Form 13D/A - Morgan
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
13D/A
Under
the Securities Exchange Act of 1934
(Amendment
No. 1)*
Tandy
Leather Factory, Inc.
(Name
of
Issuer)
Common
Stock, par value $0.0024
(Title
of
Class of Securities)
87538X105
(CUSIP
Number)
Douglas
W. Clayton
Cantey
& Hanger, LLP
801
Cherry Street, Suite 2100
Fort
Worth, Texas 76102
(817)
877-2890
Fax:
(817) 877-2807
(Name,
Address and Telephone Number of person authorized to receive notices and
communications)
May
5, 2006
(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.)
|
1
|
NAMES
OF REPORTING PERSONS:
Ronald
C. Morgan
I.R.S.
IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES
ONLY)
|
|
2
|
CHECK
THE APPROPRAITE BOX IF A MEMBER OF A GROUP (SEE
INSTRUCTIONS):
(a)
[ ]
(b)
[ X ]
|
|
3
|
SEC
USE ONLY:
|
|
4
|
SOURCE
OF FUNDS (SEE INSTRUCTIONS):
N/A
|
|
5
|
CHECK
IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) OR
2(e): ______
|
|
6
|
CITIZENSHIP
OR PLACE OF ORGANIZATION:
United
States of America
|
|
NUMBER
OF
|
7
|
SOLE
VOTING POWER:
7,008
(See Item 5)
|
|
SHARES
BENEFICIALLY
OWNED
BY
|
8
|
SHARED
VOTING POWER:
1,738,036
(See Item 5)
|
|
EACH
REPORTING
PERSON
|
9
|
SOLE
DISPOSITIVE POWER:
7,008
(See Item 5)
|
|
WITH
|
10
|
SHARED
DISPOSITIVE POWER:
1,617,810
(See Item 5)
|
|
11
|
AGGREGATE
AMOUNT BENEFITICALLY OWNED BY EACH REPORTING PERSON:
1,797,431
(See Item 5)
|
|
12
|
CHECK
BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE
INSTRUCTIONS):
[
X ]
|
|
13
|
PERCENT
OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.7%
(See Item 5)
|
|
14
|
TYPE
OF REPORTING PERSON
IN
|
|
1
|
NAMES
OF REPORTING PERSONS:
Robin
L. Morgan
I.R.S.
IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES
ONLY)
|
|
2
|
CHECK
THE APPROPRAITE BOX IF A MEMBER OF A GROUP (SEE
INSTRUCTIONS):
(a)
[ ]
(b)
[ X ]
|
|
3
|
SEC
USE ONLY:
|
|
4
|
SOURCE
OF FUNDS (SEE INSTRUCTIONS):
N/A
|
|
5
|
CHECK
IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) OR
2(e): ______
|
|
6
|
CITIZENSHIP
OR PLACE OF ORGANIZATION:
United
States of America
|
|
NUMBER
OF
|
7
|
SOLE
VOTING POWER:
0
(See Item 5)
|
|
SHARES
BENEFICIALLY
OWNED
BY
|
8
|
SHARED
VOTING POWER:
2,563,543
(See Item 5)
|
|
EACH
REPORTING
PERSON
|
9
|
SOLE
DISPOSITIVE POWER:
0
(See Item 5)
|
|
WITH
|
10
|
SHARED
DISPOSITIVE POWER:
2,563,543
(See Item 5)
|
|
11
|
AGGREGATE
AMOUNT BENEFITICALLY OWNED BY EACH REPORTING PERSON:
1,797,431
(See Item 5)
|
|
12
|
CHECK
BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE
INSTRUCTIONS):
[
X ]
|
|
13
|
PERCENT
OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.7%
(See Item 5)
|
|
14
|
TYPE
OF REPORTING PERSON
IN
|
Ronald
C.
Morgan (“Mr. Morgan”) and Robin L. Morgan (“Mrs. Morgan,” and together with Mr.
