Exhibit 10.1

 
RESTRICTED STOCK AGREEMENT
 
 
(NON-EMPLOYEE DIRECTOR)
 

GRANTED TO:
DATE OF GRANT:
GRANTED PURSUANT TO:    Tandy Leather Factory, Inc. 2013 Restricted Stock Plan
NUMBER OF SHARES:
VESTING SCHEDULE:

1.            Restricted Stock Agreement.  This Restricted Stock Agreement (this
“Agreement”) is made and entered into as of                      (the “Date of
Grant”) between Tandy Leather Factory, Inc., a Delaware corporation (the
“Company”), and                     , as a participant (the “Participant”) in
the Tandy Leather Factory, Inc. 2013 Restricted Stock Plan (the “Plan”), a copy
of which is enclosed herewith. Capitalized terms not defined herein shall have
the meanings ascribed thereto in the Plan.

2.            Grant of Restricted Stock.  The Participant is granted ___ shares
of Common Stock of the Company (the “Restricted Stock”). The Restricted Stock is
granted as provided for under the Plan and is subject to the terms and
conditions set forth in the Plan and this Agreement. The Restricted Stock
granted hereunder is a matter of separate inducement and is not in lieu of other
compensation for the services of a Participant to the Company or any of its
Affiliates.
 
 
3.            Vesting.  This grant of Restricted Stock shall vest in accordance
with the following schedule:

Subject to the provisions of Section 8 of this Agreement, the Restricted Stock
shall vest during the term of Participant’s service as a member of the Board in
four equal annual installments of 25% of the shares of Restricted Stock covered
by this Agreement, the first installment to be exercisable on the 12 month
anniversary of the date of this Agreement (the “Initial Vesting Date”), with an
additional 25% of such shares vesting on each of the three successive 12 month
periods following the Initial Vesting Date.

4.            Restrictions Prior to Vesting.  The Restricted Stock granted
hereunder shall be promptly issued and evidenced by a certificate or
certificates for such shares issued in the Participant’s name or by book entry
at the Company’s option. The Participant shall thereupon have all the rights of
a shareholder with respect to such shares, including, but not limited to, the
right to vote such shares and to receive all dividends and other distributions
paid with respect to them; provided, however, that the shares shall be subject
to the restrictions on transferability in Sections 6 and 7 below. Unless
otherwise provided in this Section 4, the Company shall hold the certificate or
certificates for such shares until the date the restrictions on transferability
are removed in accordance with Sections 6 and 8 below. The Company may, in its
sole discretion and at any time prior to the date the restrictions on
transferability are removed in accordance with Sections 6 and 8 below, require
(i) that the stock certificate or certificates representing such shares shall be
imprinted with a legend stating that the shares represented thereby are the
restricted shares subject to the terms and conditions of this Agreement and, as
such, may not be sold, exchanged, transferred, pledged, hypothecated or
otherwise disposed of except in accordance with the terms of this Agreement,
and/or (ii) that the Participant shall, upon receipt of the certificate or
certificates therefor, deposit such certificate or certificates together with a
stock power or other like instrument of transfer, appropriately endorsed in
blank, with an escrow agent designated by the Company, which may be the Company,
under a deposit agreement containing such terms and conditions as the Company
shall approve, with the expenses of such escrow to be borne by the Company.
 
5.            Adjustment Provisions.  If under Section 9 of the Plan the
Participant, as the owner of the shares of the Restricted Stock, shall be
entitled to new, additional or different shares of stock or securities, (i) the
Company may require that the certificate or certificates for, or other evidences
of, such new, additional or different shares or securities, together with a
stock power or other instrument of transfer appropriately endorsed, shall be
imprinted with a legend as provided in Section 4 above, be deposited by the
Participant under the deposit agreement provided for therein, and (ii) such
certificate or certificates for, or other evidences of, such new, additional or
different shares or securities shall be subject to the restrictions on
transferability as provided in Sections 6 and 7 below.
 
6.            Removal of Transfer Restrictions.  The shares of the Restricted
Stock shall be subject to restrictions on transferability. Subject to Section 8
below, such restrictions shall be removed from such shares according to the
vesting schedule set forth above. Notwithstanding anything contained in this
Agreement to the contrary, if there is a Change in Control of the Company, all
unvested shares of Restricted Stock granted under this Agreement shall become
fully vested immediately upon the occurrence of the Change in Control and such
vested shares of Restricted Stock shall be paid out or settled, as applicable,
within 60 days upon the occurrence of the Change in Control, subject to
requirements of applicable laws and regulations.

7.            No Transfer.  During the period when the Restricted Stock is
subject to the restrictions on transferability, none of the shares of the
Restricted Stock subject to such restrictions shall be sold, exchanged,
transferred, pledged, hypothecated or otherwise disposed of except by will or
the laws of descent and distribution. Any attempt by the Participant to dispose
of any shares of the Restricted Stock in any such manner shall result in the
immediate forfeiture of such shares.
 
