sc13d08706006_04122013.htm

0000921895-13-000846.txt : 20130422 0000921895-13-000846.hdr.sgml : 20130422 20130422170539 ACCESSION NUMBER: 0000921895-13-000846 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20130422 DATE AS OF CHANGE: 20130422 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: MORGANS FOODS INC CENTRAL INDEX KEY: 0000068145 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 340562210 STATE OF INCORPORATION: OH FISCAL YEAR END: 0602 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-32061 FILM NUMBER: 13774408 BUSINESS ADDRESS: STREET 1: 4829 GALAXY PARKWAY, SUITE S CITY: CLEVELAND STATE: OH ZIP: 44128 BUSINESS PHONE: 2163607500 MAIL ADDRESS: STREET 1: 4829 GALAXY PARKWAY, SUITE S CITY: CLEVELAND STATE: OH ZIP: 44128 FORMER COMPANY: FORMER CONFORMED NAME: MORTRONICS INC DATE OF NAME CHANGE: 19861014 FORMER COMPANY: FORMER CONFORMED NAME: MORGANS RESTAURANTS INC DATE OF NAME CHANGE: 19820616 FORMER COMPANY: FORMER CONFORMED NAME: SUGARDALE FOODS INC DATE OF NAME CHANGE: 19760608 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Bandera Partners LLC CENTRAL INDEX KEY: 0001399386 IRS NUMBER: 205269850 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 50 BROAD STREET, SUITE 1820 CITY: NEW YORK STATE: NY ZIP: 10004 BUSINESS PHONE: 2122324582 MAIL ADDRESS: STREET 1: 50 BROAD STREET, SUITE 1820 CITY: NEW YORK STATE: NY ZIP: 10004 SC 13D 1 sc13d08706006_04122013.htm SCHEDULE 13D sc13d08706006_04122013.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

(Rule 13d-101)

INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT

TO § 240.13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO

§ 240.13d-2(a)

(Amendment No. )1

Morgan’s Foods, Inc.

(Name of Issuer)

Common Stock, no par value

(Title of Class of Securities)

616900106

(CUSIP Number)

JEFFERSON GRAMM

BANDERA PARTNERS LLC

50 Broad Street, Suite 1820

New York, New York 10004

(212) 232-4583

STEVE WOLOSKY, ESQ.

OLSHAN FROME WOLOSKY LLP

Park Avenue Tower

65 East 55th Street

New York, New York 10022

(212) 451-2300

(Name, Address and Telephone Number of Person

Authorized to Receive Notices and Communications)

April 12, 2013

(Date of Event Which Requires Filing of This Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box ¨.

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See § 240.13d-7 for other parties to whom copies are to be sent.

_______________

1 The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

CUSIP NO. 616900106

1	NAME OF REPORTING PERSON BANDERA PARTNERS LLC
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS AF
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER - 0 -
	8	SHARED VOTING POWER 1,052,250
	9	SOLE DISPOSITIVE POWER - 0 -
	10	SHARED DISPOSITIVE POWER 1,052,250
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,052,250
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 26.4%
14	TYPE OF REPORTING PERSON OO

CUSIP NO. 616900106

1	NAME OF REPORTING PERSON BANDERA MASTER FUND L.P.
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION CAYMAN ISLANDS
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER - 0 -
	8	SHARED VOTING POWER 1,052,250
	9	SOLE DISPOSITIVE POWER - 0 -
	10	SHARED DISPOSITIVE POWER 1,052,250
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,052,250
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 26.4%
14	TYPE OF REPORTING PERSON PN

CUSIP NO. 616900106

1	NAME OF REPORTING PERSON GREGORY BYLINSKY
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS AF
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION UNITED STATES
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER - 0 -
	8	SHARED VOTING POWER 1,052,250
	9	SOLE DISPOSITIVE POWER - 0 -
	10	SHARED DISPOSITIVE POWER 1,052,250
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,052,250
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 26.4%
14	TYPE OF REPORTING PERSON IN

CUSIP NO. 616900106

1	NAME OF REPORTING PERSON JEFFERSON GRAMM
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS AF
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION UNITED STATES
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER - 0 -
	8	SHARED VOTING POWER 1,052,250
	9	SOLE DISPOSITIVE POWER - 0 -
	10	SHARED DISPOSITIVE POWER 1,052,250
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,052,250
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 26.4%
14	TYPE OF REPORTING PERSON IN

CUSIP NO. 616900106

1	NAME OF REPORTING PERSON ANDREW SHPIZ
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS AF
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION UNITED STATES
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER - 0 -
	8	SHARED VOTING POWER 1,052,250
	9	SOLE DISPOSITIVE POWER - 0 -
	10	SHARED DISPOSITIVE POWER 1,052,250
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,052,250
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 26.4%
14	TYPE OF REPORTING PERSON IN

CUSIP NO. 616900106

The following constitutes the Schedule 13D filed by the undersigned (the “Schedule 13D”).

Item 1.

Security and Issuer.

This statement relates to the Common Stock, no par value per share (the “Shares”), of Morgan’s Foods, Inc. (the “Issuer”). The address of the principal executive offices of the Issuer is 4829 Galaxy Parkway, Suite S, Cleveland, OH 44128.

Item 2.

Identity and Background.

(a) This statement is filed by:

(i)

Bandera Master Fund L.P., a Cayman Islands exempted limited partnership (“Master Fund”);

(ii)

Bandera Partners LLC, a Delaware limited liability company (“Bandera Partners”);

(iii)

Gregory Bylinsky;

(iv)

Jefferson Gramm; and

(v)

Andrew Shpiz.

Each of the foregoing is referred to as a “Reporting Person” and collectively as the “Reporting Persons.” Each of the Reporting Persons is party to that certain Joint Filing Agreement, as further described in Item 6. Accordingly, the Reporting Persons are hereby filing a joint Schedule 13D.

Bandera Partners is the investment manager of Master Fund and may be deemed to have beneficial ownership over Master Fund’s Shares by virtue of the sole and exclusive authority granted to Bandera Partners by Master Fund to vote and dispose of Master Fund’s Shares. Each of Messrs. Bylinsky, Gramm and Shpiz are Managing Partners, Managing Directors and Portfolio Managers of Bandera Partners. Jefferson Gramm is a director of the Issuer. By virtue of these relationships, each of Bandera Partners and Messrs. Bylinsky, Gramm and Shpiz may be deemed to beneficially own the Shares owned directly by Master Fund.

(b) The address of the principal office of each of the Reporting Persons is 50 Broad Street, Suite 1820, New York, New York 10004.

(c) The principal business of the Master Fund is investing in securities. The principal business of Bandera Partners is serving as the investment manager of Master Fund. Each of Messrs. Bylinsky, Gramm and Shpiz are Managing Partners, Managing Directors and Portfolio Managers of Bandera Partners.

(d) No Reporting Person has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors).

(e) No Reporting Person has, during the last five years, been party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

CUSIP NO. 616900106

(f) Master Fund is organized under the laws of the Cayman Islands. Bandera Partners is organized under the laws of the State of Delaware. Each of Messrs. Bylinsky, Gramm and Shpiz are citizens of the United States of America.

Item 3.

Source and Amount of Funds or Other Consideration.

The Shares purchased by Master Fund were purchased with working capital in connection with the Transaction as defined and described in Item 4. The aggregate purchase price of the 1,052,250 Shares owned directly by Master Fund is $2,104,500.

Item 4.

Purpose of Transaction.

The Reporting Persons originally purchased the Shares based on the Reporting Persons’ belief that the Shares, when purchased, represented an attractive investment opportunity. Depending upon overall market conditions, other investment opportunities available to the Reporting Persons, and the availability of Shares at prices that would make the purchase or sale of Shares desirable, the Reporting Persons may endeavor to increase or decrease their position in the Issuer through, among other things, the purchase or sale of Shares on the open market or in private transactions or otherwise, on such terms and at such times as the Reporting Persons may deem advisable.

On April 12, 2013, Master Fund and the Issuer entered into a Share Purchase Agreement (the “SPA”) whereby Master Fund purchased 1,052,250 Shares at a price of $2.00 per Share, for a total of $2,104,500 (the “Transaction”). The Transaction was approved by the Board of Directors of the Issuer (the “Board”) for purposes of Chapter 1704 of the Ohio Revised Code. Additionally, on April 10, 2013, the Issuer and Computershare Trust Company, N.A., as Rights Agent, amended the Issuer’s Shareholder Rights Agreement (“Rights Agreement”). The primary effect of the amendment was to amend the definition of who qualifies as an “Acquiring Person” under the Rights Agreement. Accordingly, the Rights Agreement now allows Master Fund (or any of its associates or affiliates) to beneficially own in the aggregate up to 27% of the Issuer’s outstanding Shares without becoming an Acquiring Person for purposes of the Rights Agreement. The foregoing description of the SPA is qualified in its entirety by reference to the SPA, which is attached as Exhibit 99.1 hereto and incorporated herein by reference.

On April 12, 2013, in accordance with the SPA the Issuer appointed Jefferson Gramm, to fill a vacancy on the Board. Additionally, the Issuer and Master Fund entered into a Nomination Agreement dated April 12, 2013. Pursuant to the terms of the Nomination Agreement, the Issuer agreed to use its best efforts to include one Master Fund selected individual in the Issuer’s slate of directors for election to the Board at any annual or special meeting of the Issuer’s shareholders at which directors are to be elected as long as the Nomination Agreement remains in effect. The Nomination Agreement remains in effect for three years so long as Master Fund and its affiliates beneficially own at least 21% of the outstanding Shares. The foregoing description of the Nomination Agreement is qualified in its entirety by reference to the Nomination Agreement, which is attached as Exhibit 99.2 hereto and incorporated herein by reference.

On April 12, 2013, Master Fund and the Issuer also entered into a Registration Rights Agreement. The Registration Rights Agreement provides Master Fund with limited demand registration rights and piggy-back registration rights with respect to the Shares owned by Master Fund. The Registration Rights Agreement remains in effect for three years so long as Master Fund and its affiliates own more than 10% of the outstanding Shares. The foregoing description of the Registration Rights Agreement is qualified in its entirety by reference to the Registration Rights Agreement, which is attached as Exhibit 99.3 hereto and incorporated herein by reference.

CUSIP NO. 616900106

No Reporting Person has any present plan or proposal which would relate to or result in any of the matters set forth in subparagraphs (a) - (j) of Item 4 of Schedule 13D except as set forth herein or such as would occur upon completion of any of the actions discussed above. The Reporting Persons intend to review their investment in the Issuer on a continuing basis as a result of Jefferson Gramm being a director of the Issuer. Depending on various factors including, without limitation, the Issuer’s financial position and investment strategy, the price levels of the Shares, conditions in the securities markets and general economic and industry conditions, the Reporting Persons may in the future take such actions with respect to their investment in the Issuer as they deem appropriate including, without limitation, engaging in communications with shareholders of the Issuer, purchasing additional Shares, selling some or all of their Shares or changing their intention with respect to any and all matters referred to in Item 4.

