<PAGE>
 
                                                                   Exhibit 3.5
 
                            ARTICLES OF AMENDMENT
                                     of
                           UNCLE B's BAKERY, INC.

TO THE SECRETARY OF STATE OF THE STATE OF IOWA:

    Pursuant to section 1002 of the Iowa Business Corporation Act (the "Act"),
the undersigned corporation adopts the following amendment to the
corporation's articles of incorporation.

I.   The name of the corporation is Uncle B's Bakery, Inc. (referred to herein 
     as the "Corporation").

II.  The Corporation's Articles of Incorporation are hereby amended by
     designating a series of the Corporation's Class B Stock, such series to
     be known as the "Class B, Series 3 Preferred Stock" (referred to herein
     as the "Series 3 Preferred Stock"). The preferences, limitations and
     relative rights of the Series 3 Preferred Stock shall be as follows:

     Section 1.  Designation and Rank.  The number of shares which shall
constitute the Series 3 Convertible Preferred Stock (the "Series 3 Preferred
Stock") shall be One Million Seventy Thousand (1,070,000) shares, $0.01 par
value per share. All shares of Series 3 Preferred Stock shall rank equally and
be identical in all respects.  The Corporation shall not be restricted from
issuing additional securities of any kind, including shares of preferred stock
of any class, series or designation (including, without limitation, preferred
stock ranking in parity as to rights and preferences with the Series 3 Preferred
Stock now or hereafter authorized), provided that issuances of the Series 3
Preferred Stock shall be limited to issuances upon exercise of warrants (the
"Warrants") issued pursuant to the Warrant Agreement, as amended (the "Warrant
Agreement"), dated as of July 12, 1995, between the Corporation and
Creditanstalt Corporate Finance, Inc. ("Creditanstalt").

     Section 2.  Dividends.  Dividends and other distributions, payable in cash
or other property shall be paid on the Series 3 Preferred Stock equally, ratably
and on a parity with such dividends and other distributions paid on the Class A
Stock, as and when such dividends and other distributions are declared by the
Board of Directors of the Corporation, as though the Class A Stock and Series 3
Preferred Stock were one and the same class; provided that in determining the
number of shares of Series 3 Preferred Stock outstanding and entitled to receipt
of any such dividend or other distribution, each share of Series 3 Preferred
Stock outstanding shall be deemed to be equal to the number of shares of Class A
Stock into which one share of Series 3 Preferred Stock could have been converted
on the date on which the holders of Class A Stock and Series 3 Preferred Stock
were determined to receive payment of such dividend or other distribution, after
giving effect to any adjustments.
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     Section 3.  Voting Rights.  Except as otherwise specifically provided by
the Iowa Business Corporation Act, as amended, the holders of Series 3 Preferred
Stock shall not be entitled to vote or give a consent to or on any matters
required or permitted to be submitted to the shareholders of the Corporation for
their approval.

