SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED):
JANUARY 5, 2001 (DECEMBER 31, 2000)
TANDYCRAFTS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 1-7258 75-1475224
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(STATE OR OTHER JURISDICTION (COMMISSION FILE NUMBER) (IRS EMPLOYER
OF INCORPORATION) IDENTIFICATION NO.)
1400 EVERMAN PARKWAY
FORTH WORTH, TEXAS 76140
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(817) 551-9600
ITEM 5. OTHER EVENTS.
On December 31, 2000, Tandycrafts, Inc. (the "Company") issued warrants to
acquire shares of the Company's common stock to Wells Fargo Bank Texas, National
Association and to Bank One, Texas, National Association. Each warrant entitles
the holder to purchase up to 254,052 shares of common stock of the Company at
the purchase price per share of $1.18, subject to adjustment upon certain
events. The warrants expire on December 31, 2005. The warrants were issued in
connection with the Company's Amended and Restated Revolving Credit Agreement,
dated October 13, 2000, with Wells Fargo Bank Texas, National Association and
Bank One, Texas, National Association. Copies of each Warrant Agreement and
Warrant Certificate are filed herewith as Exhibits 4.1 and 4.2, respectively.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits
4.1 Warrant Agreement and Warrant Certificate issued to Wells Fargo Bank
Texas, National Association dated December 31, 2000.
4.2 Warrant Agreement and Warrant Certificate issued to Bank One, Texas,
National Association dated December 31, 2000.
SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: January 5, 2001 TANDYCRAFTS, INC.
By: /s/ Michael J. Walsh
------------------------------
Michael J. Walsh
Chairman and Chief Executive
Officer
INDEX TO EXHIBITS
-----------------
Exhibit
Number Description
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4.1 Warrant Agreement and Warrant Certificate issued to Wells Fargo Bank
Texas, National Association dated December 31, 2000.
4.2 Warrant Agreement and Warrant Certificate issued to Bank One, Texas,
National Association dated December 31, 2000.
EXHIBIT 4.1
12/31/00
NO. WT 01 254,052 WARRANTS
VOID AFTER DECEMBER 31, 2005
TANDYCRAFTS, INC.
WARRANT AGREEMENT AND
WARRANT CERTIFICATE
December 31, 2000
I. A. THIS CERTIFIES THAT for value received WELLS FARGO BANK TEXAS,
NATIONAL ASSOCIATION or registered assigns, is the owner of Two Hundred Fifty-
four Thousand Fifty-two (254,052) Warrants (together with an equal number of
Warrants being issued on the date hereof to Bank One, Texas, National
Association, the "Warrants") (which number is equal to two percent (2%) of the
number of shares of common stock ("Common Stock") of the Company issued and
outstanding as of the date hereof) of TANDYCRAFTS, INC. (the "Company") set
forth above, each of which entitles the owner hereof to purchase, subject to the
restrictions referenced herein, at any time prior to the close of business on
DECEMBER 31, 2005 (the "Expiration Date"), at the principal office of the
Company, one (1) share of Common Stock of Tandycrafts, Inc. (the "Shares"), at
the purchase price of ONE DOLLAR AND EIGHTEEN CENTS ($1.18 ) per whole share
(the "Purchase Price") (which amount is equal to the average per share closing
price of the Company's Common Stock for the five (5) trading days immediately
preceding the date hereof), upon presentation and surrender of this Warrant
Certificate with the Form of Election to Purchase duly executed. The number of
Warrants evidenced by this Warrant Certificate (and the number of Shares which
may be purchased upon exercise thereof) set forth above is the number as of the
date of this Certificate, based on the shares of Common Stock of the Company as
constituted at such date.
B. Company shall have the obligation to register the Shares into
which the Warrants are exercisable in accordance with Section IV hereof. In
addition, in accordance with such Section, in the event the Company gives notice
of its plan to effect a public registration of its Common Stock, the holder of
the above Warrants will be given the opportunity to include any portion or all
of the Shares in such registration.
______________________
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT ONLY AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE. WITHOUT SUCH REGISTRATION,
SUCH SECURITIES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED AT ANY TIME WHATSOEVER,
EXCEPT UPON DELIVERY TO THE CORPORATION OF AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE CORPORATION THAT REGISTRATION IS NOT REQUIRED FOR SUCH
TRANSFER.
II. The Purchase Price, the number of Shares which may be purchased upon
the exercise of the Warrants evidenced by this Certificate, and the number of
Warrants outstanding are subject to modification and adjustment from time to
time upon the occurrence of the events enumerated below:
A. If and whenever the Company shall issue or sell any shares of its
Common Stock without consideration or for a consideration per share less than
the Purchase Price in effect immediately prior to the time of such issue or
sale, then, forthwith upon such issue or sale, the Purchase Price shall be
reduced to a price (calculated to the nearest one hundredth of a cent)
determined by dividing (1) an amount equal to the sum of (a) the number of
shares of Common Stock outstanding immediately prior to such issue or sale
multiplied by the then existing Purchase Price, and (b) the consideration, if
any, received by the Company upon such issue or sale, by (2) the total number of
shares of Common Stock outstanding immediately after such issue or sale.
B. For purposes of Subsection A. above, the following clauses (1) to
(9), inclusive, shall also be applicable:
(1) In case at any time the Company shall grant (whether
directly or by assumption in a merger or otherwise) any rights to subscribe for
or to purchase, or any options for the purchase of, Common Stock or any stock or
securities convertible into or exchangeable for Common Stock (such convertible
or exchangeable stock or securities being herein called Convertible Securities)
whether or not such rights or options or the right to convert or exchange any
such Convertible Securities are immediately exercisable, and the price per share
for which Common Stock is issuable upon the exercise of such rights or options
or upon conversion or exchange of such Convertible Securities (determined by
dividing (a) the total amount, if any, received or receivable by the Company as
consideration for the granting of such rights or options, plus the minimum
aggregate amount of additional consideration payable to the Company upon the
exercise of such rights or options, plus, in the case of such rights or options
which relate to Convertible Securities, the minimum aggregate amount of
additional consideration, if any, payable upon the issue or sale of such
Convertible Securities and upon the conversion or exchange thereof, by (b) the
total maximum number of shares of Common Stock issuable upon the exercise of
such rights or options or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of such rights or options)
shall be less than the Purchase Price in effect immediately prior to the time of
the granting of such rights or options, then the total maximum number of shares
of Common Stock issuable upon the exercise of such rights or options or upon
conversion or exchange of the total maximum amount of such Convertible
Securities issuable upon the exercise of such rights or options shall (as of the
date of granting of such rights or options) be deemed to be outstanding and to
have been issued for such price per share. Except as provided in clause (3)
below, no further adjustments of the Purchase Price shall be made upon the
actual issue of such Common Stock or of such Convertible Securities upon
exercise of such rights or options or upon the actual issue of such Common Stock
or of such Convertible Securities upon exercise of such rights or options or
upon the issue of such Common Stock upon conversion or exchange of such
Convertible Securities.
(2) In case the Company shall issue (whether directly or by
assumption in a merger or otherwise) or sell any Convertible Securities, whether
or not the rights to exchange or convert thereunder are immediately exercisable,
and the price per share for which Common Stock is issuable upon such conversion
or exchange (determined by dividing (a) the total amount received or receivable
by the Company as consideration for the issue or sale of such Convertible
Securities, plus the minimum aggregate amount of additional consideration, if
any, payable to the corporation upon the conversion or exchange thereof, by (b)
the total maximum number of shares of Common Stock issuable upon the conversion
or exchange of all such Convertible Securities) shall be less than the Purchase
Price in effect immediately prior to the time of such issue or sale, then the
total maximum number of shares of Common Stock issuable upon conversion or
exchange of all such Convertible Securities shall (as of the date of the issue
or sale of such Convertible Securities) be deemed to be outstanding and to have
been issued for such price per share, provided that (i) except as provided in
clause (3) below, no further adjustments of the Purchase Price shall be made
upon the actual issue of such Common Stock upon conversion or exchange of such
Convertible Securities, and (ii) if any such issue or sale of such Convertible
Securities is made upon exercise of any rights to subscribe for or to purchase
or any option to purchase any such Convertible Securities for which adjustments
of the Purchase Price have been or are to be made pursuant to other provisions
of this Subsection B., no further adjustment of the Purchase Price shall be made
by reason of such issue or sale.
(3) Upon the happening of any of the following events, namely,
if the purchase price provided in any rights or options referred to in clause
(1) of this Subsection B., the additional consideration, if any, payable upon
the conversion or exchange of Convertible Securities referred to in clause (1)
or clause (2) of this Subsection B., or the rate at which any Convertible
Securities referred to in clause (1) or clause (2) of this Subsection (B) are
convertible into or exchangeable for Common Stock shall change (other than under
or by reason of provisions designed to protect against dilution), the Purchase
Price in effect at the time of such event shall forthwith be readjusted to the
Purchase Price which would have been in effect at such time had such rights,
options or Convertible Securities still outstanding provided for such changed
purchase price, additional consideration or conversion rate, as the case may be,
at the time initially granted, issued or sold; and on the expiration of any such
option or right or the termination of any such right to convert or exchange such
Convertible Securities, the Purchase Price then in effect hereunder shall
forthwith be increased to the Purchase Price which would have been in effect at
the time of such expiration or termination had such right, option or Convertible
Security, to the extent outstanding immediately prior to such expiration or
termination, never been issued, and the Common Stock issuable thereunder shall
no longer be deemed to be outstanding. If the purchase price provided for in any
such right or option referred to in clause (1) of this Subsection B. or the rate
at which any Convertible Securities referred to in clause (1) or clause (2) of
this Subsection B. are convertible into or exchangeable into or exchangeable for
Common Stock, shall decrease at any time under or by reason of provisions with
respect thereto designed to protect against dilution, then in case of the
delivery of Common Stock upon the exercise of any such right or option or upon
conversion or exchange of any such Convertible Security, the Purchase Price then
in effect hereunder shall forthwith be adjusted to such respective amount as
would have obtained had such rights, option or Convertible Security never been
issued as to such Common Stock and had adjustments been made upon the issuance
of the shares of Common Stock delivered as aforesaid, but only if as a result of
such adjustment the Purchase Price then in effect hereunder is thereby
decreased.