Item 5.

Interest in Securities of the Issuer.

(a) The aggregate percentage of Shares reported owned by each person named herein is based upon 3,987,245 Shares outstanding, which is the total number of Shares outstanding as of December 14, 2012 as reported in the Issuer’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on December 19, 2012 plus the Shares issued to Master Fund in connection with the Transaction.

As of the close of business on the date hereof, Master Fund directly owned 1,052,250 Shares, constituting approximately 26.4% of the Shares outstanding. By virtue of their relationships with Master Fund discussed in further detail in Item 2, each of Bandera Partners and Messrs. Bylinsky, Gramm and Shpiz may be deemed to beneficially own the Shares directly owned by Master Fund.

(b) Master Fund may be deemed to share with each of Bandera Partners and Messrs. Bylinsky, Gramm and Shpiz the power to vote and dispose of the Shares owned directly by Master Fund.

(c) As further described in Item 4, pursuant to the terms of the SPA on April 12, 2013 Master Fund acquired 1,052,250 Shares at a price of $2.00 per Share in a private transaction with the Issuer.

(d) No person other than the Reporting Persons is known to have the right to receive, or the power to direct the receipt of dividends from, or proceeds from the sale of, the Shares.

(e)

Not applicable.

Item 6.

Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer.

On April 12, 2013, Master Fund and the Issuer entered into the SPA, Nomination Agreement and Registration Rights Agreement, as defined and described in Item 4 and attached as Exhibits 99.1, 99.2 and 99.3, respectively, hereto.

On April 22, 2013, the Reporting Persons entered into a Joint Filing Agreement in which the Reporting Persons agreed to the joint filing on behalf of each of them of statements on Schedule 13D with respect to the securities of the Issuer. A copy of this agreement is attached as Exhibit 99.4 hereto and is incorporated herein by reference.

CUSIP NO. 616900106

Other than as described herein, there are no contracts, arrangements, understandings or relationships among the Reporting Persons, or between the Reporting Persons and any other person, with respect to the securities of the Issuer.

Item 7.

Material to be Filed as Exhibits.

99.1

Share Purchase Agreement entered into as of April 12, 2013, by and between Morgan’s Foods, Inc. and Bandera Master Fund L.P.

99.2

Nomination Agreement made as of April 12, 2013, by and between Morgan’s Foods, Inc. and Bandera Master Fund L.P.

99.3

Registration Rights Agreement made as of April 12, 2013, by and between Morgan’s Foods, Inc. and Bandera Master Fund L.P.

99.4

Joint Filing Agreement by and among Bandera Master Fund L.P., Bandera Partners LLC, Gregory Bylinsky, Jefferson Gramm and Andrew Shpiz, dated April 22, 2012.

CUSIP NO. 616900106

SIGNATURES

After reasonable inquiry and to the best of his knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct.

Dated: April 22, 2013	Bandera Master Fund L.P.

	By:	Bandera Partners LLC its Investment Manager

	By:	/s/ Jefferson Gramm
		Name:	Jefferson Gramm
		Title:	Managing Director

Bandera Partners LLC

By:	/s/ Jefferson Gramm
	Name:	Jefferson Gramm
	Title:	Managing Director

	/s/ Gregory Bylinsky
	Gregory Bylinsky

	/s/ Jefferson Gramm
	Jefferson Gramm

	/s/ Andrew Shpiz
	Andrew Shpiz

EX-99.1 2 ex991to13d08706006_04122013.htm SHARE PURCHASE AGREEMENT ex991to13d08706006_04122013.htm

Exhibit 99.1

SHARE PURCHASE AGREEMENT

This SHARE PURCHASE AGREEMENT (“Purchase Agreement”) is entered into as of April 12, 2013 (the “Effective Date”) by and between Morgan’s Foods, Inc., an Ohio corporation (the “Company”), and Bandera Master Fund L.P., a Cayman Islands exempted limited partnership (“Bandera”).

A. In reliance upon the representations and warranties of Bandera, the Company has authorized the issuance of and sale to Bandera of, 1,052,250 common shares, without par value, of the Company (the “Offered Shares”).

B. In reliance upon the representations and warranties of the Company, and the terms and conditions hereinafter set forth, Bandera desires to purchase from the Company the Offered Shares.

C. The Company is party to that certain Amended and Restated Shareholder Rights Agreement between Morgan’s Foods, Inc. and Computershare Trust Company, N.A. dated as of April 10, 2013 (the “Shareholder Rights Agreement”), and recently amended the Shareholder Rights Agreement to permit Bandera to acquire the Offered Shares.

NOW, THEREFORE, the parties agree as follows:

1. Sale and Purchase of Offered Shares.

(a) On the terms set forth in this Purchase Agreement, the Company hereby sells to Bandera and Bandera hereby purchases from the Company the Offered Shares at $2.00 per share, for a total of $2,104,500 (the “Purchase Price”).

(b) Upon execution of this Purchase Agreement, Bandera shall deliver and pay to the Company the Purchase Price in U.S. Dollars by wire transfer of immediately available funds.

2. Representations and Warranties of Bandera. Bandera represents and warrants to the Company as follows:

(a) Bandera is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization and has the requisite authority to carry on its business as now being conducted. Bandera is duly qualified or licensed to do business in each jurisdiction in which the nature of its business or the ownership, leasing or operation of its properties makes such qualification or licensing necessary, except for those jurisdictions where the failure to be so qualified or licensed, individually or in the aggregate, would not reasonably be expected to have or result in a material adverse effect.

(b) Bandera has all necessary power and authority to enter into, deliver and perform this Purchase Agreement. All necessary action has been duly and validly taken by Bandera to authorize the execution, delivery and performance of this Purchase Agreement by Bandera, and this Purchase Agreement has been duly and validly authorized, executed and delivered by Bandera and constitutes the legal, valid and binding obligation of Bandera enforceable against Bandera in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles.

(c) There are no actions, suits, proceedings or investigations pending against Bandera or Bandera’s properties before any court or governmental agency (nor, to Bandera’s knowledge, is there any threat thereof) which would impair in any way Bandera’s ability to enter into and fully perform Bandera’s commitments and obligations under this Purchase Agreement or the transactions contemplated hereby.

(d) No consent, approval, or authorization of, or registration, filing or declaration with, any Governmental Authority (as defined below) is required to be obtained by Bandera in connection with the transaction contemplated by this Purchase Agreement, other than those that have been made or will be timely made or that would not have a material and adverse effect on Bandera’s ability to consummate the transaction contemplated by this Purchase Agreement. The execution and delivery of this Purchase Agreement and the performance of Bandera’s obligations hereunder and thereunder has not and will not (i) violate or conflict with, in any material respect, any material agreement to which Bandera is a party, or, Bandera’s certificate of formation, limited liability company operating agreement, or similar formation or governing documents, (ii) result in the creation of any mortgage, pledge, lien, encumbrance or charge against any of the assets or properties of Bandera or the Offered Shares or (iii) violate or conflict in any material respect with any laws, rules, regulations or orders of any Governmental Authority. “Governmental Authority” means any nation or government, any state or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing.

(e) Bandera is neither an “affiliate” nor “associate” of any “interested shareholder” of the Company, as such terms are defined in Ohio Revised Code § 1704.01(C).

(f) Bandera is an “accredited investor” as defined by Rule 501 under the Securities Act of 1933, as amended (the “Securities Act”), and Bandera is capable of evaluating the merits and risks of Bandera’s investment in the Company and has the capacity to protect Bandera’s own interests.

(g) Subject to the Registration Rights Agreement attached hereto as Exhibit A (the “Registration Rights Agreement”), Bandera acknowledges and agrees that the Offered Shares to be purchased have not been, and will not be, registered under the Securities Act or the securities laws of any state by reason of a specific exemption from the registration provisions of the Securities Act and the applicable state securities laws, the availability of which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of Bandera’s representations as expressed herein.

(h) Bandera acknowledges and agrees that the Offered Shares are being purchased in good faith solely for its own account for investment purposes and not with a view to distribution or resale, nor with the intention of selling, transferring or otherwise disposing of all or any part of the Offered Shares, whether at any particular price, or at any particular time, or upon the happening of any particular event or circumstances or otherwise, except selling, transferring, or disposing of the Offered Shares in full compliance with all applicable provisions of the Securities Act, the rules and regulations promulgated by the SEC thereunder, and applicable state securities laws; and that the Offered Shares are not a liquid investment; provided, however, that the disposition of the Offered Shares shall at all times be under Bandera’s control; provided, further, that by making the representations herein, Bandera does not agree to hold any of the Offered Shares for any minimum or other specific term and reserves the right to dispose of the Offered Shares at any time in accordance with or pursuant to a registration statement or an exemption from registration under the Securities Act. Except as set forth in the Registration Rights Agreement, the Company has no obligation or intention to register the Offered Shares for resale at any time, and the Company has not made any representations, warranties, or covenants regarding the registration of the Offered Shares.

(i) Bandera acknowledges that the Offered Shares must be held indefinitely unless subsequently registered under the Securities Act or unless an exemption from such registration is available. Bandera is aware of the provisions of Rule 144 promulgated under the Securities Act which permit investors who have satisfied a certain holding period to resell under certain conditions such securities or a portion of such securities purchased in a private placement.

(j) Bandera acknowledges that Bandera has had the opportunity to ask questions of, and receive answers from the Company or persons acting on its behalf concerning the Company and its business and to obtain any additional information, to the extent possessed by the Company (or to the extent it could have been acquired by the Company without unreasonable effort or expense). In connection therewith, Bandera acknowledges that Bandera has had the opportunity to discuss the Company’s business, management and financial affairs with the Company’s management or persons acting on its behalf. Bandera has received and reviewed all the information, both written and oral, that it desires. Without limiting the generality of the foregoing, Bandera has been furnished with or has had the opportunity to acquire, and to review, (i) copies of the Company’s most recent Annual Report on Form 10-K filed with the SEC and any Form 10-Q and Form 8-K filed thereafter and the Company’s most recent definitive Proxy Statement (collectively, the “Current SEC Filings”), and other publicly available documents, and (ii) all information, both written and oral, that it desires with respect to the Company’s business, management, financial affairs and prospects. In determining whether to make this investment, Bandera has relied solely on Bandera’s own knowledge and understanding of the Company and its business based upon Bandera’s own due diligence investigations and the information furnished pursuant to this paragraph. Bandera understands that no person has been authorized to give any information or to make any representations which were not furnished pursuant to this paragraph and Bandera has not relied on any other representations or information.