     Section 4. Liquidation. The Series 3 Preferred Stock shall be preferred
upon liquidation over the Class A Stock and any other class or classes of
stock of the Corporation which by its terms expressly provides that it ranks
junior in rights and preferences to the Series 3 Preferred Stock upon
liquidation, so that holders of shares of Series 3 Preferred Stock shall be
entitled to be paid, after full payment is made on any stock ranking prior to
the Series 3 Preferred Stock as to rights and preferences, but before any
distribution is made to the holders of the Class A Stock and such junior stock
upon the voluntary or involuntary dissolution, liquidation or winding up of
the Corporation. The amount payable on each share of Series 3 Preferred Stock
in the event of the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation shall be $0.01 per share. If, upon any such
liquidation, dissolution or winding up of the Corporation, its net assets are
insufficient to permit the payment in full of the amounts to which the holders
of all outstanding shares of Series 3 Preferred Stock are entitled as above
provided, the entire net assets of the Corporation remaining (after full
payment is made on any classes or series of stock ranking prior to the Series
3 Preferred Stock) shall be distributed among the holders of shares of Series
3 Preferred Stock in amounts proportionate to the full preferential amounts to
which they and holders of shares of preferred shares ranking in parity with
the Series 3 Preferred Stock are entitled. After such payment shall have been
made in full to the holders of the Series 3 Preferred Stock, the remaining
assets of the Corporation shall be divided and distributed among the holders
of the outstanding Series 3 Preferred Stock and the holders of the other
classes of stock then outstanding according to their respective rights and
shares, with the holders of the Series 3 Preferred Stock being entitled in
such distribution to participate with the holders of the Class A Stock ratably
in proportion to the number of shares of Class A Stock into which the Series 3
Preferred Stock is then convertible. For the purpose of this Section 4, the
voluntary sale, lease, exchange or transfer, for cash, shares of stock,
securities or other consideration, of all or substantially all the
Corporation's property or assets to, or its consolidation or merger with, one
or more corporations shall not be deemed to be a liquidation, dissolution or
winding up of the Corporation, voluntary or involuntary. Notwithstanding the
foregoing, in the event that any holder of Series 3 Preferred Stock converts
its Series 3 Preferred Stock to Class A Stock pursuant to Section 5 hereof,
the right to preferential liquidation rights with respect to such converted
stock pursuant to this Section 4 shall be immediately terminated.

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     Section 5.  Conversion Provisions.

     (a) Subject to the provisions for adjustment hereinafter set forth, each
share of Series 3 Preferred Stock shall be convertible at any time at the option
of the holder thereof, upon surrender to the transfer agent for the Series 3
Preferred Stock of the Corporation of the certificate or certificates evidencing
the shares so to be converted, into one fully paid and non-assessable share of
Class A Stock of the Corporation.  Notwithstanding the foregoing provisions of
this Section 5, a holder of Series 3 Preferred Stock shall not have the right to
convert the Series 3 Preferred Stock held by it if the Class A Stock to be
received upon conversion would, when aggregated with all other shares of Class A
Stock (other than shares of Non-Attributable Stock) currently or previously held
by or currently issuable without restriction to such holder, exceed 4.99% of the
then outstanding Class A Stock, unless the holder is a party other than a bank
or an Affiliate of a bank which is subject to the provisions of the Bank Holding
Company Act of 1956 and the Class A Stock to be issued upon such conversion will
constitute Non-Attributable Stock, as hereinafter defined.  For purposes of this
provision, "Non-Attributable Stock" shall mean shares of Class A Stock or Series
3 Preferred Stock which have been previously sold, or were issued pursuant to
the exercise of Warrants which were previously sold, either (i) in a widely
dispersed public offering; (ii) in a private placement in which no purchaser,
individually or in concert with others, acquired Class A Stock, Series 3
Preferred Stock, Warrants or any combination thereof, representing (upon
conversion, in the case of the Series 3 Preferred Stock, and upon exercise for
Class A Stock, in the case of the Warrants) more than 2% of the outstanding
Class A Stock; (iii) in compliance with Rule 144 (or any rule which is a
successor thereto) of the Securities Act of 1933, as amended; or (iv) in the
secondary market in a market transaction executed through a registered broker-
dealer in blocks of no more than 2.0% of the shares outstanding of the
Corporation in any six month period.  For purposes of this provision,
"Affiliate" of any individual, corporation, trust, partnership or other entity
shall mean any other individual, corporation, trust, partnership or other entity
directly or indirectly controlling, controlled by or under direct or indirect
common control with such individual, corporation, trust, partnership or other
entity.  For purposes of this definition, as to Creditanstalt, Affiliate shall
include any partnership a majority of the partners of which are officers,
directors, employees or Affiliates of Creditanstalt, and as to the Corporation,
Affiliate shall not include Creditanstalt.