Morgan, the “Reporting Persons”) hereby amend and supplement their Schedule 13D
filed with the Securities and Exchange Commission (the “Commission”) on January
22, 2002, with respect to their beneficial ownership of the common stock, par
value $0.0024 (“Common Stock”), of Tandy Leather Factory, Inc. (the “Issuer”) as
set forth below. This Amendment No. 1 is being filed to reflect a private
sale by the Reporting Persons of 1,500,000 shares of Common Stock at a price
of
$6.25 per share on May 5, 2006.
Item
2. Identity
and Background
Item
2 is
hereby amended by deleting the last two paragraphs thereof and replacing such
paragraphs with the following:
Mr.
Morgan and Mrs. Morgan are husband and wife and as such they may be deemed
to be
a “group,” as that term is used in Section 13(d)(3) of the Securities Exchange
Act of 1934, as amended (the “Act”). Except with respect to Common Stock held by
Mr. Morgan and Mrs. Morgan as joint tenants, Mr. Morgan and Mrs. Morgan disclaim
the existence of a group and disclaim beneficial ownership of Common Stock
held
by the other individually, whether directly or through the Issuer’s Employees
Stock Ownership Plan and Trust.
Item
3. Source
and Amount of Funds or Other Consideration
Item
3 is
hereby amended to read in its entirety as set forth below:
Not
Applicable.
Item
4. Purpose
of Transaction
Item
4 is
hereby amended to read in its entirety as set forth below:
The
Reporting Persons sold 1,500,000 shares of Common Stock in a private offering
to
institutional investors at a price of $6.25 per share for the purpose of
commencing personal estate planning initiatives while expanding the Issuer’s
institutional shareholder base.
Item
5. Interest
in Securities of the Issuer
Item
5 is
amended to read in its entirety as set forth below:
(a)
&
(b) The Reporting Persons are the beneficial owners of 1,797,431 shares of
Common Stock (16.7% of 10,763,976 shares of Common Stock outstanding as reported
by the Issuer in its proxy statement filed with the Commission on April 3,
2006). Of this amount, 179,621 shares are allocated to their accounts under
the
Issuer’s Employees’ Stock Ownership Plan & Trust (“ESOP”) (120,226 shares in
the account of Mr. Morgan and 59,396 shares in the account of Mrs. Morgan).
Mr.
Morgan and Mrs. Morgan each has the right to request that the trustee of
the
ESOP (the “Trustee”) vote shares of Common Stock allocated to his or her ESOP
account. Such requests are typically honored by the Trustee, but the Trustee
has
the authority ignore such requests and to vote ESOP shares as the Trustee
deems
prudent. The Trustee serves in the capacity of trustee of the ESOP at the
pleasure of the ESOP Committee, and except in certain limited circumstances,
the
Trustee may dispose of ESOP shares only as the ESOP Committee directs. Mrs.
Morgan is one of five members of the ESOP Committee. Accordingly, Mrs. Morgan
may be deemed to share voting and dispositive power with respect to all 952,741
shares held by the ESOP, and Mr. Morgan may be deemed to share voting power
with
respect to the 120,226 shares of Common Stock allocated to his ESOP account.
Mr.
Morgan has sole voting and sole dispositive power with respect to 7,008 shares
that he owns individually. Mr. Morgan and Mrs. Morgan share voting and
dispositive power with respect to the 1,610,802 shares of Common Stock held
jointly by them. The Reporting Persons disclaim beneficial ownership of shares
held by the ESOP except for those shares that have been allocated to the
Reporting Persons’ respective ESOP accounts.
The
Reporting Persons may be deemed to be members of a “group,” as that term is
defined in Section 13(d)(3) of the Act, with J. Wray Thompson, Sr. and his
wife,
Sally A. Thompson, who also sold 1,500,000 shares of Common Stock to
institutional investors at a price of $6.25 per share as part of the same
transaction as the Reporting Persons are reporting on this Amendment to Schedule
13D. Mr. Thompson is the Chairman of the Board and Chief Executive Officer
of
the Issuer and currently is the beneficial owner of 220,448 shares of Common
Stock (2.1% of 10,763,976 shares of Common Stock outstanding as reported by
the
Issuer in its proxy statement filed with the Commission on April 3, 2006).
