Exhibit 10.3
Tandy leather Factory, Inc.
STAND-ALONE RESTRICTED STOCK Unit AGREEMENT
THIS STAND-ALONE RESTRICTED STOCK UNIT AGREEMENT (the "Agreement") is made as of
October 2, 2018 (the "Date of Grant"), by and between Tandy Leather Factory,
Inc., a Delaware corporation (the "Company") and Janet Carr, an individual
("Grantee").
W I T N E S E T H:
WHEREAS, the Company desires to provide Grantee with the opportunity to acquire
a direct proprietary interest in the Company by granting Grantee hypothetical
units ("Restricted Stock Units") of the Company's common stock that will be
earned through Grantee's continuing employment with the Company.
NOW, THEREFORE, in consideration of the covenants and agreements herein
contained, the parties hereto hereby agree as follows:
Grant of Restricted Stock Units. Subject to the terms, conditions and
restrictions set forth in this Agreement, the Company hereby grants to Grantee
460,000 Restricted Stock Units. Each Restricted Stock Unit represents a right to
receive one share of the Company's common stock, par value $0.0024 per share
("Common Stock"), upon vesting of the Restricted Stock Unit as provided in
Section 0 below. Vested Restricted Stock Units will be settled as provided in
Section 0 below. The Company shall establish and maintain an account (the
"Restricted Stock Unit Account") for Grantee and will credit the Restricted
Stock Unit Account with the number of Restricted Stock Units granted to Grantee
under this Agreement. The Restricted Stock Units granted hereunder are a matter
of separate inducement and are not in lieu of salary or other compensation for
the services of Grantee to the Company or any of its affiliates.
Vesting and Forfeiture Conditions. The Restricted Stock Units will vest, if at
all, in accordance with this Section 0. For purposes of this Section 0, each
date on which any Restricted Unit becomes vested in accordance with Section 0, 0
or 0 is a "Vesting Date."
General. Subject to the terms and conditions set forth in this Agreement and
except as otherwise set forth in this Section 0, the Restricted Stock Units will
vest in five equal annual installments of 20% of the Restricted Stock Units on
each of the first through the fifth anniversaries of the Date of Grant (each
such anniversary an "Anniversary Date"); provided that Grantee is employed by
the Company or one of its affiliate on such Anniversary Date.
Death or Disability. If Grantee's employment with the Company and its affiliates
is terminated as a result of Grantee's death or Disability (as defined in
Grantee's employment agreement with the Company dated October 2, 2018, as may be
amended from time to time (the "Employment Agreement")) before all Restricted
Stock Units have vested, then a pro rata portion of the Restricted Stock Units
otherwise scheduled to vest on the Anniversary Date next following the date of
such termination shall become vested on the date of such termination. The pro
rata portion to be vested shall be calculated by multiplying the number of
Restricted Stock Units otherwise scheduled to vest on that Anniversary Date by a
fraction, the numerator of which is the number of days following the immediately
preceding Anniversary Date through the date of the termination of Grantee's
employment and the denominator of which is 365.
Termination of Employment by the Company without Cause or by the Executive for
Good Reason. If Grantee's employment with the Company and its affiliates is
terminated by the Company without Cause (as defined in the Employment Agreement)
or by Grantee with Good Reason (as defined in the Employment Agreement) before
all Restricted Stock Units have vested, then a pro rata portion of the
Restricted Stock Units otherwise scheduled to vest on the Anniversary Date next
following the date of such termination shall become vested on the date of such
termination. The pro rata portion to be vested shall be calculated by
multiplying the number of Restricted Stock Units otherwise scheduled to vest on
that Anniversary Date by a fraction, the numerator of which is the number of
days following the immediately preceding Anniversary Date through the date of
the termination of Grantee's employment and the denominator of which is 365.
Termination of Employment for Other Reasons. Notwithstanding anything in this
Agreement to the contrary, if Grantee's employment with the Company and its
affiliates is terminated for any reason other than those described in Sections 0
and 0 above, all Restricted Stock Units held by Grantee that have not vested as
of the date of such termination shall automatically and immediately be forfeited
by Grantee without any consideration therefor.
Settlement. The Company will settle Restricted Stock Units that vest on or
before the 10th business day following their Vesting Date by issuing to Grantee
one share of Common Stock for each Restricted Stock Unit that has satisfied all
vesting requirements on that Vesting Date. On settlement, the Restricted Stock
Units will cease to be credited to the Restricted Stock Unit Account. Subject to
the satisfaction of the tax withholding provisions in Section 0 below, the
Company will cause shares of Common Stock to be issued to Grantee following the
applicable Vesting Date either by an appropriate entry in the books of the
Company or of the Company's transfer agent or by delivery of a stock
certificate, free of all restrictions except for applicable securities laws
restrictions, and will enter Grantee's name as holder of record with respect to
such shares of Common Stock on the books of the Company. Grantee acknowledges
and agrees that shares of Common Stock may be issued in electronic form as a
book entry with the Company's transfer agent and no physical certificates need
be issued.