     (b)  The number of shares of Class A Stock into which an issued and
outstanding share of Series 3 Preferred Stock is convertible shall be subject to
adjustment from time to time as follows:

          (i) If the Corporation shall (x) declare a dividend on the Class A
Stock in shares of its capital stock (whether shares of Class A Stock, Series 3
Preferred Stock or of capital stock of any other class), (y) split or subdivide
the outstanding 

                                      -3-
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Class A Stock or (z) combine the outstanding Class A Stock into a smaller
number of shares, each share of Series 3 Preferred Stock outstanding at the
time of the record date for such dividend or of the effective date of such
split, subdivision or combination shall thereafter entitle the holder of such
share of Series 3 Preferred Stock to receive the aggregate number and kind of
shares which, if such share of Series 3 Preferred Stock had been converted
immediately prior to such time, such holder would have owned or have become
entitled to receive by virtue of such dividend, subdivision or combination.
Such adjustment shall be made successively whenever any event listed above
shall occur and, if a dividend which is declared is not paid, each share of
Series 3 Preferred Stock outstanding shall again entitle the holder thereof to
receive the number of shares of Class A Stock as would have been the case had
such dividend not been declared. If at any time, as a result of an adjustment
made pursuant to this subsection 5(b)(i), the holder of any share of Series 3
Preferred Stock thereafter converted shall become entitled to receive any
shares of capital stock of the Corporation other than shares of Class A Stock,
thereafter the number of such other shares so receivable upon conversion of
any share of Series 3 Preferred Stock shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Class A Stock contained in this subsection
5(b).

          (ii) If the Corporation shall issue any shares of Class A Stock
without consideration or at a price per share less than the Current Market Price
Per Share (as herein defined) of the Class A Stock as at the date of such
issuance, including any shares of Class A Stock deemed to have been issued
pursuant to this subsection 5(b)(ii) but excluding any Exempted Securities (as
herein defined), each share of Series 3 Preferred Stock outstanding on the date
of such issuance shall thereafter entitle the holder of such share of Series 3
Preferred Stock to receive upon conversion thereof a number of shares of Class A
Stock equal to the product of (y) the number of shares of Class A Stock to which
the holder of such share of Series 3 Preferred Stock was entitled immediately
prior to such issuance and (z) the quotient that is obtained by dividing:

               (A) the total number of shares of Class A Stock outstanding
immediately after such issuance (including any shares of Class A Stock deemed to
have been issued pursuant to this subsection 5(b)(ii))

               by

               (B)  the sum of

               (i) the number of shares of Class A Stock outstanding immediately
prior to such issuance plus

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               (ii) the number of shares of Class A Stock which the aggregate
consideration received (or deemed to be received) by the Corporation upon such
issuance would purchase at such Current Market Price Per Share.

For purposes of any adjustment of the number of shares of Class A Stock
obtainable upon the conversion of any shares of Series 3 Preferred Stock
pursuant to this subsection 5(b)(ii), the following provisions shall be
applicable:

          (1) In the case of the issuance of Class A Stock for cash, the
     consideration therefor shall be deemed to be the amount of cash paid
     therefor, without deducting therefrom any discounts, commissions or other
     expenses allowed, paid or incurred by the Corporation in connection with
     the issuance or sale thereof.

          (2) In the case of the issuance of Class A Stock for a consideration
     part or all of which shall be in a form other than cash, the value of
     such consideration shall be as determined by agreement between the
     holders of a majority of the shares of Series 3 Preferred Stock
     outstanding and the Corporation or, in the absence of such an agreement,
     by an independent investment banking firm or an independent appraiser
     engaged by the Corporation and reasonably acceptable to the holders of a
     majority of the shares of Series 3 Preferred Stock outstanding. The cost
     of such independent investment banking firm or appraiser will be borne by
     the Corporation unless the refusal of the holders of the Series 3
     Preferred Stock to agree with the Corporation's position was not
     reasonable, in which case such cost shall be borne by the holders of
     Series 3 Preferred Stock who did not agree. In the case of any issuance
     of Class A Stock upon the exercise of any warrants, options or other
     rights or the conversion or exchange of any convertible or exchangeable
     securities, the aggregate consideration received by the Corporation upon
     such issuance shall be deemed to include the consideration, if any,
     received by the Corporation upon the issuance of such warrants, options
     or rights or such convertible or exchangeable securities (excluding any
     cash received on account of accrued interest or accrued dividends) and,
     in the case of any conversion or exchange of securities, shall not
     include any amount attributable to the converted or exchanged securities.