8.            Termination of Service as a Director.

a.           Death or Disability.  If the Participant’s ceases to serve as a
member of the Board due to death or Disability all unvested shares of Restricted
Stock held by the Participant on the date of the Participant’s termination of
service due to death or the date of the termination of his or her service
related to Disability, as the case may be, shall immediately become vested as of
such date.
 
 
b.            Other Termination.  If a Participant ceases to serve as a member
of the Board for any reason, including, without limitation, retirement, other
than due to death or Disability, all unvested shares of Restricted Stock held by
the Participant on the date that the Participant ceases to serve as a member of
the Board shall immediately be forfeited by such Participant as of such date.

c.            Discretionary Accelerated Vesting.  Notwithstanding anything
contained in this Agreement to the contrary, the Committee may, in its
discretion, provide that any or all unvested shares of Restricted Stock held by
the Participant on the date of the Participant’s death and/or the date that the
Participant ceases to serve as a member of the Board shall immediately become
vested as of such date.

d.           Section 11 of the Plan.  The Company and the Participant
acknowledge and agree that the Participant is receiving the Restricted Stock
described in Section 2 of this Agreement by virtue of the Participant’s service
as a non-employee member of the Board and, therefore, the provisions of Section
11 of the Plan shall not apply to the Restricted Stock granted to the
Participant pursuant to this Agreement.
 
9.            Tax Withholding.  All payments or distributions of an award made
pursuant to this Agreement shall be net of any amounts required to be withheld
pursuant to applicable federal, state and local tax withholding requirements. If
the Company proposes or is required to distribute Common Stock pursuant to this
Agreement, it may require the Participant receiving such Common Stock to remit
to it or to the Affiliate that employs such Participant an amount sufficient to
satisfy such tax withholding requirements prior to the delivery of any
certificates for such Common Stock. In lieu thereof, the Company or the
Affiliate employing the Participant shall have the right to withhold the amount
of such taxes from any other sums due or to become due from the Company or the
Affiliate, as the case may be, to the Participant receiving Common Stock, as the
Committee shall prescribe. The Committee may, in its discretion, and subject to
such rules as the Committee may adopt (including any as may be required to
satisfy applicable tax and/or non-tax regulatory requirements), permit a
Participant to pay all or a portion of the federal, state and local withholding
taxes arising in connection with this award consisting of shares of Common Stock
by electing to have the Company withhold shares of Common Stock having a Fair
Market Value equal to the amount of tax to be withheld, such tax calculated at
rates required by statute or regulation.

10.            Legend.  If the Company, in its sole discretion, shall determine
that it is necessary, to comply with applicable securities laws, the certificate
or certificates representing any shares of Common Stock delivered to the
Participant under this Agreement shall bear an appropriate legend in form and
substance, as determined by the Company, giving notice of applicable
restrictions on transfer under or with respect to such laws. Unless and until
the shares of Common Stock delivered to the Participant under this Agreement are
registered under the Securities Act of 1933, as amended (the “Securities Act”),
all certificates representing such shares and any certificates subsequently
issued in substitution therefor and any certificate for any securities issued
pursuant to any stock split, share reclassification, stock dividend or other
similar capital event shall bear legends in substantially the following form:

THESE SECURITIES HAVE NOT BEEN REGISTERED OR OTHERWISE QUALIFIED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER THE
APPLICABLE OR SECURITIES LAWS OF ANY STATE. NEITHER THESE SECURITIES NOR ANY
INTEREST THEREIN MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE
SECURITIES LAWS OF ANY STATE, UNLESS PURSUANT TO EXEMPTIONS THEREFROM.

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED PURSUANT TO THE
RESTRICTED STOCK AGREEMENT, DATED ____________, BETWEEN THE COMPANY AND THE
ISSUEE WHICH RESTRICTS THE TRANSFER OF THESE SHARES WHICH ARE SUBJECT TO
FORFEITURE TO THE COMPANY UNDER CERTAIN CONDITIONS.

Appropriate stop transfer instructions with respect to such shares have been
placed with the Company’s transfer agent.

11.            Securities Act.  The Participant covenants and agrees with the
Company that if, with respect to any shares of Common Stock delivered to the
Participant pursuant to this Agreement, there does not exist a registration
statement on an appropriate form under the Securities Act, which registration
statement shall have become effective and shall include, or shall be accompanied
by, as applicable, a prospectus that is current with respect to the shares of
Common Stock subject to this Agreement, (i) he or she takes the shares of Common
Stock for his or her own account and not with a view to the resale or
distribution thereof, (ii) any subsequent offer for sale or sale of any such
shares shall be made either pursuant to (x) a registration statement on an
appropriate form under the Securities Act, which registration statement shall
have become effective and shall be current with respect to the shares being
offered and sold, or (y) a specific exemption from the registration requirements
of the Securities Act, but in claiming such exemption, the Participant shall,
prior to any offer for sale or sale of such shares, obtain a favorable written
opinion from counsel for or approved by the Company as to the applicability of
such exemption and (iii) the certificate or certificates evidencing such shares
shall bear a legend to the effect of the foregoing.
 
12.            Conflicts.  This Agreement is subject to all terms, conditions,
limitations and restrictions contained in the Plan, which shall be controlling
in the event of any conflicting or inconsistent provisions. In the event,
however, of any conflict between the provisions of this Agreement or the Plan
and the provisions of an employment or change-in-control agreement between the
Company and the Participant, as applicable, the provisions of the latter shall
prevail.

13.           Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORD WITH THE LAWS OF THE STATE OF DELAWARE, EXCLUDING PRINCIPLES OF
CONFLICTS OF LAW.

14.           Headings.  The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

15.           Counterparts.  This Agreement may be executed in any number of
counterparts with the same effect as if all signing parties had signed the same
document. All counterparts will be construed together and constitute the same
instrument.

IN WITNESS WHEREOF, the undersigned have executed this Restricted Stock
Agreement as of the date first written above.

TANDY LEATHER FACTORY, INC.

By:                                                                
Name:                                                                
Title:                                                                

ACCEPTED:

 
 
By:                                                            

 
[Insert the name of the Participant]