Of
this amount, 78,761 shares are allocated to Mr. Thompson’s account under the
Issuer’s ESOP and 23,702 shares are held in Mr. Thompson’s individual retirement
account. If the Reporting Persons are deemed to be members of a group with
Mr.
Thompson, they would be deemed the beneficial owner of 2,017,879 shares of
Common Stock, or 18.7% of the total shares of Common Stock outstanding. The
Reporting Persons disclaim the existence of a group with Mr. and Mrs. Thompson
and disclaim beneficial ownership of shares of Common Stock held by
them.
(c)
On
May 5, 2006, the Reporting Persons sold 1,500,000 shares of Common Stock at
a
price of $6.25 per share. This transaction was effected through a private sale
to an unrelated investor.
(d)
and
(e) Not applicable.
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:
On
May 1,
2006, Mr. Morgan entered into an agreement with Merriman Curhan Ford & Co.
(“MCF”) to advise him in connection with a possible sale of shares of Common
Stock. MCF acted pursuant to this agreement in the transaction described in
Item
5(c). As part of the agreement, Mr.
Morgan agreed to submit to a 12-month lockup of the remaining shares not sold
during this transaction. Mr. Morgan also agreed to enter into a 10b5-1 program
through MCF after such 12 month period.
Item
7. Material to be Filed as Exhibits
Item
7 is
amended to read in its entirety as set forth below:
Exhibit
1
Joint
Filing Agreement by and between the Reporting Persons.
Exhibit
2
Engagement
Agreement, dated May 1, 2006, between Ronald C. Morgan and Merriman Curhan
Ford
& Co.
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
12, 2006
Date
/s/
Ronald C. Morgan
Signature
Ronald
C. Morgan, Reporting Person
Name/Title
September
12, 2006
Date
/s/
Robin L. Morgan
Signature
Robin
L. Morgan, Reporting Person
Name/Title
Attention:
Intentional misstatements or omissions of fact constitute Federal criminal
violations (See 18 U.S.C. 1001).
Exhibit
1
JOINT
FILING AGREEMENT
The
undersigned hereby agree that Amendment No. 1 (the "Amendment"), dated as of
the
date hereof, to the Schedule 13D filed with the Securities and Exchange
Commission on January 22, 2002, with respect to their beneficial ownership
of
the common stock, par value $0.0024 of Tandy Leather Factory, Inc. is, and
any
further amendments thereto executed by each of us shall be, filed on behalf
of
each of us pursuant to and in accordance with the provisions of Rule 13d-1(k)(1)
under the Securities and Exchange Act of 1934, as amended, and that this
Agreement may be included as an Exhibit to the Amendment and any such further
amendment. This Agreement may be executed in any number of counterparts, all
of
which taken together shall constitute one and the same instrument.
IN
WITNESS WHEREOF, the undersigned have executed this Agreement as ofSeptember
12, 2006.
/s/
Ronald C. Morgan
Ronald
C.
Morgan
/s/
Robin L. Morgan
Robin
L.
Morgan
Exhibit
2
May
1,
2006
PERSONAL
& CONFIDENTIAL
Mr.
Ronald C. Morgan
President
Tandy
Leather Factory Inc.
3847
East
Loop 820 South
Ft.
Worth, TX 76119
Dear
Ron:
Mr.
