TANDYCRAFTS, INC.
1400 EVERMAN PARKWAY
FORT WORTH, TEXAS 76140
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
___________________
To the Stockholders of Tandycrafts, Inc.:
The Annual Meeting of Stockholders of Tandycrafts, Inc. will be held on
_________, 2000 at 9:30 a.m., Central Standard Time, at the Randolph County
Development Center (Black River Technical College campus) located at 1410
Highway 304 East, Pocahontas, Arkansas, for the following purposes:
(1) To elect directors to serve for the ensuing year and until their
successors are elected; and
(2) To transact such other business as may properly come before the
meeting or any adjournment(s) of the meeting.
By resolution of the Board of Directors, only stockholders of record as of
the close of business on _________, 2000 are entitled to notice of and to vote
at the Annual Meeting. The transfer books will not be closed.
By order of the Board of Directors,
Russell L. Price
Vice President, Secretary and General Counsel
Fort Worth, Texas
October ___, 2000
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THIS MEETING. WHETHER OR NOT
YOU EXPECT TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO COMPLETE, SIGN AND
DATE THE ENCLOSED WHITE PROXY CARD AND MAIL IT AS SOON AS POSSIBLE IN THE
ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
TANDYCRAFTS, INC.
1400 EVERMAN PARKWAY
FORT WORTH, TEXAS 76140
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PROXY STATEMENT
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ANNUAL MEETING OF STOCKHOLDERS OF TANDYCRAFTS, INC.
This Proxy Statement and the enclosed WHITE proxy card are furnished to the
stockholders of Tandycrafts, Inc., a Delaware corporation (the "Corporation"),
in connection with the solicitation by the Board of Directors of the Corporation
(the "Board") of proxies for use at the Annual Meeting of Stockholders for the
fiscal year ended June 30, 2000, to be held on ______________, 2000, (the
"Annual Meeting") or any adjournments or postponements thereof. This Proxy
Statement and the enclosed proxy card were first sent to the stockholders of the
Corporation on or about ____________, 2000.
VOTING RIGHTS AND PROXY INFORMATION
Only holders of the Corporation's Common Stock of record as of the close of
business on ___________, 2000 ("Record Date") will be entitled to notice of, and
to vote at, the Annual Meeting. The holders of the Corporation's Common Stock
are entitled to one vote per share on any matter, which may properly come before
the Annual Meeting. As of the close of business on ____________, 2000, there
were outstanding [12,280,897] shares of Common Stock entitled to vote.
The presence, either in person or by properly executed proxy, of the
holders of a majority of the Common Stock as of the Record Date is necessary to
constitute a quorum at the Annual Meeting. If a quorum is not present, the
Annual Meeting may be adjourned from time to time without further notice, if the
time and place of the adjourned meeting are announced at the Annual Meeting,
until a quorum is obtained. Any stockholder present (including a holder whose
shares are deemed present by a broker non-vote) at the Annual Meeting, but who
abstains from voting, will be counted as present for purposes of determining
whether a quorum exists. The affirmative vote of a plurality of the Common
Stock voted at the Annual Meeting is required to approve the election of each of
the Corporation's nominees for election as a director. The affirmative vote of
a majority of the shares represented at the Annual Meeting, in person or by
proxy, will be necessary to approve any other matter which may properly come
before the Annual Meeting.
A WHITE proxy in the accompanying form which is properly signed, dated,
returned and not revoked will be voted in accordance with the instructions
contained therein. Unless authority to vote for the election of directors (or
any one or more nominees) is withheld, WHITE proxies will be voted for the slate
of directors proposed by the Board and, if no contrary instructions are given,
WHITE proxies will be voted "For" each of the proposals before the Annual
Meeting. If any other matters are properly presented at the Annual Meeting for
action, which is not presently anticipated, the proxy holders will vote the
WHITE proxies (which confer discretionary authority upon the holder to vote on
such matters) in accordance with their judgment and discretion. With respect to
all matters other than the election of directors, an abstention (or broker non-
vote) has the same effect as a vote against the proposal.
Giving a proxy will not affect a stockholder's right to attend the Annual
Meeting and to vote in person. A proxy may be revoked at any time before it is
exercised by: (1) filing with the Corporation, at or before the Annual Meeting,
a written notice of revocation bearing a later date than the proxy; (2) duly
executing a subsequent proxy relating to the same voting securities and
delivering it to the Corporation at or before the Annual Meeting; or (3)
attending the Annual Meeting, filing a written revocation of proxy and voting in
person (attendance at the Annual Meeting and voting will not in and of itself
constitute a revocation of a proxy). Any written notice of revocation delivered
in advance of the Annual Meeting should be mailed or hand delivered to
Tandycrafts, Inc., Attention: Mr. Russell Price, Secretary, 1400 Everman
Parkway, Fort Worth, Texas 76140.
COUNTER SOLICITATION
In letters dated June 5, 2000 and September 18, 2000, a group led by Warren
G. Lichtenstein calling itself "The Tandycrafts Full Value Committee" notified
the Corporation that it intends to nominate Warren G. Lichtenstein, one of Mr.
Lichtenstein's attorneys, two of Mr. Lichtenstein's employees and two affiliates
of Mr. Lichtenstein for election to the Board at the Annual Meeting. Members of
the Lichtenstein group include Mr. Lichtenstein, Steel Partners II, L.P., Mark
E. Schwartz, Newcastle Partners, L.P., James Henderson, Glen Kassan and Harold
Smith. The Lichtenstein group's proxy materials will contain information
concerning their nominees. Your Board of Directors has unanimously determined
to oppose the election of the Lichtenstein group's nominees.
YOUR BOARD URGES YOU NOT TO SIGN ANY PROXY CARD SENT TO YOU BY THE
LICHTENSTEIN GROUP OR THE TANDYCRAFTS FULL VALUE COMMITTEE. IF YOU HAVE
ALREADY DONE SO, YOU MAY REVOKE YOUR PREVIOUSLY SIGNED PROXY BY SUBMITTING A
LATER DATED WHITE PROXY IN THE ENCLOSED ENVELOPE.
On August 22, 2000, the Corporation filed a lawsuit against Steel Partners
II, L.P., Warren G. Lichtenstein, Newcastle Partners, L.P., and Mark E. Schwartz
("Steel Partners Group") in the United States District Court in the Northern
District of Texas. The lawsuit alleges that the Steel Partners Group violated
federal securities laws by filing a series of misleading and deficient reports
with the Securities and Exchange Commission ("SEC") in order to conceal their
true intentions and to maximize their immediate financial gain at the expense of
the Corporation and its other shareholders. The lawsuit alleges violations of
Sections 10(b) and 13(d) of the Securities Exchange Act and SEC Rule 10(b)(5).