(4) In case the Company shall declare a dividend or make any
other distributions upon any stock of the Company payable in Common Stock or
Convertible Securities, any Common Stock or Convertible Securities, as the case
may be, issuable in payment of such dividend or distribution shall be deemed to
have been issued or sold without consideration.
(5) In case any shares of Common Stock or Convertible Securities
or any rights or options to purchase any such Common Stock or Convertible
Securities shall be issued or sold for cash, the consideration received therefor
shall be deemed to be the amount received by the Company therefor, without
deduction therefrom of any expenses incurred or any underwriting commissions or
concessions paid or allowed by the Company in connection therewith. In case any
shares of Common Stock or Convertible Securities or any rights or options to
purchase any such Common Stock or Convertible Securities shall be issued or sold
for a consideration other than cash, the amount of the consideration other than
cash received by the Company shall be deemed to be the fair value of such
consideration as determined in good faith by the Board of Directors of the
Company, without deduction of any expenses incurred or any underwriting
commissions or concessions paid or allowed by the Company in connection
therewith. In case any shares of Common Stock or Convertible Securities or any
rights or options to purchase such Common Stock or Convertible Securities shall
be issued in connection with any merger or consolidation in which the Company is
the surviving corporation, the amount of consideration therefor shall be deemed
to be the fair value as determined by the Board of Directors of the Company of
such portion of the assets and business of the non-surviving corporation or
corporations as such Board shall determine to be attributable to such Common
Stock or Convertible Securities, rights or options, as the case may be.
(6) In case the Company shall take a record of the holders of
its Common Stock for the purpose of entitling them (a) to receive a dividend or
other distribution payable in Common Stock or in Convertible Securities, or
(b) to subscribe for or purchase Common Stock or Convertible Securities, then
such record date shall be deemed to be the date of the issue or sale of the
shares of Common Stock deemed to have been issued upon the declaration of such
dividend or the making of such other distribution or the date of the granting of
such right of subscription or purchase, as the case may be. The Company shall
give the holders of Warrants ten (10) days prior written notice of each such
record date.
(7) The number of shares of Common Stock outstanding at any
given time shall not include shares owned or held or for the account of the
Company, and the disposition of any such shares shall be considered an issue or
sale of Common Stock for the purposes of Subsection B.
(8) Anything in clause (5) of this Subsection B. to the contrary
notwithstanding, in the case of an acquisition where all or part of the purchase
price is payable in Common Stock or Convertible Securities but is stated as a
dollar amount, where the Company upon making the acquisition pays only part of a
maximum dollar purchase price which is payable in Common Stock or Convertible
Securities and where the balance of such purchase price is deferred or is
contingently payable under a formula related to earnings over a period of time,
(a) the consideration received for any Common Stock or Convertible Securities
delivered at the time of the acquisition shall be deemed to be such part of the
total consideration as the portion of the dollar purchase price then paid in
Common Stock or Convertible Securities bears to the total maximum dollar
purchase price then paid in Common Stock or Convertible Securities, and (b) in
connection with each issuance of additional Common Stock or Convertible
Securities pursuant to the terms of the agreement relating to such acquisition,
the consideration received shall be deemed to be such part of the total
consideration as the portion of the dollar purchase price then and theretofore
paid in Common Stock or Convertible Securities bears to the total maximum dollar
purchase price payable in Common Stock or Convertible Securities multiplied by a
fraction, the numerator of which shall be the number of shares (or in the case
of Convertible Securities other than stock, the aggregate principal amount) then
issued and the denominator of which shall be the total number of shares (or in
the case of Convertible Securities other than stock, the aggregate principal
amount) then and theretofore issued under such acquisition agreement. If it is
determined that any part of the deferred or contingent portion of such purchase
price shall not be payable, the Purchase Price then in effect hereunder shall
forthwith be readjusted to such Purchase Price as would have obtained (i) had
the adjustment made in connection with such acquisition been made upon the basis
of the issuance of only the number of shares of Common Stock or Convertible
Securities actually issued in connection with such acquisition, and (ii) had
adjustments been made on the basis of the Purchase Price as adjusted in clause
(1) for all issued or sale (as prices which would have affected such adjusted
Purchase Price) of Common Stock or rights, options or Convertible Securities
made after such acquisition. In the event that only a part of the purchase price
for an acquisition is paid in Common Stock or Convertible Securities in the
manner referred to in this clause (8), the term "total consideration" as used in
this clause (8) shall mean that part of the aggregate consideration as is fairly
allocable to the purchase price paid in Common Stock or Convertible Securities
in the manner referred to in this clause (8), as determined by the Board of
Directors of the Company.
(9) Notwithstanding anything to the contrary herein, the
adjustments contemplated by this Section II. Shall not apply to the issuance of
Common Stock pursuant to (i) the 1992 Tandycrafts, Inc. Employee and Director
Stock Option Plans, as amended; (ii) the Tandycrafts, Inc. Retirement Savings
Plan, as amended; or (iii) the TRSP Benefit Restoration Plan and fiscal year-end
bonuses paid in stock for officers of the Company and its subsidiaries;
provided, however, that the exception in (iii) shall only apply with respect to
the aggregate issuance of up to 400,000 shares of Common Stock.
C. In case the Company shall declare a dividend upon the Common
Stock payable otherwise than out of consolidated earnings or consolidated earned
surplus, determined in accordance with generally accepted accounting principles,
including the making of appropriate deductions for minority interest, if any, in
subsidiary corporations, and otherwise than in Common Stock or Convertible
Securities, the Company shall give the holders of each Warrant thirty (30) days
prior written notice of the date as of which the holders of Common Stock of
record entitled to such special dividend shall be determined. For the purposes
of the foregoing a dividend other than in cash shall be considered payable out
of earnings or surplus (other than revaluation or paid-in surplus) only to the
extent that such earnings or surplus are charged an amount equal to the fair
value of such dividend as determined by the Board of Directors of the Company.
D. (1) In case the Company shall at any time subdivide its
outstanding shares of Common Stock into a greater number of shares, the Purchase
Price in effect immediately prior to such subdivision shall be proportionately
reduced, and, conversely (2) in case the outstanding shares of Common Stock of
the Company shall be combined into a smaller number of shares, the Purchase
Price in effect immediately prior to such combination shall be proportionately
increased.
E. In case of any capital reorganization or any reclassification of
the Common Stock of the Company, the consolidation of Company with or the merger
of Company with or into any other corporation, or the sale of the properties and
assets of Company as, or substantially as, an entirety to any other corporation,
then in each case, lawful provision shall be made as a part of the terms of such
transaction so that the holders of Warrants shall thereafter have the right to
purchase the number and kind of shares of stock or other securities or property
receivable upon such reorganization, reclassification, consolidation, merger or
sale or by a holder of such number of shares of Common Stock as the holder of a
Warrant would have had the right to acquire upon the exercise of such Warrant
immediately prior to such reorganization, reclassification, consolidation,
merger or sale, at the Purchase Price then in effect hereunder, and each Warrant
will thereafter represent the right to receive, upon payment of the Purchase
Price then in effect hereunder, such shares of stock or other securities or
property as are so receivable. The subdivision or combination of shares of
Common Stock at any time outstanding into a greater or lesser number of shares
of Common Stock shall not be deemed to be a reclassification of the Common Stock
of Company for the purposes of this Subsection "E."
F. (1) Except as provided in Subsection G, to follow, upon each
adjustment of the Purchase Price as a result of (a) an issuance or sale of
Common Stock below the Purchase Price as provided in Subsections A and B above,
including (without limitation) a dividend or distribution in shares of capital
stock, or (b) a subdivision of outstanding shares of Common Stock as provided in
Subsection D.(1) hereof, the number of shares of Common Stock purchasable upon
exercise of any Warrant Certificate shall be increased to the number of shares
of Common Stock (calculated to the nearest hundredth) obtained by multiplying
(i) the number of shares of Common Stock purchasable immediately prior to such
adjustment upon exercise of Warrants (evidenced by the Warrant Certificate held
by such holder) by (ii) the Purchase Price in effect immediately prior to such
adjustment, and dividing the product so obtained by the Purchase Price in effect
after such adjustment.
(2) Except as provided in Subsection G to follow, upon each
adjustment of the Purchase Price as a result of a combination of the Common
Stock as provided in Subsection D.(2) hereof, the number of shares of Common
Stock purchasable upon exercise of any Warrant Certificate shall be decreased to
the number of shares of Common Stock (calculated to the nearest hundredth)
obtained by multiplying (a) the number of shares of Common Stock purchasable
immediately prior to such adjustment upon exercise of Warrants evidenced by the
Warrant Certificate held by such holder, by (b) the Purchase Price in effect
immediately prior to such adjustment, and then dividing the product so obtained
by the Purchase Price in effect after such adjustment.
G. In lieu of an adjustment in the number of shares covered by a
Warrant, Company may elect, on or after the date of any adjustment of the
Purchase Price, to adjust the number of Warrants.
H. Irrespective of any adjustments or change in the Purchase Price
or the number of shares of the Common Stock issuable upon the exercise of the
Warrants, the Warrant Certificates theretofore and thereafter issued may
continue to express the Purchase Price per share and the number of shares which
were expressed upon the Warrant Certificates when initially issued.
I. Before taking any action which would cause an adjustment reducing
the Purchase Price below the then par value, if any, of the shares of Common
Stock issuable upon exercise of the Warrants, Company shall take any corporate
action which may, in the opinion of its counsel, be necessary in order that
Company may validly and legally issue fully paid and nonassessable shares of
such Common Stock at such adjusted Purchase Price.
J. Whenever the Purchase Price, the number of shares of Common Stock
issuable upon the exercise of each Warrant, or the number of Warrants are
adjusted as provided in this Section II., Company shall promptly prepare a
certificate setting forth the Purchase Price as so adjusted, the number of
shares of Common Stock issuable upon the exercise of each Warrant as so
adjusted, and a brief statement of the facts accounting for such adjustment.
