Document:

exv10w20

 

Second

Amended and Restated

GENERAL DYNAMICS CORPORATION

1997 INCENTIVE COMPENSATION PLAN

	1.	 	Purpose.

	 	 	This plan is an amendment and restatement of the 1988 Incentive
Compensation Plan; it was renamed the “1997 Incentive Compensation Plan”
and it was again amended and restated on October 2, 2002 and is referred
to hereinafter as the “Plan.” The purpose of the Plan is to provide
General Dynamics Corporation and its subsidiaries (the “Company”) with an
effective means of attracting, retaining, and motivating officers and
other key employees and to provide them with incentives to enhance the
growth and profitability of the Company.

	2.	 	Eligibility.

	 	 	Any officer or key employee of the Company in an executive,
administrative, professional, scientific, engineering, technical, or
advisory capacity is eligible for an award under the Plan.

	3.	 	Committee.

	 	 	The Plan shall be administered by the Compensation Committee (the
“Committee”) of the Board of Directors of the Company comprised of two or
more members of the Board of Directors, none of whom shall be employees
of the Company. Except as otherwise expressly provided in the Plan, the
Committee shall have full power and authority to interpret and administer
the Plan, to determine the officers and key employees to receive awards
and the amounts and types of the awards, to adopt, amend, and rescind
rules and regulations, and to establish terms and conditions, not
inconsistent with the provisions of the Plan, for the administration and
implementation of the Plan, provided, however, that the Committee may
not, after the date of any award, make any changes that would adversely
affect the rights of a recipient under any award without the consent of
the recipient. The determination of the Committee on these matters shall
be final and conclusive and binding on the Company and all participants.
	 
	 	 	Code Section 162(m) Subcommittee. Notwithstanding the foregoing
paragraph, the Plan shall be administered by a subcommittee of the
Committee (the “Subcommittee”) with respect to persons covered by the
deduction limitation of Section 162(m) of the Internal Revenue Code of
1986, as amended (the “Code”). The Subcommittee shall comprise two or
more members of the Committee, all of whom shall be “outside directors”
as that term is used in Code Section 162(m). With respect to such persons
subject to Code Section 162(m), the Subcommittee shall have all of the
powers, rights, and duties granted to the Committee under this Plan and
each reference to the “Committee” herein shall be deemed to be a
reference to the “Subcommittee.”

	4.	 	Awards.

	 	 	Awards may be made by the Committee in such amounts as it shall determine
in cash, in common stock of the Company (“Common Stock”), in options to
purchase Common Stock of the Corporation (“Stock Options”), or in shares
of Common Stock subject to certain restrictions (“Restricted Stock”), or
any combination thereof. Awards of Stock Options shall be limited to
awards for such number of shares as shall be allocated for that purpose
by the Board of Directors and approved by the shareholders.

	5.	 	Code Section 162(m) Awards. Awards to persons covered by the deduction
limitation of Code Section 162(m), as described by Code Section 162(m)(3),
shall be subject to the following additional limitations:

	 	a.	 	Adjustments.
The Subcommittee shall have no discretion to increase an award of
Stock Options and/or

 

 

	 	 	 	Restricted Stock once granted, except that adjustments are
permitted under Sections 11 and 12 of this Plan to the extent
permissible under regulations interpreting Code Section 162(m).

	 	b.	 	Maximum Awards.
Awards of Stock Options and/or Restricted Stock under the Plan
shall be limited as follows:

	 	(i)	 	Awards of Stock Options shall be limited to
500,000 shares awarded to any one individual for any calendar
year and shall be issued at fair market value.
	 
	 	(ii)	 	Awards of Restricted Stock shall be limited to
100,000 shares awarded to any one individual for any calendar
year. Notwithstanding the foregoing, Restricted Stock
granted under the Restricted Stock Performance Formula,
described below, shall be limited to an initial grant of
100,000 shares, but shall be adjusted upwards or downwards in
accordance with that formula.

	 	c.	 	Performance Goals. The Subcommittee, in its sole discretion,
shall establish performance goals applicable to awards of Restricted
Stock in such a manner as shall permit payments with respect thereto
to qualify as “performance-based compensation” as described in Code
Section 162(m)(4)(C). Such awards shall be based on attainment of,
over a specified period of individual performance, specified targets
or other parameters relating to one or more of the following
business criteria: market price of Common Stock, earnings per share,
net profits, total shareholder return, return of shareholders’
equity, cash flow, and cumulative return on net assets employed. In
addition, awards of Restricted Stock may be based on the Restricted
Stock Performance Formula, described below.

	6.	 	Restricted Stock Performance Formula.

	 	 	Awards of Restricted Stock may be granted pursuant to the formula
described in this section, referred to herein as the “Restricted Stock
Performance Formula.” The Committee shall make an initial grant of shares
of Restricted Stock (the “Initial Grant”). At the end of a specified
performance period (determined by the Committee), the number of shares in
the Initial Grant shall be increased or decreased based on the increase
or decrease in the value of the Common Stock over the performance period.
	 
	 	 	The increase or decrease described in the preceding paragraph shall be
determined in the following manner:
	 
	 	 	At the end of each performance period, the fair market value (as defined
in Section 7 below) of the Common Stock is compared to the fair market
value per share on the grant date. That difference is multiplied by the
number of shares of Restricted Stock to be earned at the end of each
performance period and the resulting product is divided by the fair
market value at the end of the performance period. The number of shares
of Common Stock so determined is added to (in the case of a higher fair
market value) or subtracted from (in the case of a lower fair market
value) the number of shares of Restricted Stock to be earned at that
time. Once the number of shares of Restricted Stock has been adjusted,
restrictions will continue to be imposed for a period of time.

	7.	 	Common Stock.

	 	 	In the case of awards in Common Stock, the number of shares shall be
determined by dividing the amount of the award by the average between the
highest and lowest quoted selling prices of the Company’s Common Stock on
the New York Stock Exchange on the date of the award. The average is
referred to throughout this Plan as the “fair market value.”

	8.	 	Dividend Equivalents and Interest.

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	 	a.	 	Dividends.
If any award in Common Stock or Restricted Stock is to be paid on
a deferred basis, the recipient may be entitled, on terms and
conditions to be established, to receive a payment of, or credit
equivalent to, any dividend payable with respect to the number of
shares of Common Stock or Restricted Stock which, as of the record
date for the dividend, has been awarded or made payable to the
recipient but not delivered.

	 	b.	 	Interest.
If any award in cash is to be paid on a deferred basis, the
recipient may be entitled, on terms and conditions to be
established, to be paid interest on the unpaid amount.

	9.	 	Restricted Stock Awards.

	 	 	Restricted Stock represents awards made in Common Stock in which the
shares granted may not be sold, transferred, pledged, assigned, or
otherwise alienated or hypothecated except upon passage of time, or upon
satisfaction of other conditions, or both, in every case as provided by
the Committee in its sole discretion. The recipient of an award of
Restricted Stock shall be entitled to vote the shares awarded and to the
payment of dividend equivalents on the shares from the date the award of
shares is made; and, in addition, all Special Distributions (as defined
in Section 11 hereof) thereon shall be credited to an account similar to
the Account described in Section 11. The recipient of an award of
Restricted Stock shall have a nonforfeitable interest in amounts credited
to such account in proportion to the lapse of restrictions on the
Restricted Stock to which such amounts relate. For example, when
restrictions lapse on fifty percent (50%) of the Restricted Stock granted
in an award, the holder of such Restricted Stock shall have a
nonforfeitable interest in fifty percent (50%) of the amount credited to
his account which is attributable to such Restricted Stock. The holder of
Restricted Stock shall receive a payment in cash of any amount in his
account as soon as practicable after the lapse of restrictions relating
thereto. With respect to Restricted Stock awards granted after May 3,
2001, shares underlying Restricted Stock awards shall become
nonforfeitable no sooner than three (3) years from the original grant
date (other than shares granted pursuant to a performance adjustment),
except that the Committee or Subcommittee, as the case may be, shall have
the discretion to reduce such three (3) year period or impose a shorter
period (a) for the occurrence of any event described in Section 12, (b)
for any corporate divestiture or acquisition, or (c) in the case of any
special agreement, award or situation with respect to any individual
executive.

	10.	 	Stock Option Awards.

	 	a.	 	Available Shares.
Shares available for awards of Stock Options under the Plan at the
effective date of the restatement of the Plan shall be available
for awards of Stock Options under the Plan. Shares available for
awards of Stock Options may be authorized but unissued shares or
may be treasury shares. If any option awarded under the Plan or
any predecessor plan shall expire, terminate, or be canceled for
any reason without having been exercised in full, the
corresponding number of unpurchased shares which were reserved for
issuance upon exercise thereof shall again be available for the
purposes of the Plan.

	 	b.	 	Type of Options.
Options shall be in the form of incentive stock options,
non-statutory stock options, or both, as the Committee may
determine. The term “incentive stock option” means any option, or
portion thereof, awarded under the Plan which meets the applicable
requirements of Section 422 of the Internal Revenue Code, as it
may be amended from time to time. The term “non-statutory stock
option” means any option, or portion thereof, awarded under the
Plan which does not qualify as an incentive stock option.