          (3) If (A) the Corporation shall issue warrants or options to
     purchase or rights to subscribe for Class A Stock other than Exempted
     Securities, and (B) the consideration, if any, received by the
     Corporation upon the issuance of such warrants, options or rights plus
     the minimum aggregate consideration required to be paid upon exercise of
     such warrants, options or rights (the amount of such consideration to be
     determined in each case as set forth above) shall be less than the
     product of the Current Market Price Per Share on the date of such
     issuance multiplied by the maximum number of

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<PAGE>
 
     shares of Class A Stock deliverable upon such exercise, then such
     aggregate maximum number of shares shall be deemed to have been issued at
     the time such warrants, options or rights were issued and for a
     consideration equal to such minimum aggregate consideration.

          (4) If (A) the Corporation shall issue (y) securities (other than
     Exempted Securities) which are by their terms convertible into or
     exchangeable for Class A Stock or (z) warrants or options to purchase or
     rights to subscribe for any such convertible or exchangeable securities,
     and (B) the consideration received by the Corporation for any such
     securities or any such options or rights (excluding any cash received on
     account of accrued interest or accrued dividends) plus the minimum
     aggregate consideration (not including any amount attributed to the
     converted or exchanged securities), if any, to be received by the
     Corporation upon the conversion or exchange of such securities or upon
     the exercise of such options and the conversion or exchange of the
     securities received upon such exercise, as the case may be (the amount of
     such consideration to be determined in each case as set forth above)
     shall be less than the product of the Current Market Price Per Share on
     the date of such issuance multiplied by the maximum number of shares
     deliverable upon conversion of or in exchange for such convertible or
     exchangeable securities or upon the exercise of any such options and
     subsequent conversion or exchanges thereof, then such aggregate maximum
     number of shares shall be deemed to have been issued at the time such
     securities were issued or such options or rights were issued and for a
     consideration equal to such minimum aggregate consideration.

          (5) Upon any reduction in the exercise price payable upon exercise
     of any of such warrants, options or rights as are referred to in this
     subsection 5(b)(ii) or any reduction in the amount of consideration
     required to be paid or the conversion or exchange price or ratio payable
     upon conversion or exchange of any of such convertible or exchangeable
     securities, in each case other than a change resulting from any
     antidilution provisions thereof which are no more favorable in such
     instance to the holder thereof than the provisions of this subsection
     5(b) are to the holders of the Series 3 Preferred Stock, (A) if an
     adjustment shall previously have been made pursuant to this subsection
     5(b)(ii) in respect of such warrants, options or rights or such
     securities, the number of shares of Class A Stock obtainable upon the
     conversion of the shares of Series 3 Preferred Stock shall forthwith be
     readjusted to such number of shares as would have obtained had the
     adjustment made upon the issuance of such warrants, options, rights or
     securities as have not been exercised, converted or exchanged prior to
     such change (or any prior adjustment made pursuant to this subdivision
     (5)) been made upon the basis of such change, and (B) if an adjustment
     has not previously been made pursuant to this subsection 5(b)(ii) in
     respect of such

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<PAGE>
 
    options or rights or such securities, then such warrants, options or
    rights or such securities shall be deemed to have been granted or issued
    (as the case may be) for purposes of this subsection 5(b)(ii) as of the
    date of such reduction, and any adjustments required to be made pursuant
    to this subsection 5(b)(ii) as a result of such deemed grant or issuance
    shall forthwith be made effective as of such date.