The lawsuit states that the Steel Partners Group's filings were false and
misleading in that they failed to disclose among other things: 1) Steel
Partners Group's intention to destabilize the Corporation, 2) Steel Partners
past violations of securities laws, including its admission that it violated
Section 16(b) in connection with a proxy solicitation with regard to Kinark
Corporation and that a federal judge had found that there was a "high
probability" that Steel Partners had violated Section 13(d) in a case filed by
Medical Image Centers of America, Inc., 3) Steel Partners' past involvement in
legal proceedings, 4) Steel Partners' past history of destabilization with at
least twenty (20) other companies, and 5) Steel Partners' group activities and
agreements with respect to the Corporation. The lawsuit alleges that Steel
Partners Group engaged in this hidden scheme to maximize their financial gain at
the expense of the other shareholders of the Corporation by threatening a change
of control of the Corporation, to force a sale of the Corporation, to force the
greenmail repurchase of its shares to the exclusion of other Tandycrafts'
shareholders or to manipulate the price of Tandycrafts' stock.
The lawsuit seeks a preliminary and permanent injunction that would require
Steel Partners Group to disclose complete, truthful and accurate information to
Tandycrafts and its shareholders in compliance with securities laws, to prohibit
Steel Partners Group from voting its shares of Tandycrafts' stock and to force
the orderly liquidation of Tandycrafts' shares owned by the Steel Partners Group
that it acquired in its unlawful scheme. The Corporation has sought expedited
treatment of its lawsuit.
On September 18, 2000, Steel Partners II, L.P. filed a complaint in the
Court of Chancery of the State of Delaware, naming as defendants the Corporation
and members of the Corporation's Board of Directors. The complaint alleges that
the Corporation's directors breached their fiduciary duties by causing the
Corporation to bring an action against the Steel Partners Group that asserts
that Steel Partners is acting as a group with other undisclosed shareholders of
the Corporation. Steel Partners seeks a declaratory judgment that it is not as
"acquiring person" under Tandycrafts Rights Agreement, dated May 19, 1997, and
that it is not an "interested stockholder" for purposes of Section 203 of the
Delaware General Corporation Law. Steel Partners also seeks a preliminary and
permanent injunction prohibiting the Corporation from declaring a "distribution
date" under the Rights Agreement. The Corporation and its directors believe that
the complaint is entirely without merit and intend to vigorously defend against
it.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE IN FAVOR OF THE
NOMINEES OF THE BOARD DESCRIBED BELOW AND NOT VOTE IN FAVOR OF THE NOMINEES OF
THE LICHTENSTEIN GROUP.
PROPOSAL 1: ELECTION OF DIRECTORS
Five directors are to be elected at this Annual Meeting to hold office
until the next Annual Meeting of Stockholders and until their successors are
elected and have qualified. The Board of Directors recommends a vote FOR the
election of the listed director nominees. It is the intention of the persons
named in the accompanying proxy to vote for the nominees listed below unless
authority to do so is withheld. All nominees have indicated their willingness
to serve for the ensuing term, but if any nominee is unable to or should decline
to serve as a director at the date of the Annual Meeting, it is the intention of
the persons named in the Proxy to vote for such other person or persons as they
in their discretion shall determine.
NOMINEES AGE DIRECTOR SINCE
-------- --- --------------
R.E. Cox, III.................... 67 1985
Jack Kahl........................ 60 2000
Sheldon Stein.................... 47 1995
Michael J. Walsh................. 59 1992
Colon Washburn................... 54 1999
INFORMATION CONCERNING THE BOARD AND ITS COMMITTEES
MR. COX served as Chairman of the Corporation from February 1992 until
November 1999. For more than the past five years, Mr. Cox has served as
President of R.E. Cox Realty Company, Fort Worth, Texas; the General Partner of
Sav-On Development Company, Fort Worth; and has been the Co-Owner of Ofco, Inc.
d/b/a Ofco Office Furniture, Fort Worth. From 1983 to 1995, Mr. Cox was
President of Germany's, a wholesale nursery business. From 1977 to 1982, Mr.
Cox served as Chairman of the Board of R.E. Cox and Company Department Stores,
Fort Worth. Mr. Cox is also a director of Inspire Insurance Solutions, Inc. and
KBK Capital Corporation.
MR. KAHL was the founder of Manco, Inc., a consumer products company, and
has been Chairman and Chief Executive Officer of Manco, Inc. since 1969. Mr.
Kahl currently serves as a director of Applied Industrial Technologies, Royal
Appliance Inc., Paragon Holdings, MCM Capital Advisory Board, Clark/Bardes,
Superlative Group, Leadership Cleveland, The United Way and the Cleveland Clinic
Foundation.
MR. STEIN has been a Senior Managing Director and Head of the Southwestern
Corporate Finance Department for Bear, Stearns & Co. Inc. since 1989. Mr. Stein
joined Bear Stearns in 1986 and prior to that was a partner with the law firm of
Hughes & Luce, LLP. Mr. Stein is also a director of The Men's Wearhouse, Inc.,
Fresh America Corporation, and Home Interiors & Gifts, Inc.
MR. WALSH has served as Chairman of the Corporation since November 1999
and Chief Executive Officer of the Corporation since April 1996. Previously,
he served as President of the Corporation from April 1996 to November 1999, as
Executive Vice President and Chief Financial Officer from August 1992 until
July 1996 and as General Counsel and Secretary from 1983 to 1996. He also
served as Vice President from 1986 to 1992.
MR. WASHBURN has been Chief Executive Officer of Fresh America Corporation
since October 1999, has been a partner with Bentonville Associates Ventures, LLC
since 1996 and has been President and Owner of Beau Terre Farms, Inc., a real
estate development company, for more than the past five years. Previously, he
served as a merchant consultant with C.P. Group, which is located in Thailand,
from 1994 to 1998. From 1971 until January 1993, he was employed by Wal*Mart
Stores, Inc., where he served most recently as an Executive Vice President for
Sam's Club and as a Senior Vice President for Wal*Mart Stores, Inc. Mr.
Washburn currently serves as a director of Fresh America Corporation.
BOARD COMMITTEES
The Board of Directors of the Corporation met eleven (11) times during
fiscal year 2000. All Directors were present at each meeting of the Board and
each Committee on which he or she served.
The Board of Directors has an Audit Committee, which is comprised of at
least three directors who are neither officers nor employees of the Company or
its subsidiaries. The Audit committee is currently composed of Messrs. Cox,
Stein and Washburn. The Audit Committee is primarily concerned with the
effectiveness of the Corporation's accounting policies and practices, financial
reporting and internal controls. The Audit Committee reviews and approves the
scope of the annual examination of the books and records of the Corporation and
reviews the findings and recommendations of the outside auditors on completion
of the audit; considers the organization, scope and adequacy of the
Corporation's internal controls function; monitors the extent to which the
Corporation has implemented changes recommended by the independent auditors or
the Audit Committee; and provides over-sight with respect to accounting
principles employed in the Corporation's financial reporting. The Audit
Committee met two (2) times during the past fiscal year.
The Board of Directors has a Compensation Committee currently composed of
Messrs. Cox, Stein, and Washburn. The principal functions of the Compensation
Committee are to review and make recommendations to the Board of Directors
concerning compensation plans for certain executive officers and appointments
and promotions to executive positions at the corporate level. The Compensation
Committee met one (1) time during fiscal year 2000.