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	 	c.	 	Incentive Stock Option Limitation.
For incentive stock options granted under the Plan, the aggregate
fair market value (determined as of the date the option is
awarded) of the number of whole shares with respect to which
incentive stock options are exercisable for the first time by any
employee during any calendar year under all plans of the Company
shall not exceed $100,000.

	 	d.	 	Purchase Price.
The purchase price of the Common Stock under each option shall be
determined by the Committee, but shall not be less than 100
percent of the fair market value of the Common Stock on the date
of the award of the option.

	 	e.	 	Terms and Conditions.
The Committee shall, in its discretion, establish (i) the term of
each option, which in the case of incentive stock options shall
not be more than ten years, (ii) the terms and conditions upon
which and the times when each option shall be exercised, and (iii)
the terms and conditions under which options may be exercised
after termination of employment for any reason for periods not to
exceed three years after termination of employment but not beyond
the term established above.

	 	f.	 	Purchase by Cash or Stock.
The purchase price of shares purchased upon the exercise of any
stock option shall be paid (i) in full in cash, or (ii) in whole
or in part (in combination with cash) in full shares of Common
Stock owned by the optionee and valued at its fair market value on
the date of exercise, all pursuant to procedures approved by the
Committee.

	 	g.	 	Transferability.
Options shall not be transferable. During the lifetime of the
person to whom an option has been awarded, it may be exercisable
only by such person or one acting in his stead or in a
representative capacity. Upon or after the death of the person to
whom an option is awarded, an option may be exercised by the
optionee’s legatee or legatees under his last will, or by the
option holder’s personal representative or distributee’s
executive, administrator, or personal representative or designee
in accordance with the terms of the option.

	11.	 	 Adjustments for Special Distributions.

	 	 	The Committee shall have the authority to change all Stock Options
granted under this Plan to adjust equitably the purchase price thereof to
reflect a special distribution to shareholders or other extraordinary
corporate action involving distributions or payments to shareholders
(collectively referred to as “Special Distributions”). In the event of
any Special Distribution, the Committee may, to the extent that it
determines in its judgment that the adjustment of the purchase price of
Stock Options does not fully reflect such Special Distribution, increase
the number of shares of Common Stock covered by such Stock Options or
cause to be created a Special Distribution account (the “Account”) in the
name of each individual to whom Stock Options have been granted hereunder
(sometimes herein referred to as a “Grantee”) to which shall be credited
an amount determined by the Committee, or, in the case of non-cash
Special Distributions, make appropriate comparable adjustments for or
payments to or for the benefit of the Grantee.
	 
	 	 	Amounts credited to the Account in accordance with the preceding rules
shall be credited with interest, accrued monthly, at an annual rate equal
to the higher of Moody’s Corporate Bond Yield Average or the prime rate
in effect from time to time, and such interest shall be credited in
accordance with rules to be established by the Committee. Notwithstanding
the foregoing, at no time shall the Committee permit the amount credited
to the Grantee’s Account to exceed ninety percent (90%) of the purchase
price of the Grantee’s outstanding Stock Options to which such amount
relates. To the extent that any credit would cause the Account to exceed
that limitation, such excess shall be distributed to the Grantee in cash.

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	 	 	Amounts credited to the Grantee’s Account shall be paid to the Grantee
or, if the Grantee is deceased, his or her beneficiary at the time that
the options to which it relates are exercised or expire, whichever occurs
first.
	 
	 	 	The Account shall for all purposes be deemed to be an unfunded promise to
pay money in the future in certain specified circumstances. As to amounts
credited to the Account, a Grantee shall have no rights greater than the
rights of a general unsecured creditor of the Company, and amounts
credited to the Grantee’s Account shall not be assignable or transferable
other than by will or the laws of descent and distribution, and such
amounts shall not be subject to the claims of the Grantee’s creditors.

	12.	 	 Adjustments and Reorganizations.

	 	 	The Committee may make such adjustments to awards granted under the Plan
(including the terms, exercise price, and otherwise) as it deems
appropriate in the event of changes that impact the Company, the
Company’s share price, or share status.
	 
	 	 	In the event of any merger, reorganization, consolidation, Change of
Control (as defined in Section 13 below) recapitalization, separation,
liquidation, stock dividend, stock split, extraordinary dividend,
spin-off, split-up, rights offering, share combination, or other change
in the corporate structure of the Company affecting the Common Stock, the
number and kind of shares that may be delivered under the Plan shall be
subject to such equitable adjustment as the Committee, in its sole
discretion, may deem appropriate. The determination of the Committee on
these matters shall be final and conclusive and binding on the Company
and all participants. Except as otherwise provided by the Committee, all
authorized shares, share limitations, and awards under the Plan shall be
proportionately adjusted to account for any increase or decrease in the
number of issued shares of Common Stock resulting from any stock split,
stock dividend, reverse stock split, or any similar reorganization or
event.

	13.	 	 Change of Control.

	 	 	Notwithstanding any provision of the Plan to
the contrary, immediately prior to the occurrence of a Change of Control
(as defined below), (a) each Option granted under the Plan and outstanding
at such time shall become fully vested and immediately exercisable, (b)
all restrictions on outstanding shares of Restricted Stock shall
immediately lapse and such shares shall become nonforfeitable and (c) each
Participant shall become fully vested in, and entitled to a payment or
distribution in respect of, any cash or shares, whether vested or
unvested, that may be credited under the Plan to his or her account
(including, but not limited to, his or her Account as defined in Section
11 above). For purposes of applying the Restricted Stock Performance
Formula applicable to awards of Restricted Stock, each uncompleted
performance period shall be deemed fully completed on the third business
day preceding the date upon which the Change of Control occurs.
	 
	 	 	“Change of Control” means any following events:

		
	 	        (a) An acquisition (other than directly from the Company) of
any voting securities of the Company by any Person immediately
after such acquisition is the Beneficial Owner of 40% or more of
the combined voting power of the Company’s then outstanding voting
securities; provided that in determining whether a Change of
Control has occurred, voting securities which are acquired by (i)
an employee benefit plan (or a trust forming a part thereof)
maintained by the Company or any Subsidiary of the Company, (ii)
the Company or any Subsidiary of the Company, (iii) any Person
that, pursuant to Rule 13d-1 promulgated under the Securities
Exchange Act, is permitted to, and actually does, report its
beneficial ownership of voting securities of the Company on
Schedule 13G (or any successor Schedule) (a “13G Filer”) (provided
that, if any 13G Filer subsequently becomes required to or does
report its Beneficial Ownership of voting securities of the
Company on Schedule 13D (or any successor Schedule) then such
Person shall be deemed to have first acquired, on the first date
on which such Person becomes required to or does so file,
Beneficial Ownership of all voting securities of the

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	 	Company Beneficially Owned by it on such date, (iv) any
Person in connection with a Non-Control Transaction (as
hereinafter defined) or (v) any acquisition by an underwriter
temporarily holding Company securities pursuant to an offering of
such securities, will not constitute an acquisition which results
in a Change of Control;

	 	        (b) Consummation of:

		
	 	        (i) a merger, consolidation or reorganization
involving the Company, or any direct or indirect
Subsidiary of the Company, unless:

		
	 	        (A) the stockholders of the Company
immediately before such merger, consolidation
or reorganization will own, directly or
indirectly, immediately following such merger,
consolidation or reorganization, at least 50%
of the combined voting power of the
outstanding voting securities of the
corporation resulting from such merger,
consolidation or reorganization (the
“Surviving Corporation”) or any parent thereof
in substantially the same proportion as their
ownership of the voting securities of the
Company immediately before such merger,
consolidation or reorganization;

		
	 	        (B) the individuals who were members of
the Board immediately prior to the execution
of the agreement providing for such merger,
consolidation or reorganization constitute a
majority of the members of the board of
directors of the Surviving Corporation (or
parent thereof); and

		
	 	        (C) no Person (other than the Company,
any Subsidiary of the Company, any employee
benefit plan (or any trust forming a part
thereof) maintained by the Company, any
Schedule 13G Filer, the Surviving Corporation,
any Subsidiary or parent of the Surviving
Corporation, or any Person who, immediately
prior to such merger, consolidation or
reorganization, was the Beneficial Owner of
40% or more of the then outstanding voting
securities of the Company) is the Beneficial
Owner of 40% or more of the combined voting
power of the Surviving Corporation’s then
outstanding voting securities.

		
	 	        (D) a transaction described in clauses
(A) through (C) above is referred to herein as
a “Non-Control Transaction”;

		
	 	        (ii) the complete liquidation or dissolution of
the Company; or

		
	 	        (iii) a sale or other disposition of all or
substantially all of the assets of the Company to an
entity (other than to an entity (A) of which at
least 50% of the combined voting power of the
outstanding voting securities are owned, directly or
indirectly, by stockholders of the Company in
substantially the same proportion as their ownership
of the voting securities of the Company, (B) a
majority if the board of directors of which is
comprised of the individuals who were members of the
Board immediately prior to the execution of the
agreement

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	 	providing for such sale or disposition and (C)
of which no Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan
(or any trust forming a part thereof) maintained by
the Company or any of its Subsidiaries, any Schedule
13G Filer, the Surviving Corporation, any Subsidiary
or parent of the Surviving Corporation, or any
Person who, immediately prior to such merger,
consolidation or reorganization, was the Beneficial
Owner of 40% or more of the then outstanding voting
securities of the Company) has Beneficial Ownership
of 40% or more of the combined voting power of the
entity’s outstanding voting securities.