          (6) All grants or issuances of options or other rights to acquire
    shares of Class A Stock (or securities convertible into or exchangeable
    for shares of Class A Stock) issued to any officer, director or employee
    of the Corporation or of any Subsidiary of the Corporation or to members
    of the immediate family of any of them ("Management Options"), and all
    issuances of shares of Class A Stock (or securities convertible into or
    exchangeable for shares of Class A Stock) under or pursuant to such
    Management Options shall, for purposes of subsection 5(b)(ii), be deemed
    to be granted and issued for no consideration except to the extent cash or
    notes are paid therefor.

          (7) If and when any shares of Series 3 Preferred Stock shall be
    converted as set forth herein, (A) if there shall be any outstanding
    warrants (other than the Warrants) or options to purchase or rights to
    subscribe for shares of Class A Stock and any outstanding warrants (other
    than the Warrants) or options to purchase or rights to subscribe for or
    securities which are by their terms convertible into or exchangeable for
    Class A Stock which in each case would, if issued on the date of such
    conversion, result in an adjustment pursuant to either subdivisions (3) or
    (4) of this subsection 5(b)(ii), then such warrants or options shall be
    deemed to have been exercised in full immediately prior to the conversion
    of such shares of Series 3 Preferred Stock for a consideration equal to
    the consideration, if any, received by the Corporation upon the issuance
    of such options or rights plus the minimum aggregate consideration
    required to be paid upon exercise of such options or rights (the amount of
    such consideration to be determined in each case as set forth above), and
    (B) if there shall be any outstanding securities which are by their terms
    convertible into or exchangeable for Class A Stock at the time of such
    conversion or at any time thereafter which in each case would, if issued
    on the date of such conversion, result in an adjustment pursuant to
    subdivision (4) of this subsection, then such securities shall be deemed
    to have been converted or exchanged in full immediately prior to the
    conversion of such shares of Series 3 Preferred Stock for a consideration
    equal to the consideration received by the Corporation for any such
    securities plus the minimum aggregate consideration (not including any
    amount attributed to the converted or exchanged securities), if any,
    required to be paid upon the conversion or exchange of such securities
    (the amount of such consideration to be determined in each case as set
    forth above); provided that any adjustment made pursuant to this
    subdivision (7) of subsection 5(b)(ii) shall

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<PAGE>
 
    only be made with respect to such shares of Series 3 Preferred Stock as
    are then being converted.

          (8) Shares of Class A Stock owned by or held for the account of the
    Corporation or any majority-owned subsidiary of the Corporation shall not
    be deemed outstanding for the purpose of any computation made pursuant to
    this subsection 5(b)(ii). Any adjustment required to be made pursuant to
    this subsection 5(b)(ii) shall be made successively whenever the date of
    issuance or deemed issuance of any such Class A Stock or any such options,
    rights or convertible or exchangeable securities is fixed (which date of
    issuance shall be the record date for such issuance if a record date
    therefor is fixed) and, in the event that (A) such shares or options,
    rights, warrants or convertible or exchangeable securities are not so
    issued, or (B) any such option, right, warrant or convertible or
    exchangeable security (or the conversion or exchange right thereunder)
    expires according to its terms without having been exercised, converted or
    exchanged, each share of Series 3 Preferred Stock outstanding shall, as of
    the date of cancellation of such issuance in the case of clause (A) above
    and the date of such expiration in the case of clause (B) above, entitle
    the holder thereof to receive the number of shares of Class A Stock as
    would have been the case had the date of such issuance of such unissued
    options, rights, warrants or convertible or exchangeable securities not
    been fixed or such expired options, rights, warrants or convertible or
    exchangeable securities not been issued, as the case may be.