The Board of Directors has a Nominating Committee currently composed of
Messrs. Cox, Stein, Walsh and Washburn. The Nominating Committee reviews and
makes recommendations to the Board of Directors with respect to candidates for
directors of the Corporation and assignments of directors to committees of the
Board. The Nominating Committee met one (1) time during fiscal year 2000.
Stockholders who wish to suggest nominees for election at the 2001 Annual
Meeting should submit their suggestion in writing, in accordance with Article
II, Section 8 of the Corporation's Bylaws, no earlier than May ___, 2001 and no
later than June ___, 2001 to the Secretary of the Corporation at the address on
the cover page of this Proxy Statement. Such notice shall contain the proposed
director's name, age, business and residential addresses, principal occupation,
class and number of shares of the Corporation's stock beneficially owned by such
person, written consent of such person, a description of all arrangements or
understanding between such person and the stockholder suggesting such person
pursuant to which the suggestion was made and any other information relating to
such person that is required to be disclosed under any applicable rules and
regulations.
The Board of Directors also has a temporary Progress Committee which is
currently composed of Messrs. Cox, Stein, Walsh and Washburn. The principal
functions of the Progress Committee are to discuss strategic and operational
issues. The Progress Committee did not meet during fiscal year 2000.
DIRECTOR COMPENSATION
For fiscal year 2000, all directors who were not full time employees of the
Corporation or its subsidiaries were paid an annual retainer of $25,000. Mr.
Cox, as Chairman, received an annual retainer of $60,000. The Annual Chairman
Retainer was eliminated on November 11, 1999, and there will be no annual
retainer for the Chairman in fiscal year 2001. Each non-employee director
receives a fee of $1,000 for each Board meeting and each committee meeting
attended ($1,500 per meeting for any non-employee Chairperson). Employees of
Tandycrafts who are also directors do not receive additional compensation for
their services as directors or committee members. Pursuant to the Tandycrafts,
Inc. 1992 Director Stock Option Plan, which was approved on November 10, 1993,
Messrs. Cox, Pace, and Stein had previously received a stock option grant of
60,000 shares. On August 28, 2000, Mr. Pace resigned to devote more time to
pursue expansion of his personal business and his options will be forfeited on
approximately November 28, 2000. Mr. Washburn received a stock option grant of
60,000 shares in fiscal year on January 27, 2000 at a grant price of $3.13, the
closing price of the Company's stock that day.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth information based upon the records of the
Corporation and filings with the Securities and Exchange Commission as of
October 5, 2000, with respect to the ownership of the Corporation's Common Stock
by each person known to be the beneficial owner of more than five percent (5%)
of the outstanding Common Stock of the Corporation, each director and nominee,
each executive officer named in the Summary Compensation Table and the total
shares owned by all directors and executive officers as a group.
AMOUNT AND
NATURE
NAME AND ADDRESS OF OF BENEFICIAL PERCENT OF
BENEFICIAL OWNER OWNERSHIP (1) CLASS
------------------- ------------- ----------
R.E. Cox, III............................. 82,700 (2) *
Jack Kahl................................. 0 *
Joe K. Pace............................... 61,300 (2) *
Sheldon Stein............................. 61,000 (2) *
Colon Washburn............................ 38,250 (3) *
Michael J. Walsh.......................... 426,444 (4) 3.5%
James D. Allen............................ 223,193 (5) 1.8%
Leo C. Taylor............................. 53,779 (6) *
Russell L. Price.......................... 48,468 (7) *
Phillip Greene............................ 23,776 (8) *
All Executive Officers and Directors as a
group (10 persons)...................... 1,013,910 (9) 8.3%
Tandycrafts, Inc. Retirement Savings Plan
(TRSP).................................. 1,769,178(10) 14.4%
Steel Partners II, LLP.................... 1,801,300(11) 14.7%
Dimensional Fund Advisors, Inc............ 858,000(12) 7.0%
Summit Capital Management, LLC............ 879,000(13) 7.2%
------------------
(1) Shares are deemed to be "beneficially owned" by a person if such person,
directly or indirectly, has or shares (i) the power to vote or direct the
voting of such shares, or (ii) the power to dispose or direct the
disposition of such shares. In addition, a person is deemed to
beneficially own any shares for which voting or investment power may be
acquired within 60 days pursuant to options or other rights.
(2) Includes 50,000 exercisable shares under options granted pursuant to the
Tandycrafts, Inc. 1992 Director Stock Option Plan. Mr. Pace, who resigned
August 28, 2000, will forfeit his 50,000 shares under options on
approximately November 28, 2000.
(3) Includes 20,000 exercisable shares under options granted pursuant to the
Tandycrafts, Inc. 1992 Director Stock Option Plan.
(4) Includes 53,081 shares held by the Tandycrafts Retirement Savings Plan
("TRSP"), formerly known as the Tandycrafts Employee Stock Ownership Plan,
over which Mr. Walsh has voting but not investment power, 220,000
exercisable shares under options granted pursuant to the Tandycrafts, Inc.
1992 Stock Option Plan (the "1992 Plan") and 11,643 shares held in the TRSP
Benefit Restoration Plan for the benefit of Mr. Walsh. Excludes an
aggregate of 14,746 shares owned by the Tandycrafts Investment Plan of
which Mr. Walsh shares investment power and voting power as a member of the
Administrative Committee of the Plan.
(5) Includes 16,494 shares held by the TRSP, over which Mr. Allen has voting
but not investment power, 191,667 exercisable shares under options granted
pursuant to the 1992 Plan and 3,432 shares held in the TRSP Benefit
Restoration Plan for the benefit of Mr. Allen. Excludes an aggregate of
14,746 shares owned by the Tandycrafts Investment Plan of which Mr. Allen
shares investment power and voting power as a member of the Administrative
Committee of the Plan.
(6) Includes 11,754 shares held by the TRSP, over which Mr. Taylor has voting
but not investment power and 35,600 exercisable shares under options
granted pursuant to the 1992 Plan. Excludes an aggregate of 14,746 shares
owned by Tandycrafts Investment Plan of which Mr. Taylor shares investment
power and voting power as a member of the Administrative Committee of the
Plan.
(7) Includes 10,868 shares held by the TRSP, over which Mr. Price has voting
but not investment power and 37,600 exercisable shares under options
granted pursuant to the 1992 Plan. Excludes an aggregate of 14,746 shares
owned by the Tandycrafts Investment Plan of which Mr. Price shares
investment power and voting power as a member of the Administrative
Committee of the Plan.
(8) Includes 5,576 shares held by the TRSP, over which Mr. Greene has voting
but not investment power and 18,200 exercisable shares under options
granted pursuant to the 1992 Plan.
(9) Excludes an aggregate of 14,746 shares owned by Tandycrafts Investment Plan
of which Messrs. Allen, Price, Taylor and Walsh share investment power and
voting power as members of the Administrative Committee of the Plan.