Ronald C. Morgan (the “Selling Shareholder”) proposes to sell shares of common
stock (the “Securities”) of Tandy Leather Factory Inc. (the “Company”) in one or
more private transactions. By entering into this Agreement, the Selling
Shareholder agrees to engage Merriman Curhan Ford & Co. (“MCF”) as the
Selling Shareholder’s exclusive broker. MCF accepts such engagement and agrees
to use its best efforts to place the Securities with qualified institutional
investors without making any representations as to or otherwise being
responsible for the terms of any offers that such investors may make to
purchase
the Securities. MCF hereby acknowledges and agrees that the Selling Shareholder
may reject any or all bids to purchase the Securities presented to the
Selling
Shareholder by MCF at the Selling Shareholder’s sole discretion. Mr. Morgan
agrees to submit to a 12 month-lockup of the remaining shares not sold
during
this transaction. Thereafter the 12 month period, Mr. Morgan agrees to
enter
into a 10b5-1 program through Merriman Curhan Ford. The purpose of this
letter
is to memorialize the terms of our engagement.
1. Purchase
Agreement. The sale of the Securities to any investor will be evidenced
by a
purchase agreement (“Purchase Agreement”) between the Selling Shareholder and
such investors. The form of Purchase Agreement shall be reasonably satisfactory
to MCF. Such purchase agreement will include the Company’s willingness to
register the shares within a 30 day period.
2. Scope
of
Engagement. MCF has been engaged by the Selling Shareholder only in connection
with the matters described in this letter agreement and for no other purpose.
We
have not made, and will assume no responsibility to make any representation
in
connection with our engagement as to any legal matter. Except as specifically
provided in this letter agreement, MCF shall not be required to render
any
advice or reports in writing or to perform any other services.
3. Term
of
Engagement. The engagement of MCF on an exclusive basis will continue until
the
earlier to occur of (i) the date all Securities are sold, or (ii) July
31, 2006,
unless the Selling Shareholder and MCF agree to extend the Offering for
up to
sixty (60) days. Either party may terminate the relationship at any time
upon
thirty (30) days written notice to the other party. MCF shall, within 10
business days of the expiration or termination of its engagement hereunder,
provide a written list to the Selling Shareholder with the name and address
of
all qualified institutional investors who were contacted by MCF in connection
with the potential transaction (the “List”).
4. Fees
and
Expenses. The Selling Shareholder agrees to pay MCF a cash fee at the closing
of
the transaction(s) equal to 5.0% of the total amount of capital received
by the
Selling Shareholder from the sale of its Securities (a) to any investors
prior
to the expiration or termination of MCF’s engagement hereunder, regardless of
whether or not such investors were contacted by MCF in connection with
the
potential transaction, and (b) during the time period subsequent to the
expiration or termination of MCF’s engagement hereunder until December 31, 2006,
to investors whose name appears on the List.
5. Indemnity
and Contribution. The parties agree to the terms of MCF’s standard
indemnification agreement, which is attached hereto as Appendix A and
incorporated herein by reference. The provisions of this paragraph 5 shall
survive any termination of this Agreement.
6. Compliance
with Applicable Law. The parties to this Agreement will comply with all
applicable federal, state and foreign securities laws and other applicable
laws.
7. Independent
Contractor. MCF is and at all times during the term hereof will remain
an
independent contractor, and nothing contained in this letter agreement
will
create the relationship of employer and employee or principal and agent
as
between the Selling Shareholder and MCF or any of its employees. It is
understood that MCF’s responsibility to the Selling Shareholder is solely
contractual in nature and that MCF does not owe any fiduciary duty as a
result
of its engagement.
8. Successors
and Assigns. This letter agreement and all obligations and benefits of
the
parties hereto shall bind and shall inure to their benefit and that of
their
respective successors and assigns. The indemnity and contribution provisions
incorporated into this letter agreement are for the express benefit of
the
officers, directors, employees, consultants, agents and controlling persons
of
MCF and their respective successors and assigns.
9. Arbitration.
Any dispute between the parties concerning the interpretation, validity
or
performance of this letter agreement or any of its terms and provisions
shall be
submitted to binding arbitration in San Francisco County, California, before
the
American Arbitration Association, and the prevailing party in such arbitration
shall have the right to have any award made by the arbitrators confirmed
by a
court of competent jurisdiction. The provisions of Section 1283.05 of the
California Code of Civil Procedure, authorizing the taking of depositions
and
obtaining discovery, are incorporated herein by this reference and shall
be
applicable to any such arbitration.