		
	 	        (c) Individuals who, as of the date hereof, constitute the
Board (the “Incumbent Board”), cease for any reason to constitute
at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date first
written above whose election, or nomination for election by
Company stockholders, was approved by a vote of two-thirds of the
directors then comprising the Incumbent Board shall be considered
as though such individual were a member of the Incumbent Board,
unless any such individual’s initial assumption of office occurs
as a result of either an actual or threatened election contest
(including, but not limited to, a consent solicitation).

		
	 	        (d) Notwithstanding the foregoing, a Change in Control will
not be deemed to occur solely because any Person (a “Subject
Person”) acquires Beneficial Ownership of more than the permitted
amount of the outstanding voting securities of the Company as a
result of the acquisition of voting securities by the Company
which, by reducing the number of voting securities outstanding,
increases the proportional number of shares Beneficially Owned by
the Subject Person, provided that if a Change in Control would
occur (but for the operation of this sentence) as a result of the
acquisition of voting securities by the Company, and after such
share acquisition by the Company, the Subject Person becomes the
Beneficial Owner of any additional voting securities which
increases the percentage of the then outstanding voting securities
Beneficially Owned by the Subject Person, then a Change in Control
will be deemed to have occurred.

     “Person” has the meaning used in Sections 13(d) or 14(d) of the
Securities Exchange Act, and will include any “group” as such term is used in
such sections).

     “Beneficial Owner” has the meaning used in Rule 13d-3 promulgated under
the Securities Exchange Act.

     “Subsidiary” means any corporation with respect to which another specified
corporation has the power under ordinary circumstances to vote or direct the
voting of sufficient securities to elect a majority of the directors.

	14.	 	 Tax Withholding.

	 	 	The Company shall have the right to (a) make deductions from any
settlement of an award under the Plan, including the delivery or vesting
of shares, or require shares or cash or both be withheld from any award,
in each case in an amount sufficient to satisfy withholding of any
federal, state, or local taxes required by law, or (b) take such other
action as may be necessary or appropriate to satisfy any such withholding
obligations. The Committee may determine the manner in which such tax
withholding may be satisfied, and may permit shares of Common Stock
(rounded up to the next whole number) to be used to satisfy required tax
withholding based on the fair market value of any such shares of Common
Stock, as of the appropriate time of each award.

	15.	 	 Expenses.

	 	 	The expenses of administering the Plan shall be borne by the Company

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	16.	 	 Amendments.

	 	 	The Board of Directors of the Company shall have complete power and
authority to amend the Plan, provided that the Board of Directors shall
not, without shareholder approval, adopt any amendment which would (a)
increase the number of shares for which options may be awarded under the
Plan, (b) modify the class of employees eligible to receive awards, (c)
extend the period during which incentive stock options may be awarded, or
(d) materially increase the benefits of employees receiving awards under
the Plan. No amendment to the Plan may, without the consent of the
individual to whom the award shall theretofore have been awarded,
adversely affect the rights of an individual under the award.

	17.	 	 Effective Date of the Plan.

	 	 	The second amendment and restatement of this Plan shall become effective
on its adoption by the Board of Directors of the Company, and shall apply
to all Awards outstanding hereunder on such date.

	18.	 	 Termination.

	 	 	The Board of Directors of the Company may terminate the Plan or any part
thereof at any time, provided that no termination may, without the
consent of the individual to whom any award shall theretofore have been
made, adversely affect the rights of an individual under the award.

	19.	 	 Other Actions.

	 	 	Nothing contained in the Plan shall be deemed to preclude other
compensation plans which may be in effect from time to time or be
construed to limit the authority of the Company to exercise its corporate
rights and powers, including, but not by way of limitation, the right of
the Company (a) to award options for proper corporate purposes otherwise
than under the Plan to an employee or other person, firm, corporation, or
association, or (b) to award options to, or assume the option of, any
person in connection with the acquisition, by purchase, lease, merger,
consolidation, or otherwise, of the business and assets (in whole or in
part) of any person, firm, corporation, or association.

8<PAGE>
                                                                   EXHIBIT 10.24

                         TANDY BRANDS ACCESSORIES, INC.
                                2002 OMNIBUS PLAN

         The Tandy Brands Accessories, Inc. 2002 Omnibus Plan (hereinafter
called the "Plan") was adopted by the Board of Directors of Tandy Brands
Accessories, Inc., a Delaware corporation (hereinafter called the "Company"),
effective as of September 3, 2002, and was approved by the Company's
stockholders on October 16, 2002.

                                    ARTICLE 1
                                     PURPOSE

         The purpose of the Plan is to attract and retain the services of key
management Employees of the Company and its Subsidiaries, and Board members
(whether an Employee or a Non-employee Director), and to provide such persons
with a proprietary interest in the Company through the granting of incentive
stock options, non-qualified stock options, performance units, stock
appreciation rights, or restricted stock, whether granted singly, or in
combination, or in tandem, that will:

                  (a)      increase the interest of such persons in the
                           Company's welfare;

                  (b)      furnish an incentive to such persons to continue
                           their services for the Company; and

                  (c)      provide a means through which the Company may attract
                           able persons as employees.

         With respect to Reporting Participants, the Plan and all transactions
under the Plan are intended to comply with all applicable conditions of Rule
16b-3 promulgated under the Securities Exchange Act of 1934 (the "1934 Act"). To
the extent any provision of the Plan or action by the Committee fails to so
comply, it shall be deemed null and void ab initio, to the extent permitted by
law and deemed advisable by the Committee.

                                    ARTICLE 2
                                   DEFINITIONS

         For the purpose of the Plan, unless the context requires otherwise, the
following terms shall have the meanings indicated:

         2.1 "Award" means the grant of any Incentive Stock Option,
Non-qualified Stock Option, Performance Unit, Restricted Stock or SAR, whether
granted singly, in combination or in tandem (each individually referred to
herein as an "Incentive").

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<PAGE>

         2.2 "Award Agreement" means a written agreement between a Participant
and the Company which sets out the terms of the grant of an Award.

         2.3 "Award Period" means the period during which one or more Incentives
granted under an Award may be exercised.

         2.4 "Board" means the board of directors of the Company.

         2.5 "Change of Control" means any of the following:

                  (a) any consolidation, merger or share exchange of the Company
         in which the Company is not the continuing or surviving corporation or
         pursuant to which shares of the Company's Common Stock would be
         converted into cash, securities or other property, other than a
         consolidation, merger or share exchange of the Company in which the
         holders of the Company's Common Stock immediately prior to such
         transaction have the same proportionate ownership of Common Stock of
         the surviving corporation immediately after such transaction;

                  (b) any sale, lease, exchange or other transfer (excluding
         transfer by way of pledge or hypothecation) in one transaction or a
         series of related transactions, of all or substantially all of the
         assets of the Company;

                  (c) the stockholders of the Company approve any plan or
         proposal for the liquidation or dissolution of the Company;

                  (d) the cessation of control (by virtue of their not
         constituting a majority of directors) of the Board by the individuals
         (the "Continuing Directors") who (x) at the date of this Plan were
         directors or (y) become directors after the date of this Plan and whose
         election or nomination for election by the Company's stockholders, was
         approved by a vote of at least two-thirds of the directors then in
         office who were directors at the date of this Plan or whose election or
         nomination for election was previously so approved;

                  (e) the acquisition of beneficial ownership (within the
         meaning of Rule 13d-3 under the 1934 Act) of an aggregate of 20% of the
         voting power of the Company's outstanding voting securities by any
         person or group (as such term is used in Rule 13d-5 under the 1934 Act)
         who beneficially owned less than 15% of the voting power of the
         Company's outstanding voting securities on the date of this Plan, or
         the acquisition of beneficial ownership of an additional 5% of the
         voting power of the Company's outstanding voting securities by any
         person or group who beneficially owned at least 15% of the voting power
         of the Company's outstanding voting securities on the date of this
         Plan, provided, however, that notwithstanding the foregoing, an
         acquisition shall not constitute a Change of Control hereunder if the
         acquiror is (x) a trustee or other fiduciary holding securities under
         an employee benefit plan of the Company and acting in such capacity,
         (y) a Subsidiary of the Company or a corporation owned, directly or
         indirectly, by the stockholders of the Company in substantially the
         same proportions as their ownership of voting securities of the Company
         or (z) any other person whose acquisition of shares of voting
         securities is approved in advance by a majority of the Continuing
         Directors; or

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<PAGE>

                  (f) in a Title 11 bankruptcy proceeding, the appointment of a
         trustee or the conversion of a case involving the Company to a case
         under Chapter 7.