K. If any event occurs as to which in the opinion of the Board of
Directors of the Company the other provisions of this Section II. are not
strictly applicable or if strictly applicable would not fairly protect the
conversion rights of the holders of the Warrants 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 exercise rights
as aforesaid.
III. A. This Certificate, with or without other Warrant Certificates,
upon surrender at the principal office of the Company, may be exchanged for
another Warrant Certificate or Warrant Certificates of like tenor evidencing
Warrants entitling the holder to purchase a like aggregate number of Shares as
the Warrants evidenced by the Warrant Certificate or Warrant Certificates
surrendered. If only a part of the Warrants evidenced by this Certificate are
exercised, the holder hereof shall be entitled to receive, upon surrender
hereof, another Warrant Certificate or Warrant Certificates for the number of
whole Warrants not exercised.
B. Upon receipt by Company of evidence reasonably satisfactory to it
of the loss, theft, destruction, or mutilation of a Warrant Certificate, and, in
case of loss, theft, destruction, or mutilation, of indemnity or security
reasonably satisfactory to it, and reimbursement to Company of all reasonable
expenses incidental thereto, and upon surrender to the Company and cancellation
of the Warrant Certificate, if mutilated, the Company shall deliver to the
registered owner a new Warrant Certificate in lieu of, and evidencing the right
to purchase the same number of shares as, the Warrant Certificate so lost,
stolen, destroyed, or mutilated.
C. No holder of the Warrants evidenced by this Certificate shall be
entitled to vote or receive dividends or be deemed the holder of Shares or any
other securities of Company which may at any time be issuable on the exercise of
these Warrants for any purpose, nor shall anything contained herein be construed
to confer upon the holder of these Warrants, as such, any of the rights of a
shareholder of Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action (whether upon any recapitalization,
issue of stock, reclassification of stock, change of par value, consolidation,
merger, conveyance, or otherwise) or to receive notice of meetings, or to
receive dividends or subscription rights or otherwise, until the Warrants
evidenced by this Warrant Certificate have been exercised and the Common Stock
purchasable upon the exercise thereof has become deliverable.
D. To the extent that any Warrant Certificates remain outstanding at
5:01 P.M. New York time on the Expiration Date, such outstanding Warrant
Certificates shall be automatically deemed cancelled.
E. Upon the exercise of the Warrant, in lieu of the issuance of any
fractional Shares, the Company shall round the number of Shares issuable to the
registered holder of such Warrant to the next highest whole number.
F. The holder hereof, by accepting same, consents and agrees with
Company and with every other holder of a Warrant Certificate that:
(1) The Warrants evidenced by this Certificate are
transferable only on the registry books of the
Company upon surrender of this Certificate at the
principal office of the Company and only as
provided below; and,
(2) Company may deem and treat the person in whose name
this Certificate is registered as the absolute
owner thereof and of the Warrants evidenced thereby
(notwithstanding any notations of ownership or
writing on the Certificate made by anyone other
than Company) for all purposes whatsoever, and the
Company shall not be affected by any notice to the
contrary.
G. The registered holder of any Warrant Certificate may exercise it
in whole or in part at any time, but only in such multiples as are required to
permit the issuance by Company of one or more shares, by surrender of the
Warrant Certificate with the form of election to purchase on the reverse side
thereof duly executed, to the Company at the principal office of the Company at
or prior to 5:00 P.M. New York time on December 31, 2005, or such later date or
dates as Company may determine together with payment of the Purchase Price,
payable to Company, for each share into which the Warrants are exercised.
H. Upon receipt of a Warrant Certificate, with the form of election
to purchase duly executed, accompanied by payment of the Purchase Price for its
shares to be purchased and an amount equal to any applicable transfer tax in
cash, or by certified check, bank draft, or postal or express money order
payable to the order of Company, the Company shall thereupon cause the
certificates for the number of whole shares to be purchased to be delivered to
or upon the order of the registered holder of such Warrant Certificate
registered in such name or names as may be designated by such holder.
I. In case the registered holder of any Warrant Certificate
exercises less than all the Warrants evidenced thereby, a new Warrant
Certificate evidencing Warrants equivalent to the Warrants remaining unexercised
shall be issued by Warrant Agent to the registered holder of such Warrant
Certificate or to such holder's duly authorized assigns.
J. Each person in whose name any certificate for shares of Common
Stock of the Company is issued upon the exercise of Warrants shall for all
purposes be deemed to have become the holder of record of the shares of Common
Stock represented thereby on, and such certificate shall be dated, the date upon
which the Warrant Certificate evidencing such Warrants was duly surrendered and
payment of the Purchase Price (and any applicable transfer taxes) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the transfer books of Company are closed, such person shall be deemed to
have become the record holder of such shares on, and such certificate shall be
dated, the next succeeding business day on which the transfer books of Company
are open.
IV. A. If the Company shall receive from the holders of Registrable
Securities (as defined below) (individually a "holder" and, collectively,
"holders"), on or before the first anniversary of the Expiration Date, a written
request that the Company effect any registration with respect to not less than
35% of the Registrable Securities, the Company will promptly give written notice
of the proposed registration to all other such holders and, as soon as
practicable, use its best efforts to effect such registration on Form S-3 under
the Securities Act or, in the event the Company is not eligible to utilize Form
S-3, such other Form as the Company may utilize to effect such registration
under the Securities Act, (including, without limitation, filing post-effective
amendments, appropriate qualifications under applicable blue sky or other state
securities laws, and appropriate compliance with the Securities Act) and
covering the sale and distribution of such Registrable Securities as are
specified in such request, together with all or such portion of the Registrable
Securities of any other holder joining in such request as are specified in a
written request received by the Company within twenty (20) days after delivery
by the Company of such written notice. Such holders shall be entitled to
specify the plan of distribution for the offering and sale of the Registrable
Securities, which plan of distribution may include an offering through one or
more underwriters (who shall be selected by a majority in interest of such
holders but shall be reasonably acceptable to the Company) or a sale of such
Registrable Securities in privately negotiated transactions or open market
transactions through brokers, market makers or otherwise. "Registrable
Securities" means, at any time:
(a) any Shares that have been issued upon the exercise of any
Warrant;
(b) any Shares into which such Shares shall have been converted
or exchanged at any time; and
(c) any Shares that are issuable upon the exercise of the
Warrants or the conversion or exchange of Common Stock
referred to in clause (a) or clause (b) above.
Holders of Warrants at any time shall be deemed to be holders of Registrable
Securities described in clauses (b) and (c) of this definition that are at such
time issuable upon exercise in full of such Warrants.
As to any particular Registrable Securities once issued, such Shares shall
cease to be Registrable Securities:
(i) when a registration statement with respect to the sale of
such Shares shall have become effective under the Securities
Act and such Shares shall have been disposed of in accordance
with such registration statement;
(ii)when they shall have been distributed to the public pursuant
to Rule 144 (or any successor provision) under the Securities
Act;
(iii) when they shall have been otherwise transferred and
subsequent disposition of them shall not require registration
or qualification under the Securities Act or any similar
state law then in force; or
(iv)when they shall have ceased to be outstanding or (with
respect to Registrable Securities described in clause (c) of
this definition) issuable upon exercise of the Warrants.
B. If at any time on or before the first anniversary of the Expiration
Date, the Company shall determine to register any of its securities either for
its own account or the account of a security holder or holders, other than a
registration relating solely to or pursuant to employee benefit plans, or a
registration relating solely to a Rule 145 transaction, or a registration on any
registration form under the Securities Act that does not permit secondary sales,
and except in the event that the holder may immediately distribute all of such
Registrable Securities pursuant to Rule 144 (or any successor provision) and the
Company has provided the holder with an opinion of counsel acceptable to such
holder and to the Company's transfer agent to such effect, the Company will:
(1) promptly give to the holders referenced in IV. A. above written
notice thereof; and
(2) include in such registration (and any related qualification under
blue sky laws or other compliance), and in any underwriting involved
therein, all the Registrable Securities specified in a written
request or requests, made by any such holder and received by the
Company within twenty (20) days after the written notice from the
Company described in clause (1) above is delivered by the Company.
Such written request may specify all or a part of a holder's shares.
(3) (a) If the registration of which the Company gives notice is for
a registered public offering involving an underwriting, the
Company shall so advise such holders as a part of the written
notice given pursuant to clause (1) above. In such event,
the right of holder to registration pursuant to this
Subsection IV.B. shall be conditioned upon such holder's
participation in such underwriting and the inclusion of such
holder's Registrable Securities in the underwriting to the
extent provided herein. All holders proposing to distribute
their Registrable Securities through such underwriting shall
(together with the Company) enter into an underwriting
agreement in customary form with the representative of the
underwriter or underwriters selected by the Company.
(b) If the managing underwriter shall advise the Company in
writing that, in such underwriter's opinion, the number of
Shares requested to be included in such registration exceeds
the number that can be sold in such offering within a price
range acceptable to the Company, the Company will include in
such registration only the number of Shares that the Company
is so advised can be sold in such offering:
(A) first, Shares that the Company proposes to issue and sell
for its own account; and
(B) second, Registrable Securities requested to be sold by
the holders thereof pursuant to this Section IV and all
Common Stock proposed to be registered by other holders
exercising a contractual right to demand or participate in a
Company registration, pro rata among such holders on the
basis of the number of Shares requested to be so registered
by such holders.
C. (1) All (a) expenses incurred in connection with any registration,
qualification or compliance pursuant to this Section IV, and (b)
reasonable fees of one counsel for holders for any registration
effected pursuant to this Section IV, shall be borne by the
Company.