10. General
Provisions. No purported waiver or modification of any of the terms of
this
letter agreement will be valid unless made in writing and signed by the
parties
hereto. Section headings used in this letter agreement are for convenience
only,
are not a part of this letter agreement and will not be used in construing
any
of the terms hereof. This letter agreement constitutes and embodies the
entire
understanding and agreement of the parties hereto relating to the subject
matter
hereof, and there are no other agreements or understandings, written or
oral, in
effect between the parties relating to the subject matter hereof. No
representation, promise, inducement or statement of intention has been
made by
either of the parties hereto which is to be embodied in this letter agreement,
and none of the parties hereto shall be bound by or liable for any alleged
representation, promise, inducement or statement of intention, not so set
forth
herein. No provision of this letter agreement shall be construed in favor
of or
against either of the parties hereto by reason of the extent to which either
of
the parties or its counsel participated in the drafting hereof. If any
provision
of this letter agreement is held by a court of competent jurisdiction to
be
invalid, illegal or unenforceable, the remaining provisions hereof shall
in no
way be affected and shall remain in full force and effect. In case of any
litigation or arbitration between the parties hereto, the prevailing party
shall
be entitled to its reasonable legal fees. This letter agreement is made
and
entered in the State of California, and the laws of that state relating
to
contracts made in, and to be performed entirely in, the State shall govern
the
validity and the interpretation hereof. This letter agreement may be executed
in
any number of counterparts and by facsimile signature.
If
the
foregoing correctly sets forth your understanding of our agreement, please
sign
the enclosed copy of this letter and return it to MCF, whereupon it shall
constitute a binding agreement between us.
Very
truly yours,
MERRIMAN
CURHAN FORD & CO.
By:
/s/
J.
Buckner Brown
Title:
Managing Director
The
undersigned hereby accepts, agrees to and becomes party to the foregoing
letter
agreement, effective as of the date first written above.
Ronald
C. Morgan
By:
/s/
Ronald C. Morgan
APPENDIX
A —INDEMNIFICATION AGREEMENT
The
Selling Shareholder agrees to indemnify and hold harmless MCF and its officers,
directors, employees, consultants, attorneys, agents and controlling persons
(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) (MCF and
each
such other persons are collectively and individually referred to below
as an
"Indemnified Party") from and against any and all loss, claim, damage,
liability
and expense whatsoever, as incurred, including, without limitation, reasonable
costs of any investigation, legal and other fees and expenses incurred
in
connection with, and any amounts paid in settlement of, any action, suit
or
proceeding or any claim asserted, to which the Indemnified Party may become
subject under any applicable federal or state law (whether in tort, contract
or
on any other basis) or otherwise, and related to the performance by the
Indemnified Party of the services contemplated by this letter agreement
and will
reimburse the Indemnified Party for all expenses (including legal fees
and
expenses) as they are incurred in connection with the investigation of,
preparation for or defense of any pending or threatened claim or any action
or
proceeding arising therefrom, whether or not the Indemnified Party is a
party
and whether or not such claim, action or proceeding is initiated or brought
by
the Selling Shareholder. The Selling Shareholder will not be liable under
the
foregoing indemnification provision to the extent that any loss, claim,
damage,
liability or expense is found in a final judgment by a court or arbitrator,
not
subject to appeal or further appeal, to have resulted from the Indemnified
Party's bad faith, willful misconduct or gross negligence. The Selling
Shareholder also agrees that the Indemnified Party shall have no liability
(whether direct or indirect, in contract, tort or otherwise) to the Selling
Shareholder related to, or arising out of, the engagement of the Indemnified
Party pursuant to, or the performance by the Indemnified Party of the services
contemplated by, this letter agreement except to the extent that any loss,
claim, damage, liability or expense is found in a final judgment by a court
or
arbitrator, not subject to appeal or further appeal, to have resulted from
the
Indemnified party's bad faith, willful misconduct or gross negligence.