         2.6 "Code" means the Internal Revenue Code of 1986, as amended.

         2.7 "Committee" means the committee appointed or designated by the
Board to administer the Plan in accordance with Article 3 of this Plan.

         2.8 "Common Stock" means the common stock, par value $1.00 per share,
which the Company is currently authorized to issue or may in the future be
authorized to issue.

         2.9 "Company" means Tandy Brands Accessories, Inc., a Delaware
corporation, and any successor entity.

         2.10 "Date of Grant" means the effective date on which an Award is made
to a Participant as set forth in the applicable Award Agreement; provided,
however, that solely for purposes of Section 16 of the 1934 Act and the rules
and regulations promulgated thereunder, the Date of Grant of an Award shall be
the date of stockholder approval of the Plan if such date is later than the
effective date of such Award as set forth in the Award Agreement.

         2.11 "Employee" means a common law employee (as defined in accordance
with the Regulations and Revenue Rulings, as issued by the Internal Revenue
Service, then applicable under Section 3401(c) of the Code) of the Company or
any Subsidiary of the Company.

         2.12 "Fair Market Value" of a share of Common Stock means:

                  (a) If the Common Stock is listed or admitted to trade on a
         national securities exchange, the average of the high and low prices of
         the Common Stock as reported by such national securities exchange for
         the date the Award is granted or, if no sale of the Common Stock shall
         have been made on that date, the next preceding day on which there was
         a sale of Common Stock;

                  (b) If the Common Stock is not listed on a national securities
         exchange, then the average of the high and low prices of the Common
         Stock as reported for the date the Award is granted or, if no sale of
         the Common Stock shall have been made on that date, the next preceding
         day on which there was a sale of Common Stock, on the National Market
         System of the National Association of Securities Dealers, Inc.;

                  (c) If the Common Stock is not listed to trade on the National
         Market System, the average between the bid and asked price for the
         Common Stock on any electronic quotation system on the date the Award
         is granted; or

                  (d) If the Common Stock is not listed or admitted to trade on
         a national securities exchange, the National Market System, or any
         electronic quotation system, the Committee shall establish the Fair
         Market Value in its good faith judgement.

         2.13 "Incentive Stock Option" or "ISO" means an incentive stock option
within the meaning of Section 422 of the Code, granted pursuant to this Plan.

                                       3
<PAGE>

         2.14 "Non-employee Director" means a member of the Board who is not an
Employee and who satisfies (a) the requirements of Rule 16b-3(b)(3) promulgated
under the 1934 Act or any successor provision, or (b) the requirements of any
national securities exchange or other market on which the Common Stock is listed
or quoted.

         2.15 "Non-qualified Stock Option" or "NQSO" means a non-qualified stock
option, granted pursuant to this Plan.

         2.16 "Option Price" means the price which must be paid by a Participant
upon exercise of a Stock Option to purchase a share of Common Stock.

         2.17 "Participant" shall mean an Employee or a Non-employee Director to
whom an Award is granted under this Plan.

         2.18 "Performance Unit" means a unit granted to a Participant which
entitles the Participant to receive a payment, in cash, Common Stock, or both,
pursuant to Section 6.8 of this Plan which is subject to restrictions or
limitations set forth in this Plan and in the related Award Agreement.

         2.19 "Plan" means this Tandy Brands Accessories, Inc. 2002 Omnibus
Plan, as amended from time to time.

         2.20 "Reporting Participant" means a Participant who is subject to the
reporting requirements of Section 16 of the 1934 Act.

         2.21 "Restricted Stock" means shares of Common Stock issued or
transferred to a Participant pursuant to Section 6.6 of this Plan which are
subject to restrictions or limitations set forth in this Plan and in the related
Award Agreement.

         2.22 "Retirement" means any Termination of Service solely due to
retirement upon attainment of age 65, or permitted early retirement as
determined by the Committee.

         2.23 "SAR" means the right to receive a payment, in cash and/or Common
Stock, equal to the excess of the Fair Market Value of a specified number of
shares of Common Stock on the date the SAR is exercised over the SAR Price for
such shares.

         2.24 "SAR Price" means the Fair Market Value of each share of Common
Stock covered by an SAR, determined on the Date of Grant of the SAR.

         2.25 "Stock Option" means a Non-qualified Stock Option or an Incentive
Stock Option.

         2.26 "Subsidiary" means (a) any corporation in an unbroken chain of
corporations beginning with the Company, if each of the corporations other than
the last corporation in the unbroken chain owns stock possessing a majority of
the total combined voting power of all classes of stock in one of the other
corporations in the chain, (b) any limited partnership, if the Company or any
corporation described in item (a) above owns a majority of the general
partnership interest and a majority of the limited partnership interests
entitled to vote on the

                                       4
<PAGE>
removal and replacement of the general partner, and (c) any partnership or
limited liability company, if the partners or members thereof are composed only
of the Company, any corporation listed in item (a) above or any limited
partnership listed in item (b) above. "Subsidiaries" means more than one of any
such corporations, limited partnerships, partnerships or limited liability
companies.

         2.27 "Termination of Service" for a Participant who is an Employee of
the Company or any Subsidiary means the date the Employee ceases to serve as an
Employee of the Company and its Subsidiaries, for any reason. "Termination of
Service" for a Non-employee Director means the date the Non-employee Director
ceases to serve as a member of the Board.

         2.28 "Total and Permanent Disability" means a Participant is qualified
for long-term disability benefits under the Company's disability plan or
insurance policy; or, if no such plan or policy is then in existence, that the
Participant, because of ill health, physical or mental disability or any other
reason beyond his or her control, is unable to perform his or her duties of
employment for a period of six (6) continuous months, as determined in good
faith by the Committee; provided that, with respect to any Incentive Stock
Option, Total and Permanent Disability shall have the meaning given it under the
rules governing Incentive Stock Options under the Code.

                                    ARTICLE 3
                                 ADMINISTRATION

         3.1 Appointment of Committee. The Plan shall be administered by a
committee appointed by the Board (the "Committee"), which shall consist of two
(2) or more members, as determined by the Board. Any member of the Committee may
be removed at any time, with or without cause, by resolution of the Board. Any
vacancy occurring in the membership of the Committee may be filled by
appointment by the Board.

         Membership on the Committee shall be limited to those members of the
Board who are Non-employee Directors and who are "outside directors" under
Section 162(m) of the Code. The Committee shall select one of its members to act
as its Chairman. A majority of the Committee shall constitute a quorum, and the
act of a majority of the members of the Committee present at a meeting at which
a quorum is present shall be the act of the Committee.

         3.2 Determination of Awards. The Committee shall determine and
designate from time to time the eligible persons to whom Awards will be granted
and shall set forth in each related Award Agreement the Award Period, the Date
of Grant, and such other terms, provisions, limitations, and performance
requirements, as are approved by the Committee, but not inconsistent with the
Plan. The Committee shall determine whether an Award shall include one type of
Incentive, two or more Incentives granted in combination, or two or more
Incentives granted in tandem (that is, a joint grant where exercise of one
Incentive results in cancellation of all or a portion of the other Incentive).

         The Committee may from time to time delegate the authority provided for
in this Section 3.2 to the president of the Company.

                                       5
<PAGE>
         3.3 Committee Discretion. The Committee, in its discretion, shall (a)
interpret the Plan, (b) prescribe, amend, and rescind any rules and regulations
necessary or appropriate for the administration of the Plan, and (c) make such
other determinations and take such other action as it deems necessary or
advisable in the administration of the Plan. Any interpretation, determination,
or other action made or taken by the Committee shall be final, binding, and
conclusive on all interested parties.

         With respect to restrictions in the Plan that are based on the
requirements of Rule 16b-3 promulgated under the 1934 Act, Section 422 of the
Code, Section 162(m) of the Code, the rules of any exchange or inter-dealer
quotation system upon which the Company's securities are listed or quoted, or
any other applicable law, rule or restriction (collectively, "Applicable Law"),
to the extent that any such restrictions are no longer required by Applicable
Law, the Committee shall have the sole discretion and authority to grant Awards
that are not subject to such mandated restrictions and/or to waive any such
mandated restrictions with respect to outstanding Awards.

                                    ARTICLE 4
                                   ELIGIBILITY

         Any Employee (including an Employee who is also a member of the Board
or an officer) or Non-employee Director whose judgment, initiative, and efforts
contributed or may be expected to contribute to the successful performance of
the Company is eligible to participate in the Plan; provided that only Employees
shall be eligible to receive Incentive Stock Options. The Committee, upon its
own action, may grant, but shall not be required to grant, an Award to any
Employee or Non-employee Director. Awards may be granted by the Committee at any
time and from time to time to new Participants, or to then Participants, or to a
greater or lesser number of Participants, and may include or exclude previous
Participants, as the Committee shall determine. Except as required by this Plan,
Awards granted at different times need not contain similar provisions. The
Committee's determinations under the Plan (including without limitation
determinations of which Employees or Non-employee Directors, if any, are to
receive Awards, the form, amount and timing of such Awards, the terms and
provisions of such Awards and the agreements evidencing same) need not be
uniform and may be made by it selectively among Employees and Non-employee
Directors who receive, or are eligible to receive, Awards under the Plan.