(2) In the case of each registration effected by the Company
pursuant to this Agreement, the Company will keep each such holder
advised in writing as to the initiation of each registration and
as to the completion thereof. At its expense, the Company will:
(a) Keep such registration effective for a period of one hundred
eighty (180) days or until the holders have completed the
distribution described in the registration statement relating
thereto, whichever first occurs; provided, however, that (i)
if the filing of such registration statement or the continued
use or effectiveness of such registration statement at any
time would require the Company to make an Adverse Disclosure
(as defined below), the Company may, upon giving prompt
written notice of such action to the holders who have elected
to participate in such registration, delay filing or suspend
use of the registration statement, once for any such
registration and for a period not to exceed forty-five (45)
days (a "Suspension"); and (ii) such one hundred eighty (180)
day period shall be extended for a period of time equal to
any Suspension; "Adverse Disclosure" means public disclosure
of material non-public information, which disclosure in the
Company's Board's good faith judgment after consultation with
counsel to the Company (i) may reasonably be required to be
made in any registration statement filed with the SEC by the
Company so that such registration statement would not be
materially misleading; (ii) would not be required to be made
at such time but for the filing of such registration
statement and (iii) may reasonably have a materially adverse
effect on the Company and for which the Company has a bona
fide business purpose for not disclosing publicly;
(b) Prepare and file with the Securities and Exchange Commission
(the "Commission") such amendments and supplements to such
registration statement and the prospectus used in connection
with such registration statement as may be necessary to
comply with the provisions of the Securities Act of 1933 (the
"Securities Act") with respect to the disposition of all
Shares covered by such registration statement;
(c) Furnish such number of prospectuses and other documents
incident thereto, including any amendment of or supplement to
the prospectus, as a holder from time to time may reasonably
request;
(d) Notify each holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating
thereto is required to be delivered under the Securities Act
of the happening of any event as a result of which the
prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in
the light of the circumstances then existing, and prepare and
furnish to each Investor a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers
of such shares, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading in the light of the
circumstances then existing;
(e) If the Common Stock is then listed on a national securities
exchange or quoted on The Nasdaq Stock Market, then cause all
such Registrable Securities registered pursuant hereunder to
be listed on each such national securities exchange or quoted
on The Nasdaq Stock Market and if the Common Stock is not
then listed on a national securities exchange or quoted on
The Nasdaq Stock Market, then cause the Common Stock to be
listed on a national securities exchange or quoted on The
Nasdaq Stock Market if a national securities exchange or The
Nasdaq Stock Market is reasonably likely to permit the
listing or quoting of the Common Stock;
(f) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant to such registration statement
and a CUSIP number for all such Registrable Securities, in
each case not later than the effective date of such
registration;
(g) In connection with any underwritten offering pursuant to a
registration statement filed pursuant to Section 4.IV.A., the
Company will enter into an underwriting agreement reasonably
necessary to effect the offer and sale of Common Stock,
provided such underwriting agreement contains customary
underwriting provisions;
(h) Register or qualify the Registrable Securities covered by
such registration statement under the securities or blue sky
laws of such jurisdictions as such holders shall reasonably
request, keep such registration or qualification in effect
for so long as such registration statement remains in effect
and do any and all other acts and things which may be
reasonably necessary or appropriate to enable such holders to
dispose of the Registrable Securities in such jurisdiction;
(i) Notify each such holder promptly (i) when such registration
statement and any post-effective amendment thereto has become
effective under the Securities Act, (ii) of any request by
the Commission for an amendment or supplement to such
registration statement or the prospectus included therein or
for additional information, (iii) of the issuance by the
Commission of any stop order suspending the effectiveness of
such registration statement or the initiation of any
proceedings for that purpose and (iv) of the receipt of any
notification with respect to the suspension of the
registration or qualification of any Registrable Securities
in any jurisdiction in which they are registered or qualified
or the initiation of any proceedings for that purpose;
(j) Use commercially reasonable efforts to obtain the withdrawal
at the earliest possible moment to any stop order suspending
the effectiveness of such registration statement and the
lifting at the earliest possible moment of any suspension of
the registration or qualification of the Shares in any
jurisdiction in which they are registered or qualified; and
(k) Otherwise use commercially reasonable efforts to comply with
all applicable rules and regulations of the Commission, and
make available to its security holders, as soon as reasonably
practicable, an earnings statement covering a period of
twelve (12) months after the effective date of such
registration statement, which earnings statement shall
satisfy the provisions of Section 11 (a) of the Securities
Act.
(3) (a) The Company will indemnify each such holder, each of its
employees, officers, directors and partners, legal counsel,
and accountants and each person controlling such holder
within the meaning of Section 15 of the Securities Act or
Section 20 of the Securities Exchange Act (the "Exchange
Act"), with respect to which registration, qualification, or
compliance has been effected pursuant to this Agreement, and
each underwriter, if any, and each person who controls within
the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act any underwriter, against all expenses,
claims, losses, damages, and liabilities (or actions,
proceedings, or settlements in respect thereof) arising out
of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any prospectus,
offering circular, or other document (including any related
registration statement, notification, or the like) incident
to any such registration, qualification, or compliance, or
based on any omission (or alleged omission) to state therein
a material fact required to be stated therein or necessary to
make the statements therein not misleading, or any violation
by the Company of the Securities Act or any rule or
regulation thereunder applicable to the Company and relating
to action or inaction required of the Company in connection
with any such registration, qualification, or compliance, and
will reimburse each such holder, each of its employees,
officers, directors, partners, legal counsel, and accountants
and each person controlling such holder, each such
underwriter, and each person who controls any such
underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating and defending or
settling any such claim, loss damage, liability, or action;
provided that the Company will not be liable in any such case
to the extent that any such claim, loss, damage, liability,
or expense arises out of or is based on any untrue statement
or omission based upon written information furnished to the
Company by such holder in its capacity as such a holder, and
not in their capacity as a director, officer or employee of
the Company, if applicable, or underwriter and stated to be
specifically for use therein. It is agreed that the indemnity
agreement contained in this Section IV.C.(3)(a) shall not
apply to amounts paid in settlement of any such loss, claim,
damage, liability, or action if such settlement is effected
without the consent of the Company (which consent shall not
have been unreasonably withheld).
(b) Each such holder will, if Registrable Securities held by such
holder are included in the securities as to which such
registration, qualification, or compliance is being effected,
severally and not jointly, indemnify the Company, each of its
directors, officers, employees, partners, legal counsel, and
accountants and each underwriter, if any, of the Securities
covered by such a registration statement, each person who
controls the Company or such underwriter within the meaning
of Section 15 of the Securities Act, each other such holder,
and each of their officers, directors, and partners, and each
person controlling such other holder, against all clams,
losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any
such registration statement, prospectus, offering circular,
or other document, or any omission (or alleged omission) to
state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading,
and will reimburse the Company and such other holders,
directors, officers, partners, legal counsel, and
accountants, persons, underwriters, or control persons for
any legal and any other expenses reasonably incurred in
connection with investigating or defending any such claim,
loss, damage, liability, or action, in each case to the
extent, but only to the extent, that such untrue statement
(or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus,
offering circular, or other document in reliance upon and in
conformity with written information furnished to the Company
by such holder in their capacity as such holder, and not in
its capacity as a director, officer or employee of the
Company, if applicable, and stated to be specifically for use
therein.
(c) Each party entitled to indemnification under this Section
IV.C.(3) (the "Indemnified Party") shall give notice to the
party required to provide indemnification (the "Indemnifying
Party") promptly after such Indemnified Party has actual
knowledge of any claim as to which indemnity may be sought,
and shall permit the Indemnifying Party to assume the defense
of such claim or any litigation resulting therefrom, provided
that counsel for the Indemnifying Party, who shall conduct
the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose
approval shall not be unreasonably withheld), and the
Indemnified Party may participate in such defense, but the
fees and expenses of such counsel shall be at the expense of
the Indemnified Party unless (i) the Indemnifying Party has
agreed in writing to pay such fees and expenses or (ii) the
named parties to any such action or proceeding (including any
impleaded parties) include both the Indemnified Party and the
Indemnifying Party, and the Indemnified Party shall have been
advised by counsel that there may be one or more legal
defenses available to such Indemnifying Party which are
different from or additional to those available to the
Indemnified Party (in which case, if the Indemnified Party
notifies the Indemnifying Party in writing that it elects to
employ separate counsel at the, expense of the Indemnifying
Party, the Indemnifying Party shall not have the right to
assume the defense of such action or proceeding on behalf of
the Indemnified Party). The failure of any Indemnified Party
to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement,
to the extent such failure is not prejudicial. No
Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each
Indemnified Party (which consent shall not be unreasonably
withheld), consent to entry of any judgment or enter into any
settlement that does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect
to such claim or litigation. Each Indemnified Party shall
furnish such information regarding itself or the claim in
question as an Indemnifying Party may reasonably request in
writing and as shall be reasonably required in connection
with defense of such claim and litigation resulting
therefrom.
(d) If the indemnification provided for in this Section 4.3 is
held by a court of competent jurisdiction to be unavailable
to an Indemnified Party with respect to any loss, liability,
claim, damage or expense referred to therein, then the
Indemnifying Party, in lieu of indemnifying such Indemnified
Party hereunder, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such loss,
liability, claim, damage, or expense in such proportion as is
appropriate to reflect the relative fault of the Indemnifying
Party, on the one hand, and of the Indemnified Party, on the
other hand, in connection with the statements or omissions
that resulted in such loss, liability, claim, damage; or
expense as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party
and of the Indemnified Party shall be determined by reference
to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a
material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the
parties' relative intent, knowledge, access to information,
and opportunity to correct or prevent such statement or
omission.
WITNESS the signatures of the proper officers of Company and its
corporate seal. Dated to be effective December 31, 2000.
TANDYCRAFTS, INC.
By: ______________________________
Name: Leo Taylor
Title: Senior Vice President of Finance
ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Warrant Certificate)
FOR VALUE RECEIVED, __________________________________hereby sells,
assigns, and transfers unto ___________________________________
(Please print name and address of transferee)
___________________________________________________________________
this Warrant Certificate, together with all right, title, and interest therein,
and does hereby irrevocably constitute and appoint ___________________________
Attorney, to transfer the within Warrant Certificate on the books of the within-
named Company, with full power of substitution.
Dated:________________, 20___.
-------------------------------
Signature
-------------------------------
Signature
Guaranteed
NOTICE: The signature(s) to this assignment must correspond with the name(s)
as written upon the face of the Certificate in every particular
without alteration or enlargement or any change whatever.
Signature(s) must be guaranteed by a commercial bank or trust company
or a member firm of a major stock exchange.
ELECTION TO PURCHASE
(To be executed if holder desires
to exercise the Warrant Certificate)
TO: TANDYCRAFTS, INC.