(k) Bandera has not, and will not, incur, directly or indirectly, as a result of any action taken by Bandera, any liability for brokerage or finders’ fees or agents’ commissions or any similar charges in connection with this Purchase Agreement.

(l) Bandera understands that any and all certificates representing the Offered Shares and any and all securities issued in replacement thereof or in exchange therefor shall bear the following legend or one substantially similar thereto, which Bandera has read and understands:

“The securities evidenced by this certificate have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), and may not be offered, sold or otherwise transferred unless registered under the Securities Act and any applicable state securities laws, or unless an opinion of counsel has been rendered to the company, in form and substance satisfactory to the company and its counsel, to the effect that such registration is not required.”

(m) Because of the restrictions imposed on resale, Bandera understands that the Company shall have the right to note stop-transfer instructions in share transfer records, and Bandera has been informed of the Company’s intention to do so. Any sales, transfers, or any other dispositions of the Offered Shares by Bandera, if any, shall be done in compliance with the Securities Act and applicable state securities laws.

(n) Bandera acknowledges that the Offered Shares are speculative and involve a high degree of risk. Bandera represents that (i) Bandera is able to bear the economic risks of an investment in the Offered Shares and to afford the complete loss of the investment; and (ii) Bandera is qualified to evaluate and assess the risks, nature and other aspects of an investment in the Offered Shares.

(o) To the extent Bandera deems necessary, Bandera has reviewed with Bandera’s own tax advisors the federal, state, local and foreign tax consequences of this investment and the transactions contemplated by this Purchase Agreement. Bandera relies solely on such advisors and not on any statements or representations of the Company or any of its agents. Bandera understands that Bandera (and not the Company) shall be responsible for Bandera’s own tax liability that may arise as a result of this investment or the transactions contemplated by this Purchase Agreement.

3. Representations and Warranties of the Company. The Company represents and warrants to Bandera as follows:

(a) The Company is a corporation duly organized, validly existing and in good standing under the law of the State of Ohio and has the requisite corporate authority to carry on its business as now being conducted. The Company is duly qualified or licensed to do business in each jurisdiction in which the nature of its business or the ownership, leasing or operation of its properties makes such qualification or licensing necessary, except for those jurisdictions where the failure to be so qualified or licensed, individually or in the aggregate, would not reasonably be expected to have or result in a material adverse effect for the Company.

(b) The authorized capital shares of the Company consist entirely of 25,000,000 Common Shares, without par value (the “Common Shares”), and 1,000,000 Preferred Shares, without par value (the “Preferred Shares”), of which 100,000 are designated Series A Preferred Shares. As of the Effective Date, 2,987,897 Common Shares and no Preferred Shares are issued and outstanding. All outstanding Common Shares are, and the Offered Shares that will be issued after the date hereof will be, when issued, duly authorized, validly issued, fully paid and nonassessable and not subject to or issued in violation of preemptive rights. Except as disclosed in the Company’s Current SEC Filings and the Shareholder Rights Agreement, there are not issued, reserved for issuance or outstanding (i) any capital shares or other voting securities of the Company, (ii) any securities convertible into or exchangeable or exercisable for capital shares or voting securities of the Company or any Company Subsidiary, (iii) any warrants, calls, options or other rights to acquire from the Company or any Company Subsidiary any capital shares, voting securities or securities convertible into or exchangeable or exercisable for capital shares or voting securities of the Company or any Company Subsidiary, or (iv) any outstanding restricted shares, restricted share units, stock appreciation rights, performance shares, contingent value rights, “phantom” stock or similar securities or rights that are derivative of, or provide economic benefits based, directly or indirectly, on the value or price of, any capital stock of, or other equity interests in, the Company or any other obligations of the Company to make any payment based on the price or value of any shares of or other equity interests in the Company.

(c) The Company has all necessary power and authority to enter into, deliver and perform this Purchase Agreement. All necessary action has been duly and validly taken by the Company to authorize the execution, delivery and performance of this Purchase Agreement by the Company, and the issuance and sale of the Offered Shares to be sold by the Company pursuant to this Purchase Agreement, and this Purchase Agreement has been duly and validly authorized, executed and delivered by the Company and constitutes the legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles.

(d) No consent, approval, or authorization of, or registration, filing or declaration with, any Governmental Authority is required to be obtained by the Company in connection with the transaction contemplated by this Purchase Agreement, other than those that have been made or will be timely made or that would not have a material and adverse effect on the Company’s ability to consummate the transaction contemplated by this Purchase Agreement. The execution and delivery of this Purchase Agreement by the Company and the performance by the Company of its covenants and obligations hereunder do not and will not (i) violate or conflict with any provision of the Company’s Articles of Organization or the Code of Regulations, (ii) conflict with, or result in the breach of or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration under, any material contract as defined in Item 601 of SEC Regulation S-K, (iii) violate or conflict with any law or order applicable to the Company or by which any of its properties or assets are bound, or (iv) result in the creation of any lien upon any of the properties or assets of the Company, except in the case of each of clauses (ii),(iii) and (iv) above, for such violations, conflicts, defaults, terminations, accelerations or liens which would not, individually or in the aggregate, reasonably be expected to have or result in a material adverse effect on the Company.

(e) The Company has filed or furnished all forms, documents, certifications, exhibits and reports required to be filed or furnished by it with the SEC since January 1, 2011 (as amended through the Effective Date, the “Recent SEC Filings”). As of their respective dates, or, if amended prior to the date hereof, as of the date of the last such amendment prior to the date hereof, the Recent SEC Filings complied in all material respects with the requirements of the Securities Act or the Securities Exchange Act of 1934, as amended, as the case may be, and the applicable rules and regulations promulgated thereunder, and none of the Recent SEC Filings contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. As of the date of this Agreement, there are no outstanding or unresolved comments in comment letters received from the staff of the SEC.

(f) The consolidated financial statements (including all related notes and schedules thereto) of the Company included in the Recent SEC Filings (i) fairly present in all material respects the consolidated financial position of the Company, as of the respective dates thereof, and the consolidated results of its operations and its consolidated cash flows for the respective periods indicated (subject, in the case of the unaudited statements, to normal year-end audit adjustments and to any other adjustments described therein, including the notes thereto) and (ii) have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) (except, in the case of the unaudited statements, as permitted by the SEC) applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto).

(g) Prior to the Effective Date, the Board of Directors of the Company (i) approved the sale of the Offered Shares to Bandera for purposes of Chapter 1704 of the Ohio Revised Code and (ii) amended the Shareholder Rights Agreement to permit Bandera to acquire up to 27% of the Common Shares issued and outstanding without being deemed an “Acquiring Person” (as defined in the Shareholder Rights Agreement).

(h) The resolution by the Board of Directors of the Company attached hereto as Exhibit B has been duly adopted, remains in effect and will result in Bandera’s nominee becoming a director of the Company upon consummation of the purchase of Offered Shares hereby.

(i) The resolution by the Board of Directors of the Company attached hereto as Exhibit C has been duly adopted, remains in effect and will result in the Board of Directors adopting a written policy providing that no executive employee of the Company, other than the Chief Executive Officer, shall be nominated to serve on the Board of Directors.

(j) The Board of Directors has determined that this Agreement, the Registration Rights Agreement, the Nomination Agreement and the transactions contemplated hereby and thereby, including the terms of issuance of the Offered Shares, are advisable and in the best interests of the Company and its shareholders.

(k) The Company has obtained an agreement from JCP Investment Management, LLC (“JCP Investment Management”) that JCP Investment Management will neither sell nor purchase any securities of the Company until the earlier to occur of (a) the approval by shareholders of the termination of the Shareholder Rights Agreement and (b) October 4, 2013.

4. Covenants of Bandera. Within ten days after the Effective Date, Bandera shall file with the SEC a Schedule 13D disclosing execution of this Purchase Agreement and the transactions contemplated hereby.

5. Covenants of the Company.

(a) The Company shall reimburse Bandera for Bandera’s reasonable legal costs, not to exceed $25,000, in connection with the transactions contemplated by this Purchase Agreement.

(b) The Company shall, at a meeting of shareholders to be held no later than July 15, 2013, submit to its shareholders a vote to terminate the Shareholder Rights Agreement or to amend the Shareholder Rights Agreement such that it expires immediately under its terms.

(c) The Company shall indemnify and hold Bandera and its directors, officers, stockholders, employees and agents (and any other persons with a functionally equivalent role notwithstanding a lack of such title or any other title) (each, an “Indemnified Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Indemnified Party may suffer or incur due to any action, claim, suit, proceeding or investigation (collectively, “Actions”) by a third party (other than any director, officer, stockholder, employee or agent (or any other persons with a functionally equivalent role notwithstanding a lack of such title or any other title) of Bandera) as a result of or relating to the execution and delivery of this Purchase Agreement by the Company or the performance by the Company of its obligations hereunder and the transactions contemplated hereby. If any action shall be brought against any Indemnified Party in respect of which indemnity may be sought pursuant to this Purchase Agreement, such Indemnified Party shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Indemnified Party. Any Indemnified Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party except to the extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of counsel, a material conflict on any material issue between the position of the Company and the position of such Indemnified Party, in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel. The Company will not be liable under this Section 5(c) for any amount in excess of the Purchase Price, or to any Indemnified Party under this Purchase Agreement (y) for any settlement by a Indemnified Party effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the extent that an Action is based in whole or in part on allegations that, if true, would constitute, or a loss, claim, damage or liability is attributable to, any Indemnified Party’s breach of any of the representations, warranties, covenants or agreements made by such Indemnified Party in this Purchase Agreement. The Company will have the exclusive right to settle any claim or proceeding.

6. Mutual Covenants.

(a) Immediately following the execution of this Purchase Agreement, the parties agree to execute the Registration Rights Agreement.

(b) Immediately following the execution of this Purchase Agreement, the parties agree to execute a Nomination Agreement in the form attached as Exhibit D.

7. Miscellaneous.

(a) Bandera agrees not to transfer or assign this Purchase Agreement or any of Bandera’s interest herein or rights hereunder, and further agrees that the transfer or assignment of the Offered Shares acquired pursuant hereto shall be made only in accordance with all applicable laws.

(b) If required by applicable securities laws or the Company, Bandera will execute, deliver and file or assist the Company in filing such reports, undertakings and other documents with respect to the issue of the Offered Shares as may be required by any securities commission, or other regulatory authority.

(c) Bandera agrees that Bandera cannot cancel, terminate, or revoke this Purchase Agreement or any agreement of Bandera made hereunder, and this Purchase Agreement shall be binding upon Bandera’s successors and permitted assigns.

(d) This Purchase Agreement constitutes the entire agreement among the parties hereto with respect to the subject matter hereof and may be amended only by a written execution by all parties.