                                    ARTICLE 5
                             SHARES SUBJECT TO PLAN

         Subject to adjustment as provided in Articles 13 and 14, the maximum
number of shares of Common Stock that may be delivered pursuant to Awards
granted under the Plan is (a) 398,588 shares; plus (b) shares of Common Stock
previously subject to Awards issued under this Plan or any stock option
agreements issued under any stock option plan previously maintained by the
Company, which are forfeited, terminated, settled in cash in lieu of Common
Stock, or exchanged for Awards that do not involve Common Stock, or expired
unexercised.

                                       6
<PAGE>
         Shares to be issued may be made available from authorized but unissued
Common Stock, Common Stock held by the Company in its treasury, or Common Stock
purchased by the Company on the open market or otherwise. During the term of
this Plan, the Company will at all times reserve and keep available the number
of shares of Common Stock that shall be sufficient to satisfy the requirements
of this Plan.

                                    ARTICLE 6
                                 GRANT OF AWARDS

         6.1 In General. The grant of an Award shall be authorized by the
Committee and shall be evidenced by an Award Agreement setting forth the
Incentive or Incentives being granted, the total number of shares of Common
Stock subject to the Incentive(s), the Option Price (if applicable), the Award
Period, the Date of Grant, and such other terms, provisions, limitations, and
performance objectives, as are approved by the Committee, but not inconsistent
with the Plan. The Company shall execute an Award Agreement with a Participant
after the Committee approves the issuance of an Award. Any Award granted
pursuant to this Plan must be granted within ten (10) years of the date of
adoption of this Plan. The Plan shall be submitted to the Company's stockholders
for approval; however, the Committee may grant Awards under the Plan prior to
the time of stockholder approval. Any such Award granted prior to such
stockholder approval shall be made subject to such stockholder approval. The
grant of an Award to a Participant shall not be deemed either to entitle the
Participant to, or to disqualify the Participant from, receipt of any other
Award under the Plan.

         If the Committee establishes a purchase price for an Award, the
Participant must accept such Award within a period of 30 days (or such shorter
period as the Committee may specify) after the Date of Grant by executing the
applicable Award Agreement and paying such purchase price.

         6.2 Maximum ISO Grants. The Committee may not grant Incentive Stock
Options under the Plan to any Employee which would permit the aggregate Fair
Market Value (determined on the Date of Grant) of the Common Stock with respect
to which Incentive Stock Options (under this and any other plan of the Company
and its Subsidiaries) are exercisable for the first time by such Employee during
any calendar year to exceed $100,000. To the extent any Stock Option granted
under this Plan which is designated as an Incentive Stock Option exceeds this
limit or otherwise fails to qualify as an Incentive Stock Option, such Stock
Option shall be a Non-qualified Stock Option.

         6.3 Maximum Individual Grants. No Participant may receive during any
fiscal year of the Company Awards covering an aggregate of more than One Hundred
Thousand (100,000) shares of Common Stock.

                                       7
<PAGE>

         6.4 Grant Upon Election or Appointment as a Non-employee Director. When
a Non-employee Director is first elected or appointed to the Board, such
director will be granted an Award of (a) Five Thousand (5,000) Non-qualified
Stock Options, or (b) upon the determination of the Board, an alternative form
of Award (other than an Incentive Stock Option) with a value substantially
equivalent to the value of Five Thousand (5,000) Non-qualified Stock Options.

         6.5 Annual Grants to Non-employee Directors.

                  (a) Concurrently with each regular annual election of the
         Board, each Non-employee Director (other than the Chairman of the
         Board) who was previously elected to the Board and who continues to
         serve in such capacity shall be granted an Award of (i) Two Thousand
         Five Hundred (2,500) Non-qualified Stock Options, or (ii) upon the
         determination of the Board, an alternative form of Award (other than an
         Incentive Stock Option) with a value substantially equivalent to the
         value of Two Thousand Five Hundred (2,500) Non-qualified Stock Options.

                  (b) Concurrently with each regular annual election of the
         Board, the Chairman of the Board (if the Chairman was previously
         elected to the Board and continues to serve as a director) shall be
         granted an Award of (i) Four Thousand Four Hundred Twenty Five (4,425)
         Non-qualified Stock Options, or (ii) upon the determination of the
         Board, an alternative form of Award (other than an Incentive Stock
         Option) with a value substantially equivalent to the value of Four
         Thousand Four Hundred Twenty Five (4,425) Non-qualified Stock Options.

         6.6 Restricted Stock.

                  (a) In General. If Restricted Stock is granted to a
         Participant under an Award, the Committee shall set forth in the
         related Award Agreement: (1) the number of shares of Common Stock
         awarded, (2) the price, if any, to be paid by the Participant for such
         Restricted Stock, (3) the time or times within which such Award may be
         subject to forfeiture, (4) specified performance goals of the Company,
         a Subsidiary, any division thereof or any group of Employees of the
         Company, or other criteria, which the Committee determines must be met
         in order to remove any restrictions (including vesting) on such Award,
         and (5) all other terms, limitations, restrictions, and conditions of
         the Restricted Stock, which shall be consistent with this Plan. The
         provisions of Restricted Stock need not be the same with respect to
         each Participant.

                  (b) Legend on Shares. Each Participant who is awarded
         Restricted Stock shall be issued a stock certificate or certificates in
         respect of such shares of Restricted Stock. Such certificate(s) shall
         be registered in the name of the Participant, and shall bear an
         appropriate legend referring to the terms, conditions, and restrictions
         applicable to such Restricted Stock, substantially as provided in
         Section 17.9 of the Plan. The Committee may require the stock
         certificates evidencing shares of Restricted Stock be held in custody
         by the Company until the restrictions thereon shall have lapsed, and
         that the Participant deliver to the Committee a stock power or stock
         powers, endorsed in blank, relating to the shares of Restricted Stock.

                                       8
<PAGE>

                  (c) Restrictions and Conditions. Shares of Restricted Stock
         shall be subject to the following restrictions and conditions:

                           (1) Subject to the other provisions of this Plan and
                  the terms of the particular Award Agreements, during such
                  period as may be determined by the Committee commencing on the
                  Date of Grant (the "Restriction Period"), the Participant
                  shall not be permitted to sell, transfer, pledge or assign
                  shares of Restricted Stock. Except for these limitations, the
                  Committee may in its sole discretion, remove any or all of the
                  restrictions on such Restricted Stock whenever it may
                  determine that, by reason of changes in applicable laws or
                  other changes in circumstances arising after the date of the
                  Award, such action is appropriate.

                           (2) Except as provided in sub-paragraph (1) above,
                  the Participant shall have, with respect to his or her
                  Restricted Stock, all of the rights of a stockholder of the
                  Company, including the right to vote the shares, and the right
                  to receive any dividends thereon. Certificates for shares of
                  Common Stock free of restriction under this Plan shall be
                  delivered to the Participant promptly after, and only after,
                  the Restriction Period shall expire without forfeiture in
                  respect of such shares of Common Stock. Certificates for the
                  shares of Common Stock forfeited under the provisions of the
                  Plan and the applicable Award Agreement shall be promptly
                  returned to the Company by the forfeiting Participant. Each
                  Award Agreement shall require that (x) each Participant, by
                  his or her acceptance of Restricted Stock, shall irrevocably
                  grant to the Company a power of attorney to transfer any
                  shares so forfeited to the Company and agrees to execute any
                  documents requested by the Company in connection with such
                  forfeiture and transfer, and (y) such provisions regarding
                  returns and transfers of stock certificates with respect to
                  forfeited shares of Common Stock shall be specifically
                  performable by the Company in a court of equity or law.

                           (3) The Restriction Period of Restricted Stock shall
                  commence on the Date of Grant and, subject to Article 14 of
                  the Plan, unless otherwise established by the Committee in the
                  Award Agreement setting forth the terms of the Restricted
                  Stock, shall expire upon satisfaction of the conditions set
                  forth in the Award Agreement; such conditions may provide for
                  vesting based on (i) length of continuous service, (ii)
                  achievement of specific business objectives, (iii) increases
                  in specified indices, (iv) attainment of specified growth
                  rates, or (v) other comparable measurements of Company
                  performance, as may be determined by the Committee in its sole
                  discretion.

                           (4) Subject to the provisions of the particular Award
                  Agreement, upon Termination of Service for any reason during
                  the Restriction Period, the nonvested shares of Restricted
                  Stock shall be forfeited by the Participant. In the event a
                  Participant has paid any consideration to the Company for such
                  forfeited Restricted Stock, the Company shall, as soon as
                  practicable after the event causing forfeiture (but in any
                  event within 5 business days), pay to the Participant, in
                  cash, an amount equal to the total consideration paid by the
                  Participant for such

                                       9
<PAGE>
                  forfeited shares. Upon any forfeiture, all rights of a
                  Participant with respect to the forfeited shares of the
                  Restricted Stock shall cease and terminate, without any
                  further obligation on the part of the Company.