          (iii) In the event of any capital reorganization of the Corporation,
or of any reclassification of the Class A Stock (other than a subdivision or
combination of outstanding shares of Class A Stock), or in case of the
consolidation of the Corporation with or the merger of the Corporation with or
into any other corporation or of the sale of the properties and assets of the
Corporation as, or substantially as, an entirety to any other corporation,
each share of Series 3 Preferred Stock shall after such capital
reorganization, reclassification of Class A Stock, consolidation, merger or
sale be convertible upon the terms and conditions specified herein, for the
number of shares of stock or other securities or assets to which a holder of
the number of shares of Class A Stock into which such share of Series 3
Preferred Stock shall be convertible (at the time of such capital
reorganization, reclassification of Class A Stock, consolidation, merger or
sale) would have been entitled upon such capital reorganization,
reclassification of Class A Stock, consolidation, merger or sale; and in any
such case, if necessary, the provisions set forth in this subsection 5(b) with
respect to the rights thereafter of the holders of the shares of Series 3
Preferred Stock shall be appropriately adjusted so as to be applicable, as
nearly as may reasonably be, to any shares of stock or other securities or
assets thereafter deliverable upon the conversion of the shares of Series 3
Preferred Stock.

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          (iv) If any event occurs, as to which, in the good faith opinion of
the Board of Directors of the Corporation, the other provisions of this
subsection 5(b) are not strictly applicable or (if strictly applicable) would
not fairly protect the conversion rights of the shares of Series 3 Preferred
Stock in accordance with the essential intent and principles of such provisions,
then the Board of Directors shall make an adjustment in the application of such
provisions, in accordance with such essential intent and principles, so as to
protect such purchase rights as aforesaid, but in no event shall any such
adjustment have the effect of decreasing the number of shares of Class A Stock
obtainable upon the conversion of each share of Series 3 Preferred Stock from
that which would otherwise be determined pursuant to this subsection 5(b).

          (v) No adjustment in the number of shares of Class A Stock into which
a share of Series 3 Preferred Stock shall be convertible shall be required
unless such adjustment would require an increase or decrease in the aggregate
number of such shares of Class A Stock obtainable of at least 1%, provided that
any adjustments which by reason of this subsection 5(b)(v) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment.  All calculations under this subsection 5(b) shall be made to the
nearest cent or to the nearest hundredth of a share, as the case may be.

          (vi) Irrespective of any adjustments in the number or kind of shares
obtainable upon the conversion of a share of Series 3 Preferred Stock,
certificates theretofore or thereafter issued may continue to express the same
number and kind of shares as are stated on the certificates initially issuable
therefor.

          (vii) If any question shall at any time arise with respect to the
number of shares of Class A Stock into which a share of Series 3 Preferred Stock
is then convertible following any adjustment pursuant to this subsection 5(b),
such question shall be determined by agreement between the holders of a majority
of the shares of Series 3 Preferred Stock outstanding and the Corporation or, in
the absence of such an agreement, by an independent investment banking firm or
an independent appraiser engaged by the Corporation and reasonably acceptable to
the holders of a majority of the shares of Series 3 Preferred Stock outstanding.
The cost of such independent investment banking firm or appraiser will be borne
by the Corporation unless the refusal of the holders of the Series 3 Preferred
Stock to agree with the Corporation's position was not reasonable, in which case
such cost shall be borne by the holders of Series 3 Preferred Stock who did not
agree.

          (viii) Anything in this subsection 5(b) to the contrary
notwithstanding, the Corporation shall be entitled to make such increases in
the number of shares of Class A Stock into which a share of Series 3 Preferred
Stock shall be convertible, in addition to those adjustments required by this
subsection 5(b), as it in its sole discretion shall determine to be advisable
in order that any consolidation or 

                                      -9-
<PAGE>
 
subdivision of the Class A Stock, or any issuance wholly for cash or any
shares of Class A Stock at less than the Current Market Price Per Share, or
any issuance wholly for cash or shares of Class A Stock or securities which by
their terms are convertible into or exchangeable for shares of Class A Stock
or any stock dividend, or any issuance of rights, options or warrants referred
to hereinabove in this subsection 5(b), hereinafter made by the Corporation to
the holders of its Class A Stock shall not be taxable to them.