(e) This Purchase Agreement shall be enforced, governed and construed in all respects in accordance with the laws of the State of Ohio without giving effect to any choice or conflict of law provision or rule (whether of the State of Ohio or any other jurisdiction). Any action concerning, relating to, or involving this Purchase Agreement or the transactions contemplated hereby shall be brought in a state or federal court located in the Northern District of Ohio, and the parties hereby consent to the jurisdiction and venue of such courts for such purpose.

(f) All notices, consents, waivers and other communications under this Purchase Agreement must be in writing and will be deemed to have been duly given when (a) delivered by hand (with written confirmation of receipt), (b) sent by email with written confirmation of receipt, provided that a copy is mailed by registered mail, return receipt requested, or (c) when received by the addressee, if sent by a nationally recognized overnight delivery service (receipt requested), in each case to the appropriate addresses set forth below:

If to Bandera:

Bandera Master Fund L.P.

c/o Bandera Partners LLC

50 Broad Street, Suite 1820

New York, NY 10004

Attn: Jefferson Gramm

With a Copy to:

Olshan Frome Wolosky LLP

Park Avenue Tower

65 East 55th Street

New York, NY 10022

Attn: Steve Wolosky

SWolosky@olshanlaw.com

212.451.2333

If to the Company:

Morgan’s Foods, Inc.

4829 Galaxy Parkway, Suite S

Cleveland, Ohio 44128

Attn: Ken Hignett, Chief Financial Officer

With a Copy to:

Tucker Ellis LLP

925 Euclid Avenue, Suite 1150

Cleveland, Ohio 44115-1414

Attn: Robert M. Loesch Esq.

robert.loesch@tuckerellis.com

216.696.5916

(g) The section headings contained in this Purchase Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Purchase Agreement.

(h) This Purchase Agreement may be executed simultaneously in counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the parties have caused this Purchase Agreement to be executed as of the Effective Date.

MORGAN’S FOODS, INC.

By:	/s/ Kenneth L. Hignett
Name:		Kenneth L. Hignett
Title:		Senior Vice President, Chief Financial Officer and Secretary

	BANDERA MASTER FUND L.P.


	By:	Bandera Partners LLC its Investment Manager

	By:	/s/ Jefferson Gramm
	Name:	Jefferson Gramm
	Title:	Managing Member

EXHIBIT A

REGISTRATION RIGHTS AGREEMENT

See attached.

EXHIBIT B

BOARD RESOLUTION

Election of Jefferson Gramm:

RESOLVED, that effective upon the closing of the Share Purchase Agreement and pursuant to Article II, Section 5 of the Amended Code of Regulations, Jefferson Gramm shall be, and hereby is, elected to the Board of Directors to fill a vacancy.

EXHIBIT C

BOARD RESOLUTION

Policy Regarding Board Composition:

RESOLVED, that the following policy statement of the Board of Directors be, and hereby is, approved and adopted:

Board Composition Policy

It is the policy of the Board of Directors that no executive employee of the Company, other than the Chief Executive Officer of the Company, shall be nominated to serve as a director on the Board of Directors.

EXHIBIT D

NOMINATION AGREEMENT

See attached.

EX-99.2 3 ex992to13d08706006_04122013.htm NOMINATION AGREEMENT ex992to13d08706006_04122013.htm

Exhibit 99.2

NOMINATION AGREEMENT

This NOMINATION AGREEMENT (this “Agreement”) is made as of April 12, 2013, by and between Morgan’s Foods, Inc., an Ohio corporation (the “Company”) and Bandera Master Fund L.P., a Cayman Islands exempted limited partnership (“Bandera”). Unless otherwise specified herein, all of the capitalized terms used herein are defined in Section 4 hereof.

A. The Company and Bandera are parties to a Share Purchase Agreement, dated as of April 12, 2013 (the “Purchase Agreement”) whereby Bandera has agreed to participate in the transaction described therein.

B. The Company has agreed to grant Bandera, subject to the limitations set forth in this Agreement, nomination rights as set forth herein on the terms and conditions of this Agreement.

NOW, THEREFORE, the parties to this Agreement hereby agree as follows:

1. Board Nomination Rights.

(a) At any time prior to the Expiration Time, subject to the terms and conditions of this Agreement and provided that Bandera together with its Affiliates Beneficially Own 21% or greater of the Outstanding Equity, Bandera shall have the right (but not the obligation) to designate one person to be nominated for election to the Board (a “Nominee”) by giving written notice to the Chairman of the Board or the Secretary of the Company prior to the Expiration Time. The Nominee shall be selected by Bandera in reasonable consultation with (but without the need for the approval of) the Board.

(b) Provided Bandera exercises its right under Section 1(a), the Company, subject to its rights under Section 2, shall at all times prior to the Expiration Time use its best efforts to cause the Board to include the Nominee in the slate of nominees recommended for election as a director at any annual or special meeting of the shareholders held prior to the Expiration Time (or, if permitted, by any action by written consent of the shareholders taken prior to the Expiration Time) at or by which directors of the Company are to be elected.

(c) If, following the election of the Nominee to the Board, a Board vacancy occurs prior to the Expiration Time solely because of the death, disability, disqualification, resignation or removal of the Nominee, Bandera shall be entitled to designate such person’s successor in accordance with Section 2(b).

(d) If prior to the Expiration Time the Nominee is not nominated or elected to the Board because of such Nominee’s death, disability, disqualification, withdrawal as a nominee or such Nominee is for any other reason unavailable or unable to serve on the Board, Bandera shall be entitled to promptly designate another Nominee in accordance with the applicable provisions of Section 1 and the director position for which such Nominee was nominated shall not be filled pending such designation.

(e) A Nominee shall be entitled to the same compensation paid and expense reimbursement payable to other non-employee Directors.

(f) For the avoidance of doubt, the provisions of this Agreement shall not limit any rights Bandera may have as a shareholder of the Company pursuant to Ohio law, the Articles of Incorporation or the Code of Regulations.

2. Company Obligations.

(a) Notwithstanding anything herein to the contrary, the Company shall not be obligated to appoint any Nominee to serve on the Board or cause to be nominated for election to the Board or recommend to the shareholders the election of any Nominee: (i) who fails to submit to the Company on a timely basis such questionnaires as the Company may reasonably require of its directors generally and such other information as the Company may reasonably request in connection with the preparation of its filings under the Securities Laws; or (ii) if the Board determines in good faith, after consultation with outside legal counsel, that (A) such action would constitute a breach of its fiduciary duties or applicable law or violate the Company’s Articles of Incorporation or Code of Regulations; or (B) such Nominee would not be qualified under any applicable law, rule or regulation to serve as a Director of the Company; provided, however, that upon the occurrence of either (i) or (ii) above, the Company shall promptly notify Bandera of the occurrence of such event and permit Bandera to provide an alternate Nominee sufficiently in advance of any Board action, the meetings of the shareholders called or written action of shareholders with respect to such election of nominees and the Company shall use commercially reasonable efforts to perform its obligations under Section 1 with respect to such alternate Nominee (provided that if the Company provides at least 45 days advance notice of the occurrence of any such event such alternative nominee must be designated by Bandera not less than 30 days in advance of any Board action, notice of meeting of the shareholders or written action of shareholders with respect to such election of nominees), and in no event shall the Company be obligated to postpone, reschedule or delay any scheduled meeting of the shareholders with respect to such election of Nominees.

(b) If at any time prior to the Expiration Time a Board vacancy occurs solely because of the death, disability, disqualification, resignation or removal of the Nominee, then the Board, or any committee thereof, shall not fill such vacancy until the earliest to occur of: (i) Bandera’s designation of a successor Nominee (which successor Nominee shall be designated in accordance with Section 1(a) and subject to the terms of Section 2(a)) and the Board’s appointment of such successor Nominee to fill the vacancy; (ii) Bandera’s failure to designate a successor Nominee within 20 Business Days after receiving notification of the vacancy from the Company; or (iii) Bandera’s specifically waiving in writing its rights under this Section 2(b). For the purposes of clarity, the Company shall have the right to fill any Board vacancy which may occur due to any reason other than the death, disability, disqualification, resignation or removal of the Nominee in accordance with the terms of the Company’s Code of Regulations and Articles of Incorporation.

3. Term and Termination.

(a) This Agreement shall become effective upon the closing of the transactions contemplated by the Purchase Agreement (the “Effective Date”).

(b) Notwithstanding anything to the contrary contained herein, this Agreement shall automatically terminate and be of no further force and effect, and no party hereto shall have any surviving obligations, rights, or duties hereunder after such termination, upon the first to occur of (i) the Expiration Time, or (ii) the date on which Bandera, together with its Affiliates, ceases to Beneficially Own at least 21% of the Outstanding Equity, whether as a result of dilution, Transfer or otherwise (a “Termination Event”). Within three Business Days after the occurrence of a Termination Event (i) that results from a Transfer of Common Shares by Bandera, Bandera shall notify the Company of such event, and (ii) that results from any other event or occurrence, the Company shall notify Bandera of such event (in each case, a “Termination Notice”).

4. Definitions.

“Affiliate” means, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such first Person.

“Agreement” has the meaning set forth in the preamble.

“Articles of Incorporation” means the Company’s Articles of Incorporation, as in effect on the date hereof, as the same may be amended from time to time.

“Bandera” has the meaning set forth in the preamble.

“Beneficially Own” means having sole beneficial ownership within the meaning of Rule 13d-3 (or successor rule or rules then in effect) promulgated under Exchange Act.

“Board” means the Board of Directors of the Company.

“Business Day” means any day that is not a Saturday, Sunday, legal holiday or other day on which commercial banks in New York, New York are authorized or required by applicable law to close.

“Code of Regulations” means the Company’s Code of Regulations, as in effect on the date hereof, as the same may be amended from time to time.

“Common Shares” means the Common Shares, no par value of the Company.

“Company” has the meaning set forth in the preamble.

“Director” means a duly elected member of the Board.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Expiration Time” means the earlier of (i) termination of this Agreement at the election of Bandera by written notice to the Company, (ii) occurrence of a Termination Event, and (iii) 5:00 p.m. (New York time) on the date that is on the third anniversary of the Effective Date.

“Nominee” has the meaning set forth in Section 1(a).

“Outstanding Equity” means, at any time, the issued and outstanding Common Shares of the Company (assuming (i) the conversion of all outstanding securities that are convertible, directly or indirectly, into Common Shares, and (ii) exercise of all outstanding rights or options to purchase Common Shares).

“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof.

“Securities Act” means the Securities Act of 1933, as amended from time to time.

“Securities Laws” means the Securities Act and the Exchange Act, and the rules promulgated thereunder.

“Termination Event” has the meaning set forth in Section 3.