         6.7 SAR. An SAR shall entitle the Participant at his election to
surrender to the Company the SAR, or portion thereof, as the Participant shall
choose, and to receive from the Company in exchange therefor cash in an amount
equal to the excess (if any) of the Fair Market Value (as of the date of the
exercise of the SAR) per share over the SAR Price per share specified in such
SAR, multiplied by the total number of shares of the SAR being surrendered. In
the discretion of the Committee, the Company may satisfy its obligation upon
exercise of an SAR by the distribution of that number of shares of Common Stock
having an aggregate Fair Market Value (as of the date of the exercise of the
SAR) equal to the amount of cash otherwise payable to the Participant, with a
cash settlement to be made for any fractional share interests, or the Company
may settle such obligation in part with shares of Common Stock and in part with
cash.

         6.8 Performance Unit. If a Performance Unit is granted to a Participant
under an Award, the Committee shall set forth in the related Award Agreement:
(a) the Date of Grant, (b) the number of Performance Units awarded, (c) the
Award Value of the units, (d) the period during which the Performance Unit shall
vest, (e) the period during which the Performance Unit shall be convertible, and
(f) all other terms, limitations, restrictions and conditions of the Performance
Units, which shall be consistent with this Plan.

         6.9 Tandem Awards. The Committee may grant two or more Incentives in
one Award in the form of a "tandem award," so that the right of the Participant
to exercise one Incentive shall be canceled if, and to the extent, the other
Incentive is exercised. For example, if a Stock Option and an SAR are issued in
a tandem Award, and the Participant exercises the SAR with respect to 100 shares
of Common Stock, the right of the Participant to exercise the related Stock
Option shall be canceled to the extent of 100 shares of Common Stock.

                                    ARTICLE 7
                                  OPTION PRICE

         The Option Price for any share of Common Stock which may be purchased
under a Stock Option and the SAR Price for any share of Common Stock subject to
an SAR shall be at least One Hundred Percent (100%) of the Fair Market Value of
the share on the Date of Grant. If an Incentive Stock Option is granted to an
Employee who owns or is deemed to own (by reason of the attribution rules of
Section 424(d) of the Code) more than 10% of the combined voting power of all
classes of stock of the Company (or any parent or Subsidiary), the Option Price
shall be at least 110% of the Fair Market Value of the Common Stock on the Date
of Grant.

                                       10
<PAGE>
                                    ARTICLE 8
                              AWARD PERIOD; VESTING

         8.1 Award Period. Subject to the other provisions of this Plan, the
Committee may, in its discretion, provide that an Incentive may not be exercised
in whole or in part for any period or periods of time or beyond any date
specified in the Award Agreement. Except as provided in the Award Agreement, an
Incentive may be exercised in whole or in part at any time during its term. The
Award Period for an Incentive shall be reduced or terminated upon Termination of
Service in accordance with this Article 8 and Article 9. No Incentive granted
under the Plan may be exercised at any time after the end of its Award Period.
No portion of any Incentive may be exercised after the expiration of ten (10)
years from its Date of Grant. However, if an Employee owns or is deemed to own
(by reason of the attribution rules of Section 424(d) of the Code) more than 10%
of the combined voting power of all classes of stock of the Company (or any
parent or Subsidiary) and an Incentive Stock Option is granted to such Employee,
the term of such Incentive Stock Option (to the extent required by the Code at
the time of grant) shall be no more than five (5) years from the Date of Grant.

         8.2 Vesting. The Committee, in its sole discretion, may determine that
an Incentive will be immediately exercisable, in whole or in part, or that all
or any portion may not be exercised until a date, or dates, subsequent to its
Date of Grant, or until the occurrence of one or more specified events, subject
in any case to the terms of the Plan. If the Committee imposes conditions upon
exercise, then subsequent to the Date of Grant, the Committee may, in its sole
discretion, accelerate the date on which all or any portion of the Incentive may
be exercised.

                                    ARTICLE 9
                             TERMINATION OF SERVICE

         In the event of Termination of Service of a Participant, an Incentive
may only be exercised as determined by the Committee and provided in the Award
Agreement.

                                   ARTICLE 10
                              EXERCISE OF INCENTIVE

         10.1 In General. A vested Incentive may be exercised during its Award
Period, subject to limitations and restrictions set forth therein and in Article
9. A vested Incentive may be exercised at such times and in such amounts as
provided in this Plan and the applicable Award Agreement, subject to the terms,
conditions, and restrictions of the Plan.

         In no event may an Incentive be exercised or shares of Common Stock be
issued pursuant to an Award if a necessary listing or quotation of the shares of
Common Stock on a stock exchange or inter-dealer quotation system or any
registration under state or federal securities laws required under the
circumstances has not been accomplished. No Incentive may be exercised for a
fractional share of Common Stock. The granting of an Incentive shall impose no
obligation upon the Participant to exercise that Incentive.

                                       11
<PAGE>

         10.2 Stock Options. Subject to such administrative regulations as the
Committee may from time to time adopt, a Stock Option may be exercised by the
delivery (including by fax) of written notice to the Committee setting forth the
number of shares of Common Stock with respect to which the Stock Option is to be
exercised and the date of exercise thereof (the "Exercise Date") which shall be
at least three (3) days after giving such notice unless an earlier time shall
have been mutually agreed upon.

         On the Exercise Date, the Participant shall deliver to the Company
consideration with a value equal to the total Option Price of the shares to be
purchased, payable as follows: (1) cash, check, bank draft, or money order
payable to the order of the Company, (2) Common Stock (including Restricted
Stock) owned by the Participant on the Exercise Date, valued at its Fair Market
Value on the Exercise Date, (3) by delivery (including by fax) to the Company or
its designated agent of an executed irrevocable option exercise form together
with irrevocable instructions from the Participant to a broker or dealer,
reasonably acceptable to the Company, to sell certain of the shares of Common
Stock purchased upon exercise of the Stock Option or to pledge such shares as
collateral for a loan and promptly deliver to the Company the amount of sale or
loan proceeds necessary to pay such purchase price, and/or (4) in any other form
of valid consideration that is acceptable to the Committee in its sole
discretion.

         In the event that shares of Restricted Stock are tendered as
consideration for the exercise of a Stock Option, a number of shares of Common
Stock issued upon the exercise of the Stock Option equal to the number of shares
of Restricted Stock used as consideration therefor shall be subject to the same
restrictions and provisions as the Restricted Stock so submitted.

         Upon payment of all amounts due from the Participant, the Company shall
cause certificates for the Common Stock then being purchased to be delivered as
directed by the Participant (or the person exercising the Participant's Stock
Option in the event of his death) at its principal business office promptly
after the Exercise Date; provided that if the Participant has exercised an
Incentive Stock Option, the Company may at its option retain physical possession
of the certificate evidencing the shares acquired upon exercise until the
expiration of the holding periods described in Section 422(a)(1) of the Code.
The obligation of the Company to deliver shares of Common Stock shall, however,
be subject to the condition that if at any time the Committee shall determine in
its discretion that the listing, registration, or qualification of the Stock
Option or the Common Stock upon any securities exchange or inter-dealer
quotation system or under any state or federal law, or the consent or approval
of any governmental regulatory body, is necessary or desirable as a condition
of, or in connection with, the Stock Option or the issuance or purchase of
shares of Common Stock thereunder, the Stock Option may not be exercised in
whole or in part unless such listing, registration, qualification, consent, or
approval shall have been effected or obtained free of any conditions not
acceptable to the Committee.

         If the Participant fails to pay for any of the Common Stock specified
in such notice or fails to accept delivery thereof, the Participant's right to
purchase such Common Stock may be terminated by the Company.

                                       12
<PAGE>

         10.3 SARs. Subject to the conditions of this Section 10.3 and such
administrative regulations as the Committee may from time to time adopt, an SAR
may be exercised by the delivery (including by fax) of written notice to the
Committee setting forth the number of shares of Common Stock with respect to
which the SAR is to be exercised and the date of exercise thereof (the "Exercise
Date") which shall be at least three (3) days after giving such notice unless an
earlier time shall have been mutually agreed upon.

         On the Exercise Date, the Participant shall receive from the Company in
exchange therefor cash in an amount equal to the excess (if any) of the Fair
Market Value (as of the date of the exercise of the SAR) per share of Common
Stock over the SAR Price per share specified in such SAR, multiplied by the
total number of shares of Common Stock of the SAR being surrendered. In the
discretion of the Committee, the Company may satisfy its obligation upon
exercise of an SAR by the distribution of that number of shares of Common Stock
having an aggregate Fair Market Value (as of the date of the exercise of the
SAR) equal to the amount of cash otherwise payable to the Participant, with a
cash settlement to be made for any fractional share interests, or the Company
may settle such obligation in part with shares of Common Stock and in part with
cash.