          (ix) For purposes of this subsection 5(b), the following terms shall
have the following meanings:

          "Current Market Price Per Share" shall mean, with respect to any
     shares of the Class A Stock, as of any particular date of determination:

               (A) if the Class A Stock is then reported on the Composite
          Transactions Tape, the average of the daily closing prices for the
          20 consecutive trading days immediately prior to such date as
          reported on the Composite Transactions Tape (as adjusted for any
          stock dividend, split, combination or reclassification that occurred
          during such 20-day period); or

               (B) if the Class A Stock is not then reported on the Composite
          Transaction Tape but is then listed or admitted to trading on a
          national securities exchange, the average of the daily last sale
          prices regular way of the Class A Stock, for the 20 consecutive
          trading days immediately prior to such date (as adjusted for any
          stock dividend, split, combination or reclassification that occurred
          during such 20-day period), on the principal national securities
          exchange on which the Class A Stock is traded or, in case no such
          sale takes place on any such day, the average of the closing bid and
          asked prices regular way, in either case on such national securities
          exchange; or

               (C) if the Class A Stock is not then reported on the Composite
          Transaction Tape but is then traded in the over-the-counter market,
          the average of the daily closing sales prices, or, if there is no
          closing sales price, the average of the closing bid and asked
          prices, in the over-the-counter market, for the 20 consecutive
          trading days immediately prior to such date (as adjusted for any
          stock dividend, split, combination or reclassification that occurred
          during such 20-day period), as reported by the National Association
          of Securities Dealers' Automated Quotation System, or, if not so
          reported, as reported by the National Quotation Bureau, Incorporated
          or any successor thereof, or, if not so reported the average of the
          closing bid and asked prices as furnished by any member of the
          National Association of Securities

                                      -10-
<PAGE>
 
         Dealers, Inc. selected from time to time by the Board of Directors of
         the Corporation for that purpose; or

               (D) if no such prices are then furnished, the higher of (x) the
         Exercise Price for the Warrants and (y) the fair market value of a
         share of Class A Stock as determined by agreement between the holders
         of a majority of the shares of Series 3 Preferred Stock and the
         Corporation or, in the absence of such an agreement, by an
         independent investment banking firm or an independent appraiser
         engaged by the Corporation (in either case the cost of which
         engagement will be borne one-half by the Corporation and one-half by
         the holders of a majority of the shares of Series 3 Preferred Stock
         outstanding) and reasonably acceptable to the holders of a majority
         of the shares of Series 3 Preferred Stock.

          "Exempted Securities" shall mean (A) the Warrant Shares (as defined
     in the Warrant Agreement), (B) shares of the Corporation's capital stock
     issued as a stock dividend described in subsection 5(b)(i) and (C)
     options which constitute Exempted Securities under the Warrant Agreement
     and shares of Class A Stock issuable upon exercise of such options.

     (c) Upon any adjustment of the number of the shares of Class A Stock
issuable upon conversion of shares of Series 3 Preferred Stock pursuant to this
Section 5, the Corporation shall promptly but in any event within 20 days
thereafter, cause to be given to each of the registered holders of the Series 3
Preferred Stock, at its address appearing on the Register for the Series 3
Preferred Stock by registered mail, postage prepaid, return receipt requested a
certificate signed by its chairman, president or chief financial officer setting
forth the number of shares of Class A Stock issuable upon conversion of shares
of Class A Stock as so adjusted and describing in reasonable detail the facts
accounting for such adjustment and the method of calculation used.  Where
appropriate, such certificate may be given in advance and included as a part of
the notice required to be mailed under the other provisions of this resolution.