The undersigned hereby irrevocably elects to exercise ________________
Warrants represented by this Warrant Certificate to purchase the shares of
Common Stock issuable upon the exercise of such Warrants and requests that
certificates for such shares be issued in the name of:
___________________________________________________________________
(Please insert social security or other identifying number)
___________________________________________________________________
(Please print name and address)
If such number of Warrants does not constitute all of the Warrants
evidenced by this Warrant Certificate, a new Warrant Certificate for the balance
remaining of such Warrants shall be registered in the name of and delivered to:
___________________________________________________________________
(Please insert social security or other identifying number)
__________________________________________________________________
Dated: ____________________, 20_____
---------------------------
Signature
---------------------------
Signature
Guaranteed
NOTICE: The signature on this Form of Election to Purchase must correspond
with the name(s) as written upon the face of the Certificate without
alteration or enlargement or any change whatever. Signature(s) must
be guaranteed by a commercial bank or trust company or a member firm
of a major stock exchange.
EXHIBIT 4.2
12/31/00
NO. WT 02 254,052 WARRANTS
VOID AFTER DECEMBER 31, 2005
TANDYCRAFTS, INC.
WARRANT AGREEMENT AND
WARRANT CERTIFICATE
December 31, 2000
I. A. THIS CERTIFIES THAT for value received BANK ONE, TEXAS, NATIONAL
ASSOCIATION or registered assigns, is the owner of Two Hundred Fifty-four
Thousand Fifty-two (254,052) Warrants (together with an equal number of Warrants
being issued on the date hereof to Wells Fargo Bank Texas, National Association,
the "Warrants") (which number is equal to two percent (2%) of the number of
shares of common stock ("Common Stock") of the Company issued and outstanding as
of the date hereof) of TANDYCRAFTS, INC. (the "Company") set forth above, each
of which entitles the owner hereof to purchase, subject to the restrictions
referenced herein, at any time prior to the close of business on DECEMBER 31,
2005 (the "Expiration Date"), at the principal office of the Company, one (1)
share of Common Stock of Tandycrafts, Inc. (the "Shares"), at the purchase price
of ONE DOLLAR AND EIGHTEEN CENTS ($1.18 ) per whole share (the "Purchase Price")
(which amount is equal to the average per share closing price of the Company's
Common Stock for the five (5) trading days immediately preceding the date
hereof), upon presentation and surrender of this Warrant Certificate with the
Form of Election to Purchase duly executed. The number of Warrants evidenced by
this Warrant Certificate (and the number of Shares which may be purchased upon
exercise thereof) set forth above is the number as of the date of this
Certificate, based on the shares of Common Stock of the Company as constituted
at such date.
B. Company shall have the obligation to register the Shares into
which the Warrants are exercisable in accordance with Section IV hereof. In
addition, in accordance with such Section, in the event the Company gives notice
of its plan to effect a public registration of its Common Stock, the holder of
the above Warrants will be given the opportunity to include any portion or all
of the Shares in such registration.
______________________
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT ONLY AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE. WITHOUT SUCH REGISTRATION,
SUCH SECURITIES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED AT ANY TIME WHATSOEVER,
EXCEPT UPON DELIVERY TO THE CORPORATION OF AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE CORPORATION THAT REGISTRATION IS NOT REQUIRED FOR SUCH
TRANSFER.
II. The Purchase Price, the number of Shares which may be purchased upon
the exercise of the Warrants evidenced by this Certificate, and the number of
Warrants outstanding are subject to modification and adjustment from time to
time upon the occurrence of the events enumerated below:
A. If and whenever the Company shall issue or sell any shares of its
Common Stock without consideration or for a consideration per share less than
the Purchase Price in effect immediately prior to the time of such issue or
sale, then, forthwith upon such issue or sale, the Purchase Price shall be
reduced to a price (calculated to the nearest one hundredth of a cent)
determined by dividing (1) an amount equal to the sum of (a) the number of
shares of Common Stock outstanding immediately prior to such issue or sale
multiplied by the then existing Purchase Price, and (b) the consideration, if
any, received by the Company upon such issue or sale, by (2) the total number of
shares of Common Stock outstanding immediately after such issue or sale.
B. For purposes of Subsection A. above, the following clauses (1) to
(9), inclusive, shall also be applicable:
(1) In case at any time the Company shall grant (whether
directly or by assumption in a merger or otherwise) any rights to subscribe for
or to purchase, or any options for the purchase of, Common Stock or any stock or
securities convertible into or exchangeable for Common Stock (such convertible
or exchangeable stock or securities being herein called Convertible Securities)
whether or not such rights or options or the right to convert or exchange any
such Convertible Securities are immediately exercisable, and the price per share
for which Common Stock is issuable upon the exercise of such rights or options
or upon conversion or exchange of such Convertible Securities (determined by
dividing (a) the total amount, if any, received or receivable by the Company as
consideration for the granting of such rights or options, plus the minimum
aggregate amount of additional consideration payable to the Company upon the
exercise of such rights or options, plus, in the case of such rights or options
which relate to Convertible Securities, the minimum aggregate amount of
additional consideration, if any, payable upon the issue or sale of such
Convertible Securities and upon the conversion or exchange thereof, by (b) the
total maximum number of shares of Common Stock issuable upon the exercise of
such rights or options or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of such rights or options)
shall be less than the Purchase Price in effect immediately prior to the time of
the granting of such rights or options, then the total maximum number of shares
of Common Stock issuable upon the exercise of such rights or options or upon
conversion or exchange of the total maximum amount of such Convertible
Securities issuable upon the exercise of such rights or options shall (as of the
date of granting of such rights or options) be deemed to be outstanding and to
have been issued for such price per share. Except as provided in clause (3)
below, no further adjustments of the Purchase Price shall be made upon the
actual issue of such Common Stock or of such Convertible Securities upon
exercise of such rights or options or upon the actual issue of such Common Stock
or of such Convertible Securities upon exercise of such rights or options or
upon the issue of such Common Stock upon conversion or exchange of such
Convertible Securities.
(2) In case the Company shall issue (whether directly or by
assumption in a merger or otherwise) or sell any Convertible Securities, whether
or not the rights to exchange or convert thereunder are immediately exercisable,
and the price per share for which Common Stock is issuable upon such conversion
or exchange (determined by dividing (a) the total amount received or receivable
by the Company as consideration for the issue or sale of such Convertible
Securities, plus the minimum aggregate amount of additional consideration, if
any, payable to the corporation upon the conversion or exchange thereof, by (b)
the total maximum number of shares of Common Stock issuable upon the conversion
or exchange of all such Convertible Securities) shall be less than the Purchase
Price in effect immediately prior to the time of such issue or sale, then the
total maximum number of shares of Common Stock issuable upon conversion or
exchange of all such Convertible Securities shall (as of the date of the issue
or sale of such Convertible Securities) be deemed to be outstanding and to have
been issued for such price per share, provided that (i) except as provided in
clause (3) below, no further adjustments of the Purchase Price shall be made
upon the actual issue of such Common Stock upon conversion or exchange of such
Convertible Securities, and (ii) if any such issue or sale of such Convertible
Securities is made upon exercise of any rights to subscribe for or to purchase
or any option to purchase any such Convertible Securities for which adjustments
of the Purchase Price have been or are to be made pursuant to other provisions
of this Subsection B., no further adjustment of the Purchase Price shall be made
by reason of such issue or sale.
(3) Upon the happening of any of the following events, namely,
if the purchase price provided in any rights or options referred to in clause
(1) of this Subsection B., the additional consideration, if any, payable upon
the conversion or exchange of Convertible Securities referred to in clause (1)
or clause (2) of this Subsection B., or the rate at which any Convertible
Securities referred to in clause (1) or clause (2) of this Subsection (B) are
convertible into or exchangeable for Common Stock shall change (other than under
or by reason of provisions designed to protect against dilution), the Purchase
Price in effect at the time of such event shall forthwith be readjusted to the
Purchase Price which would have been in effect at such time had such rights,
options or Convertible Securities still outstanding provided for such changed
purchase price, additional consideration or conversion rate, as the case may be,
at the time initially granted, issued or sold; and on the expiration of any such
option or right or the termination of any such right to convert or exchange such
Convertible Securities, the Purchase Price then in effect hereunder shall
forthwith be increased to the Purchase Price which would have been in effect at
the time of such expiration or termination had such right, option or Convertible
Security, to the extent outstanding immediately prior to such expiration or
termination, never been issued, and the Common Stock issuable thereunder shall
no longer be deemed to be outstanding. If the purchase price provided for in any
such right or option referred to in clause (1) of this Subsection B. or the rate
at which any Convertible Securities referred to in clause (1) or clause (2) of
this Subsection B. are convertible into or exchangeable into or exchangeable for
Common Stock, shall decrease at any time under or by reason of provisions with
respect thereto designed to protect against dilution, then in case of the
delivery of Common Stock upon the exercise of any such right or option or upon
conversion or exchange of any such Convertible Security, the Purchase Price then
in effect hereunder shall forthwith be adjusted to such respective amount as
would have obtained had such rights, option or Convertible Security never been
issued as to such Common Stock and had adjustments been made upon the issuance
of the shares of Common Stock delivered as aforesaid, but only if as a result of
such adjustment the Purchase Price then in effect hereunder is thereby
decreased.
(4) In case the Company shall declare a dividend or make any
other distributions upon any stock of the Company payable in Common Stock or
Convertible Securities, any Common Stock or Convertible Securities, as the case
may be, issuable in payment of such dividend or distribution shall be deemed to
have been issued or sold without consideration.