         10.4 Performance Units. Subject to the conditions of this Section 10.4
and such administrative regulations as the Committee may from time to time
adopt, a Performance Unit may be exercised by the delivery (including by fax) of
written notice to the Committee setting forth the number of units of the
Participant's Performance Units to be exercised and the date of exercise thereof
(the "Exercise Date") which shall be at least three (3) days after giving such
notice unless an earlier time shall have been mutually agreed upon.

         On the Exercise Date, the Participant shall be entitled to receive an
amount of cash equal to: (a) the aggregate Fair Market Value of the units
exercised on the Exercise Date less (b) the aggregate Award Value of the units
exercised (the "Conversion Gain"). In the discretion of the Committee, the
Company may satisfy its obligation upon exercise of Performance Units by the
distribution of that number of shares of Common Stock having an aggregate Fair
Market Value (as of the Exercise Date) equal to the amount of cash otherwise
payable to the Participant, with a cash settlement to be made for any fractional
share interests, or the Company may settle such obligation in part with shares
of Common Stock and in part with cash.

         10.5 Disqualifying Disposition of ISO. If shares of Common Stock
acquired upon exercise of an Incentive Stock Option are disposed of by a
Participant prior to the expiration of either two (2) years from the Date of
Grant of such Stock Option or one (1) year from the transfer of shares of Common
Stock to the Participant pursuant to the exercise of such Stock Option, or in
any other disqualifying disposition within the meaning of Section 422 of the
Code, such Participant shall notify the Company in writing of the date and terms
of such disposition. A disqualifying disposition by a Participant shall not
affect the status of any other Stock Option granted under the Plan as an
Incentive Stock Option within the meaning of Section 422 of the Code.

                                       13
<PAGE>
                                   ARTICLE 11
                           AMENDMENT OR DISCONTINUANCE

         Subject to the limitations set forth in this Article 11, the Board may
at any time and from time to time, without the consent of the Participants,
alter, amend, revise, suspend, or discontinue the Plan in whole or in part;
provided, however, that no amendment which results in material changes to the
Plan shall be effective unless such amendment shall be approved by the requisite
vote of the stockholders of the Company entitled to vote thereon.

         Any such amendment shall, to the extent deemed necessary or advisable
by the committee, be applicable to any outstanding Incentives theretofore
granted under the Plan, notwithstanding any contrary provisions contained in any
stock option agreement. In the event of any such amendment to the Plan, the
holder of any Incentive outstanding under the Plan shall, upon request of the
Committee and as a condition to the exercisability thereof, execute a conforming
amendment in the form prescribed by the Committee to any Award Agreement
relating thereto.

         Notwithstanding anything contained in this Plan to the contrary, unless
required by law, no action contemplated or permitted by this Article 11 shall
adversely affect any rights of Participants or obligations of the Company to
Participants with respect to any Incentive theretofore granted under the Plan
without the consent of the affected Participant.

                                   ARTICLE 12
                                      TERM

         The Plan shall be effective from the date that this Plan is approved by
the Board. Unless sooner terminated by action of the Board, the Plan will
terminate on October 16, 2012, but Incentives granted before that date will
continue to be effective in accordance with their terms and conditions.

                                   ARTICLE 13
                               CAPITAL ADJUSTMENTS

         If at any time while the Plan is in effect, or Incentives are
outstanding, there shall be any increase or decrease in the number of issued and
outstanding shares of Common Stock resulting from (1) the declaration or payment
of a stock dividend, (2) any recapitalization resulting in a stock split-up,
combination, or exchange of shares of Common Stock, or (3) other increase or
decrease in such shares of Common Stock effected without receipt of
consideration by the Company, then and in such event:

                  (a) An appropriate adjustment shall be made in the maximum
         number of shares of Common Stock then subject to being awarded under
         the Plan and in the maximum number of shares of Common Stock that may
         be awarded to a Participant to the end that the same proportion of the
         Company's issued and outstanding shares of Common Stock shall continue
         to be subject to being so awarded.

                                       14
<PAGE>
                  (b) Appropriate adjustments shall be made in the number of
         shares of Common Stock and the Option Price thereof then subject to
         purchase pursuant to each such Stock Option previously granted and
         unexercised, to the end that the same proportion of the Company's
         issued and outstanding shares of Common Stock in each such instance
         shall remain subject to purchase at the same aggregate Option Price.

                  (c) Appropriate adjustments shall be made in the number of
         SARs and the SAR Price thereof then subject to exercise pursuant to
         each such SAR previously granted and unexercised, to the end that the
         same proportion of the Company's issued and outstanding shares of
         Common Stock in each instance shall remain subject to exercise at the
         same aggregate SAR Price.

                  (d) Appropriate adjustments shall be made in the number of
         outstanding shares of Restricted Stock with respect to which
         restrictions have not yet lapsed prior to any such change.

                  (e) Appropriate adjustments shall be made in the number of
         Performance Units thereof then subject to exercise pursuant to each
         such Performance Unit previously granted and unexercised, to the end
         that the same proportion of the Company's issued and outstanding shares
         of Common Stock in each such instance shall remain subject to exercise.

         Except as otherwise expressly provided herein, the issuance by the
Company of shares of its capital stock of any class, or securities convertible
into shares of capital stock of any class, either in connection with direct sale
or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to (i) the number of or Option Price of shares of Common
Stock then subject to outstanding Stock Options granted under the Plan, (ii) the
number of or SAR Price of SARs then subject to outstanding SARs granted under
the Plan, (iii) the number of outstanding shares of Restricted Stock, or (iv)
the number of Performance Units then subject to outstanding Performance Units
granted under the Plan.

         Upon the occurrence of each event requiring an adjustment with respect
to any Incentive, the Company shall mail to each affected Participant its
computation of such adjustment which shall be conclusive and shall be binding
upon each such Participant.

                                   ARTICLE 14
                          RECAPITALIZATION, MERGER AND
                        CONSOLIDATION; CHANGE OF CONTROL

                  (a) The existence of this Plan and Incentives granted
         hereunder shall not affect in any way the right or power of the Company
         or its stockholders to make or

                                       15
<PAGE>
         authorize any or all adjustments, recapitalizations, reorganizations,
         or other changes in the Company's capital structure and its business,
         or any merger or consolidation of the Company, or any issue of bonds,
         debentures, preferred or preference stocks ranking prior to or
         otherwise affecting the Common Stock or the rights thereof (or any
         rights, options, or warrants to purchase same), or the dissolution or
         liquidation of the Company, or any sale or transfer of all or any part
         of its assets or business, or any other corporate act or proceeding,
         whether of a similar character or otherwise.

                  (b) Subject to any required action by the stockholders, if the
         Company shall be the surviving or resulting corporation in any merger,
         consolidation or share exchange, any Incentive granted hereunder shall
         pertain to and apply to the securities or rights (including cash,
         property, or assets) to which a holder of the number of shares of
         Common Stock subject to the Incentive would have been entitled.

                  (c) In the event of any merger, consolidation or share
         exchange pursuant to which the Company is not the surviving or
         resulting corporation, there shall be substituted for each share of
         Common Stock subject to the unexercised portions of such outstanding
         Incentives, that number of shares of each class of stock or other
         securities or that amount of cash, property, or assets of the
         surviving, resulting or consolidated company which were distributed or
         distributable to the stockholders of the Company in respect to each
         share of Common Stock held by them, such outstanding Incentives to be
         thereafter exercisable for such stock, securities, cash, or property in
         accordance with their terms. Notwithstanding the foregoing, however,
         all such Incentives may be canceled by the Company as of the effective
         date of any such reorganization, merger, consolidation, share exchange
         or any dissolution or liquidation of the Company by giving notice to
         each holder thereof or his personal representative of its intention to
         do so and by permitting the purchase during the thirty (30) day period
         next preceding such effective date of all of the shares of Common Stock
         subject to such outstanding Incentives.

                  (d) In the event of a Change of Control, then, notwithstanding
         any other provision in this Plan to the contrary, all unmatured
         installments of Incentives outstanding shall thereupon automatically be
         accelerated and exercisable in full and all Restriction Periods
         applicable to Awards of Restricted Stock shall automatically expire.
         The determination of the Committee that any of the foregoing conditions
         has been met shall be binding and conclusive on all parties.

                                   ARTICLE 15
                           LIQUIDATION OR DISSOLUTION

         In case the Company shall, at any time while any Incentive under this
Plan shall be in force and remain unexpired, (i) sell all or substantially all
of its property, or (ii) dissolve, liquidate, or wind up its affairs, then each
Participant shall be thereafter entitled to receive, in lieu of each share of
Common Stock of the Company which such Participant would have been entitled to
receive under the Incentive, the same kind and amount of any securities or
assets as may be issuable, distributable, or payable upon any such sale,
dissolution, liquidation, or winding

                                       16
<PAGE>
up with respect to each share of Common Stock of the Company. If the Company
shall, at any time prior to the expiration of any Incentive, make any partial
distribution of its assets, in the nature of a partial liquidation, whether
payable in cash or in kind (but excluding the distribution of a cash dividend
payable out of earned surplus and designated as such) then in such event the
Option Prices or SAR Prices then in effect with respect to each Stock Option or
SAR shall be reduced, on the payment date of such distribution, in proportion to
the percentage reduction in the tangible book value of the shares of the
Company's Common Stock (determined in accordance with generally accepted
accounting principles) resulting by reason of such distribution.