(10) As of October 4, 2000, a total of 1,769,178 shares of the Corporation's
Common Stock were held in the Corporation's TRSP, located at 1400 Everman
Parkway, Fort Worth, Texas 76140, c/o Tandycrafts Retirement Savings Plan
Committee, with 14,746 shares held in the Tandycrafts Investment Plan
(which was merged into the TRSP) account and 1,754,432 shares held in the
TRSP account. Except for the Tandycrafts Investment Plan account, each
participant in the TRSP is entitled to direct the Trustee with respect to
the voting of the Common Stock allocated to his or her account. If a
participant does not direct the Trustee with respect to the voting of the
shares of his or her account, such shares will be voted in the discretion
of the Trustee.
(11) Based on Amendment No. 7 to a Schedule 13D, dated October 5, 2000, Steel
Partners II, LP, a Delaware limited partnership, located at 150 East 52nd
Street, 21st Floor, New York, New York 10022, and Warren G. Lichtenstein
own sole voting and investment power over 1,537,100 shares of the
Corporation's Common Stock and Mark E. Schwartz and Newcastle Partners, LP,
a Texas limited partnership, located at 4020 Windsor Avenue, Dallas, Texas
75205 own sole voting and investment power over 264,200 shares of the
Corporation's Common Stock.
(12) Based on a Schedule 13G, dated February 4, 2000, Dimensional Fund Advisors,
Inc., a Delaware corporation, located at 1299 Ocean Avenue, 11th Floor,
Santa Monica, CA 90401, holds sole voting and investment power over 858,000
shares of the Corporation's Common Stock.
(13) Based on a Schedule 13G, dated February 11, 2000, Summit Capital
Management, LLC, a Washington corporation, Summit Capital Partners, LP, and
John C. Rudolf, located at 601 Union Street, Suite 3900, Seattle,
Washington 98101, hold shared voting investment power over 870,100 share of
the Corporation's common stock.
* Less than 1%.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Corporation's directors, executive officers, and persons who own more than
10% of the Corporation's Common Stock, to file with the Securities and Exchange
Commission ("SEC") reports of ownership and changes of ownership of the
Corporation's Common Stock. Directors, executive officers, and greater-than-10%
stockholders are required by SEC regulations to furnish the Corporation with
copies of all such Section 16(a) reports. Based solely on review of the copies
of such reports furnished to the Corporation or written representations, the
Corporation believes that all filing requirements applicable to the
Corporation's directors, executive officers and greater-than-10% stockholders
with regard to Section 16(a) were complied with.
EXECUTIVE OFFICERS OF THE COMPANY
The current executive officers of the Company, their respective ages,
positions held and tenure as officers are as follows:
Position and Business Experience Served as
Name and Age During the Past Five Years Officer Since
-------------------- ----------------------------------- -------------
Michael J. Walsh, 59 Chairman and Chief Executive Officer 1983
since November 1999. President and
Chief Executive Officer from April
1996 until November 1999. Executive
Vice President and Chief Financial
Officer from August 1992 to April
1996. Prior to 1992, Mr. Walsh was
a Vice President of the Corporation
from 1986 to August 1992 and was
General Counsel and Secretary from
1983 to 1996.
James D. Allen, 40 President since November 1999. 1993
Chief Operating Officer since May
1999. Executive Vice President and
Chief Financial Officer from July
1996 until November 1999. Vice
President from November 1993 to July
1996. Prior to 1993, Mr. Allen was a
Senior Manager in the accounting
firm of Price Waterhouse, LLP.
Leo C. Taylor, 38 Senior Vice President of Finance 1996
since December 1999. Vice President
of Taxation, Risk Management and
Human Resources from November 1996
until December 1999. Director of
Tax Administration from February
1994 to November 1996. Prior to
1994, Mr. Taylor was a manager in
the accounting firm of Price
Waterhouse, LLP.
Russell L. Price, 35 Vice President, General Counsel and 1996
Secretary since November 1996.
Corporate Counsel from March 1994 to
November 1996. Prior to 1994, Mr.
Price was an associate at the law
firm of Hughes & Luce, LLP.
Phillip Greene, 31 Vice President of Information 1999
Systems and Technologies since
November 1999. From September 1997
to November 1999, Mr. Greene was
Director of Information Services.
From September 1995 to September
1997, Mr. Greene was a Vice
President and Director of
Information Services for Old America
Stores. Prior to September 1995,
Mr. Greene was a Network Manager for
the Corporation.
None of the above officers are related by birth, adoption or marriage, and
there are no arrangements or understandings between any officer and any other
person pursuant to which that officer was elected. All officers are elected
annually by the Board of Directors to serve for the ensuing year.
EXECUTIVE COMPENSATION
The following table sets forth a summary of the compensation paid during
the past three fiscal years for services in all capacities to the Corporation
and its subsidiaries of those persons who at June 30, 2000 were the
Corporation's chief executive officer and the four other most highly paid
executive officers of the Corporation whose salary and bonus exceeded $100,000
for the year ended June 30, 2000.
<TABLE><S><C>
SUMMARY COMPENSATION TABLE
LONG-
TERM
COMPEN-
ANNUAL COMPENSATION SATION
----------------------------------- ----------
NUMBER
OF
NAME AND OTHER SECURITIES ALL
PRINCIPAL FISCAL ANNUAL UNDERLYING OTHER
POSITION YEAR SALARY BONUS(6) COMPENSATION(7) OPTIONS COMPENSATION(8)
-------- -------------------------------------------------------------------------
Michael J. Walsh (1) 2000 $ 272,499 $ 0 - 75,000 $ 14,248
President and Chief 1999 $ 235,000 $ 0 - 30,000 $ 14,170
Executive Officer 1998 $ 183,750 $ 78,400 - -0- $ 14,062
James D. Allen (2) 2000 $ 246,250 $ 0 - 75,000 $ 13,498
Executive Vice 1999 $ 205,000 $ 0 - 25,000 $ 12,190
President, 1998 $ 153,750 $ 68,800 - -0- $ 8,332
Chief Operating
Officer and Chief
Financial Officer
Leo C. Taylor (3) 1999 $ 120,167 $ 50,000 - 40,000 $ 6,833
Senior Vice President 1998 $ 107,500 $ 50,000 - 6,000 $ 7,375
of Finance 1998 $ 97,500 $ 40,000 - -0- $ 6,875
Russell L. Price (4) 2000 $ 116,231 $ 50,000 - 40,000 $ 8,000
Vice President, 1999 $ 107,500 $ 50,000 - 6,000 $ 7,375
Secretary and 1998 $ 97,500 $ 40,000 - -0- $ 6,820
General Counsel
Phillip Greene (5) 2000 $ 110,000 $ 25,000 - 40,000 $ 5,742
Vice President of 1999 $ 92,498 $ 40,000 - 5,000 $ 5,625
Information 1998 $ 70,830 $ 20,000 - -0- $ 3,187
Systems and
Technologies
</TABLE>
(1) Mr. Walsh was named Chairman November 10, 1999. Mr. Walsh has been Chief
Executive Officer since April 12, 1996.
(2) Mr. Allen was named President on November 10, 1999 and Chief Operating
Officer on April 20, 1999. Mr. Allen became an executive officer on
November 10, 1993.
(3) Mr. Taylor became an executive officer on November 13, 1996. Mr. Taylor
was named Senior Vice President of Finance on January 27, 2000.