(5) In case any shares of Common Stock or Convertible Securities
or any rights or options to purchase any such Common Stock or Convertible
Securities shall be issued or sold for cash, the consideration received therefor
shall be deemed to be the amount received by the Company therefor, without
deduction therefrom of any expenses incurred or any underwriting commissions or
concessions paid or allowed by the Company in connection therewith. In case any
shares of Common Stock or Convertible Securities or any rights or options to
purchase any such Common Stock or Convertible Securities shall be issued or sold
for a consideration other than cash, the amount of the consideration other than
cash received by the Company shall be deemed to be the fair value of such
consideration as determined in good faith by the Board of Directors of the
Company, without deduction of any expenses incurred or any underwriting
commissions or concessions paid or allowed by the Company in connection
therewith. In case any shares of Common Stock or Convertible Securities or any
rights or options to purchase such Common Stock or Convertible Securities shall
be issued in connection with any merger or consolidation in which the Company is
the surviving corporation, the amount of consideration therefor shall be deemed
to be the fair value as determined by the Board of Directors of the Company of
such portion of the assets and business of the non-surviving corporation or
corporations as such Board shall determine to be attributable to such Common
Stock or Convertible Securities, rights or options, as the case may be.
(6) In case the Company shall take a record of the holders of
its Common Stock for the purpose of entitling them (a) to receive a dividend or
other distribution payable in Common Stock or in Convertible Securities, or
(b) to subscribe for or purchase Common Stock or Convertible Securities, then
such record date shall be deemed to be the date of the issue or sale of the
shares of Common Stock deemed to have been issued upon the declaration of such
dividend or the making of such other distribution or the date of the granting of
such right of subscription or purchase, as the case may be. The Company shall
give the holders of Warrants ten (10) days prior written notice of each such
record date.
(7) The number of shares of Common Stock outstanding at any
given time shall not include shares owned or held or for the account of the
Company, and the disposition of any such shares shall be considered an issue or
sale of Common Stock for the purposes of Subsection B.
(8) Anything in clause (5) of this Subsection B. to the contrary
notwithstanding, in the case of an acquisition where all or part of the purchase
price is payable in Common Stock or Convertible Securities but is stated as a
dollar amount, where the Company upon making the acquisition pays only part of a
maximum dollar purchase price which is payable in Common Stock or Convertible
Securities and where the balance of such purchase price is deferred or is
contingently payable under a formula related to earnings over a period of time,
(a) the consideration received for any Common Stock or Convertible Securities
delivered at the time of the acquisition shall be deemed to be such part of the
total consideration as the portion of the dollar purchase price then paid in
Common Stock or Convertible Securities bears to the total maximum dollar
purchase price then paid in Common Stock or Convertible Securities, and (b) in
connection with each issuance of additional Common Stock or Convertible
Securities pursuant to the terms of the agreement relating to such acquisition,
the consideration received shall be deemed to be such part of the total
consideration as the portion of the dollar purchase price then and theretofore
paid in Common Stock or Convertible Securities bears to the total maximum dollar
purchase price payable in Common Stock or Convertible Securities multiplied by a
fraction, the numerator of which shall be the number of shares (or in the case
of Convertible Securities other than stock, the aggregate principal amount) then
issued and the denominator of which shall be the total number of shares (or in
the case of Convertible Securities other than stock, the aggregate principal
amount) then and theretofore issued under such acquisition agreement. If it is
determined that any part of the deferred or contingent portion of such purchase
price shall not be payable, the Purchase Price then in effect hereunder shall
forthwith be readjusted to such Purchase Price as would have obtained (i) had
the adjustment made in connection with such acquisition been made upon the basis
of the issuance of only the number of shares of Common Stock or Convertible
Securities actually issued in connection with such acquisition, and (ii) had
adjustments been made on the basis of the Purchase Price as adjusted in clause
(1) for all issued or sale (as prices which would have affected such adjusted
Purchase Price) of Common Stock or rights, options or Convertible Securities
made after such acquisition. In the event that only a part of the purchase price
for an acquisition is paid in Common Stock or Convertible Securities in the
manner referred to in this clause (8), the term "total consideration" as used in
this clause (8) shall mean that part of the aggregate consideration as is fairly
allocable to the purchase price paid in Common Stock or Convertible Securities
in the manner referred to in this clause (8), as determined by the Board of
Directors of the Company.
(9) Notwithstanding anything to the contrary herein, the
adjustments contemplated by this Section II. Shall not apply to the issuance of
Common Stock pursuant to (i) the 1992 Tandycrafts, Inc. Employee and Director
Stock Option Plans, as amended; (ii) the Tandycrafts, Inc. Retirement Savings
Plan, as amended; or (iii) the TRSP Benefit Restoration Plan and fiscal year-end
bonuses paid in stock for officers of the Company and its subsidiaries;
provided, however, that the exception in (iii) shall only apply with respect to
the aggregate issuance of up to 400,000 shares of Common Stock.
C. In case the Company shall declare a dividend upon the Common
Stock payable otherwise than out of consolidated earnings or consolidated earned
surplus, determined in accordance with generally accepted accounting principles,
including the making of appropriate deductions for minority interest, if any, in
subsidiary corporations, and otherwise than in Common Stock or Convertible
Securities, the Company shall give the holders of each Warrant thirty (30) days
prior written notice of the date as of which the holders of Common Stock of
record entitled to such special dividend shall be determined. For the purposes
of the foregoing a dividend other than in cash shall be considered payable out
of earnings or surplus (other than revaluation or paid-in surplus) only to the
extent that such earnings or surplus are charged an amount equal to the fair
value of such dividend as determined by the Board of Directors of the Company.
D. (1) In case the Company shall at any time subdivide its
outstanding shares of Common Stock into a greater number of shares, the Purchase
Price in effect immediately prior to such subdivision shall be proportionately
reduced, and, conversely (2) in case the outstanding shares of Common Stock of
the Company shall be combined into a smaller number of shares, the Purchase
Price in effect immediately prior to such combination shall be proportionately
increased.
E. In case of any capital reorganization or any reclassification of
the Common Stock of the Company, the consolidation of Company with or the merger
of Company with or into any other corporation, or the sale of the properties and
assets of Company as, or substantially as, an entirety to any other corporation,
then in each case, lawful provision shall be made as a part of the terms of such
transaction so that the holders of Warrants shall thereafter have the right to
purchase the number and kind of shares of stock or other securities or property
receivable upon such reorganization, reclassification, consolidation, merger or
sale or by a holder of such number of shares of Common Stock as the holder of a
Warrant would have had the right to acquire upon the exercise of such Warrant
immediately prior to such reorganization, reclassification, consolidation,
merger or sale, at the Purchase Price then in effect hereunder, and each Warrant
will thereafter represent the right to receive, upon payment of the Purchase
Price then in effect hereunder, such shares of stock or other securities or
property as are so receivable. The subdivision or combination of shares of
Common Stock at any time outstanding into a greater or lesser number of shares
of Common Stock shall not be deemed to be a reclassification of the Common Stock
of Company for the purposes of this Subsection "E."
F. (1) Except as provided in Subsection G, to follow, upon each
adjustment of the Purchase Price as a result of (a) an issuance or sale of
Common Stock below the Purchase Price as provided in Subsections A and B above,
including (without limitation) a dividend or distribution in shares of capital
stock, or (b) a subdivision of outstanding shares of Common Stock as provided in
Subsection D.(1) hereof, the number of shares of Common Stock purchasable upon
exercise of any Warrant Certificate shall be increased to the number of shares
of Common Stock (calculated to the nearest hundredth) obtained by multiplying
(i) the number of shares of Common Stock purchasable immediately prior to such
adjustment upon exercise of Warrants (evidenced by the Warrant Certificate held
by such holder) by (ii) the Purchase Price in effect immediately prior to such
adjustment, and dividing the product so obtained by the Purchase Price in effect
after such adjustment.
(2) Except as provided in Subsection G to follow, upon each
adjustment of the Purchase Price as a result of a combination of the Common
Stock as provided in Subsection D.(2) hereof, the number of shares of Common
Stock purchasable upon exercise of any Warrant Certificate shall be decreased to
the number of shares of Common Stock (calculated to the nearest hundredth)
obtained by multiplying (a) the number of shares of Common Stock purchasable
immediately prior to such adjustment upon exercise of Warrants evidenced by the
Warrant Certificate held by such holder, by (b) the Purchase Price in effect
immediately prior to such adjustment, and then dividing the product so obtained
by the Purchase Price in effect after such adjustment.
G. In lieu of an adjustment in the number of shares covered by a
Warrant, Company may elect, on or after the date of any adjustment of the
Purchase Price, to adjust the number of Warrants.
H. Irrespective of any adjustments or change in the Purchase Price
or the number of shares of the Common Stock issuable upon the exercise of the
Warrants, the Warrant Certificates theretofore and thereafter issued may
continue to express the Purchase Price per share and the number of shares which
were expressed upon the Warrant Certificates when initially issued.
I. Before taking any action which would cause an adjustment reducing
the Purchase Price below the then par value, if any, of the shares of Common
Stock issuable upon exercise of the Warrants, Company shall take any corporate
action which may, in the opinion of its counsel, be necessary in order that
Company may validly and legally issue fully paid and nonassessable shares of
such Common Stock at such adjusted Purchase Price.
J. Whenever the Purchase Price, the number of shares of Common Stock
issuable upon the exercise of each Warrant, or the number of Warrants are
adjusted as provided in this Section II., Company shall promptly prepare a
certificate setting forth the Purchase Price as so adjusted, the number of
shares of Common Stock issuable upon the exercise of each Warrant as so
adjusted, and a brief statement of the facts accounting for such adjustment.
K. If any event occurs as to which in the opinion of the Board of
Directors of the Company the other provisions of this Section II. are not
strictly applicable or if strictly applicable would not fairly protect the
conversion rights of the holders of the Warrants 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 exercise rights
as aforesaid.
III. A. This Certificate, with or without other Warrant Certificates,
upon surrender at the principal office of the Company, may be exchanged for
another Warrant Certificate or Warrant Certificates of like tenor evidencing
Warrants entitling the holder to purchase a like aggregate number of Shares as
the Warrants evidenced by the Warrant Certificate or Warrant Certificates
surrendered. If only a part of the Warrants evidenced by this Certificate are
exercised, the holder hereof shall be entitled to receive, upon surrender
hereof, another Warrant Certificate or Warrant Certificates for the number of
whole Warrants not exercised.
