Document:

EXHIBIT 4.1

    

       

    DESCRIPTION OF THE REGISTRANT’S SECURITIES REGISTERED UNDER SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934

     

       

    As of August 9, 2020, Tandy Leather Factory, Inc. (“TLF,” “we,” “our” and “us”) had one class of securities registered under Section 12 of the Securities Exchange Act of
      1934, as amended (the “Exchange Act”): our common stock, $0.0024 par value per share (the “Common Stock”).

     

       

    Description of Capital Stock

     

       

    The following summary of our capital stock does not purport to be complete and is subject to and qualified in its entirety by reference to our Certificate of
      Incorporation, as amended, including the certificates of designations and certificates of eliminations pursuant to which any outstanding series of preferred stock may be issued (the “Certificate of Incorporation”), our Bylaws (the “Bylaws”) and the
      General Corporation Law of the State of Delaware (“DGCL”), including Section 203. Please refer to these materials for a complete statement of the terms and rights of the Common Stock and preferred stock. Copies of our Certificate of Incorporation and
      Bylaws have been filed with the Securities and Exchange Commission (the “SEC”) as Exhibits 3.1 and 3.2, respectively, to our Annual Report on Form 10-K.

     

       

    Authorized Capital Stock

     

       

    Under the Certificate of Incorporation, our authorized capital stock consists of:

     

       

    	

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            25,000,000 shares of Common Stock, $0.0024 par value per share, and

          

     

       

    	

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            20,000,000 shares of preferred stock, $0.10 par value per share (the “Preferred Stock”), 25,000 shares of which have been designated as “Series A Junior Participating Preferred
              Stock” (“Series A Preferred Stock”), with a liquidation preference of $1,000.00 per share or an amount equal to 1,000 times the aggregate amount to be distributed per share to holders of shares of Common Stock (subject to adjustment as set
              forth in the certificate of designations in respect of the Series A Preferred Stock), whichever is greater.

          

     

       

    As of December 31, 2019, we had approximately 9,022,187 shares of our Common Stock and no shares of Preferred Stock outstanding.

     

       

    Common Stock

     

       

    Dividend Rights

     

       

    The holders of Common Stock are entitled to receive dividends as may be declared from time to time by our board of directors out of legally available funds.

     

       

    Voting Rights

     

       

    Our Common Stock possesses ordinary voting rights for the election of directors and in respect of other corporate matters, each share being entitled to one vote. The
      Common Stock has no cumulative voting rights, meaning that the holders of a majority of the shares cast for the election of directors can elect all the directors standing for election if they choose to do so.

     

       

    Liquidation Rights

     

       

    Upon our liquidation or dissolution, the holders of our Common Stock are entitled to share ratably in the net assets legally available for distribution to stockholders
      after payment of all corporate debts and payment of any liquidation preference granted to holders of any outstanding shares of our Preferred Stock.

     

       

    
      102

      
        

    

    Miscellaneous

     

       

    The Common Stock carries no preemptive, conversion or subscription rights and is not redeemable, assessable or entitled to the benefits of any sinking fund. All
      outstanding shares of Common Stock are duly authorized, validly issued, fully paid and non-assessable.

     

       

    Listing

     

       

    Our Common Stock trades on the  OTC Link (previously “Pink Sheets”) operated by OTC Markets Group under the symbol “TLFA.”

     

       

    Transfer Agent

    

      The transfer agent and registrar for our Common Stock is Broadridge Corporate Issuer Solutions.

     

       

    Preferred Stock

     

       

    Under our Certificate of Incorporation, our board of directors may provide for the issuance of up to 20,000,000 shares of Preferred Stock in one or more series. We
      currently have one authorized series of Preferred Stock: the Series A Preferred Stock. In June 2013, the board of directors, in connection with a rights agreement, authorized 25,000 shares of the Series A Preferred Stock, with a liquidation
      preference of $1,000.00 per share or an amount equal to 1,000 times the aggregate amount to be distributed per share to holders of shares of Common Stock (subject to adjustment as set forth in the certificate of designations in respect of the Series
      A Preferred Stock), whichever is greater. The rights agreement and the related preferred share purchase rights expired on June 6, 2016. As of December 31, 2019, there were no shares of the Series A Preferred Stock outstanding. The certificate of
      designations in respect of the Series A Preferred Stock is filed as Exhibit 3.3 to our Annual Report on Form 10-K.

