CONSULTATION AGREEMENT
Exhibit
10.1
This
Consultation Agreement, dated as of January 1, 2008 (the “Agreement”) between
TANDY LEATHER FACTORY, INC., a Delaware corporation (and any successor entity
thereto, the “Company” or “TLF”) and J. XXXX XXXXXXXX (the
“Consultant”).
WHEREAS
the Company desires to retain the Consultant as Chairman of the Board and as a
Consultant and the Consultant desires to serve in those positions.
NOW,
THEREFORE, in consideration of the covenants and agreements hereinafter set
forth, the parties hereto agree as follows:
1. EFFECTIVENESS OF
AGREEMENT
This
Agreement shall become effective as of January 1, 2008.
2. SERVICE AND
DUTIES
2.1 General. The
Company hereby retains the Consultant, and the Consultant agrees to serve as
Chairman of the Board of the Company, upon the terms and conditions herein
contained. The Consultant shall have all of the responsibilities and
powers normally associated with such office. The Consultant shall
perform such other duties and services for the Company, commensurate with the
Consultant’s position, as may be designated from time to time by the Board of
Directors of the Company (the “Board”). The Consultant agrees to
serve the Company faithfully and to the best of his ability under the direction
of the Board. It is understood and agreed that the Consultant not be
an employee of the Company despite any title assigned to the
Consultant.
2.2 Services. Except
as may otherwise be approved in advance by the Board and except during vacation
periods and reasonable periods of absence due to sickness, personal injury, or
other disability, the Consultant shall be available by telephone, fax, or in
person at all reasonable times for consultation throughout the Term (as defined
in Section 2.3). The Consultant shall render his services to the
Company during the Term and shall use his best efforts, judgment and energy to
improve and advance the business and interest of the Company in a manner
consistent with the duties of his position. However, this
Consultation Agreement will be non-exclusive and the Consultant may engage in
other business or employment, not inconsistent with the terms of Section 7
herein.
2.3 Term of
Service. The Consultant’s service under this Agreement shall
commence as of January 1, 2008 and shall terminate on the earlier of December
31, 2008 or termination of the Consultant’s service pursuant to this
Agreement. The period commencing as of January 1, 2008 and ending on
December 31, 2008 is hereinafter referred to as the “Term”.
2.4 Automatic
Renewal.
[deleted]
2.5 Company Credit
Card/Expenses. During the Term or Renewed Term, the Consultant
shall continue to be eligible to use his Company-issued credit card for
reasonable travel and other business expenses incurred by him in the fulfillment
of his duties hereunder, in accordance with Company practices as in effect
during the Term.
3. SALARY
3.1 Base
Salary. The Consultant shall be entitled to receive a base
salary (“Base Salary”) at a rate of $50,000 per annum, payable in arrears in
equal installments not less frequently than monthly. Any increases
will be in accordance with the terms hereof. Once increased, such
higher shall constitute the Consultant’s annual Base Salary.
3.2 Annual
Review. The Consultant’s Base Salary shall be reviewed by the
Board and its Compensation Committee, based upon the Consultant’s performance,
not less often than annually. In addition to any increases effected
as a result of such review, the Board at any time may in its sole discretion
increase the Consultant’s Base Salary if, in the Board’s opinion, it is in the
best interest of the Company to do so.
4. BENEFITS
The
Consultant will, during the Term of this Agreement, be included to the extent
eligible in all Company medical, dental and vision insurance which shall be
established by the Company for, or made available to Consultant. The
Company’s medical plan, dental plan and vision plan shall provide benefits
substantially similar to those provided to the Company’s existing plans provided
for other employees. During the Term, the benefits described in this
Section 4 may only be reduced as a result of a general reduction for Senior
Consultants, where the Base Salary is increased to offset benefits
lost. In the event is it necessary to purchase a separate health
insurance policy for the Consultant, then the cost of medical, dental or vision
insurance will be deducted from the Consultant’s Salary as defined in Section
3.
5. TERMINATION OF
SERVICE
5.1 General. If,
prior to the expiration of the Term, the Consultant’s service is terminated by
the Company, the Company shall continue to pay the Consultant the Base Salary
(at the rate in effect on the date of such termination) for the remainder of the
Term (such period being referred to hereinafter as the “Severance Period”), at
such intervals as the same would have been paid had the Consultant remained in
the active service of the Company. In addition, the Consultant shall
be entitled to continue to participate during the Severance Period in any
benefit plans set forth herein. The Consultant shall have no further
right to receive any other compensation or benefits after such termination or
resignation of service except as determined in accordance with the terms of the
employee benefits plans or programs of the Company established for Consultant
under the terms of this Agreement.