No Transfer. No portion of the Restricted Stock Units may be sold, assigned,
transferred, encumbered, hypothecated or pledged by Grantee other than to the
Company as a result of forfeiture of the Restricted Stock Units as provided
herein, unless and until settlement is made in respect of vested Restricted
Stock Units in accordance with the provisions hereof.
Tax Withholding. The settlement of any Restricted Stock Units under this
Agreement shall be net of any amounts required to be withheld pursuant to
applicable federal, state and local tax withholding requirements, and the
Company may require Grantee to remit to the Company an amount sufficient to
satisfy such tax withholding requirements prior to the issuance of shares of
Common Stock. In lieu thereof, the Company shall have the right to withhold the
amount of such taxes from any other sums due or to become due from the Company
to Grantee as determined by the board of directors of the Company (the "Board").
The Company shall permit Grantee to pay all or a portion of the federal, state
and local withholding taxes arising in connection with the Restricted Stock
Units 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.
For purposes of this Agreement, "Fair Market Value" means, on a given date, the
closing price of a share of Common Stock on the Nasdaq Stock Market or such
other public trading market on which shares of Common Stock are listed or quoted
on that date. If there is no regular public trading market for the Common Stock,
then the Fair Market Value shall be determined by the Board in good faith.
Compliance with Laws and Regulations. The issuance, transfer, vesting and
ownership of shares of Common Stock shall be subject to compliance by the
Company and Grantee with all applicable requirements of federal and state
securities laws and with all applicable requirements of any stock exchange on
which the Common Stock may be listed at the time of such issuance or transfer.
Grantee agrees to cooperate with the Company to ensure compliance with such laws
and requirements.
Changes in Capital Structure and Similar Events. In the event of (i)any dividend
or other distribution (whether in the form of cash, shares of Common Stock,
other securities or other property), recapitalization, stock split, reverse
stock split, reorganization, merger, amalgamation, consolidation, split-up,
split-off, combination, repurchase or exchange of shares of Common Stock or
other securities of the Company, issuance of warrants or other rights to acquire
shares of Common Stock or other securities of the Company, or other similar
corporate transaction or event that affects the Common Stock, or (ii)unusual or
nonrecurring events affecting the Company, any of its affiliates, or the
financial statements of the Company or any of its affiliates, or changes in
applicable rules, rulings, regulations or other requirements of any governmental
body or securities exchange or inter-dealer quotation system, accounting
principles or law, such that in either case an adjustment is determined by the
Board in its sole discretion to be necessary or appropriate (in order to avoid a
"modification" for accounting purposes), then the Board shall make any such
adjustments in such manner as it may deem equitable, including without
limitation any or all of the following:
adjusting the number of shares of Common Stock or other securities of the
Company (or number and kind of other securities or other property) that may be
delivered in respect of the Restricted Stock Units;
providing for a substitution or assumption of the Restricted Stock Units,
accelerating the vesting, or termination, of the Restricted Stock Units; and
cancelling the Restricted Stock Units and causing to be paid to Grantee, in
cash, shares of Common Stock, other securities or other property, or any
combination thereof, the value of such Restricted Stock Units, if any, as
determined by the Board (which if applicable may be based upon the price per
share of Common Stock received or to be received by other stockholders of the
Company in such event);
provided, however, that in the case of any "equity restructuring" (within the
meaning of the Financial Accounting Standards Board Accounting Standards
Codification Topic 718 (or any successor pronouncement thereto)), the Board
shall make an equitable or proportionate adjustment to the Restricted Stock
Units to reflect such equity restructuring. Any adjustments under this Section
1)a)i)(1)(a)(i) shall be made in a manner that does not adversely affect the
exemption provided pursuant to Rule 16b-3 under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), to the extent applicable. The Company
shall give Grantee notice of an adjustment hereunder and, upon notice, such
adjustment shall be conclusive and binding for all purposes.
Interpretation. Subject to applicable law, the Board shall have the sole
authority to interpret, administer, reconcile any inconsistency in, correct any
defect in or supply any omission in this Agreement, and to make any other
determination and take any other action that the Board deems necessary or
desirable for the administration of this Agreement. All determinations,
interpretations and other decisions under or with respect to this Agreement
shall be within the sole discretion of the Board, may be made at any time and
shall be final, conclusive and binding on all persons or entities, including,
without limitation, the Company, its affiliates, Grantee, any holder or
beneficiary of the Restricted Stock Units and any stockholder of the Company.
Notices. Every notice or other communication relating to this Agreement shall be
in writing, and shall be mailed to or delivered to the party for whom it is
intended at such address as may from time to time be designated by it in a
notice mailed or delivered to the other party as herein provided; provided that,
unless and until some other address be so designated, all notices or
communications by Grantee to the Company shall be mailed or delivered to the
Company at its principal executive office, and all notices or communications by
the Company to Grantee may be given to Grantee personally or may be mailed to
Grantee at the address as recorded in the records of the Company.