“Termination Notice” has the meaning set forth in Section 3.

“Transfer” means any sale, transfer, assignment or other disposition of (whether with or without consideration and whether voluntary or involuntary or by operation of law) of Common Shares.

5. No Assignment; Benefit of Parties; No Transfer. No party may assign this Agreement or any of its rights or obligations hereunder and any assignment hereof will be null and void. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns for the uses and purposes set forth and referred to herein. Except as explicitly set forth herein, nothing contained in this Agreement shall confer or is intended to confer on any third party or entity that is not a party to this Agreement any rights under this Agreement.

6. Remedies. The Company and Bandera shall be entitled to enforce their rights under this Agreement specifically, to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights existing in their favor. The parties hereto agree and acknowledge that a breach of this Agreement could cause irreparable harm and money damages would not be an adequate remedy for any such breach and that, in addition to other rights and remedies hereunder, the Company and Bandera shall be entitled to seek specific performance and/or injunctive or other equitable relief (without posting a bond or other security) from any court of law or equity of competent jurisdiction in order to enforce or prevent any violation of the provisions of this Agreement.

7. Notices. Any notice provided for in this Agreement shall be in writing and shall be either personally delivered, or mailed first class mail (postage prepaid, return receipt requested) or sent by reputable overnight courier service (charges prepaid) to the Company at the addresses set forth below and to Bandera at the addresses set forth below. Notices shall be deemed to have been given hereunder when delivered personally, three days after deposit in the U.S. mail and one day after deposit with a reputable overnight courier service.

If to Bandera:	Bandera Master Fund L.P. c/o Bandera Partners LLC 50 Broad Street, Suite 1820 New York, NY 10004 Attn: Jefferson Gramm
With a copy to:	Olshan Frome Wolosky LLP Park Avenue Tower 65 East 55th Street New York, NY 10022 Attn: Steve Wolosky SWolosky@olshanlaw.com 212-451-2333
If to the Company:	Morgan’s Foods, Inc. 4829 Galaxy Parkway, Suite S Cleveland, Ohio 44128 Attn: Ken Hignett, Chief Financial Officer
With a copy to:	Tucker Ellis LLP 925 Euclid Avenue, Suite 1150 Cleveland, Ohio 44115-1414 Attn: Robert M. Loesch, Esq. robert.loesch@tuckerellis.com 216.696.5916

8. Adjustments. If, and as often as, there are any changes in the Common Shares by way of stock split, stock dividend, combination or reclassification, or through merger, consolidation, reorganization, recapitalization or sale, or by any other means, appropriate adjustment shall be made in the provisions of this Agreement, as may be required, so that the rights, privileges, duties and obligations hereunder shall continue as so changed.

9. No Strict Construction. The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any party.

10. No Third-Party Beneficiaries. Nothing in this Agreement, express or implied, is intended or shall be construed to confer upon, or give to, any person or entity other than the parties hereto and their respective successors and assigns, any remedy or claim under or by reason of this Agreement or any terms, covenants or conditions hereof, and all of the terms, covenants, conditions, promises and agreements contained in this Agreement shall be for the sole and exclusive benefit of the parties hereto and their respective successors and assigns.

11. Further Assurances. Each of the parties hereby agrees that it will hereafter execute and deliver any further document, agreement, instruments of assignment, transfer or conveyance as may be necessary or desirable to effectuate the purposes hereof.

12. Counterparts. This Agreement may be executed in one or more counterparts, and may be delivered by means of facsimile or electronic transmission in portable document format, each of which shall be deemed to be an original and shall be binding upon the party who executed the same, but all of such counterparts shall constitute the same agreement.

13. Governing Law. This Agreement shall be enforced, governed and construed in all respects in accordance with the laws of the State of Ohio without giving effect to any choice or conflict of law provision or rule (whether of the State of Ohio or any other jurisdiction). Any action concerning, relating to, or involving this Agreement or the transactions contemplated hereby shall be brought in a state or federal court located in the Northern District of Ohio, and the parties hereby consent to the jurisdiction and venue of such courts for such purpose.

14. Mutual Waiver of Jury Trial. The parties hereto hereby irrevocably waive any and all rights to trial by jury in any legal proceeding arising out of or related to this Agreement. Any action or proceeding whatsoever between the parties hereto relating to this Agreement shall be tried in a court of competent jurisdiction by a judge sitting without a jury.

15. Complete Agreement; Inconsistent Agreements. This Agreement represents the complete agreement between the parties hereto as to all matters covered hereby, and supersedes any prior agreements or understandings between the parties.

16. Severability. In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

17. Amendment and Waiver. Except as otherwise provided herein, no modification, amendment or waiver of any provision of this Agreement shall be effective against the Company or Bandera unless such modification is approved in writing, in the case of an amendment, by the Company and Bandera, and in the case of a waiver, by each party against whom the waiver is to be effective. The failure of any party to enforce any of the provisions of this Agreement shall in no way be construed as a waiver of such provisions and shall not affect the right of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written.

MORGAN’S FOODS, INC.

By:	/s/ Kenneth L. Hignett
Name:		Kenneth L. Hignett
Title:		Senior Vice President, Chief Financial Officer and Secretary

	BANDERA MASTER FUND L.P.


	By:	Bandera Partners LLC its Investment Manager

	By:	/s/ Jefferson Gramm
	Name:	Jefferson Gramm
	Title:	Managing Member

EX-99.3 4 ex993to13d08706006_04122013.htm REGISTRATION RIGHTS AGREEMENT ex993to13d08706006_04122013.htm

Exhibit 99.3

REGISTRATION RIGHTS AGREEMENT

This REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made as of April 12, 2013, by and between Morgan’s Foods, Inc., an Ohio corporation (the “Company”), and Bandera Master Fund L.P., a Cayman Islands exempted limited partnership (“Bandera”).

RECITALS:

A. Pursuant to the Share Purchase Agreement, dated April 12, 2013, by and between the Company and Bandera (the “Share Purchase Agreement”), Bandera has agreed to purchase 1,052,250 common shares, without par value, (the “Purchased Shares”).

B. To induce Bandera to purchase the Purchased Shares, the Company has agreed to provide the registration rights set forth in this Agreement.

C. Execution and delivery of this Agreement are covenants of the Company and Bandera pursuant to the Share Purchase Agreement.

AGREEMENT:

NOW, THEREFORE, the parties hereto agree as follows:

1. Definitions. As used herein, the following terms shall have the following respective meanings:

“Common Shares” shall mean the Common Shares, without par value, of the Company, including any associated Right, as defined in and issued pursuant to the Shareholder Rights Agreement, dated as of April 10, 2013, as amended, by and between the Company and Computershare Trust Company, N.A., as Rights Agent, and any and all securities of any kind whatsoever of the Company which are received in exchange for Common Shares or into which the Common Shares are converted.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

“Holders” shall mean Bandera and Affiliates of Bandera who are holders of record of shares of Registrable Shares, and any combination of them, and the term “Holder” shall mean any such Person.

“Indemnified Parties” shall have the meaning set forth in Section 8(a).

“FINRA” shall mean the Financial Industry Regulatory Authority, Inc.

“Person” shall mean any individual, corporation, association, partnership, group (as defined in Section 13(d)(3) of the Exchange Act and the rules and regulations promulgated thereunder), joint venture, business trust or unincorporated organization, or a government or any agency or political subdivision thereof.

“Purchased Shares” shall have the meaning set forth in Recital A.

“Registrable Shares” shall mean any Common Shares (i) which are Purchased Shares, or (ii) issued or distributed in respect of the Purchased Shares by way of share dividend or share split or other distribution, recapitalization, reclassification, merger consolidation or otherwise. As to any particular Registrable Share, such Registrable Share shall cease to be a Registrable Share when (x) it shall have been sold, transferred or otherwise disposed of or exchanged pursuant to a registration statement under the Securities Act or pursuant to an exemption from registration under the Securities Act, or (y) it shall have been distributed to the public pursuant to Rule 144 (or any successor provision) under the Securities Act.

“Registration Expenses” shall have the meaning set forth in Section 7(b).

“SEC” shall mean the United States Securities and Exchange Commission.

“Securities Act” shall mean the Securities Act of 1933, as amended.

“Share Purchase Agreement” shall have the meaning set forth in Recital A.

2. Registration on Request.

(a) Request by Holders. From and after April 13, 2013, upon the written request of the Holder or Holders of at least 51% of the Registrable Shares that the Company effect the registration under the Securities Act of all such Holder or Holders’ Registrable Shares, and specifying the amount and intended method of disposition thereof, the Company will promptly give notice of such requested registration to all other Holders of Registrable Shares and use its commercially reasonable efforts to effect the registration under the Securities Act (including, without limitation, by means of a shelf registration pursuant to Rule 415 under the Securities Act if so requested, and if the Company is then eligible to use such registration) of: (i) the Registrable Shares which the Company has been so requested to register by such Holder or Holders, and (ii) all other Registrable Shares which the Company has been requested to register by any other Holder thereof by written request received by the Company within 14 days after the giving of such written notice by the Company (which request shall specify the intended method of disposition of such Registrable Shares); provided, however, that the Company shall not be obligated to file a registration statement relating to a registration request under this Section 2 (other than on Form S-3 or any similar short-form registration statement) within a period of 180 days after the effective date of any other registration statement of the Company other than registration statements on Forms S-3 or S-8 (or any similar short-form registration statement) or any-successor or similar forms. The Company shall be required to effect one registration pursuant to this Section 2, provided, however, that if a registration requested pursuant to this Section 2 involves an underwritten public offering and 100% of the Registrable Shares requested to be registered pursuant to this Section 2 are not included in such offering, then the Holders shall be entitled to demand, and the Company shall be required to effect, an additional registration in accordance with the terms and conditions of this Agreement. Promptly after the expiration of the 14-day period referred to in clause (ii) above, the Company will notify all the Holders to be included in the registration of the other Holders and the number of shares of Registrable Shares requested to be included therein. The Holders initially requesting a registration pursuant to this Section 2(a) may, at any time prior to the effective date of the registration statement relating to such registration, revoke such request by providing a written notice to the Company revoking such request; provided, however, that, in the event the Holders shall have made a written request for a demand registration (i) which is subsequently withdrawn by the Holders after the Company has filed a registration statement with the SEC in connection therewith but prior to such demand registration being declared effective by the SEC, unless such withdrawal is due to a material and adverse change in the Company’s business, condition (financial or otherwise), results of operations, properties, assets, liabilities or prospects, or (ii) which is not declared effective solely as a result of the failure of the Holders to take all actions reasonably required in order to have the registration and the related registration statement declared effective by the SEC, then, in any such event, such demand registration shall be counted as a demand for registration for purposes of this Section 2(a).