5.2 Death During Term or
Severance Period. In the event of the Consultant’s death
during the Term or the Severance Period, payments of the Base Salary under this
Section 5 shall terminate.
5.3 Date of
Termination. The date of termination of service shall be the
date specified in a written notice of termination to the
Consultant. The date of resignation shall be the date specified in
the written notice of resignation from the Consultant to the
Company.
6. DISABILITY
In the
event of termination of service by reason of Permanent Disability (as
hereinafter defined), the Consultant (or his estate, as applicable) shall be
entitled to Base Salary and benefits determined under Sections 3 and 4 hereof
through the date of disability. Other benefits shall be determined in
accordance with the benefits plans maintained by the Company applicable to the
Consultant, and the Company shall have no further obligation
hereunder. For purposes of this Agreement, “Permanent Disability”
means a physical or mental disability or infirmity of the Consultant that
prevents the normal performance of substantially all his duties as a consultant
of the Company, which disability or infirmity shall exist for any continuous
period of 60 days. The presumption of disability will arise if the
Consultant is unable to attend two (2) consecutive Board meetings.
7. NONSOLICITATION;
CONFIDENTIALITY; NONCOMPETITION
7.1 Nonsolicitation. For
so long as the Consultant serves the Company and continuing for two years
thereafter, the Consultant shall not, without the prior written consent of the
Company, directly or indirectly, as a sole proprietor, member of a partnership,
stockholder or investor, office or director of a corporation, or as an employee,
associate, consultant or agent of any person, partnership, corporation or other
business organization or entity other than the Company:
|
|
a)
|
1)
|
solicit
or endeavor to entice away from the Company, or any of its subsidiaries
or
|
|
|
2)
|
solicit
any person or entity who during the then most recent twelve-month period,
was employed by or served as an agent or key consultant of the Company or
any of its Subsidiaries, or
|
b) solicit
or endeavor to entice away from the Company, or any of its subsidiaries, any
person or entity who is, or was within the then most recent 12-month period, a
customer or client (or reasonably anticipated [to the general knowledge of the
Consultant or the public] to become a customer or client) of the Company, or any
of its subsidiaries.
7.2 Confidentiality. The
Consultant covenants and agrees with the Company that he will not at any time,
except in performance of his obligations to the Company hereunder or with the
prior written consent of the Company, directly or indirectly, disclose any
secret or confidential information that he may learn or has learned by reason of
his association with the Company, or any of its subsidiaries and
affiliates. The term “confidential information” includes information
not previously disclosed to the public or to the trade by the Company’s
management, or otherwise in the public domain, with respect to the Company’s, or
any of its affiliates’ or subsidiaries’, products, facilities, applications and
methods, trade secrets and other intellectual property, systems, procedures,
manuals, confidential reports, product price lists, customer lists, technical
information, financial information (including the revenues, cost or profits
associated with any of the Company’s products), business plans, prospects or
opportunities, but shall exclude any information which (i) is or becomes
available to the public or is general known in the industry or industries in
which the Company operates other than as a result of disclosure by any employee
of the Company, including, but not limited to, the Consultant’s agreement under
this Section 7.2 or (ii) the Consultant is required to disclose under any
applicable laws, regulations or directives of any government agency, tribunal or
authority having jurisdiction in the matter or under subpoena or other process
of law.
7.3 Non
Compete. For so long as the Consultant serves the Company (or,
if the Consultant is entitled to a continuation of his Base Salary, the period
during which such Base Salary is continued) and continuing for two years
thereafter, the Consultant shall not, directly or indirectly, as a sole
proprietor, member of a partnership, stockholder, investor, officer or director
of a corporation, or as an employee, associate, consult or agent of any person,
partnership, corporation or other business organization or entity other than the
Company, or any of its subsidiaries, render any service to or in any way be
affiliated with a competitor (or any person or entity that is reasonably
anticipated [to the general knowledge of the Consultant or the public] to become
a competitor) of the Company, or any of its subsidiaries. Further
purposes of this Section 7.3, ownership of securities having no more than one
percent of the outstanding voting power of any competitor which is listed on any
national securities exchange or traded actively in the national over-the-counter
market shall not be deemed to be in violation of this Section so long as
Consultant has no other connection or relationship with such
competitor.
