Hancock Fabrics 8-K 03/21/06 Exhibit 10.1


    Exhibit
      10.1
 

    Amendment
      No. 2 to the 

    Amended
      and Restated Rights Agreement

     

    This
      Amendment No. 2 to the Amended and Restated Rights Agreement, effective as
      of
      March 20, 2006 (“Amendment No. 2”), between
      Hancock Fabrics, Inc.,
      a
      Delaware corporation (the “Company”), and
      Continental Stock Transfer & Trust Company
      (the
“Rights Agent”), provides as follows:

     

    Whereas,
      the
      Company and the Rights Agent are parties to an Amended and Restated Rights
      Agreement dated as of March 4, 2001 and most recently amended on December 9,
      2005 (the “Rights Agreement”), specifying the terms of the Rights (as defined
      therein);

     

    Whereas,
      the
      Company and the Rights Agent now desire to amend the definition of "Person",
      as
      provided herein.

     

    Now,
      Therefore,
      in
      consideration of the premises and mutual agreements herein set forth, the
      parties hereby agree as follows:

     

    1.              
      Amendment and Restatement of Section 1(k):  “Certain
      Definitions." 
      Section 1(k) of the Rights Agreement is hereby amended, restated and replaced
      in
      its entirety by the following:

     

     “Person”
      means
      any
      individual, partnership, firm, corporation, company, association, trust,
      unincorporated organization, syndicate or group (the existence of a “group”
being determined in accordance with Rule 13d-5 under the Exchange Act, as the
      Rule is in effect on the date of this Agreement including, but not limited
      to, a
      Person having any agreement, arrangement or understanding [whether formal or
      informal and whether or not in writing] with any other Person to act together
      to
      acquire, offer to acquire, hold, vote or dispose of any Common Shares of the
      Company).

     

     2.              
      No Other Amendments. 
      Except as expressly amended hereby, the terms of the Rights Agreement will
      remain in full force and effect in all respects.

     

    3.              
      Governing Law.
      This
      Agreement and each Right Certificate issued hereunder shall be deemed to be
      a
      contract made under the laws of the State of Delaware and for all purposes
      shall
      be governed by and construed in accordance with the laws of such state
      applicable to contracts to be made and performed entirely within such
      state.

     

    4.              
      Counterparts. 
      This Amendment No. 2 may be executed in any number of counterparts, and each
      of
      such counterparts will for all purposes be deemed to be an original, and all
      such counterparts will together constitute but one and the same
      instrument.

     

     


    
      
        
        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
           

        

      

    



    


    IN
      WITNESS WHEREOF,
      the
      parties hereto have caused this Amendment No. 2 to be executed by their duly
      authorized representatives as of the date first above written.

     

    
      	
              Continental
                Stock Transfer & Trust Company

            
	
               

            
	
              /s/
                William F. Seegraber

            	
               

            
	
              William
                F. Seegraber

              Vice
                President 

            
	
               

            
	
              Hancock
                Fabrics, Inc.

            
	
               

            
	
              /s/
                Bruce D. Smith

            	
               

            
	
              Bruce
                D. Smith

            
	
              Executive
                Vice President, 

              Chief
                Financial Officer and Treasurer