(4) Mr. Price became an executive officer on November 13, 1996.
(5) Mr. Greene became an executive officer on November 10, 1999.
(6) Bonus figures reflect the bonus earned during the represented fiscal year,
although such bonus is paid during the next fiscal year. Although accrued,
bonuses for Messrs. Taylor, Price and Greene for fiscal year 2000 have not
been paid, have been deferred to a later date and may not be paid in cash.
(7) None of the named executive officers received Other Annual Compensation in
excess of the lesser of $50,000 or 10% of combined salary and bonus for
each fiscal year.
(8) The amounts listed in the "All Other Compensation" column consist of: a)
contributions to the TRSP made by the Corporation on behalf of Messrs.
Walsh, Allen, Taylor, Price and Greene in the amounts of $8,000, $8,000,
$7,667, $6,833, and $5,742 respectively; and b) contributions to the
Tandycrafts Benefit Restoration Plan made by the Corporation on behalf
of Mr. Walsh and Mr. Allen in the amounts of $6,248 and $5,498,
respectively.
REPORT OF COMPENSATION COMMITTEE
The Compensation Committee has developed and implemented a compensation
program that it believes will attract, motivate, reward and retain the
broad-based management talent required to achieve the Corporation's objectives
and to increase stockholder value. The Committee believes that corporate
performance and, in turn, stockholder value will be enhanced by a compensation
system which supports and reinforces the Corporation's key operating and
strategic goals while aligning the financial interests of the Corporation's
executive officers with those of the stockholders. For executive officers, the
Corporation relies on an annual incentive program and a stock option program to
align the executives' financial interests with those of stockholders.
The Corporation's compensation program for executive officers consists of a
base salary, an annual incentive bonus program and a stock option program. The
base salary for Messrs. Walsh and Allen are reviewed and set by the Compensation
Committee on an annual basis and are based upon respective responsibilities,
comparative data and performance. The base salary for the other executive
officers are set by the Corporation based upon similar criteria.
The annual incentive bonus program for executive officers is the principal
short-term incentive compensation program of the Corporation. The annual
incentive bonus program is based upon the extent to which the Corporation meets
or exceeds financial and strategic objectives, including the Corporation's
earnings per share. The annual incentive bonus program is approved in the
beginning of each fiscal year. The Compensation Committee approves the bonus
program for Messrs. Walsh and Allen and the Corporation approves that bonus
program for the other executive officers. Based on the bonus program and the
Corporation's performance for fiscal year 2000, Messrs. Walsh and Allen did not
receive a bonus for fiscal year 2000.
The Corporation's long-term incentive program is a stock option program
under which the Committee reviews and recommends proposed grants of long-term
incentive compensation in the form of stock options. The stock option component
of the compensation program was adopted by the Board of Directors in 1992 and
approved by the stockholders at the 1993 Annual Meeting. The Committee granted
stock options to the named executives in the Summary Compensation Table as set
forth in the Stock Option Grants In the Last Fiscal Year Table. The Committee
considers stock options to be an important means of ensuring that executive
officers maintain their incentive to increase the profitability of the
Corporation and the value of its Common Stock. Because the value of stock
options is entirely a function of the value of the Corporation's Common Stock,
the Committee believes that this component of the Corporation's compensation
policy aligns the interests of executive officers with those of the
Corporation's stockholders and will enhance the value of the Common Stock for
all stockholders.
The Committee determined the compensation of Michael J. Walsh, Chief
Executive Officer, for the fiscal year ended June 30, 2000 in a manner
consistent with the guidelines described above. Mr. Walsh abstains from any
vote involving his compensation.
Compensation Committee R.E. Cox, III
Sheldon Stein
Colon Washburn
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Cox, who serves on the Compensation Committee, is a beneficiary of certain
leases with Office Holdings, Inc. (f/k/a Sav-On, Inc.). Mr. Cox is an indirect
beneficiaries of two leases between Office Holdings, Inc. and Sav-On Development
Company (a Texas Partnership). Mr. Cox owns a 50% partnership interest in
Sav-On Development Company. The total rents paid on such leases for the period
of July 1, 1999 through June 30, 2000 were $137,641.87. Management believes
that rents paid under such leases were at least as favorable to the Corporation
as could have been obtained from unrelated parties. The Corporation began a
consulting arrangement with Bentonville Associates Ventures, LLC ("BAV") in
March 1999, prior to Mr. Washburn's appointment as a director of the
Corporation. Mr. Colon Washburn is a part-owner and principal in BAV. Pursuant
to the arrangement, BAV provides certain consulting services to Tandycrafts
including the development and training of integrated account teams, the
assessment of certain merchandising and integrated account team functions, the
development of strategic business plans and budgets for integrated account
teams, the development of project plans for merchandising and integrated account
team initiatives, the creation of performance benchmarks and scorecards for
integrated account teams, the development of category management plans, and the
analysis of product location, point of sale, cross-merchandising and strategic
partnership opportunities. The Corporation pays BAV a monthly retainer of
$4,167 for twenty-four months, a monthly consulting fee of $14,000 through
August 1999 and $3,500 through February 2000 and certain expenses incurred by
BAV, unless earlier terminated by the Corporation. The Corporation paid BAV
$190,157.41 in total fees and expenses in fiscal year 2000. Management believes
that the fees paid under such arrangement were at least as favorable to the
Corporation as could have been obtained from unrelated parties. The
Corporation terminated the consulting arrangement with BAV in approximately
April 2000.
TANDYCRAFTS RETIREMENT SAVINGS PLAN
Under the Tandycrafts, Inc. Retirement Savings Plan (the "TRSP"), an
eligible employee may elect to defer from 3% to 15% of his or her wages as a
salary reduction contribution. Employee contributions are invested in various
mutual funds and other investments selected by each employee. The Corporation
makes a matching contribution of up to 100% of the first 5% of the employee
contributions. The Corporation's contributions are invested in the Common Stock
of the Corporation. Generally, all contributions by the Corporation become 100%
vested and nonforfeitable upon the completion of five (5) years of credited
service. Participation in the Tandycrafts Employee Deferred Salary and
Investment Plan (the "Prior Plan"), which was discontinued in 1986, is counted
in determining years of service under the TRSP. Generally, upon retirement,
death or termination of employment, the value of the employee's account may be
paid out in a lump sum, in installments payable generally over a period of five
(5) years or may be deferred until retirement age in a combination of cash or
securities. Officers and directors who are employees participate in the TRSP on
the same terms as other employees.
TANDYCRAFTS, INC. BENEFIT RESTORATION PLAN
In 1993, the Board approved the Tandycrafts, Inc. Benefit Restoration Plan
(the "Benefit Restoration Plan"), which covers a select group of the
Corporation's management or highly compensated employees (the "Plan
Participants"). The Benefit Restoration Plan restores to certain Plan
Participants benefits lost under the TRSP because of certain limitations imposed
by the Internal Revenue Code. The contributions made by the Corporation under
the Benefit Restoration Plan during the fiscal year ended June 30, 2000 for Mr.