Successors and Assigns. The Company may assign any of its rights under this
Agreement. This Agreement shall be binding upon and inure to the benefit of the
successors and assigns of the Company. Subject to the restrictions on transfer
set forth herein, this Agreement shall be binding upon Grantee and Grantee's
heirs, executors, administrators, legal representatives, successors and assigns.
No Third-Party Beneficiaries. This Agreement shall be binding upon and inure
solely to the benefit of the parties hereto and their permitted assigns and
nothing herein, express or implied, is intended to or shall confer upon any
other person any legal or equitable right, benefit or remedy of any nature
whatsoever, under or by reason of this Agreement, and any reference to a party
shall also be a reference to the successors and permitted assigns thereof.
Governing Law. This Agreement shall be governed by and construed in accordance
with the substantive laws of the State of Delaware without regard to its
conflict of laws principles. If any provision of this Agreement is determined by
a court of law to be illegal or unenforceable, then such provision will be
enforced to the maximum extent possible and the other provisions will remain
fully effective and enforceable.
Lock-up and Other Agreements. The Board may require, as a condition to receipt
of shares of Common Stock on settlement of Restricted Stock Units hereunder,
that Grantee execute lock-up, voting proxy or other agreements, as the Board may
determine in its sole and absolute discretion should be applicable to all
Executive Officers and Non-Employee Directors of the Company. Grantee agrees to
execute all such agreements.
Entire Agreement; Amendment or Termination. This Agreement contains the entire
agreement and understanding of the parties hereto with respect to the Restricted
Stock Units and supersedes and cancels any and all prior or contemporaneous
agreements or understandings. This Agreement may be modified, amended or
terminated by the Company at any time and for any reason; provided, however,
that Grantee's prior consent shall be required for any modification, amendment
or termination that adversely changes the terms of the Restricted Stock Units.
No Right to Continued Employment. Nothing in this Agreement shall be deemed by
implication or otherwise to impose any limitation on any right of the Company or
its affiliates to terminate Grantee's employment or service at any time for any
reason whatsoever.
Severability. Any provision hereof that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by law, each party hereto hereby
waives any provision of law that renders any such provision prohibited or
unenforceable in any respect.
Section 409A. This Agreement is intended to comply with, or be exempt from, the
provisions of Section 409A of the Internal Revenue Code of 1986, as amended
("Section 409A") and shall be construed and interpreted in accordance with such
intent. The Company reserves the right to amend this Agreement to the extent it
reasonably determines is necessary in order to avoid any adverse tax
consequences under Section 409A. Notwithstanding anything to the contrary, none
of the Company, its officers, directors, employees, agents or representatives
guarantees that this Agreement complies with, or is exempt from, the provisions
of Section 409A and none of the foregoing shall have any liability for the
failure of this Agreement to comply with, or be exempt from, the provisions of
Section 409A.
No Secured Rights. Grantee's right to payments under this Agreement shall not
constitute nor be treated as property or as a trust fund of any kind. Grantee's
rights are limited exclusively to the right to receive shares of Common Stock as
provided in the Agreement. Grantee shall not have any rights as an owner of the
Company with respect to any Restricted Stock Units granted to Grantee. All
benefits payable to Grantee shall be payable solely from the general assets of
the Company and no separate or special funds shall be established and no
segregation of assets shall be made to assure the payment of benefits to
Grantee. Grantee's rights shall be limited to those rights which are
specifically enumerated in the Agreement, and such rights shall be for all
purposes, unsecured contractual creditors' rights against the Company only,
being on a parity with the rights of all other unsecured general creditors of
the Company.
Clawback. The Restricted Stock Units, any Common Stock issued on settlement of
the Restricted Stock Units and any proceeds of any shares of Common Stock that
previously have been sold, transferred or otherwise disposed of, to the extent
required under any clawback policy adopted or maintained by the Company, now or
in the future, pursuant to the Dodd-Frank Wall Street Reform and Consumer
Protection Act and the Sarbanes–Oxley Act of 2002, each as amended, and rules,
regulations, and binding, published guidance thereunder. If the Company would
not be eligible for continued listing, if applicable, under Section 10D(a) of
the Exchange Act, unless it adopted policies consistent with Section 10D(b) of
the Exchange Act, then, in accordance with those policies that are so required,
the Restricted Stock Units and the Common Stock will be subject to clawback in
the circumstances, to the extent, and in the manner, required by Section
10D(b)(2) of the Exchange Act, as interpreted by rules of the Securities
Exchange Commission. By accepting the restricted stock units under this
Agreement, Grantee hereby consents to any such clawback.
Headings. The headings of the Sections hereof are provided for convenience only
and are not to serve as a basis for interpretation of construction, and shall
not constitute a part of this Agreement.
Counterparts, Copies. This Agreement may be signed in counterparts, each of
which when executed shall be deemed an original but all of which taken together
shall constitute one and the same agreement. Fax or PDF copies of the parties'
signatures shall have the same force and effect as original signatures.
[Signature Page Follows]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first set forth above.
Tandy Leather Factory, Inc.
By: /s/ William Warren, Secretary
By: /s/ Janet Carr, Grantee