UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 50249
________________________________________________________________________
SCHEDULE 13D/A
(RULE 13D-101)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 2)*
THE LEATHER FACTORY, INC.
(Name of Issuer)
COMMON STOCK, PAR VALUE $0.0024
(Title of Class of Securities)
522126101
(CUSIP Number)
PATRICK A. REARDON
ATTORNEY-AT-LAW
210 WEST SIXTH STREET, SUITE 401
FORT WORTH, TEXAS 76102
(817) 348-8801
FAX: (817) 348-8804
(Name, Address and Telephone Number of person authorized to receive notices and
communications)
SEPTEMBER 24, 2003
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of 240.13d-1(e), (f), or (g), check the following box. (___)
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See 240.13c-7 for other parties
to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provision of the Act (however, see the Notes.)
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SCHEDULE 13D/A
(AMENDMENT NO. 2)
CUSIP NO. 522126101
____________________________________________________________________________
1) NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)
J. Wray Thompson, Sr.
________________________________________________________________________
2) CHECK THE APPROPRIATE BOX IF EITHER IS A MEMBER OF A GROUP
(A) (___) (B) ( X)
____________________________________________________________________________
3) SEC USE ONLY
____________________________________________________________________________
4) SOURCE OF FUNDS
PF, OO
________________________________________________________________________
5) CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED BY ITEMS 2(D) OR 2(E)
(____)
____________________________________________________________________________
6) CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
____________________________________________________________________________
7) SOLE VOTING POWER
NUMBER OF 2,214,331
SHARES 8) SHARED VOTING POWER
BENEFICIALLY 5,528,766
OWNED BY EACH 9) SOLE DISPOSITIVE POWER
REPORTING 2,214,331
PERSON WITH 10) SHARED DISPOSITIVE POWER
5,528,766
____________________________________________________________________________
11) AGGREGATE AMOUNT BENEFICALLY OWNED BY EACH REPORTING PERSON
5,528,766
____________________________________________________________________________
12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(____)
____________________________________________________________________________
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
52.8%
________________________________________________________________________
14) TYPE OF REPORTING PERSON
IN
________________________________________________________________________
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SCHEDULE 13D/A
(AMENDMENT NO. 2)
CUSIP NO. 522126101
____________________________________________________________________________
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
ITEM 5 IS AMENDED TO READ IN ITS ENTIRETY AS SET FORTH BELOW:
( a ) & ( b ) Mr. Thompson currently is the beneficial owner of 2,214,331
shares (21.1 percent of the total outstanding shares) of Common Stock ("Common
Stock") issued by The Leather Factory, Inc., a Delaware corporation ("Issuer").
Of this amount, 112,584 shares are held in The Leather Factory, Inc. Employee
Stock Ownership Plan ("ESOP") or other retirement plan and are allocated to Mr.
Thompson's account. Mr. Thompson has the sole right to vote the foregoing
2,214,331 shares or to dispose of the shares (subject to certain standard
restrictions in the ESOP and other plans.) See Item 2 for information
concerning the property interests of Mr. Thompson's spouse in these shares.
In addition, Mr. and Mrs. Morgan are the beneficial owners of 3,314,435 shares
of Common Stock (31.7 percent of the total outstanding shares). Of this amount,
173,127 shares are allocated to their ESOP accounts (115,810 shares in the
account of Mr. Morgan and 57,317 in the account of Mrs. Morgan), and Mr. Morgan
alone owns 7,008 shares. Mr. and Mrs. Morgan only have the right to vote these
3,314,435 shares or to dispose of them.
If Mr. Thompson is deemed to be the beneficial owner of Mr. and Mrs. Morgan's
shares, he is the beneficial owner of 5,528,766 shares of Common Stock, or 52.8%
of the total shares of the Common Stock outstanding. Mr. Thompson disavows
beneficial ownership of the shares held by Mr. and Mrs. Morgan.
( c ) On September 24, 2003, Mr. Thompson sold 500,000 shares of the Common
Stock at $3.50 per share. This transaction was effected through a private sale
to an unrelated investor. The information reported in subparts (a) and (b) of
this Item 5 gives effect to this transaction.