Walsh and Mr. Allen were $6,248 and $5,498, respectively, and for all present
plan participants as a group during the fiscal year ended June 30, 2000 were
$12,829. No contributions were made by the Corporation for Messrs. Taylor,
Price and Greene under the Benefit Restoration Plan.
STOCK OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information with respect to individual
grants under the Tandycrafts, Inc. 1992 Stock Option Plan (the "1992 Plan"),
during fiscal year ended June 30, 2000 to the Chief Executive Officer and the
other named executives in the Summary Compensation Table.
<TABLE><S><C>
NUMBER OF POTENTIAL REALIZABLE
SHARES VALUE AT ASSUMED
UNDERLYING PERCENT OF TOTAL OPTIONS ANNUAL RATES(3)
OPTIONS GRANTED TO EMPLOYEES EXERCISE OR EXPIRATION ------------------
NAME GRANTED(1) DURING THE YEAR BASE PRICE(2) DATE 5% 10%
------------ ---------- --------------- ------------- ---- ---- -----
Michael J. Walsh 75,000 16.1% 3.31 11-10-10 $156,123 $395,647
James D. Allen 75,000 16.1% 3.31 11-10-10 $156,123 $395,647
Leo C. Taylor 40,000 8.6% 3.31 11-10-10 $ 83,266 $211,012
Russell L. Price 40,000 8.6% 3.31 11-10-10 $ 83,266 $211,012
Phillip Greene 40,000 8.6% 3.31 11-10-10 $ 83,266 $211,012
</TABLE>
(1) Grants of options to purchase shares under the 1992 Plan generally vest at
a rate of either 33 1/3% per year for three years or 20% per year over five
years, and expire on the tenth anniversary of the date of grant. The 1992
Plan provides that, in the event of a change of control, death or total
disability, as defined therein, all options granted under the 1992 Plan
immediately vest and become exercisable.
(2) The Exercise or Base price is equal to the average of the high and low
trading price of the Common Stock on the New York Stock Exchange on the
date of grant.
(3) The 5% and 10% assumed annual rates of compounded stock price appreciation
are mandated by the rules of the Securities and Exchange Commission. The
actual value, if any, an executive officer may realize will depend on the
excess of the stock price over the exercise price on the date the option is
exercised. There is no assurance the value realized by an executive
officer will be at or near the assumed 5% or 10% levels.
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table provides information relating to the exercise of stock
options during the last fiscal year by the Chief Executive Officer and the other
named executive officers in the Summary Compensation Table, and the number and
value of exercisable and unexercisable stock options held by such officers at
June 30, 2000.
<TABLE><S><C>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT FISCAL YEAR-END FISCAL YEAR-END
ACQUIRED VALUE ------------------------------ --------------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE(1) EXERCISABLE(2) UNEXERCISABLE(2)
------ ----------- -------- ----------- ---------------- -------------- ----------------
Michael J. Walsh -0- -0- 220,000 60,000 $0 $0
James D. Allen -0- -0- 191,750 58,250 $0 $0
Leo C. Taylor -0- -0- 35,600 30,400 $0 $0
Russell L. Price -0- -0- 37,600 30,400 $0 $0
Phillip Greene -0- -0- 18,200 29,300 $0 $0
</TABLE>
(1) All options were granted on one of the following dates: April 20, 1994,
July 9, 1996, April 14, 1997, and August 11, 1998, and November 10, 1999
and vest ratably over either a five-year period or a three-year period from
the date of grant.
(2) Computed as the difference between the option exercise price and $2.8125
(the closing price of the Common Stock at fiscal year-end) as reported on
the New York Stock Exchange.
TRANSACTIONS WITH MANAGEMENT AND DIRECTORS
Mr. Cox is an indirect beneficiary of two leases between Office Holdings,
Inc. (f/k/a Sav-On, Inc.) and Sav-On Development Company (a Texas Partnership).
Mr. Cox owns a 50% partnership interest in Sav-On Development Company. The
total rents paid on such leases for the period of July 1, 1999 through June 30,
2000 were $137,641.87. Management believes that rents paid under such leases
were at least as favorable to the Corporation as could have been obtained from
unrelated parties. The Corporation began a consulting arrangement with
Bentonville Associates Ventures, LLC ("BAV") in March 1999, prior to Mr.
Washburn's appointment as a director of the Corporation. Mr. Colon Washburn is
a part-owner and principal in BAV. Pursuant to the arrangement, BAV provides
certain consulting services to Tandycrafts including the development and
training of integrated account teams, the assessment of certain merchandising
and integrated account team functions, the development of strategic business
plans and budgets for integrated account teams, the development of project
plans for merchandising and integrated account team initiatives, the creation of
performance benchmarks and scorecards for integrated account teams, the
development of category management plans, and the analysis of product location,
point of sale, cross-merchandising and strategic partnership opportunities.
The Corporation pays BAV a monthly retainer of $4,167 for twenty-four months, a
monthly consulting fee of $14,000 through August 1999 and $3,500 through
February 2000 and certain expenses incurred by BAV, unless earlier terminated by
the Corporation. The Corporation paid BAV $190,157.41 in fiscal year 2000.
Management believes that the fees paid under this arrangement were at least as
favorable to the Corporation as could have been obtained from unrelated parties.
The Corporation terminated this consulting arrangement with BAV in
approximately April 2000.
TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS
The Corporation has entered into severance agreements ("Severance
Agreements") and special termination agreements ("Change in Control Agreements")
with Messrs. Price, Taylor and Walsh and into a Change of Control Agreement with
Mr. Allen and Mr. Greene, all effective as of July 1, 1999. The Severance
Agreements are intended to provide non-competition protection to the Corporation
for a one-year period after the Corporation terminates the executive's
employment. The Severance Agreements prohibit the executive from soliciting
employees of the Corporation for employment and from soliciting customers or
suppliers of the Corporation from ceasing to do business with the Corporation or
decreasing their business with the Corporation for a period of one year after
the Corporation terminates the executive's employment. In exchange, in the
event that the executive's employment was terminated for reasons other than
death, disability or "cause", as defined in the Severance Agreements, the
executive is entitled to certain severance benefits, provided that the executive
signs a release of employment related claims against the Corporation. The
severance benefits are continuation of health care benefits for one year and a
payment in the amount of the executive's annual salary and bonus, based on the
average salary and bonus for the preceding two years. The Severance Agreements
have initial terms of two years. The terms of the Severance Agreements are
automatically extended for one-year terms but the Corporation may terminate the
Severance Agreements by providing written notice of non-renewal to the executive
not later than 90 days prior to the expiration of the current term. The Change
in Control Agreements provide for certain severance benefits if the Corporation
terminates (other than as a result of death, disability or "cause") the
employment of the executive within two years after a "Change in Control", as
defined in the Change in Control Agreements, or in certain other instances in
connection with a Change of Control. The severance benefits include
continuation of certain fringe benefits (including health care, life and
disability insurance) for up to two years and a payment in the amount of 150% of
the highest annual salary of the executive immediately prior to or after a
Change of Control and of the bonus in the fiscal year preceding the Change of
Control or in the fiscal year before such executive is terminated, whichever is
larger. The Change of Control Agreements have a term of two years (or, if there
is a Change of Control, two years after such Change of Control). The Change of
Control Agreements terminate upon the executive's death or voluntary retirement.