(b) Registration Statement Form. If any registration requested pursuant to this Section 2 which is proposed by the Company to be effected by the filing of a registration statement on Form S-3 (or any successor or similar short-form registration statement) shall be in connection with an underwritten public offering, and if the managing underwriter or underwriters shall advise the Company in writing that, in its opinion, the use of another form of registration statement is of material importance to the success of such proposed offering, then such registration shall be effected on such other form.

(c) Effective Registration Statement. Except as otherwise provided in Section 2(a), a registration requested pursuant to this Section 2 will not be deemed to have been effected unless it has become effective under the Securities Act and, has remained effective for two years or such shorter period as all the Registrable Shares included in such registration have actually been sold thereunder.

(d) Priority in Requested Registrations. If a requested registration pursuant to this Section 2 involves an underwritten public offering and the managing underwriter or underwriters in good faith advises the Company in writing that, in its opinion, the number of securities requested to be included in such registration (including securities of the Company which are not Registrable Shares) exceeds the largest number of securities which can be sold in such offering without having an adverse effect on such offering (including the price at which such securities can be sold), then the Company will promptly give the Holders written notice thereof, and include in such registration:

(i) first, upon the election of the Holders, 100% of the Registrable Shares requested to be registered pursuant to Section 2(a) (provided that if the number of Registrable Shares requested to be registered pursuant to Section 2(a) exceeds the number which the Company has been advised can be sold in such offering without having the adverse effect referred to above, the number of such Registrable Shares to be included in such registration by the Holders shall be allocated pro rata among such Holders on the basis of the relative number of Registrable Shares each such Holder has requested to be included in such registration);

(ii) second, to the extent that the number of Registrable Shares requested to be registered pursuant to Section 2(a) is less than the number of securities which the Company has been advised can be sold in such offering without having the adverse effect referred to above, such number of shares of equity securities the Company requests to be included in such registration; and

(iii) third, to the extent that the number of Registrable Shares requested to be included in such registration pursuant to Section 2(a) and the securities which the Company proposes to sell for its own account are, in the aggregate, less than the number of equity securities which the Company has been advised can be sold in such offering without having the adverse effect referred to above, such number of other securities proposed to be sold by any other person which, in the opinion of such managing underwriter or underwriters, can be sold without having the adverse effect referred to above (provided that if the number of such securities of such other Persons requested to be registered exceeds the number which the Company has been advised can be sold in such offering without having the adverse effect referred to above, the number of such securities to be included in such registration pursuant to this Section 2(d) shall be allocated pro rata among all such other Persons on the basis of the relative number of securities each such Person has requested to be included in such registration); provided, that if upon receiving such notice from the Company the Holders elect to withdraw their demand for registration, then such demand for registration shall not be counted as a demand for registration for purposes of this Section 2.

(e) Additional Restrictions on Registrations. Not more than once in any twelve-month period, the Company may postpone for a reasonable period, not to exceed an aggregate of 90 days, the filing or the effectiveness of a registration statement pursuant to Section 2(a), if the Company determines reasonably and in good faith that such filing would have a material adverse effect on any proposal or plan by the Company to engage in any significant transaction, provided that in such event the Holders of Registrable Shares initially requesting such demand registration will be entitled to withdraw such request and, if such request is withdrawn, such demand registration will not count as a demand registration for purposes of Section 2(a). The Company may postpone for up to 45 days the filing or the effectiveness of a registration statement for a demand registration pursuant to Section 2(a) for the purpose of preparing audited financial statements, if such statements are required for the demand registration.

3. Piggyback Registration Rights.

(a) Right to Include Registrable Shares. If the Company at any time or from time to time subsequent to the date of this Agreement proposes to register any securities under the Securities Act either for its own account or the account of any selling security holders (other than (i) a registration statement on Forms S-4 or S-8 or any successor or similar forms or (ii) a registration on any form that does not permit secondary sales), it will give written notice to each of the Holders of its intention at least 20 days in advance of the filing of any registration statement with respect thereto. Upon the written request of a Holder given within 15 days after receipt of such notice, the Company, subject to Section 3(b), will use its commercially reasonable efforts to include in such registration, and in any underwriting involved therein, all the Registrable Shares included in such Holder’s request. For the avoidance of doubt, a request made by the Holders under this Section 3(a) shall not be counted as a demand for registration for purposes of Section 2.

(b) Underwriting Agreement. In the case of an underwritten offering by the Company of securities, each Holder shall, with respect to Registrable Shares that such Holder then desires to sell, enter into an underwriting agreement with the same underwriters engaged by the Company with respect to securities being offered by the Company, and the Company shall, subject to Section 3(c) below, cause such underwriters to include in any such underwriting all of the Registrable Shares that a Holder then desires to sell; provided, however, that such underwriting agreement shall be in substantially the same form as the underwriting agreement that the Company enters into in connection with the primary offering it is making; provided, further, that no Holder participating in such underwriting shall be required to make any representations or warranties except as they relate to such Holder’s ownership of Registrable Shares and authority to enter into the underwriting agreement (including as to the execution, delivery and enforceability thereof) and to such Holder’s intended method of distribution, or to agree to indemnify the Company, the underwriters or any other Person thereunder on terms other than substantially as set forth in Section 8 below; provided, further, that if, at any time after giving written notice of its intention to register any securities and prior to the effective date of the registration statement filed in connection with such registration, the Company or the requesting Holder, as applicable, shall determine for any reason not to proceed with the proposed registration of the securities to be sold by the Company or the requesting Holder, as applicable, the Company shall give written notice of such determination to each Holder and thereupon shall be relieved of the Company’s obligation to register any Registrable Shares in connection with such registration (but not from the Company’s obligation to pay the registration expenses pursuant to Section 7 in connection therewith).

(c) Priority in Incidental Registrations. If a registration pursuant to this Section 3 involves an underwritten public offering and the managing underwriter or underwriters in good faith advises the Company in writing that, in its opinion, the number of securities which the Company, the Holders and any other Persons intend to include in such registration exceeds the largest number of securities which can be sold in such offering without having an adverse effect on such offering (including the price at which such securities can be sold), then the Company will promptly give the Holders written notice thereof, and the Company shall include in such registration

(i) first, if the registration pursuant to this Section 3 was initiated by holders exercising demand registration rights other than the Holders, 100% of the securities such other holders propose to sell (except to the extent the terms of such other holders’ registration rights provide otherwise);

(ii) second, 100% of the securities the Company proposes to sell for its own account, if any;

(iii) third, to the extent that the number of securities which such other holders exercising demand registration rights and the Company propose to sell is, in the aggregate, less than the number of securities which the Company has been advised can be sold in such offering without having the adverse effect referred to above, such number of Registrable Shares which the Holders have requested to be included in such registration and such number of securities which such other holders have requested to be included in such registration, in each case pursuant to Section 3(a) or other piggyback registration rights and which, in the opinion of such managing underwriter or underwriters, can be sold without having the adverse effect referred to above, upon the election of the Holders, such number of Registrable Shares and securities to be included on a pro rata basis among all requesting Holders and other holders on the basis of the relative number of Common Shares beneficially owned (as such term is used in Rule 13d-3 of the Exchange Act) by such Holders and other holders (provided, that if the number of Registrable Shares requested to be included in such registration by the Holders pursuant to Section 3(a) and permitted to be included in such registration by the Holders pursuant to this Section 3(c) exceeds the number which the Company has been advised can be sold in such offering without having the adverse effect referred to above, the number of such Registrable Shares to be included in such registration by the Holders shall be allocated pro rata among such Holders on the basis of the relative number of Registrable Shares each such Holder has requested to be included in such registration); and

(iv) fourth, to the extent that the number of securities which are to be included in such registration pursuant to clauses (i), (ii) and (iii) of this Section 3(c) is, in the aggregate, less than the number of securities which the Company has been advised can be sold in such offering without having the adverse effect referred to above, such number of other securities requested to be included in the offering for the account of any other Persons which, in the opinion of such managing underwriter or underwriters, can be sold without having the adverse effect referred to above, such number to be allocated pro rata among all other Persons on the basis of the relative number of such other securities each other Person has requested to be included in such registration.

4. Lock-Up Agreements.

(a) If any registration of Registrable Shares shall be in connection with an underwritten public offering, the Holders agree not to effect any public sale or distribution (except in connection with such public offering), of any equity securities of the Company, or of any security convertible into or exchangeable or exercisable for any equity security of the Company (in each case, other than as part of such underwritten public offering), during the 180-day period (or such lesser period as the managing underwriter or underwriters may permit) beginning on the effective date of such registration, if, and to the extent, the managing underwriter or underwriters of any such offering determines such action is necessary or desirable with respect to such offering.

(b) If any registration of Registrable Shares shall be in connection with any underwritten public offering, the Company agrees not to effect any public sale or distribution (except in connection with such public offering) of any of its equity securities or of any security convertible into or exchangeable or exercisable for any of its equity securities (in each case other than as part of such underwritten public offering) during the 180-day period (or such lesser period as the managing underwriter or underwriters may permit) beginning on the effective date of such registration, and the Company also agrees to use its commercially reasonable efforts to cause each member of the management of the Corporation who holds any equity security and each other holder of 5% or more of the outstanding shares of any equity security, or of any security convertible into or exchangeable or exercisable for any equity security, of the Company purchased from the Company (at any time other than in a public offering) to so agree.