B. Upon receipt by Company of evidence reasonably satisfactory to it
of the loss, theft, destruction, or mutilation of a Warrant Certificate, and, in
case of loss, theft, destruction, or mutilation, of indemnity or security
reasonably satisfactory to it, and reimbursement to Company of all reasonable
expenses incidental thereto, and upon surrender to the Company and cancellation
of the Warrant Certificate, if mutilated, the Company shall deliver to the
registered owner a new Warrant Certificate in lieu of, and evidencing the right
to purchase the same number of shares as, the Warrant Certificate so lost,
stolen, destroyed, or mutilated.
C. No holder of the Warrants evidenced by this Certificate shall be
entitled to vote or receive dividends or be deemed the holder of Shares or any
other securities of Company which may at any time be issuable on the exercise of
these Warrants for any purpose, nor shall anything contained herein be construed
to confer upon the holder of these Warrants, as such, any of the rights of a
shareholder of Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action (whether upon any recapitalization,
issue of stock, reclassification of stock, change of par value, consolidation,
merger, conveyance, or otherwise) or to receive notice of meetings, or to
receive dividends or subscription rights or otherwise, until the Warrants
evidenced by this Warrant Certificate have been exercised and the Common Stock
purchasable upon the exercise thereof has become deliverable.
D. To the extent that any Warrant Certificates remain outstanding at
5:01 P.M. New York time on the Expiration Date, such outstanding Warrant
Certificates shall be automatically deemed cancelled.
E. Upon the exercise of the Warrant, in lieu of the issuance of any
fractional Shares, the Company shall round the number of Shares issuable to the
registered holder of such Warrant to the next highest whole number.
F. The holder hereof, by accepting same, consents and agrees with
Company and with every other holder of a Warrant Certificate that:
(1) The Warrants evidenced by this Certificate are
transferable only on the registry books of the Company
upon surrender of this Certificate at the principal
office of the Company and only as provided below; and,
(2) Company may deem and treat the person in whose name
this Certificate is registered as the absolute owner
thereof and of the Warrants evidenced thereby
(notwithstanding any notations of ownership or writing
on the Certificate made by anyone other than Company)
for all purposes whatsoever, and the Company shall not
be affected by any notice to the contrary.
G. The registered holder of any Warrant Certificate may exercise it
in whole or in part at any time, but only in such multiples as are required to
permit the issuance by Company of one or more shares, by surrender of the
Warrant Certificate with the form of election to purchase on the reverse side
thereof duly executed, to the Company at the principal office of the Company at
or prior to 5:00 P.M. New York time on December 31, 2005, or such later date or
dates as Company may determine together with payment of the Purchase Price,
payable to Company, for each share into which the Warrants are exercised.
H. Upon receipt of a Warrant Certificate, with the form of election
to purchase duly executed, accompanied by payment of the Purchase Price for its
shares to be purchased and an amount equal to any applicable transfer tax in
cash, or by certified check, bank draft, or postal or express money order
payable to the order of Company, the Company shall thereupon cause the
certificates for the number of whole shares to be purchased to be delivered to
or upon the order of the registered holder of such Warrant Certificate
registered in such name or names as may be designated by such holder.
I. In case the registered holder of any Warrant Certificate
exercises less than all the Warrants evidenced thereby, a new Warrant
Certificate evidencing Warrants equivalent to the Warrants remaining unexercised
shall be issued by Warrant Agent to the registered holder of such Warrant
Certificate or to such holder's duly authorized assigns.
J. Each person in whose name any certificate for shares of Common
Stock of the Company is issued upon the exercise of Warrants shall for all
purposes be deemed to have become the holder of record of the shares of Common
Stock represented thereby on, and such certificate shall be dated, the date upon
which the Warrant Certificate evidencing such Warrants was duly surrendered and
payment of the Purchase Price (and any applicable transfer taxes) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the transfer books of Company are closed, such person shall be deemed to
have become the record holder of such shares on, and such certificate shall be
dated, the next succeeding business day on which the transfer books of Company
are open.
IV. A. If the Company shall receive from the holders of Registrable
Securities (as defined below) (individually a "holder" and, collectively,
"holders"), on or before the first anniversary of the Expiration Date, a written
request that the Company effect any registration with respect to not less than
35% of the Registrable Securities, the Company will promptly give written notice
of the proposed registration to all other such holders and, as soon as
practicable, use its best efforts to effect such registration on Form S-3 under
the Securities Act or, in the event the Company is not eligible to utilize Form
S-3, such other Form as the Company may utilize to effect such registration
under the Securities Act, (including, without limitation, filing post-effective
amendments, appropriate qualifications under applicable blue sky or other state
securities laws, and appropriate compliance with the Securities Act) and
covering the sale and distribution of such Registrable Securities as are
specified in such request, together with all or such portion of the Registrable
Securities of any other holder joining in such request as are specified in a
written request received by the Company within twenty (20) days after delivery
by the Company of such written notice. Such holders shall be entitled to
specify the plan of distribution for the offering and sale of the Registrable
Securities, which plan of distribution may include an offering through one or
more underwriters (who shall be selected by a majority in interest of such
holders but shall be reasonably acceptable to the Company) or a sale of such
Registrable Securities in privately negotiated transactions or open market
transactions through brokers, market makers or otherwise. "Registrable
Securities" means, at any time:
(a) any Shares that have been issued upon the exercise of any
Warrant;
(b) any Shares into which such Shares shall have been
converted or exchanged at any time; and
(c) any Shares that are issuable upon the exercise of the
Warrants or the conversion or exchange of Common Stock
referred to in clause (a) or clause (b) above.
Holders of Warrants at any time shall be deemed to be holders of Registrable
Securities described in clauses (b) and (c) of this definition that are at such
time issuable upon exercise in full of such Warrants.
As to any particular Registrable Securities once issued, such Shares shall
cease to be Registrable Securities:
(i) when a registration statement with respect to the
sale of such Shares shall have become effective under the
Securities Act and such Shares shall have been disposed of
in accordance with such registration statement;
(ii) when they shall have been distributed to the public
pursuant to Rule 144 (or any successor provision) under the
Securities Act;
(iii) when they shall have been otherwise transferred and
subsequent disposition of them shall not require
registration or qualification under the Securities Act or
any similar state law then in force; or
(iv) when they shall have ceased to be outstanding or (with
respect to Registrable Securities described in clause
(c) of this definition) issuable upon exercise of the
Warrants.
B. If at any time on or before the first anniversary of the Expiration
Date, the Company shall determine to register any of its securities either for
its own account or the account of a security holder or holders, other than a
registration relating solely to or pursuant to employee benefit plans, or a
registration relating solely to a Rule 145 transaction, or a registration on any
registration form under the Securities Act that does not permit secondary sales,
and except in the event that the holder may immediately distribute all of such
Registrable Securities pursuant to Rule 144 (or any successor provision) and the
Company has provided the holder with an opinion of counsel acceptable to such
holder and to the Company's transfer agent to such effect, the Company will:
(1) promptly give to the holders referenced in IV. A. above written
notice thereof; and
(2) include in such registration (and any related qualification under
blue sky laws or other compliance), and in any underwriting involved
therein, all the Registrable Securities specified in a written
request or requests, made by any such holder and received by the
Company within twenty (20) days after the written notice from the
Company described in clause (1) above is delivered by the Company.
Such written request may specify all or a part of a holder's shares.
(3) (a) If the registration of which the Company gives notice is for
a registered public offering involving an underwriting, the
Company shall so advise such holders as a part of the written
notice given pursuant to clause (1) above. In such event,
the right of holder to registration pursuant to this
Subsection IV.B. shall be conditioned upon such holder's
participation in such underwriting and the inclusion of such
holder's Registrable Securities in the underwriting to the
extent provided herein. All holders proposing to distribute
their Registrable Securities through such underwriting shall
(together with the Company) enter into an underwriting
agreement in customary form with the representative of the
underwriter or underwriters selected by the Company.
(b) If the managing underwriter shall advise the Company in
writing that, in such underwriter's opinion, the number of
Shares requested to be included in such registration exceeds
the number that can be sold in such offering within a price
range acceptable to the Company, the Company will include in
such registration only the number of Shares that the Company
is so advised can be sold in such offering:
(A) first, Shares that the Company proposes to issue and sell
for its own account; and
(B) second, Registrable Securities requested to be sold by the
holders thereof pursuant to this Section IV and all Common
Stock proposed to be registered by other holders exercising a
contractual right to demand or participate in a Company
registration, pro rata among such holders on the basis of the
number of Shares requested to be so registered by such
holders.
C. (1) All (a) expenses incurred in connection with any
registration, qualification or compliance pursuant to this Section IV,
and (b) reasonable fees of one counsel for holders for any
registration effected pursuant to this Section IV, shall be borne by
the Company.