The term of the Change of Control Agreements is automatically extended for an
additional year upon each anniversary date of the Agreements unless the
Corporation provides written notice of non-renewal not later than 90 days prior
to such anniversary date. In addition, the Corporation will pay the legal fees
of the executive if the Corporation breaches the Change of Control Agreement or
declares them void or unenforceable.
INDEMNIFICATION AGREEMENTS
The Corporation has entered into certain indemnification agreements
("Indemnification Agreements") with Messrs. Walsh, Allen, Taylor, Price and
Greene, as of March 7, 2000 whereby the Corporation entered into formal
agreements which implement the Corporation's By-Laws on indemnification and in
which the Corporation agrees to indemnify each such officer against claims
stemming from such officer's service with the Corporation and agrees to provide
extended insurance coverage for a period of seven years after the termination of
such officer's service with the Corporation.
STOCK PRICE PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return over a
five-year period, assuming $100 invested at June 30, 1995 in each of (i)
Tandycrafts, Inc. Common Stock, (ii) the Russell 2000 Index, an index consisting
of primarily small capitalization stocks, and (iii) a peer group consisting of
40 similarly classified retail companies based on standardized SIC codes. The
Corporation has switched from the NYSE Market Value Index to the Russell 2000
Index as the Corporation believes that the Russell 2000 Index is a more
appropriate index and is reflective of the Corporation's peer group of small
capitalization stocks. Total stockholder return is based on the increase in the
price of the Common Stock with dividends reinvested. Total return of the SIC
Code Index is weighted according to market capitalization of each company. The
performance shown in the graph is not necessarily indicative of future
performance. The graph will not be deemed to be incorporated by reference in
any filing by the Corporation under the Securities Act or the Exchange Act.
FIVE YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN
1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ----
Tandycrafts, Inc. $100 $ 82 $ 61 $ 60 $ 47 $ 36
SIC Code Index $100 $108 $116 $103 $ 84 $ 75
Russell 2000 Index $100 $124 $144 $168 $169 $191
INDEPENDENT ACCOUNTANTS
The firm of Pricewaterhouse Coopers, LLP, which served as independent
accountants for the fiscal year ended June 30, 2000, has been selected by the
Board of Directors to continue as the Corporation's independent accountants for
fiscal year 2001. Representatives are expected to be present at the meeting
with an opportunity to make a statement and to respond to appropriate questions.
STOCKHOLDER PROPOSALS
A proper proposal submitted by a stockholder in accordance with applicable
rules and regulations for presentation at the Corporation's 2001 Annual Meeting
of Stockholders that is received at the Corporation's principal executive office
by June ___, 2001 will be included in the Corporation's proxy statement and form
of proxy for that meeting.
Stockholders wanting to present proper proposals for action at the 2001
Annual Meeting must give written notice by certified mail, in accordance with
Article II, Section 8 of the Corporation's Bylaws, to the Secretary of the
Corporation at the address set forth in the address set forth in the cover page
of this Proxy Statement (a) not less than 120 days nor more than 150 days before
the first anniversary date of the Corporation's proxy statement in connection
with the previous annual meeting of stockholders or (b) with respect to a
special meeting of stockholders, not later than the seventh day following the
day on which notice of a special meeting was first mailed or otherwise given to
stockholders. In accordance with the Bylaws of the Corporation, any such notice
shall include the name and address of the stockholder, the class and number of
shares held by the stockholder, a representation that the stockholder intends to
appear at the meeting in person or by proxy to submit the proposal, a disclosure
of any material interest that the stockholder has in the proposal, and a brief
description of the proposal. The Corporation may in its sole discretion refuse
to allow any proposal to be presented which the Corporation would not be
required to include in a proxy statement pursuant to any rule promulgated by the
Securities and Exchange Commission. The holders of the proxies solicited by the
Corporation will have discretionary authority to vote on any matter which was
not submitted to the Corporation within the time frame specified in Article II,
Section 8 of the Corporation's Bylaws referenced above.
OTHER BUSINESS
As of the date of this Proxy Statement, the Board of Directors is not aware
of any other matter to be presented for action other than the matters set forth
herein. Should any other matter requiring a vote of stockholders arise, the
proxies in the enclosed form confer upon the person or persons entitled to vote
the shares represented by such proxies discretionary authority to vote the same
in accordance with their best judgment in the interest of the Corporation.
SOLICITATION OF PROXIES
Solicitation of proxies may be made by directors, officers and other
employees of the Corporation listed in Appendix A of this Proxy Statement, by
means of personal interview, telephone, telegraph, telefax or electronic
communications. No additional compensation will be paid for any such services.
Costs of solicitation will be borne by the Corporation. Upon request, the
Corporation will reimburse the reasonable fees and expenses of banks, brokerage
houses or other nominees or fiduciaries for forwarding proxy materials to, and
obtaining authority to execute proxies from, beneficial owners for whose
accounts they hold shares of Common Stock. The Corporation has retained
Corporate Investors Communications, Inc. to assist in the solicitation of
proxies. Pursuant to the Corporation's agreement, Corporate Investors
Communications, Inc. will provide various proxy advisory and solicitation
services for the Corporation at a fee estimated at approximately $45,000, plus
reasonable out-of-pocket expenses and indemnification against certain
liabilities. It is expected that Corporate Investors Communications, Inc. will
use approximately 25-30 persons in such solicitation. Certain information
concerning the directors, officers and other employees of the Corporation who
may solicit proxies is outlined in Appendix A to the Proxy Statement.
Certain information concerning the Common Stock held by the persons listed
in Appendix A and certain transactions between any of them and the Corporation
are set forth in this Proxy Statement. Although no precise estimate can be made
at this time, the Corporation anticipates that the aggregate amount to be spent
by the Corporation in connection with the solicitation of proxies by the
Corporation will be approximately $65,000, of which approximately $15,000 has
been incurred to date. This amount includes fees payable to Corporate Investors
Communications, Inc. but excludes (i) the salaries and expenses of officers,
directors and employees of the Corporation; and (ii) the normal expenses of an
uncontested election. The aggregate amount to be spent will vary depending on,
among other things, any developments that may occur in the proxy contest
described below.
Please complete, date and sign the enclosed WHITE proxy card and return it
promptly in the envelope provided. If your shares are held in "street name,"
only your bank or broker can vote your shares and only upon your specific
instructions. Please contact the person responsible for your account and
instruct him or her to vote the WHITE proxy card. The Board of Directors urges
you NOT TO SIGN any GOLD proxy card sent to you by the Lichtenstein Group. See
"Counter Solicitation" above. If you have already done so, you may revoke your
previously signed GOLD proxy by delivering a written notice of revocation or a
later dated WHITE proxy card in the enclosed envelope.
FINANCIAL STATEMENTS
A copy of the 2000 Annual Report of the Corporation containing the audited
financial statements accompanies this Proxy Statement. The Annual Report does
not constitute a part of the proxy solicitation material.