5. Registration Procedures.

(a) If and whenever the Company is required by the provisions of Section 2 or Section 3 to use its commercially reasonable efforts to effect or cause the registration of Registrable Shares, the Company shall:

(i) prepare and, in any event within 60 days after the Company’s receipt of a request for registration, file with the SEC a registration statement with respect to such Registrable Shares and use its commercially reasonable efforts to cause such registration statement to become effective;

(ii) prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith that the Company determines are necessary to keep such registration statement effective for a period not in excess of two years (provided, that such two year period shall not apply to any such registration statement filed pursuant to Rule 415 under the Securities Act) and to comply with the provisions of the Securities Act, the Exchange Act, and the rules and regulations promulgated thereunder with respect to the disposition of all the securities covered by such registration statement during such period in accordance with the intended methods of disposition by the Holders thereof set forth in such registration statement; provided, that (A) before filing a registration statement (including an initial filing) or prospectus, or any amendments or supplements thereto, the Company will furnish to one counsel selected by the Holders of at least 51% of the Registrable Shares covered by such registration statement copies of all documents proposed to be filed, and (B) the Company will notify each Holder of Registrable Shares covered by such registration statement of any stop order issued or threatened by the SEC, any other order suspending the use of any preliminary prospectus or of the suspension of the qualification of the registration statement for offering or sale in any jurisdiction, and take all reasonable actions required to prevent the entry of such stop order, other order or suspension or to remove it if entered;

(iii) furnish, without charge, to each Holder and each underwriter, if applicable, of Registrable Shares covered by such registration statement such number of copies of the registration statement and of each amendment and supplement thereto (in each case including all exhibits), such number of copies of the prospectus included in such registration statement (including each preliminary prospectus and summary prospectus), in conformity with the requirements of the Securities Act, and such other documents as each Holder of Registrable Shares covered by such registration statement may reasonably request in order to facilitate the disposition of the Registrable Shares owned by such Holder;

(iv) use its commercially reasonable efforts to register or qualify such Registrable Shares covered by such registration statement under the state securities or blue sky laws of such jurisdictions as each Holder of Registrable Shares covered by such registration statement and, if applicable, each underwriter, may reasonably request, and do any and all other acts and things which may be reasonably necessary to consummate the disposition in such jurisdictions of the Registrable Shares owned by such Holder, except that the Company shall not for any purpose be required to qualify generally to do business as a foreign corporation in any jurisdiction where, but for the requirements of this clause (iv), it would not be obligated to be so qualified;

(v) use its commercially reasonable efforts to cause such Registrable Shares covered by such registration statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the Holders thereof to consummate the disposition of such Registrable Shares;

(vi) if at any time when a prospectus relating to the Registrable Shares is required to be delivered under the Securities Act any event shall have occurred as the result of which any such prospectus as then in effect would include an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, immediately give written notice thereof to each Holder and the managing underwriter or underwriters, if any, of such Registrable Shares and prepare and furnish to each such Holder a reasonable number of copies of an amended or supplemental prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Registrable Shares, such prospectus shall not include an untrue statement of material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading;

(vii) provide a transfer agent and registrar for such Registrable Shares covered by such registration statement not later than the effective date of such registration statement;

(viii) enter into such customary agreements (including an underwriting agreement in customary form) and take such other actions as each Holder of Registrable Shares being sold or the underwriter or underwriters, if any, reasonably request in order to expedite or facilitate the disposition of such Registrable Shares, including customary indemnification and opinions;

(ix) use its commercially reasonable efforts to obtain (A) a “cold comfort” letter or letters from the Company’s independent public accountants in customary form and covering matters of the type customarily covered by “cold comfort” letters and (B) an opinion of counsel for the Company, as the Holders of at least 51% of the Registrable Shares being sold or the underwriters retained by such Holders shall reasonably request;

(x) make available for inspection by representatives of any Holder of Registrable Shares covered by such registration statement, by any underwriter participating in any disposition to be effected pursuant to such registration statement and by any attorney, accountant or other agent retained by such Holders or any such underwriter, all financial and other records, pertinent corporate documents and properties of the Company and its subsidiaries, and cause all of the Company’s and its subsidiaries’, officers, directors and employees to supply all information and respond to all inquiries reasonably requested by such Holders or any such representative, underwriter, attorney, accountant or agent in connection with such registration statement;

(xi) deliver promptly to counsel for the Holders of Registrable Shares included in such registration statement and each underwriter, if any, participating in the offering of the Registrable Shares, copies of all correspondence between the SEC and the Company, its counsel or auditors and all memoranda relating to discussions with the SEC or its staff with respect to such registration statement;

(xii) otherwise use its commercially reasonable efforts to comply with all applicable rules and regulations of the SEC, and make available to its security holders, as soon as reasonably practicable after the effective date of the registration statement, an earnings statement which shall satisfy the provisions of Section 11(a) of the Securities Act and the rules and regulations promulgated thereunder;

(xiii) notify counsel for the Holders of Registrable Shares included in such registration statement and the managing underwriter or underwriters, if any, immediately, and confirm the notice in writing, (A) when the registration statement, or any post-effective amendment to the registration statement, shall have become effective, or any supplement to the prospectus or any amendment prospectus shall have been filed, (B) of the receipt of any comments from the SEC, and (C) of any request of the SEC to amend the registration statement or amend or supplement the prospectus or for additional information;

(xiv) cause its officers to use their commercially reasonable efforts to support the marketing of the Registrable Shares covered by the registration statement (including, without limitation, participation in “road shows”) taking into account the Company’s business needs; and

(xv) use its commercially reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of the registration statement.

(b) Each Holder of Registrable Shares hereby agrees that, upon receipt of any notice from the Company of the happening of any event of the type described in Section 5(a)(vi), such Holder shall forthwith discontinue disposition of such Registrable Shares covered by such registration statement or related prospectus until such Holder’s receipt of the copies of the supplemental or amended prospectus contemplated by Section 5(a)(vi), and, if so directed by the Company, such Holder will deliver to the Company (at the Company’s expense) all copies, other than permanent file copies then in such Holder’s possession, of the prospectus covering such Registrable Shares at the time of receipt of such notice. In the event the Company shall give any such notice, the period mentioned in Section 5(a)(ii) shall be extended by the number of days during the period from and including the date of the giving of such notice pursuant to Section 5(a)(vi) and including the date when such Holder shall have received the copies of the supplemental or amended prospectus contemplated by Section 5(a)(vi). If for any other reason the effectiveness of any registration statement filed pursuant to Section 2 is suspended or interrupted prior to the expiration of the time period regarding the maintenance of the effectiveness of such Registration Statement required by Section 5(a)(ii) so that Registrable Shares may not be sold pursuant thereto, the applicable time period shall be extended by the number of days equal to the number of days during the period beginning with the date of such suspension or interruption to and ending with the date when the sale of Registrable Shares pursuant to such registration statement may be recommenced.

(c) Each Holder hereby agrees to (i) provide the Company, upon receipt of its request, with such information about such Holder to enable the Company to comply with the requirements of the Securities Act, and (ii) to execute such certificates as the Company may reasonably request in connection with such information and otherwise to satisfy any requirements of law.

(d) Notwithstanding anything in this Agreement to the contrary, the Company shall control any “road show” or presentations with respect to any offering of securities of the Company.

6. Underwritten Registrations. Subject to the provisions of Section 2, Section 3 and Section 4, any of the Registrable Shares covered by a registration statement may be sold in an underwritten public offering at the discretion of the Holder thereof. The managing underwriter or underwriters that will administer the offering shall be selected by the Holders of at least 51% of the Registrable Shares to be registered, provided, that such underwriters are reasonably satisfactory to the Company.

7. Expenses.

(a) The fees, costs and expenses of all registrations in accordance with this Agreement shall be borne by the Company, subject to the provisions of Section 7(b); provided, however, that the Holder shall reimburse the Company for any fees, costs and expenses paid by the Company for any registration (i) which is subsequently withdrawn by the Holders, unless such withdrawal is due to a material and adverse change in the Company’s business, condition (financial or otherwise), results of operations, properties, assets, liabilities or prospects, or (ii) which is not declared effective solely as a result of the failure of the Holders to take all actions reasonably required in order to have the registration and the related registration statement declared effective by the SEC.

(b) The fees, costs and expenses of registration to be borne as provided in Section 7(a) shall include, without limitation, all expenses incident to the Company’s performance of or compliance with this Agreement, including without limitation all SEC and stock exchange registration and filing fees and expenses, if any, reasonable fees and expenses of any “qualified independent underwriter” and its counsel as may be required by FINRA rules, fees and expenses of compliance with securities or blue sky laws (including without limitation reasonable fees and disbursements of counsel for the underwriters, if any, or for the selling Holders, in connection with blue sky qualifications of the Registrable Shares), printing expenses (including expenses of printing certificates for Registrable Shares and prospectuses), messenger, telephone and delivery expenses, the fees and expenses incurred in connection with any listing of the securities to be registered on each securities exchange or national market system on which similar securities issued by the Company are then listed, fees and disbursements of counsel for the Company and all independent certified public accountants (including the expenses of any annual audit, special audit and “cold comfort” letters required by or incident to such performance and compliance), the fees and disbursements of underwriters customarily paid by issuers or sellers of securities (including, without limitation, expenses relating to “road shows” and other marketing activities), the reasonable fees of one counsel retained in connection with such registration by the Holders of a majority of the Registrable Shares being registered (such counsel fees not to exceed $20,000), the reasonable fees and expenses of any special experts retained by the Company in connection with such registration, and fees and expenses of other Persons retained by the Company (but not including any underwriting discounts or commissions or transfer taxes, if any, attributable to the sale of Registrable Shares by such Holders) (collectively, “Registration Expenses”).

8. Indemnification.

(a) Indemnification by the Company. In the event of any registration of any securities of the Company under the Securities Act pursuant to Section 2 or Section 3, the Company will, and it hereby does, indemnify and hold harmless, to the extent permitted by law, each of the Holders of any Registrable Shares covered by such registration statement, each affiliate of such Holder and their respective directors and officers or general and limited partners (and the directors, officers, general and limited partners, affiliates and controlling Persons thereof), each other Person who participates as an underwriter in the offering or sale of such securities and each other Person, if any, who controls such Holder or any such underwriter within the meaning of the Securities Act (collectively, the “Indemnified Parties”), against any and all losses, claims, damages or liabilities, joint or several, and expenses (including any amounts paid in any settlement effected with the Company’s consent) to which any Indemnified Party may become subject under the Securities Act, state securities or blue sky laws, common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof, whether or not such Indemnified Party is a party thereto) or expenses arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which such securities were registered under the Securities Act, any preliminary, final or summary prospectus contained therein, or any amendment or supplement thereto, (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or (iii) any violation by the Company of any federal, state or common law rule or regulation applicable to the Company and relating to action required of or inaction by the Company in connection with any such registration; provided, that the Company shall not be liable to any Indemnified Party in any such case to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement or amendment or supplement thereto or in any such preliminary, final or summary prospectus in reliance upon and in conformity with written information with respect to such Holder furnished by such Holder to the Company. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Holder or any Indemnified Party and shall survive the transfer of such securities by such Holder.

(b) Indemnification by the Holders and Underwriters. The Company may require, as a condition to including any Registrable Shares in any registration statement filed in accordance with Section 2 or Section 3, that the Company shall have received an undertaking reasonably satisfactory to it from the Holders of such Registrable Shares or any underwriter to indemnify and hold harmless (in the same manner and to the same extent as set forth in Section 8(a)) the Company with respect to any untrue statement or alleged untrue statement in or omission or alleged omission from such registration statement, any preliminary, final or summary prospectus contained therein, or any amendment or supplement, if such statement or alleged statement or omission or alleged omission was made in reliance upon and in conformity with written information with respect to the Holders of the Registrable Shares being registered or such underwriter furnished in writing to the Company by such Holders or such underwriter, or a document incorporated by reference into any of the foregoing, provided, however, that the liability of the Holders shall not be greater in amount than the dollar amount of the proceeds (net of any selling expenses) received by the Holders from the sale by the Holders giving rise to such indemnification. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Company or any of the Holders, or any of their respective affiliates, directors, officers or controlling Persons, and shall survive the transfer of such securities by such Holder.