ITEM 6. CONTRACTS, ARRANGEMENT, UNDERSTANDING, OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER
ITEM 6 IS AMENDED TO READ IN ITS ENTIRETY AS SET FORTH BELOW:
Mr. Thompson has entered into a contract with Westminster Securities
Corporation (a member firm of the New York Stock Exchange) to advise him in
connection with a possible sale of some of his Common Stock. The contract
terminates on October 31, 2003. Westminster Securities Corporation acted
pursuant to this agreement in the transaction described in Item 5 ( c ).
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
ITEM 7 IS AMENDED TO READ IN ITS ENTIRETY AS SET FORTH BELOW:
Exhibit 1
----------
Engagement Agreement, dated April 30, 2003, among Wray Thompson, The Leather
Factory, Inc. and Westminster Securities Corporation
Signature
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
September 30, 2003
________________________________________________________________________
Date
/s/ J. Wray Thompson, Sr.
________________________________________________________________________
Signature
J. Wray Thompson, Sr., Reporting Person
________________________________________________________________________
Name/Title
ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE FEDERAL
CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1061).
3
EXHIBIT 1
----------
Westminster Securities Corporation
Member New York Stock Exchange
April 30, 2003
Mr. Wray Thompson
Chairman and CEO
The Leather Factory, Inc.
3847 E. Loop 820 South
Fort Worth, TX 76119
RE: Engagement Agreement
Dear Wray:
This agreement ("Agreement") is made and entered into this 1st day of May, 2003
between Wray Thompson, (the "Seller"), The Leather Factory, Inc. ("Company") and
Westminster Securities Corporation, a registered broker/dealer ("Westminster").
Pursuant to this Agreement, Westminster will provide services to the Seller as
set forth below:
1. PURPOSE
-----------
Based on the terms set forth in this Agreement, the Seller hereby retains
Westminster on an exclusive basis during the Engagement Period (as defined
herein) to sell a minimum of 1,000,0000 shares of The Leather Factory, Inc.
common stock ("TLF") held by the Seller. [The exclusivity of this agreement
specifically excludes the agreement between Mr. Thompson and the Company's
ESOP.]
2. ENGAGEMENT PERIOD
----------------------
This Agreement shall commence on May 1, 2003 and terminate on October 31,
2003 (the "Engagement Period") unless extended by mutual written agreement of
Westminster, the Seller and the Company.
3. SERVICES
------------
Westminster will represent the Seller as agent in a private placement
("Private Placement or a Placement") of 1,000,000 shares of TLF to be placed for
$3.50 or such other price as agreed by Seller. Additionally, Westminster will
assist the Company and Seller in the preparation of a Private Placement
Memorandum ("Memorandum") for sale of the Seller's common stock, including
conducting customary due diligence of the Company, reviewing financial forecasts
for the preparation of such Memorandum. In performance of these duties,
Westminster shall provide the Seller with the benefits of its commercially
reasonable judgment and efforts. The Company is a party to this Agreement
solely for the purpose of its agreement to assist the Seller and Westminster in
the due diligence and preparation of the Memorandum, which the Company
acknowledges will be of benefit to the Company.
4. COMPENSATION
----------------
a. At closing of the Placement, the Seller shall pay Westminster 5% of the
gross proceeds payable at the in New York Clearinghouse Funds.
b. Upon commencement of the Engagement, the Company shall pay Westminster
a financial advisory fee of $15,000.
5. ADDITIONAL SERVICES
------------------------
Should the Company or Seller desire Westminster to provide any financial
advisory or investment banking service(s) ("Additional Services") not listed
above, the Company or Seller, as applicable, and Westminster shall enter into an
additional engagement letter to be executed by the parties hereto at the
commencement of the Additional Service(s) to be rendered by Westminster.
6. EXPENSES
-------------
The Seller shall reimburse Westminster for any and all reasonable
out-of-pocket expenses incurred in connection with services provided to the
Seller under this Agreement including, but not limited to travel, legal fees,
printed, and other expenses, incurred in connection with Westminster's providing
the services stated or contemplated herein. Westminster will not bear any of
the Seller's legal, accounting, printing or other expenses in connection with
any transaction considered or consummated hereby. It also is understood that
neither Westminster, nor the directors, employees and agents of Westminster,
will be responsible for any fees or commissions payable to any finder or to any
other financial or other advisor utilized or retained by the Seller. With the
exception of out of pocket expenses, Westminster shall obtain prior approval
from the Seller. All expenses billed by Westminster to the Seller will be
invoiced to the Seller and reimbursed on a monthly basis within ten days of
receipt.
