividend
Payment Date.
(2) Dividends will begin to accrue and be cumulative on
outstanding Series A Preferred Shares from the Quarterly Dividend Payment Date
next preceding the date of issue of such Series A Preferred Shares, unless the
date of issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares will begin to
accrue from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of Series A Preferred Shares entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment Date, in either of
which events such dividends will begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends will not bear
interest. Dividends paid on the Series A Preferred Shares in an amount less than
the total amount of such dividends at the time accrued and payable on such
shares will be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors may fix in accordance
with applicable law a record date for the determination of holders of Series A
Preferred Shares entitled to receive payment of a dividend or distribution
declared thereon, which record date will be not more than such number of days
prior to the date fixed for the payment thereof as may be allowed by applicable
law.
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(c) REACQUIRED SHARES. Any Series A Preferred Shares purchased
or otherwise acquired by the Company in any manner whatsoever will be retired
and canceled promptly after the acquisition thereof. All such shares will upon
their cancellation become authorized but unissued preferred shares and may be
reissued as part of a new series of Preferred Shares to be created by resolution
or resolutions of the Board of Directors, subject to the conditions and
restrictions on issuance set forth herein.
(d) LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any
liquidation (voluntary or otherwise), dissolution or winding up of the Company,
no distribution may be made (x) to the holders of shares ranking junior (either
as to dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Shares unless, prior thereto, the holders of Series A Preferred Shares
shall have received an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment,
plus an amount equal to the greater of (1) $1,000.00 per share or (2) an
aggregate amount per share, subject to the provision for adjustment hereinafter
set forth, equal to 1,000 times the aggregate amount to be distributed per share
to holders of Common Shares, or (y) to the holders of shares ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Shares, except distributions made ratably on the Series A
Preferred Shares and all other such parity stock in proportion to the total
amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up. If the Company at any time after the
Rights Declaration Date (i) declares or pays any dividend on Common Shares
payable in Common Shares, or (ii) effects a subdivision or combination or
consolidation of the outstanding Common Shares (by reclassification or otherwise
than by payment of a dividend in Common Shares) into a greater or lesser number
of Common Shares, then in each such case the aggregate amount per share to which
holders of Series A Preferred Shares were entitled immediately prior to such
event under clause (x) of the preceding sentence will be adjusted by multiplying
such amount by a fraction, the numerator of which is the number of Common Shares
outstanding immediately after such event and the denominator of which is the
number of Common Shares that were outstanding immediately prior to such event.
Neither the consolidation of nor merging of the Company with
or into any other corporation or corporations, nor the sale or other transfer of
all or substantially all of the assets of the Company, will be considered to be
a liquidation, dissolution or winding up of the Company within the meaning of
this paragraph (d).
(e) CONSOLIDATION, MERGER, ETC. If the Company shall enter
into any consolidation, merger, combination or other transaction in which the
Common Shares are exchanged for or changed into other shares, stock or
securities, cash or any other property, then in any such case the Series A
Preferred Shares will at the same time be similarly exchanged or changed in an
amount per share (subject to the provision for adjustment hereinafter set forth)
equal to 1,000 times the aggregate amount of shares, stock, securities, or other
property, as the case may be, into which or for which each Common Share is
changed or exchanged, plus accrued and unpaid dividends, if any, payable with
respect to the Series A Preferred Shares. If the Company at any time after the
Rights Declaration Date (i) declares or pays any dividend on Common Shares
payable in Common Shares, or (ii) effects a subdivision or combination or
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consolidation of the outstanding Common Shares (by reclassification or otherwise
than by payment of a dividend in Common Shares) into a greater or lesser number
of Common Shares, then in each such case the amount set forth in the preceding
sentence with respect to the exchange or change of Series A Preferred Shares
will be adjusted by multiplying such amount by a fraction, the numerator of
which is the number of Common Shares outstanding immediately after such event
and the denominator of which is the number of Common Shares that were
outstanding immediately prior to such event.
(f) REDEMPTION. The Series A Preferred Shares are not
redeemable, but the foregoing does not limit the ability of the Company to
purchase or otherwise deal in the Series A Preferred Shares to the extent
otherwise permitted hereby and by law.
(g) AMENDMENT. The Amended Articles of Incorporation of the
Company, as amended, may not be amended in any manner that would materially
alter or change the powers, preferences or special rights of the Series A
Preferred Shares so as to affect them adversely without the affirmative vote of
the holders of at least two-thirds of the outstanding Series A Preferred Shares,
voting separately as a class.
(h) FRACTIONAL SHARES. Series A Preferred Shares may be issued
in whole shares or in any fraction of a share that is one one-thousandth
(1/1,000th) of a share or any integral multiple of such fraction, which will
entitle the holder, in proportion to such holder's fractional shares, to
exercise voting rights, receive dividends, participate in distributions and have
the benefit of all other rights of holders of Series A Preferred Shares. In lieu
of fractional shares, the Company may elect to make a cash payment as provided
in that certain Rights Agreement dated as of April 8, 1999, between the Company
and Firstar Bank, N.A., a national banking association, as rights agent, for
fractions of a share smaller than one one-thousandth (1/1,000th) of a share or
any integral multiple thereof.
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IN WITNESS WHEREOF, we have executed this instrument in one or
more counterparts as of April 29, 1999.
MORGAN'S FOODS, INC.,
an Ohio corporation
/s/ James J. Liguori
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James J. Liguori, President
/s/ Kenneth L. Hignett
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Kenneth L. Hignett, Secretary
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