     (d) The Corporation will at all times have authorized, and reserve and keep
available, free from preemptive rights, for the purpose of enabling it to
satisfy any obligation to issue shares of Class A Stock upon the conversion of
the Series 3 Preferred Stock, the number of shares of Class A Stock deliverable
upon conversion of the Series 3 Preferred Stock.

     (e) The Corporation shall not be required to issue fractional shares of
Class A Stock upon conversion of the Series 3 Preferred Stock but shall pay for
any such fraction of a share an amount in cash equal to the current market price
per share of 

                                      -11-
<PAGE>
 
Class A Stock of such share (determined in accordance with the provisions of
subsection 5(b)(ix) hereof) multiplied by such fraction.

     (f) The Corporation will pay all taxes attributable to the issuance of
shares of Class A Stock upon conversion of shares of Series 3 Preferred Stock,
provided that the Corporation shall not be required to pay any income tax
incurred by the holder upon conversion of the Series 3 Preferred Stock or any
tax which may be payable in respect of any transfer involved in the issue of any
shares of Class A Stock in a name other than that of the registered holder of
the Series 3 Preferred Stock surrendered for conversion, and the Corporation
shall not be required to issue or deliver such certificate unless or until the
person or persons requesting the issuance thereof shall have paid to the
Corporation the amount of such tax or shall have established to the satisfaction
of the Corporation that such tax has been paid.

     Section 6.  Notices to Holders of Series 3 Preferred Stock.  In the event:

          (a) that the Corporation shall authorize the issuance to all holders
     of Class A Stock of rights or warrants to subscribe for or purchase
     capital stock of the Corporation or of any other subscription rights or
     warrants; or

          (b) that the Corporation shall authorize the distribution to all
     holders of Class A Stock of evidences of its indebtedness or assets
     (including, without limitation cash dividends or cash distributions
     payable out of consolidated earnings or earned surplus or dividends
     payable in Class A Stock); or

          (c) of any consolidation or merger to which the Corporation is a
     party and for which approval of any stockholders of the Corporation is
     required, or of the conveyance or transfer of the properties and assets
     of the Corporation substantially as an entirety, or of any capital
     reorganization or reclassification or change of the Class A Stock (other
     than a change in par value, or from par value to no par value, or from no
     par value to par value, or as a result of a subdivision or combination);
     or

          (d) of the voluntary or involuntary dissolution, liquidation or
     winding up of the Corporation; or

          (e) that the Corporation proposes to take any other action which
     would require an adjustment in the number of shares of Class A Stock or
     other securities or assets issuable upon conversion of shares of Series 3
     Preferred Stock pursuant to Section 5;

then the Corporation shall cause to be given to each of the registered holders
of the Series 3 

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<PAGE>
 
Preferred Stock at its address appearing on the Register for the
Series 3 Preferred Stock, at least 10 calendar days prior to the applicable
record date, if any, hereinafter specified, or, if no such record date is
specified, 10 calendar days prior to the taking of any action referred to in
clause (a) through (e) above, by registered mail, postage prepaid, return
receipt requested, a written notice stating (i) the date as of which the holders
of record of Class A Stock to be entitled to receive any such rights, warrants
or distribution are to be determined, or (ii) the date on which any such
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up is expected to become effective or (iii) the date on which such other action
is to be effected, and the date as of which it is expected that holders of
record of Class A Stock shall be entitled to exchange their shares for
securities or other property, if any, deliverable upon such reclassification,
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up or other action.  The failure to give the notice required by this Section 6
or any defect therein shall not affect the legality or validity of any
distribution, right, warrant, consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up or other action referred to above, or the
vote upon any such action.

III. The date of adoption of the amendment was August 21, 1997.

IV.  Pursuant to sections 602 and 1002 of the Act, shareholder approval is not
     required for this Amendment.

     Dated this 25th day of August, 1997.


                                     UNCLE B's BAKERY, INC.


                                     By /s/ Wm. Howard McClennan, Jr.
                                       ------------------------------
                                       Wm. Howard McClennan, Jr.
                                       Secretary and Treasurer

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