7. LIMITATION OF LIABILITY
-----------------------------
In the absence of gross negligence or willful misconduct on the part of
Westminster, Westminster shall not be liable to the Seller or the Company for
any action or omission of Westminster or any of its officers, directors,
employees, agents, representatives or stockholders in the course of, or in
connection with, rendering or performing any services contemplated hereby.
8. INDEMNIFICATION
-------------------
The Seller agrees to indemnify Westminster in accordance with the
provisions of Annex A hereto, which is incorporated by reference and made a part
hereof.
9. SEVERABILITY
----------------
Any term or provision of this Agreement which is invalid or unenforceable
in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent
of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this Agreement or affecting
the validity or enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction. If any provision of this Agreement is so
broad as to be unenforceable, the provision shall be interpreted to be only so
broad as is enforceable.
10. MISCELLANEOUS
------------------
(a) Any notice or communication between parties hereto shall be sufficiently
given if sent by certified or registered mail, postage prepaid, or faxed and
confirmed if to the Seller or the Company, addressed to Seller or Company at
3847 East Loop 820 South or if to Westminster, addressed to it at Westminster
Securities Corporation, 100 Wall Street, 7th Floor, New York, NY 10005. Such
notice or other communication shall be deemed to be given on the date of
receipt.
(b) If Westminster shall cease to do business, the provisions hereof
relating to duties of Westminster and compensation by the Seller as it applies
to Westminster shall thereupon cease to be in effect, except for the Seller's
obligation of payment for services rendered prior thereto. This Agreement shall
survive any merger of, acquisition of, or acquisition by Westminster and after
any such merger or acquisition shall be binding upon the Seller and the entity
surviving such merger, acquisition or similar transaction.
(c) This Agreement embodies the entire agreement and understanding between
the Seller and Westminster and supersedes any and all negotiations, prior
discussions and preliminary and prior agreements and understandings related to
the subject matter hereof, and may be modified only by a written instrument duly
executed by each party.
(d) This Agreement has been duly authorized, executed and delivered by and
on behalf of the Seller and Westminster.
(e) This Agreement shall be deemed made in New York. This Agreement and all
controversies arising from or relating to performance under this Agreement shall
be governed by and construed in accordance with the laws of the State of New
York, without giving effect to such state's rules concerning conflicts of law.
The Seller and Westminster each hereby irrevocably consents to personal
jurisdiction and venue in any court of the State of New York or any Federal
court sitting in the County of New York for the purposes of any suit, action or
other proceeding arising out of this Agreement or any of the agreements or
transactions contemplated hereby, which is brought by or against the Seller, and
hereby agrees that all claims in respect of any such suit, action or proceeding
shall be heard and determined in any such court. The Seller and Westminster
each hereby irrevocably consents to the service of process of any of the
aforementioned courts in any such suit, action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to the Seller
or Westminster at its address set forth above, such service to become effective
ten (10) days after such mailing. Each of the Seller and Westminster hereby
waive any right to trial by jury with respect to any claim, proceeding,
counterclaim or action arising out of this Agreement then the prevailing party
in such action or proceeding, whether or not the action or proceeding proceeds
to final judgment.
(f) There is no relationship of partnership, agency, employment, franchise
or joint venture between the parties. Neither party has the authority to bind
the other or incur any obligation on its behalf.
(g) The Seller hereby acknowledges that Westminster is not a fiduciary of
the Seller and that Westminster makes no representations or warranties regarding
Seller's ability to sell the shares of TLF, whether now or in the future.
(h) This Agreement and the rights hereunder may not be assigned by either
party (except by operation of law) and shall be binding upon and inure to the
benefit of the parties and their respective permitted successors, assigns and
legal representatives.
(i) No waiver, amendment or other modification of this Agreement shall be
effective unless in writing and signed by both parties. This Agreement may be
executed in counterparts, each of which together shall be considered a single
document.
(j) All amounts payable to Westminster by the Seller hereunder which are not
paid within thirty (30) days of the dates payable shall accrue interest at a
rate of twelve (12%) per annum from the date due until paid.
If you are in agreement with the foregoing, please execute and return one copy
of this Engagement Agreement and $15,000 from the Company to Westminster.
Sincerely,
WESTMINSTER SECURITIES CORPORATION
By: /s/ John O'Shea
-----------------
Name: John O'Shea
Title: President
By: /s/ Samuel M. Chase Jr.
