CONSULTATION AGREEMENT
EXHIBIT
10.3
This
Consultation Agreement, dated as of January 1, 2007 (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, 2007.
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, 2007
and shall terminate on the earlier of December 31, 2007 or termination of the
Consultant’s service pursuant to this Agreement. The period commencing as of
January 1, 2007 and ending on December 31, 2007 is hereinafter referred to
as
the “Term”.
2.4 Automatic
Renewal.
This
Consultation Agreement will be automatically renewed each year until terminated
as provided herein. Any renewal will be referred to as the “Renewed Term”. Each
Term will be for a one (1) year period.
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 $100,000 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, 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:
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a)
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1)
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solicit
or endeavor to entice away from the Company, or any of its subsidiaries
or
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2)
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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
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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
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Notices.
All notices or communications hereunder shall be in writing, addressed
as
follows:
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To
the Company:
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Tandy
Leather Factory, Inc.
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0000
Xxxx Xxxx 000 Xxxxx
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Xxxx
Xxxxx, Xxxxx 00000
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Telecopier
No: 000-000-0000
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Attention:
Xxxxxx X. Xxxxxx
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With
a copy to:
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Xxxxxxx
X. Xxxxxx
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Xxx,
Xxxxxx, Rosenfield, Kaitcer, Xxxxx & Windsor, PC
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0000
X. Xxxxxxx Xxxx
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Xxxx
Xxxxx, Xxxxx 00000
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Telecopier
No.: 817-377-1120
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To
the Consultant:
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J.
Xxxx Xxxxxxxx
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0000
Xxxxxxxx
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Xxxxxxxxx,
Xxxxx 00000
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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/
Xxxxxx X. Xxxxxx
Xxxxxx
X.
Xxxxxx
Title: Chief
Executive Officer
Consultant
/s/
J.
Xxxx Xxxxxxxx
J.
Xxxx
Xxxxxxxx