(c) Notices of Claims, etc. Promptly after receipt by an indemnified party hereunder of written notice of the commencement of any action or proceeding with respect to which a claim for indemnification may be made pursuant to this Section 8, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party, give written notice to the latter of the commencement of such action; provided, that the failure of the indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations under this Section 8, except to the extent that the indemnifying party is actually and materially prejudiced by such failure to give notice. In case any such action is brought against an indemnified party, the indemnifying party will be entitled to participate in and to assume the defense thereof, with counsel satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party for any legal or other expenses subsequently incurred by the latter in connection with the defense thereof other than reasonable costs of investigation; provided that the indemnified party shall have the right to employ counsel to represent the indemnified party and its respective controlling persons, directors, officers, general or limited partners, employees or agents who may be subject to liability arising out of any claim in respect of which indemnity may be sought by the indemnified party against such indemnifying party under this Section 8 if (i) the employment of such counsel shall have been authorized in writing by such indemnifying party in connection with the defense of such action, (ii) the indemnifying party shall not have promptly employed counsel reasonably satisfactory to the indemnified party to assume the defense of such action or counsel, or (iii) any indemnified party shall have reasonably concluded in consultation with counsel that there may be defenses available to such indemnified party or its respective controlling persons, directors, officers, employees or agents which are in conflict with or in addition to those available to the indemnifying party based upon the advice of counsel to the indemnified party, and in that event the reasonable fees and expenses of one firm of separate counsel for the indemnified party shall be paid by the indemnifying party. No indemnifying party will consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation.

(d) If the indemnification provided for in this Section 8 shall for any reason be unavailable to any indemnified party under Section 8(a) or Section 8(b) or is insufficient to hold it harmless in respect of any loss, claim, damage or liability, or any action in respect thereof referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability, or action in respect thereof, (i) in such proportion as shall be appropriate to reflect the relative benefits received by the indemnified party and indemnifying party or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the indemnified party and indemnifying party with respect to the statements or omissions which resulted in such loss, claim, damage or liability, or action in respect thereof, as well as any other relevant equitable considerations. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

(e) Other Indemnification. Indemnification similar to that specified in the preceding subdivisions of this Section 8 (with appropriate modifications) shall be given by the Company and each Holder of Registrable Shares with respect to any required registration or other qualification of securities under any federal or state law or regulation or governmental authority other than the Securities Act.

(f) Non-Exclusivity. The obligations of the parties under this Section 8 shall be in addition to any liability which any party may otherwise have to any other party.

9. Rule 144. The Company covenants that it will use its commercially reasonable efforts to file in a timely manner the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations promulgated thereunder (or, if the Company is not required to file such reports, it will, upon the request of any Holder of Registrable Shares, make publicly available such information), and it will take such further action as any Holder of Registrable Shares may reasonably request, all to the extent required from time to time to enable such Holder to sell Registrable Shares without registration under the Securities Act within the limitation of the exemptions provided by (a) Rule 144 under the Securities Act, as such Rule may be amended from time to time, or (b) any similar rule or regulation hereafter adopted by the SEC. Upon the request of any Holder of Registrable Shares, the Company will deliver to such Holder a written statement as to whether it has complied with such requirements.

10. Termination. This Agreement will terminate on the earlier of (i) the third anniversary of the date hereof and (ii) at any time Bandera and its Affiliates cease to own at least 10% of the issued and outstanding Common Shares. Upon termination, any rights hereunder shall extinguish.

11. Specific Performance. The Company acknowledges that the rights granted to the Holders in this Agreement are of a special, unique and extraordinary character, and that any breach of this Agreement by the Company could not be compensated for by damages. Accordingly, if the Company breaches its obligations under this Agreement, the Holders shall be entitled, in addition to any other remedies that they may have, to enforcement of this Agreement by a decree of specific performance requiring the Company to fulfill its obligations under this Agreement.

12. Defaults. A default by any party to this Agreement in such party’s compliance with any of the conditions or covenants hereof or performance of any of the obligations of such party hereunder shall not constitute a default by any other party.

13. Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given, if delivered personally, by telecopier or sent by overnight courier as follows:

If to Bandera:	Bandera Master Fund L.P. c/o Bandera Partners LLC 50 Broad Street, Suite 1820 New York, NY 10004 Attn: Jefferson Gramm
With a copy to:	Olshan Frome Wolosky LLP Park Avenue Tower 65 East 55th Street New York, NY 10022 Attn: Steve Wolosky SWolosky@olshanlaw.com 212-451-2333
If to the Company:	Morgan’s Foods, Inc. 4829 Galaxy Parkway, Suite S Cleveland, Ohio 44128 Attn: Ken Hignett, Chief Financial Officer
With a copy to:	Tucker Ellis LLP 925 Euclid Avenue, Suite 1150 Cleveland, Ohio 44115-1414 Attn: Robert M. Loesch, Esq. robert.loesch@tuckerellis.com 216.696.5916

or to such other address or addresses as shall be designated in writing. All notices shall be effective when received.

14. Entire Agreement; Amendments; Waivers. This Agreement, the Share Purchase Agreement, and the documents described herein and therein or attached or delivered pursuant hereto or thereto set forth the entire agreement between the parties hereto with respect to the transactions contemplated by this Agreement. Any provision of this Agreement may be amended or modified in whole or in part at any time by an agreement in writing among the Company and a majority of the Holders executed in the same manner as this Agreement. No failure on the part of any party to exercise, and no delay in exercising, any right shall operate as a waiver thereof nor shall any single or partial exercise by any party of any right preclude any other or future exercise thereof or the exercise of any other right. No investigation by Bandera of the Company prior to or after the date hereof shall stop or prevent Bandera from exercising any right hereunder or be deemed to be a waiver of any such right.

15. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to constitute an original, but all of which together shall constitute one and the same documents.

16. Governing Law; Jurisdiction. This Agreement shall be enforced, governed and construed in all respects in accordance with the laws of the State of Ohio without giving effect to any choice or conflict of law provision or rule (whether of the State of Ohio or any other jurisdiction). Any action concerning, relating to, or involving this Agreement or the transactions contemplated hereby shall be brought in a state or federal court located in the Northern District of Ohio, and the parties hereby consent to the jurisdiction and venue of such courts for such purpose.

17. Successors and Assigns. The Company may not assign any of its rights or delegate any of its duties under this Agreement without the prior written consent of Holders of a majority of the Registrable Shares. A Holder may not assign any of its rights or delegate any of its duties under this Agreement other than to an Affiliate without the prior written consent of the Company. Any purported assignment in violation of this Section 17 shall be void. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors, personal representatives and permitted assigns, whether so expressed or not. If any Holder shall acquire additional Registrable Shares, such Registrable Shares shall be subject to all of the terms, and entitled to all the benefits, of this Agreement.

18. Transfer of Certain Rights. Notwithstanding anything to the contrary herein, any Holder may transfer rights granted to it hereunder to any Affiliate of Bandera to whom Registrable Shares are transferred and who delivers to the Company a written instrument in accordance with the second sentence of this Section 18 and containing the representation that the transfer is exempt from registration under the Securities Act. Any transferee (other than a Holder who is a party to this Agreement) to whom rights hereunder are transferred shall, as a condition to such transfer, deliver to the Company a written instrument by which such transferee agrees to be bound by the obligations imposed upon Holders of Registrable Shares under this Agreement to the same extent as if such transferee were a party hereto and shall at such time be entitled to all of the benefits to and subject to all of the obligations of a Holder. In the event of such transfer, such Affiliate shall be deemed a Holder.

19. No Inconsistent Agreements. The Company will not, on or after the date of this Agreement, enter into any agreement with respect to its securities which is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof, other than any customary lock-up agreement with the underwriters in connection with any offering effected hereunder, pursuant to which the Company shall agree not to register for sale, and the Company shall agree not to sell or otherwise dispose of, Common Shares or any securities convertible into or exercisable or exchangeable for Common Shares, for a specified period (not to exceed 180 days) following such offering. The Company has not previously entered into any agreement with respect to its securities granting any registration rights to any Person. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with any other agreements to which the Company is a party or by which it is bound. The Company further agrees that if any other registration rights agreement entered into after the date of this Agreement with respect to any of its securities contains terms which are more favorable to, or less restrictive on, the other party thereto than the terms and conditions contained in this Agreement (insofar as they are applicable) with respect to the Holders, then the terms and conditions of this Agreement shall immediately be deemed to have been amended without further action by the Company or the Holders so that the Holders shall be entitled to the benefit of any such more favorable or less restrictive terms or conditions.

20. Captions; References. The captions contained in this Agreement are for reference purposes only and are not part of this Agreement. Unless otherwise indicated, all references to Sections and clauses in this Agreement refer to Sections and clauses of this Agreement.

21. Severability. Should any part of this Agreement for any reason be declared invalid, such decision shall not affect the validity of any remaining portion, which remaining portion shall remain in full force and effect as if this Agreement had been executed with the invalid portion thereof eliminated, and it is hereby declared the intention of the parties hereto that they would have executed the remaining portion of this Agreement without including therein any such part or parts which may, for any reason, be hereafter declared invalid.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective authorized officers as of the date aforesaid.

MORGAN’S FOODS, INC.

By:	/s/ Kenneth L. Hignett
Name:		Kenneth L. Hignett
Title:		Senior Vice President, Chief Financial Officer and Secretary

	BANDERA MASTER FUND L.P.


	By:	Bandera Partners LLC its Investment Manager

	By:	/s/ Jefferson Gramm
	Name:	Jefferson Gramm
	Title:	Managing Member

EX-99.4 5 ex994to13d08706006_04122013.htm JOINT FILING AGREEMENT ex994to13d08706006_04122013.htm

Exhibit 99.4

JOINT FILING AGREEMENT

In accordance with Rule 13d-1(k)(1)(iii) under the Securities Exchange Act of 1934, as amended, the persons named below agree to the joint filing on behalf of each of them of a Statement on Schedule 13D (including amendments thereto) with respect to the shares of Common Stock, no par value per share, of Morgan’s Foods, Inc. This Joint Filing Agreement shall be filed as an Exhibit to such Statement.

Dated: April 22, 2013	Bandera Master Fund L.P.

	By:	Bandera Partners LLC its Investment Manager

	By:	/s/ Jefferson Gramm
		Name:	Jefferson Gramm
		Title:	Managing Director

Bandera Partners LLC

By:	/s/ Jefferson Gramm
	Name:	Jefferson Gramm
	Title:	Managing Director

	/s/ Gregory Bylinsky
	Gregory Bylinsky

	/s/ Jefferson Gramm
	Jefferson Gramm

	/s/ Andrew Shpiz
	Andrew Shpiz