(2) In the case of each registration effected by the Company
pursuant to this Agreement, the Company will keep each such holder
advised in writing as to the initiation of each registration and as to
the completion thereof. At its expense, the Company will:
(a) Keep such registration effective for a period of one hundred
eighty (180) days or until the holders have completed the
distribution described in the registration statement relating
thereto, whichever first occurs; provided, however, that (i)
if the filing of such registration statement or the continued
use or effectiveness of such registration statement at any
time would require the Company to make an Adverse Disclosure
(as defined below), the Company may, upon giving prompt
written notice of such action to the holders who have elected
to participate in such registration, delay filing or suspend
use of the registration statement, once for any such
registration and for a period not to exceed forty-five (45)
days (a "Suspension"); and (ii) such one hundred eighty (180)
day period shall be extended for a period of time equal to
any Suspension; "Adverse Disclosure" means public disclosure
of material non-public information, which disclosure in the
Company's Board's good faith judgment after consultation with
counsel to the Company (i) may reasonably be required to be
made in any registration statement filed with the SEC by the
Company so that such registration statement would not be
materially misleading; (ii) would not be required to be made
at such time but for the filing of such registration
statement and (iii) may reasonably have a materially adverse
effect on the Company and for which the Company has a bona
fide business purpose for not disclosing publicly;
(b) Prepare and file with the Securities and Exchange Commission
(the "Commission") such amendments and supplements to such
registration statement and the prospectus used in connection
with such registration statement as may be necessary to
comply with the provisions of the Securities Act of 1933 (the
"Securities Act") with respect to the disposition of all
Shares covered by such registration statement;
(c) Furnish such number of prospectuses and other documents
incident thereto, including any amendment of or supplement to
the prospectus, as a holder from time to time may reasonably
request;
(d) Notify each holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating
thereto is required to be delivered under the Securities Act
of the happening of any event as a result of which the
prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in
the light of the circumstances then existing, and prepare and
furnish to each Investor a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers
of such shares, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading in the light of the
circumstances then existing;
(e) If the Common Stock is then listed on a national securities
exchange or quoted on The Nasdaq Stock Market, then cause all
such Registrable Securities registered pursuant hereunder to
be listed on each such national securities exchange or quoted
on The Nasdaq Stock Market and if the Common Stock is not
then listed on a national securities exchange or quoted on
The Nasdaq Stock Market, then cause the Common Stock to be
listed on a national securities exchange or quoted on The
Nasdaq Stock Market if a national securities exchange or The
Nasdaq Stock Market is reasonably likely to permit the
listing or quoting of the Common Stock;
(f) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant to such registration statement
and a CUSIP number for all such Registrable Securities, in
each case not later than the effective date of such
registration;
(g) In connection with any underwritten offering pursuant to a
registration statement filed pursuant to Section 4.IV.A., the
Company will enter into an underwriting agreement reasonably
necessary to effect the offer and sale of Common Stock,
provided such underwriting agreement contains customary
underwriting provisions;
(h) Register or qualify the Registrable Securities covered by
such registration statement under the securities or blue sky
laws of such jurisdictions as such holders shall reasonably
request, keep such registration or qualification in effect
for so long as such registration statement remains in effect
and do any and all other acts and things which may be
reasonably necessary or appropriate to enable such holders to
dispose of the Registrable Securities in such jurisdiction;
(i) Notify each such holder promptly (i) when such registration
statement and any post-effective amendment thereto has become
effective under the Securities Act, (ii) of any request by
the Commission for an amendment or supplement to such
registration statement or the prospectus included therein or
for additional information, (iii) of the issuance by the
Commission of any stop order suspending the effectiveness of
such registration statement or the initiation of any
proceedings for that purpose and (iv) of the receipt of any
notification with respect to the suspension of the
registration or qualification of any Registrable Securities
in any jurisdiction in which they are registered or qualified
or the initiation of any proceedings for that purpose;
(j) Use commercially reasonable efforts to obtain the withdrawal
at the earliest possible moment to any stop order suspending
the effectiveness of such registration statement and the
lifting at the earliest possible moment of any suspension of
the registration or qualification of the Shares in any
jurisdiction in which they are registered or qualified; and
(k) Otherwise use commercially reasonable efforts to comply with
all applicable rules and regulations of the Commission, and
make available to its security holders, as soon as reasonably
practicable, an earnings statement covering a period of
twelve (12) months after the effective date of such
registration statement, which earnings statement shall
satisfy the provisions of Section 11 (a) of the Securities
Act.
(3) (a) The Company will indemnify each such holder, each of its
employees, officers, directors and partners, legal counsel,
and accountants and each person controlling such holder
within the meaning of Section 15 of the Securities Act or
Section 20 of the Securities Exchange Act (the "Exchange
Act"), with respect to which registration, qualification, or
compliance has been effected pursuant to this Agreement, and
each underwriter, if any, and each person who controls within
the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act any underwriter, against all expenses,
claims, losses, damages, and liabilities (or actions,
proceedings, or settlements in respect thereof) arising out
of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any prospectus,
offering circular, or other document (including any related
registration statement, notification, or the like) incident
to any such registration, qualification, or compliance, or
based on any omission (or alleged omission) to state therein
a material fact required to be stated therein or necessary to
make the statements therein not misleading, or any violation
by the Company of the Securities Act or any rule or
regulation thereunder applicable to the Company and relating
to action or inaction required of the Company in connection
with any such registration, qualification, or compliance, and
will reimburse each such holder, each of its employees,
officers, directors, partners, legal counsel, and accountants
and each person controlling such holder, each such
underwriter, and each person who controls any such
underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating and defending or
settling any such claim, loss damage, liability, or action;
provided that the Company will not be liable in any such case
to the extent that any such claim, loss, damage, liability,
or expense arises out of or is based on any untrue statement
or omission based upon written information furnished to the
Company by such holder in its capacity as such a holder, and
not in their capacity as a director, officer or employee of
the Company, if applicable, or underwriter and stated to be
specifically for use therein. It is agreed that the indemnity
agreement contained in this Section IV.C.(3)(a) shall not
apply to amounts paid in settlement of any such loss, claim,
damage, liability, or action if such settlement is effected
without the consent of the Company (which consent shall not
have been unreasonably withheld).
(b) Each such holder will, if Registrable Securities held by such
holder are included in the securities as to which such
registration, qualification, or compliance is being effected,
severally and not jointly, indemnify the Company, each of its
directors, officers, employees, partners, legal counsel, and
accountants and each underwriter, if any, of the Securities
covered by such a registration statement, each person who
controls the Company or such underwriter within the meaning
of Section 15 of the Securities Act, each other such holder,
and each of their officers, directors, and partners, and each
person controlling such other holder, against all clams,
losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any
such registration statement, prospectus, offering circular,
or other document, or any omission (or alleged omission) to
state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading,
and will reimburse the Company and such other holders,
directors, officers, partners, legal counsel, and
accountants, persons, underwriters, or control persons for
any legal and any other expenses reasonably incurred in
connection with investigating or defending any such claim,
loss, damage, liability, or action, in each case to the
extent, but only to the extent, that such untrue statement
(or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus,
offering circular, or other document in reliance upon and in
conformity with written information furnished to the Company
by such holder in their capacity as such holder, and not in
its capacity as a director, officer or employee of the
Company, if applicable, and stated to be specifically for use
therein.
(c) Each party entitled to indemnification under this Section
IV.C.(3) (the "Indemnified Party") shall give notice to the
party required to provide indemnification (the "Indemnifying
Party") promptly after such Indemnified Party has actual
knowledge of any claim as to which indemnity may be sought,
and shall permit the Indemnifying Party to assume the defense
of such claim or any litigation resulting therefrom, provided
that counsel for the Indemnifying Party, who shall conduct
the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose
approval shall not be unreasonably withheld), and the
Indemnified Party may participate in such defense, but the
fees and expenses of such counsel shall be at the expense of
the Indemnified Party unless (i) the Indemnifying Party has
agreed in writing to pay such fees and expenses or (ii) the
named parties to any such action or proceeding (including any
impleaded parties) include both the Indemnified Party and the
Indemnifying Party, and the Indemnified Party shall have been
advised by counsel that there may be one or more legal
defenses available to such Indemnifying Party which are
different from or additional to those available to the
Indemnified Party (in which case, if the Indemnified Party
notifies the Indemnifying Party in writing that it elects to
employ separate counsel at the, expense of the Indemnifying
Party, the Indemnifying Party shall not have the right to
assume the defense of such action or proceeding on behalf of
the Indemnified Party). The failure of any Indemnified Party
to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement,
to the extent such failure is not prejudicial. No
Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each
Indemnified Party (which consent shall not be unreasonably
withheld), consent to entry of any judgment or enter into any
settlement that does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect
to such claim or litigation. Each Indemnified Party shall
furnish such information regarding itself or the claim in
question as an Indemnifying Party may reasonably request in
writing and as shall be reasonably required in connection
with defense of such claim and litigation resulting
therefrom.
(d) If the indemnification provided for in this Section 4.3 is
held by a court of competent jurisdiction to be unavailable
to an Indemnified Party with respect to any loss, liability,
claim, damage or expense referred to therein, then the
Indemnifying Party, in lieu of indemnifying such Indemnified
Party hereunder, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such loss,
liability, claim, damage, or expense in such proportion as is
appropriate to reflect the relative fault of the Indemnifying
Party, on the one hand, and of the Indemnified Party, on the
other hand, in connection with the statements or omissions
that resulted in such loss, liability, claim, damage; or
expense as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party
and of the Indemnified Party shall be determined by reference
to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a
material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the
parties' relative intent, knowledge, access to information,
and opportunity to correct or prevent such statement or
omission.
WITNESS the signatures of the proper officers of Company and its
corporate seal. Dated to be effective December 31, 2000.
TANDYCRAFTS, INC.
By: ----------------------------------
Name: Leo Taylor
Title: Senior Vice President of Finance
ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Warrant Certificate)
FOR VALUE RECEIVED, __________________________________ hereby sells,
assigns, and transfers unto ___________________________________
(Please print name and address of transferee)
___________________________________________________________________
this Warrant Certificate, together with all right, title, and interest therein,
and does hereby irrevocably constitute and appoint ___________________________
Attorney, to transfer the within Warrant Certificate on the books of the within-
named Company, with full power of substitution.
Dated:_________________, 20___.
-----------------------------
Signature
-----------------------------
Signature
Guaranteed
NOTICE: The signature(s) to this assignment must correspond with the name(s)
as written upon the face of the Certificate in every particular
without alteration or enlargement or any change whatever.
Signature(s) must be guaranteed by a commercial bank or trust company
or a member firm of a major stock exchange.
ELECTION TO PURCHASE
(To be executed if holder desires
to exercise the Warrant Certificate)
TO: TANDYCRAFTS, INC.
The undersigned hereby irrevocably elects to exercise ________________
Warrants represented by this Warrant Certificate to purchase the shares of
Common Stock issuable upon the exercise of such Warrants and requests that
certificates for such shares be issued in the name of:
___________________________________________________________________
(Please insert social security or other identifying number)
___________________________________________________________________
(Please print name and address)
If such number of Warrants does not constitute all of the Warrants
evidenced by this Warrant Certificate, a new Warrant Certificate for the balance
remaining of such Warrants shall be registered in the name of and delivered to:
___________________________________________________________________
(Please insert social security or other identifying number)
__________________________________________________________________
Dated: ____________________, 20_____
-----------------------------
Signature
-----------------------------
Signature
Guaranteed
NOTICE: The signature on this Form of Election to Purchase must correspond
with the name(s) as written upon the face of the Certificate without
alteration or enlargement or any change whatever. Signature(s) must
be guaranteed by a commercial bank or trust company or a member firm
of a major stock exchange.