                                   ARTICLE 16
                         INCENTIVES IN SUBSTITUTION FOR
                    INCENTIVES GRANTED BY OTHER CORPORATIONS

         Incentives may be granted under the Plan from time to time in
substitution for similar instruments held by employees of a corporation who
become or are about to become management Employees of the Company or any
Subsidiary as a result of a merger or consolidation of the employing corporation
with the Company or the acquisition by the Company of stock of the employing
corporation. The terms and conditions of the substitute Incentives so granted
may vary from the terms and conditions set forth in this Plan to such extent as
the Board at the time of grant may deem appropriate to conform, in whole or in
part, to the provisions of the Incentives in substitution for which they are
granted.

                                   ARTICLE 17
                            MISCELLANEOUS PROVISIONS

         17.1 Investment Intent. The Company may require that there be presented
to and filed with it by any Participant under the Plan, such evidence as it may
deem necessary to establish that the Incentives granted or the shares of Common
Stock to be purchased or transferred are being acquired for investment and not
with a view to their distribution.

         17.2 No Right to Continued Employment. Neither the Plan nor any
Incentive granted under the Plan shall confer upon any Participant any right
with respect to continuance of employment by the Company or any Subsidiary.

         17.3 Indemnification of Board and Committee. No member of the Board or
the Committee, nor any officer or Employee of the Company acting on behalf of
the Board or the Committee, shall be personally liable for any action,
determination, or interpretation taken or made in good faith with respect to the
Plan, and all members of the Board or the Committee and each and any officer or
employee of the Company acting on their behalf shall, to the extent permitted by
law, be fully indemnified and protected by the Company in respect of any such
action, determination, or interpretation.

                                       17
<PAGE>

         17.4 Effect of the Plan. Neither the adoption of this Plan nor any
action of the Board or the Committee shall be deemed to give any person any
right to be granted an Award or any other rights except as may be evidenced by
an Award Agreement, or any amendment thereto, duly authorized by the Committee
and executed on behalf of the Company, and then only to the extent and upon the
terms and conditions expressly set forth therein.

         17.5 Compliance With Other Laws and Regulations. Notwithstanding
anything contained herein to the contrary, the Company shall not be required to
sell or issue shares of Common Stock under any Incentive if the issuance thereof
would constitute a violation by the Participant or the Company of any provisions
of any law or regulation of any governmental authority or any national
securities exchange or inter-dealer quotation system or other forum in which
shares of Common Stock are quoted or traded (including without limitation
Section 16 of the 1934 Act and Section 162(m) of the Code); and, as a condition
of any sale or issuance of shares of Common Stock under an Incentive, the
Committee may require such agreements or undertakings, if any, as the Committee
may deem necessary or advisable to assure compliance with any such law or
regulation. The Plan, the grant and exercise of Incentives hereunder, and the
obligation of the Company to sell and deliver shares of Common Stock, shall be
subject to all applicable federal and state laws, rules and regulations and to
such approvals by any government or regulatory agency as may be required.

         17.6 Tax Requirements. The Company shall have the right to deduct from
all amounts hereunder paid in cash or other form, any Federal, state, or local
taxes required by law to be withheld with respect to such payments. The
Participant receiving shares of Common Stock issued under the Plan shall be
required to pay the Company the amount of any taxes which the Company is
required to withhold with respect to such shares of Common Stock.

         Notwithstanding the foregoing, in the event of an assignment of a
Non-qualified Stock Option or SAR pursuant to Section 17.7, the Participant who
assigns the Non-qualified Stock Option or SAR shall remain subject to
withholding taxes upon exercise of the Non-qualified Stock Option or SAR by the
transferee to the extent required by the Code or the rules and regulations
promulgated thereunder. Such payments shall be required to be made prior to the
delivery of any certificate representing such shares of Common Stock. Such
payment may be made in cash, by check, or through the delivery of shares of
Common Stock owned by the Participant (which may be effected by the actual
delivery of shares of Common Stock by the Participant or by the Company's
withholding a number of shares to be issued upon the exercise of a Stock Option,
if applicable), which shares have an aggregate Fair Market Value equal to the
required minimum withholding payment, or any combination thereof.

         17.7 Assignability. Incentive Stock Options and Performance Units may
not be transferred or assigned other than by will or the laws of descent and
distribution and may be exercised during the lifetime of the Participant only by
the Participant or the Participant's legally authorized representative, and each
Award Agreement in respect of an Incentive Stock Option or Performance Unit
shall so provide. The designation by a Participant of a beneficiary will not
constitute a transfer of the Stock Option. The Committee may waive or modify any
limitation contained in the preceding sentences of this Section 17.7 that is not
required for compliance with Section 422 of the Code.

                                       18
<PAGE>

         The Committee may, in its discretion, authorize all or a portion of a
Non-qualified Stock Option or SAR to be granted to a Participant to be on terms
which permit transfer by such Participant to (i) the spouse, children or
grandchildren of the Participant ("Immediate Family Members"), (ii) a trust or
trusts for the exclusive benefit of such Immediate Family Members, or (iii) a
partnership in which such Immediate Family Members are the only partners, (iv)
an entity exempt from federal income tax pursuant to Section 501(c)(3) of the
Code or any successor provision, or (v) a split interest trust or pooled income
fund described in Section 2522(c)(2) of the Code or any successor provision,
provided that (x) there shall be no consideration for any such transfer, (y) the
Award Agreement pursuant to which such Non-qualified Stock Option or SAR is
granted must be approved by the Committee and must expressly provide for
transferability in a manner consistent with this Section, and (z) subsequent
transfers of transferred Non-qualified Stock Options or SARs shall be prohibited
except those by will or the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined in the Code or Title I of the
Employee Retirement Income Security Act of 1974, as amended. Following transfer,
any such Non-qualified Stock Option and SAR shall continue to be subject to the
same terms and conditions as were applicable immediately prior to transfer,
provided that for purposes of Articles 10, 11, 13, 15 and 17 hereof the term
"Participant" shall be deemed to include the transferee.

         The events of Termination of Service shall continue to be applied with
respect to the original Participant, following which the Non-qualified Stock
Options and SARs shall be exercisable by the transferee only to the extent and
for the periods specified in the Award Agreement. The Committee and the Company
shall have no obligation to inform any transferee of a Non-qualified Stock
Option or SAR of any expiration, termination, lapse or acceleration of such
Option. The Company shall have no obligation to register with any federal or
state securities commission or agency any Common Stock issuable or issued under
a Non-qualified Stock Option or SAR that has been transferred by a Participant
under this Section 17.7.

         17.8 Use of Proceeds. Proceeds from the sale of shares of Common Stock
pursuant to Incentives granted under this Plan shall constitute general funds of
the Company.

         17.9 Legend. Each certificate representing shares of Restricted Stock
issued to a Participant shall bear the following legend, or a similar legend
deemed by the Company to constitute an appropriate notice of the provisions
hereof (any such certificate not having such legend shall be surrendered upon
demand by the Company and so endorsed):

                  On the face of the certificate:

                           "Transfer of this stock is restricted in accordance
                           with conditions printed on the reverse of this
                           certificate."

                  On the reverse:

                           "The shares of stock evidenced by this certificate
                           are subject to and transferable only in accordance
                           with that certain Tandy Brands Accessories, Inc. 2002
                           Omnibus Plan, a copy of which is on file at the
                           principal office of the

                                       19
<PAGE>

                           Company in Arlington, Texas. No transfer or pledge of
                           the shares evidenced hereby may be made except in
                           accordance with and subject to the provisions of said
                           Plan. By acceptance of this certificate, any holder,
                           transferee or pledgee hereof agrees to be bound by
                           all of the provisions of said Plan."

         The following legend shall be inserted on a certificate evidencing
Common Stock issued under the Plan if the shares were not issued in a
transaction registered under the applicable federal and state securities laws:

                           "Shares of stock represented by this certificate have
                           been acquired by the holder for investment and not
                           for resale, transfer or distribution, have been
                           issued pursuant to exemptions from the registration
                           requirements of applicable state and federal
                           securities laws, and may not be offered for sale,
                           sold or transferred other than pursuant to effective
                           registration under such laws, or in transactions
                           otherwise in compliance with such laws, and upon
                           evidence satisfactory to the Company of compliance
                           with such laws, as to which the Company may rely upon
                           an opinion of counsel satisfactory to the Company."

         A copy of this Plan shall be kept on file in the principal office of
the Company in Arlington, Texas.

         IN WITNESS WHEREOF, the Company has caused this instrument to be
executed as of October 16, 2002, by its duly authorized officer pursuant to
prior action taken by the Board.

                               TANDY BRANDS ACCESSORIES, INC.

                               By: /s/ J.S.B. Jenkins
                                   --------------------------------------------
                                   Name: J.S.B. Jenkins
                                         --------------------------------------
                                   Title: President and Chief Executive Officer
                                          -------------------------------------

                                       20

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