     

       

    The rights, preferences, privileges and restrictions, including liquidation preferences, of the Preferred Stock of each additional series will be fixed or designated by
      our board of directors pursuant to a certificate of designations without any further vote or action by our stockholders. Certificates of designations will be filed with the SEC in connection with the offering of the specific series of Preferred
      Stock. The issuance of Preferred Stock could have the effect of delaying, deferring or preventing a change in control of TLF. Upon issuance against full payment of the purchase price therefor, shares of Preferred Stock offered will be fully paid and
      non-assessable.

     

       

    Limitation on Directors’ Liability

     

       

    Delaware corporation law authorizes corporations to limit or eliminate the personal liability of directors to corporations and their stockholders for monetary damages
      for breach of directors’ fiduciary duty of care. The duty of care requires that, when acting on behalf of the corporation, directors must exercise an informed business judgement based on all material information reasonably available to them. Absent
      the limitations authorized by such laws, directors are accountable to corporations and their stockholders for monetary damages for conduct constituting gross negligence in the exercise of their duty of care. Delaware law enables corporations to limit
      available relief to equitable remedies such as injunction or rescission. Our Certificate of Incorporation limits the liabilities of our directors to us or our stockholders, in their capacity as directors but not in their capacity as officers, to the
      fullest extent permitted by Delaware law. Specifically, our directors will not be personally liable for monetary damages for breach of a director’s fiduciary duty as a director, except for liability:

     

       

    	

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            for any breach of the director’s duty of loyalty to us or to our stockholders;

          

     

       

    	

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            for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law;

          

     

       

    	

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            for unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the DGCL; or

          

     

       

    	

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            for any transaction from which the director derived an improper personal benefit.

          

     

       

    
      103

      
        

    

    This provision in our Certificate of Incorporation, as amended, may have the effect of reducing the likelihood of derivative litigation against directors, and may
      discourage or deter stockholders or management from bringing a lawsuit against directors for breach of their duty of care, even though such an action, if successful, might otherwise have benefited us and our stockholders.

     

       

    Anti-Takeover Provisions

     

       

    Certain provisions in our organizational documents could delay or prevent an unsolicited change in control of us, including the authority of our board of directors to issue Preferred Stock
      discussed above and advance notice provisions for director nominations or business to be considered at a stockholders meeting. In addition, Delaware law imposes certain restrictions on mergers and other business combinations between us and any holder
      of 15% or more of our outstanding Common Stock.

     

       

     

       

     

  

   
  104EXHIBIT 10.5

    Amendment #1 to Tandy Leather Factory, Inc. 2013 Restricted Stock Plan

    

       

    The Tandy Leather Factory 2013 Restricted Stock Plan (the “Plan”) is hereby amended as follows:

    

       

    	

             	1.	
            Section 5(a) of the Plan shall be amended and restated to read as follows:

          

    

       

    a.            Shares Available. The aggregate number of shares of Common Stock that may be subject to Awards granted under this
        Plan shall be 800,000 shares of Common Stock, which may be authorized and unissued or treasury shares, subject to any adjustments made in accordance with Section 9 below.

    

       

    	

             	2.	
            Section 20 of the Plan shall be amended and restated to read as follows:

          

    

       

    20.             Duration, Amendment and Termination.  No Award shall be granted more than ten years after the Effective Date; provided,
        however, that the terms and conditions applicable to any Award granted prior to such date may thereafter be amended or modified by mutual agreement between the Company and the Participant or such other persons as may then have an interest
        therein.  The Board or the Committee may amend the Plan from time to time or suspend or terminate the Plan at any time.  However, no action authorized by this Section 20 shall reduce the amount of any existing Award or change the terms and
        conditions thereof without the Participant’s consent, except as otherwise provided for in Section 9.  No amendment of the Plan shall, without approval of the shareholders of the Company, (i) increase the total number of shares which may be
        issued under the Plan; (ii) modify the requirements as to eligibility for Awards under the Plan; or (iii) otherwise materially amend the Plan as provided in Nasdaq Marketplace Rules or the rules of another public trading market on which shares of
        Common Stock are then listed or quoted.  Upon approval by the Company’s stockholders of this Plan or any amendment hereof extending the duration of this Plan, all grants of Awards approved by the Company’s Board of Directors prior to the date of
        such stockholder approval shall be deemed ratified by the stockholders.

    

       

    Other than the amendments set forth above, in all other respects the text of the Plan would appear as such document was filed as Annex 1 to the
      Company’s Notice and Proxy Statement for its 2013 Annual Meeting of Stockholders, filed with the Securities and Exchange Commission on April 23, 2013.

     

       

     

       

     

  

   
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