If
the
indemnity provided above shall be unenforceable or unavailable for any
reason
whatsoever, the Selling Shareholder, its successors and assigns, and the
Indemnified Party shall contribute to all such losses, claims, damages,
liabilities and expenses (including, without limitation, all costs of any
investigation, legal or other fees and expenses incurred in connection
with, and
any amounts paid in settlement of, any action, suit or proceeding or any
claim
asserted) (i) in such proportion as is appropriate to reflect the relative
benefits received by the Selling Shareholder and MCF under the terms of
this
letter agreement or (ii) if the allocation provided for by clause (i) of
this
sentence is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
(i),
but also the relative fault of the Selling Shareholder and MCF in connection
with the matter(s) as to which contribution is to be made. The relative
benefits
received by the Selling Shareholder and MCF shall be deemed to be in the
same
proportion as the fee the Selling Shareholder actually pays to MCF bears
to the
total value of the consideration paid or to be paid to the Selling Shareholder
in the Capital Raising Transaction. The relative fault of the Selling
Shareholder and MCF shall be determined by reference to, among other things,
whether any untrue or alleged untrue statement of material fact or omission
or
alleged omission to state a material fact relates to information supplied
by the
Selling Shareholder or by MCF and the Selling Shareholder’s and MCF’s relative
intent, knowledge, access to information and opportunity to correct. The
Selling
Shareholder and MCF agree that it would not be just or equitable if contribution
pursuant to this paragraph were determined by pro rata allocation or by
any
other method of allocation which does not take into account these equitable
considerations. Notwithstanding the foregoing, to the extent permitted
by law,
in no event shall the Indemnified Party's share of such losses, claims,
damages,
liabilities and expenses exceed, in the aggregate, the fee actually paid
to the
Indemnified Party by the Selling Shareholder.
The
Indemnified Party will give prompt written notice to the Selling Shareholder
of
any claim for which it seeks indemnification hereunder, but the omission
to so
notify the Selling Shareholder will not relieve the Selling Shareholder
from any
liability which it may otherwise have hereunder except to the extent that
the
Selling Shareholder is damaged or prejudiced by such omission or from any
liability it may have other than under this Appendix A. The Selling Shareholder
shall have the right to assume the defense of any claim, lawsuit or action
(collectively an "action") for which the Indemnified Party seeks indemnification
hereunder, subject to the provisions stated herein with counsel reasonably
satisfactory to the Indemnified Party. After notice from the Selling Shareholder
to the Indemnified Party of its election so to assume the defense thereof,
and
so long as the Selling Shareholder performs its obligations pursuant to
such
election, the Selling Shareholder will not be liable to the Indemnified
Party
for any legal or other expenses subsequently incurred by the Indemnified
Party
in connection with the defense thereof. The Indemnified Party shall have
the
right to employ separate counsel in any such action and to participate
in the
defense thereof at its own expense; provided, however, that the reasonable
fees
and expenses of such counsel shall be at the expense of the Selling Shareholder
if the named parties to any such action (including any impleaded parties)
include both the Indemnified Party and the Selling Shareholder and the
Indemnified Party shall have reasonably concluded, based on advice of counsel,
that there are legal defenses available to the Indemnified Party which
are in
conflict with any legal defenses which are asserted by the Selling Shareholder
(in which event the Selling Shareholder shall not have the right to assume
the
defense of such action on behalf of the Indemnified Party, it being understood,
however, that the Selling Shareholder shall not be liable for the reasonable
fees and expenses of more than one separate firm of attorneys for all
Indemnified Parties in each jurisdiction in which counsel is needed). Despite
the foregoing, the Indemnified Party shall not settle any claim without
the
prior written approval of the Selling Shareholder, which approval shall
not be
unreasonably withheld, so long as the Selling Shareholder is not in material
breach of this Appendix A. Also, each Indemnified Party shall make reasonable
efforts to mitigate its losses and liabilities.