7.4 Exclusive
Property. The Consultant confirms that all confidential
information is and shall remain the exclusive property of the
Company. All business records, papers and documents kept or made by
the Consultant relating to the business of the Company shall be and remain the
property of the Company.
7.5 Injunctive Relief.
Without intending to limit the remedies available to the Company, the Consultant
acknowledges that a breach of any of the covenants contained in this Section 7
may result in material and irreparable injury to the Company, or its affiliates
or subsidiaries, for which there is no adequate remedy at law, that it will not
be possible to measure damages for such injuries precisely and that, in the
event of such a breach or threat thereof, the Company shall be entitled to seek
a temporary restraining order and/or a preliminary or permanent injunction
restraining the Consultant from engaging in activities prohibited by this
Section 7 or such other relief as may be required specifically to enforce any of
the covenants in this Section 7. If for any reason it is held that
the restrictions under this Section 7 are not reasonable or that consideration
therefor is inadequate, such restrictions shall be interpreted or modified to
include as much of the duration and scope identified in this Section 7 as will
render such restrictions valid and enforceable.
8. MISCELLANEOUS
8.1 Notices. All
notices or communications hereunder shall be in writing, addressed as
follows:
|
To
the Company:
|
Tandy
Leather Factory, Inc.
|
|
|
0000
Xxxx Xxxx 000 Xxxxx
|
||
|
Xxxx
Xxxxx, Xxxxx 00000
|
||
|
Telecopier
No:
|
000-000-0000
|
|
|
Attention:
|
Xxxxxx
X. Xxxxxx
|
|
|
With
a copy to:
|
Xxxxxxx
X. Xxxxxx
|
|
|
Xxx,
Xxxxxx, Rosenfield, Kaitcer, Xxxxx & Windsor, PC
|
||
|
0000
X. Xxxxxxx Xxxx
|
||
|
Xxxx
Xxxxx, Xxxxx 00000
|
||
|
Telecopier
No:
|
817-377-1120
|
|
|
To
the Consultant:
|
J.
Xxxx Xxxxxxxx
|
|
|
0000
Xxxxxxxx
|
||
|
Xxxxxxxxx,
Xxxxx 00000
|
All such notices shall be conclusively deemed to be received and shall be effective (i) if sent by hand delivery, upon receipt, (ii) if sent by telecopy or facsimile transmission, upon confirmation of receipt by the sender of such transmission or (iii) if sent by registered or certified mail, on the fifth day after the day on which such notice is mailed.
8.2 Severability. Each
provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement
is held to be prohibited by or invalid under applicable law, such provision will
be ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
8.3 Assignment. The
Company’s rights and obligations under this Agreement shall not be assignable by
the Company except as incident to a reorganization, merger or consolidation, or
transfer of all or substantially all of the Company’s business and
properties. Neither this Agreement nor any rights hereunder
shall be assignable or otherwise subject to hypothecation by the
Consultant.
8.4 Entire
Agreement. This Agreement represents the entire agreement of
the parties and shall supersede any and all previous contracts, arrangements or
understandings between the Company and the Consultant, including, without
limitation, the Prior Agreement. This Agreement may be amended at any
time by mutual written agreement of the parties hereto. In the case
of any conflict between any express term of this Agreement and any statement
contained in any employment manual, memo or rule of general applicability of the
Company, this Agreement shall control.
8.5 Withholding. The
payment of any amount pursuant to this Agreement shall be subject to applicable
withholding and payroll taxes, and such other deductions as may be required
under the Company’s employee benefit plans, if any.
8.6 Governing
Law. This Agreement shall be construed, interpreted and
governed in accordance with the laws of Texas without reference to rules
relating to conflict of law. The venue for any dispute will be in the
Court of applicable jurisdiction in Tarrant County, Texas.
IN
WITNESS WHEREOF, the Company has caused this Agreement to be duly executed and
the Consultant has hereunto set his hand, as of the day and year first above
written.
|
TANDY
LEATHER FACTORY, INC.
|
||
|
By: /s/ Xxx Xxxxxx
|
||
|
Chief
Executive Officer and President
|
||
|
Consultant
|
||
|
/s/ J. Xxxx Xxxxxxxx
|
||
|
J.
Xxxx Xxxxxxxx
|
||