The Company will provide, without charge, to each person to whom a copy of
this proxy statement is delivered, upon the written or oral request of such
person and by first class mail or other equally prompt means within one business
day of receipt of such request, a copy of the annual report on Form 10-K of the
Corporation. Requests should be directed to Shareholder Services, c/o
Tandycrafts, Inc., 1400 Everman Parkway, Fort Worth, Texas 76140.
By Order of the Board of Directors,
RUSSELL L. PRICE
Vice President, General Counsel and Secretary
TANDYCRAFTS, INC.
Fort Worth, Texas
October ___, 2000
APPENDIX A
INFORMATION CONCERNING DIRECTORS AND CERTAIN OFFICERS AND EMPLOYEES OF THE
CORPORATION WHO MAY SOLICIT PROXIES
Under the applicable regulations of the SEC, each of the Directors of the
Corporation is deemed to be a "Participant" in the Corporation's solicitation of
proxies. The following table sets forth (a) the name, business address and
principal occupation of the Directors and nominees as Director of the
Corporation and any officers and employees of the Corporation who may assist in
soliciting proxies from stockholders of the Corporation ("Participants") and (b)
the dates, types, and amounts of each Participants' purchases and sales of the
Corporation's Common Stock within the past two years.
Except as described in the Proxy Statement, shares of the Common Stock of
the Corporation owned of record by each Participant are also owned beneficially
by such Participant. The total number of shares of Common Stock of the
Corporation owned by each Participant is set forth in this Proxy Statement.
<TABLE><S><C>
NAME DATE OF TRANSACTION TYPE OF TRANSACTION(1) AMOUNT OF SHARES
------- ------------------ ---------------------- ----------------
R. E. Cox, III 5/24/99 A 4,000
R. E. Cox Real Estate 5/24/99 A 10,000
6300 Ridglea Pl #1014
Fort Worth, TX 76116
President
Jack Kahl
Manco, Inc.
32150 Just Imagine Dr.
Avon, OH 44011
Chairman and CEO
Sheldon Stein 3/1/99 A 5,000
Bear Stearns & Co. 3/1/99 A 6,000
300 Crescent Ct.,
Su 200
Dallas, TX 75201
Senior Managing Director
Michael J. Walsh 2/18/99 A 64,000
Tandycrafts, Inc.
1400 Everman Parkway
Fort Worth, TX 76140
Chairman and CEO
Colon Washburn
Fresh America Corp
One Lincoln Centre
6600 LBJ Fwy, Suite 180
Dallas, TX 75240
CEO
James D. Allen 2/23/99 A 3,000
Tandycrafts, Inc.
1400 Everman Parkway
Fort Worth, TX 76140
President and COO
Leo C. Taylor 5/3/99 A 1,825
Tandycrafts, Inc.
1400 Everman Parkway
Fort Worth, TX 76140
Senior VP of Finance
Russell L. Price
Tandycrafts, Inc.
1400 Everman Parkway
Fort Worth, TX 76140
VP, General Counsel
and Secretary
Phillip Greene
Tandycrafts, Inc.
1400 Everman Parkway
Fort Worth, TX 76140
VP of Information
Systems and Technologies
Nathan New
Tandycrafts, Inc.
1400 Everman Parkway
Fort Worth, TX 76140
Controller
</TABLE>
(1) "A" indicates an acquisition of the Corporation's stock. "D" indicates a
disposal of the Corporations stock.
Except as described in this Proxy Statement, none of the Participants nor
any of their respective affiliates or associates (together, the "Participant
Affiliates"), (i) directly or indirectly beneficially owns any securities of the
Corporation or of any subsidiary of the Corporation or (ii) has had any
relationship with the Corporation in any capacity other than as a stockholder,
employee, officer or directors. Furthermore, except as described in this Proxy
Statement, no Participant or Participant Affiliate is either a party to any
transaction or series of transactions since January 1, 1999, or has knowledge of
any currently proposed transaction or series of transactions, (i) to which the
Corporation or any of its subsidiaries was or is to be a party, (ii) in which
the amount involved exceeds $60,000, and (iii) in which any director, executive
officer, or nominee for election as director of the Corporation, beneficial
owner of five percent or more of any class of the Corporation's voting
securities, or a family member of any of the foregoing, had or will have a
direct or indirect material interest.
Except as described in this Proxy Statement, no Participant or Participant
Affiliates has entered into any agreement or understanding with any person
respecting (i) future employment by the Corporation or its affiliates or (ii)
any transactions to which the Corporation or any of its affiliates will or may
be a party. Except as described in this Proxy Statement, there are no
contracts, arrangements or understandings by any Participant or any Participant
Affiliates within the past year with any person with respect to any capital
stock of the Corporation.
Except as described in this Proxy Statement, no Participant has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors).
TANDYCRAFTS, INC.
ANNUAL MEETING - ___________, 2000
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned, having received the Annual Report, notice of Annual Meeting and
Proxy Statement for said meeting, hereby appoints COLON WASHBURN and JACK KAHL,
and either of them, as Proxies with full power of substitution and
resubstitution and hereby authorize them to represent and to vote, as designed
hereon, all shares of common stock of Tandycrafts, Inc. which the undersigned
would be entitled to vote at the Annual Meeting of Stockholders to be held on
____________, 2000, at 9:30 a.m., C.S.T., or at any adjournments or
postponements thereof, with all the powers the undersigned would possess if then
personally present.
THE BOARD OF DIRECTORS OF TANDYCRAFTS, INC. RECOMMENDS A VOTE FOR THE ELECTION
OF THE NOMINEES NAMED BELOW.
This proxy, when properly executed, will be voted in the manner directed herein
by the above signed stockholder. If no direction is made, this proxy will be
FOR Proposal Item 1. The proxies will use their discretion with respect to any
matter referred to in Item 2.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR EACH OF THE NOMINEES
LISTED BELOW.
1. Election of Directors (Check only one box) FOR [ ] WITHHELD [ ]
Nominees: R. Earl Cox, III, Jack Kahl, Sheldon Stein, Michael J. Walsh,
Colon Washburn
2. In their discretion, upon such other business as may properly come before
the meeting.
For all nominees (except as shareholder may indicate below):
The undersigned hereby revokes any other proxy or proxies heretofore given to
vote or act with respect to the shares of common stock of the Company held by
the undersigned, and hereby ratifies and confirms all action the herein named
attorneys and proxies, their substitutes or any of them may lawfully take by
virtue hereof.
NOTE: if you desire to withhold authority to vote for one or more, but not all
of the nominees above, indicate your desire to withhold such authority by
drawing a line through the name(s) of such nominee(s).
IMPORTANT: This proxy must be dated and signed exactly as shown above. When
signing as attorney, administrator, trustee or guardian, please give full title
as such. When shares are held by joint tenants, both must sign. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized
person. Please mark, sign, date and return this proxy promptly using the
enclosed envelope.
-------------------------------------
SIGNATURE (S) DATE
IMPORTANT: PLEASE VOTE AND SIGN YOUR
PROXY AND RETURN IT IN THE ENVELOPE PROVIDED