---------------------------
Name: Samuel M. Chase Jr.
Title: Managing Director
Agreed to and accepted this 30th day of April 2003.
By: /s/ Wray Thompson
--------------------
Name: Mr. Wray Thompson
THE LEATHER FACTORY, INC.
Agreed to and accepted this 30th day of April 2003.
By: /s/ Shannon L. Greene
-------------------------
Name: Ms. Shannon Greene
Title: CFO
4
ANNEX A
INDEMNIFICATION
Seller hereby agrees to indemnify and hold harmless Westminster and its
affiliates, their respective directors, officers, agents, employees and
controlling persons, and each of their respective successors and assigns
(collectively, the "Indemnified Persons"), to the full extent lawful, from and
against any and all losses, claims, damages, judgments, assessments, costs,
expenses and other liabilities ("Liabilities") and shall periodically and
promptly reimburse each Indemnified Person for all fees (including attorney's
fees and costs) and expenses (collectively "Expenses") as they are incurred by
them in investigating, preparing, pursuing, or defending any claim, action,
proceeding or investigation, whether or not in connection with pending or
threatened litigation, action, suit, proceeding or arbitration and whether or
not brought by the Seller or any affiliate thereof or any third party and
whether or not any Indemnified Person is a party (collectively, "Actions") which
(A) are related to or arise out of actions or alleged actions taken or omitted
to be taken (including without limitation any untrue statements or alleged
untrue statements made or any statement omitted to be made) by the Seller or (B)
are otherwise related to or arise out of Westminster's activities on the
Seller's behalf or the advice or services rendered or to be rendered by any
Indemnified Person hereunder; provided, however, the Seller shall not be
responsible for any Liabilities pursuant to clause (B) or this sentence which
are determined by a court of competent jurisdiction in a final judgment which is
not longer subject to appeal or further review to have resulted solely from the
gross negligence or willful misconduct of such Indemnified Person, and provided
further, that the aggregate liability of the Indemnified Person, if any
hereunder, shall in no event exceed the total fees paid by the Seller to
Westminster under this Agreement. If the foregoing indemnification is
unavailable to an Indemnified Person for any reason or insufficient to hold it
harmless, the Seller shall contribute to the Liabilities and Expenses for which
such indemnification is held unavailable, (i) in such proportion as is
appropriate to reflect the relative benefits to the Seller and its stockholders,
on the one hand, and Westminster, on the other hand, in connection with
Westminster's engagement hereunder or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, then in such proportion as is
appropriate to reflect the relative benefits referred to in clause (i) and also
the relative fault of the Seller and Westminster with respect to such
Liabilities, and any other relevant equitable considerations; provided, however,
that in no event shall the Seller contribute less than the amount necessary to
ensure that all Indemnified Persons, in the aggregate, are not liable for any
Liabilities and Expenses in excess of the fees actually paid Westminster
hereunder. These reimbursement, indemnity and contribution obligations shall be
in addition to any liability which the Seller may otherwise have, and shall be
binding upon and inure to the benefit of any of its successors, assigns, heirs
and representatives. The Seller also agrees that no Indemnified Person shall
have any liability to the Seller, its stockholders or any person asserting
claims on behalf of the Seller for or in connection with any advise or services
rendered or to be rendered by any Indemnified Person pursuant to this Agreement,
the transactions contemplated hereby or any action or inaction by an Indemnified
Person in connection therewith except, with respect to Westminster, for
Liabilities (and related Expenses) of the Seller that are determined by a court
of competent jurisdiction in a final judgment no longer subject to appeal or
further review to have resulted solely from Westminster's gross negligence or
willful misconduct in performing its services hereunder, provided that the
aggregate liability of Westminster, if any, hereunder shall be limited to the
total fees paid by the Seller to Westminster under this Agreement.
The indemnity, reimbursement and contribution provisions set forth herein shall
remain operative and in full force and effect regardless of (i) any withdrawal,
termination or consummation of or failure to initiate or consummate any Action
referred to herein, (ii) any investigation made by or on behalf of any party
hereto or any person controlling (within the meaning of Section 15 of the
Securities Act of 1933 as amended, or Section 20 of the Securities Exchange Act
of 1934, as amended) any party hereto, (iii) any termination or the completion
or expiration of this letter of Westminster's engagement and (iv) whether or not
Westminster shall, or shall not be called upon to, render any formal or informal
advise in the course of such engagement.
5