TANDY LEATHER FACTORY INC (Form: 8-K, Received: 02/14/2014 16:34:55)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 8-K

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported):

February 11, 2014

Tandy Leather Factory, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

(State or Other Jurisdiction of Incorporation)

1-12368		75-2543540
(Commission File Number)		(IRS Employer Identification Number)

1900 Southeast Loop 820, Fort Worth, Texas		76140
(Address of Principal Executive Offices)		(Zip Code)

(817) 872-3200

(Registrant’s telephone number, including area code)

N/A

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01

Entry into a Material Definitive Agreement.

On February 11, 2014, the compensation committee of the board of directors of Tandy Leather Factory, Inc. (the “ Company ”) approved a form of restricted stock award agreement that will be used for grants to non-employee directors of the Company of restricted shares of the Company’s common stock, par value $0.0024 per share (such common stock, the “ Common Stock ” and such restricted shares of Common Stock, the “ Restricted Stock ”) under the Company’s 2013 Restricted Stock Plan (the “ Restricted Stock Plan ”), the form of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is hereby incorporated by reference herein.

Item 5.02

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Third Amendment to Tandy Leather Factory, Inc. 2007 Director Non-Qualified Stock Option Plan

On February 11, 2014, the board of directors of the Company approved and adopted a third amendment to the Company’s 2007 Director Non-Qualified Stock Option Plan (the “ Plan ”). The Plan was adopted by the board of directors of the Company on March 22, 2007. The stockholders of the Company ratified the Plan on May 22, 2007. The Plan was initially amended by the board of directors of the Company on May 3, 2010. The Plan was further amended by the board of directors of the Company on October 7, 2010. The Plan authorizes the Company to grant to outside directors of the Company options to purchase up to 100,000 shares of the Company’s Common Stock.

The third amendment to the Plan revises the stock option grant schedule in the Plan so that the annual grants described in the Plan are permissive, as opposed to mandatory. The stock option grant schedule in the Plan, as revised by the third amendment to the Plan, provides as follows: (i) on March 22, 2014, and on March 22 of each calendar year thereafter, a stock option for 3,000 shares of Common Stock may be granted to each individual who is serving as an outside director of the Company or any subsidiary on that date; and (ii) if an individual first becomes an outside director of the Company or any subsidiary within six months after March 22 of a year, such individual may be granted a stock option for 3,000 shares of Common Stock immediately upon becoming an outside director. The third amendment to the Plan further provides that the decision to grant or not grant stock options in any given year as described above shall be made by the compensation committee of the board of directors of the Company in its discretion.

The disclosure contained herein in intended merely as a summary of the material provisions relating to the third amendment to the Plan and does not purport to be complete and is qualified in its entirety by reference to the full text of the Plan, filed as Exhibit A to the Company’s definitive proxy statement on Schedule 14A, filed with the Securities and Exchange Commission on April 18, 2007, the first amendment to the Plan filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on May 4, 2010, the second amendment to the Plan, filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on October 12, 2010, and the third amendment to the Plan, filed as Exhibit 10.5 to this Current Report on Form 8-K, each of which is hereby incorporated by reference herein.

Restricted Stock Awards

On February 11, 2014, the compensation committee of the board of directors of the Company approved a form of restricted stock award agreement that will be used for grants to executive officers of the Company of shares of Restricted Stock under the Restricted Stock Plan, the form of which is filed as Exhibit 10.6 to this Current Report on Form 8-K and is hereby incorporated by reference herein. In addition, on February 11, 2014, the compensation committee of the board of directors of the Company approved grants of shares of Restricted Stock under the Plan to executive officers of the Company, including the executive officers who were listed in the Summary Compensation Table of the Company’s most recent proxy statement (the “Named Executive Officers”) and, effective as of February 12, 2014, the Company entered into restricted stock award agreements in the form described above with each of the Named Executive Officers with respect to such awards. In connection with such awards, each of Jon Thompson, Chief Executive Officer, President and Chief Operating Officer of the Company, Shannon L. Greene, Chief Financial Officer and Treasurer of the Company, and Mark Angus, Senior Vice President and Assistant Secretary of the Company, were each granted the corresponding number of shares of Restricted Stock described in the following table:

Name	No. of Shares of Restricted Stock
Jon Thompson	9,375
Shannon L. Greene	9,375
Mark Angus	9,375

All of the awards provide for the grant of Restricted Stock based on a price of $8.96 per share, the fair market value of such shares as of the date of the awards. The Restricted Stock vests over four years in equal installments of one-fourth on each of the first, second, third, and fourth anniversaries of the date of the awards. If a recipient’s employment with the Company is terminated due to death or disability, all unvested shares of Restricted Stock held by such recipient on the date of such termination of employment shall immediately become vested as of such date. If a recipient’s employment is terminated for any reason, including, without limitation, retirement, other than due to death or disability, all unvested shares of Restricted Stock held by such recipient on the date of such termination shall immediately be forfeited by such recipient as of such date. Notwithstanding the foregoing, the compensation committee of the board of directors of the Company may, in its discretion, provide that any or all unvested shares of Restricted Stock held by a recipient on the date of the recipient’s death and/or the date of the termination of the recipient’s employment shall immediately become vested as of such date. If a change in control occurs on or before the fourth anniversary of the date of the award, all unvested shares of Restricted Stock will immediately vest. The description on this Current Report on Form 8-K of the form of agreement is qualified in its entirety by referenced to the Exhibit 10.6 attached hereto.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

10.1	Form of Non-Employee Director Restricted Stock Agreement under Tandy Leather Factory Inc.’s 2013 Restricted Stock Plan.

10.2	2007 Director Non-Qualified Stock Option Plan, filed as Exhibit A to the Definitive Proxy Statement of the Company on Schedule 14A, filed with the Securities and Exchange Commission on April 18, 2007 and incorporated by reference herein.

10.3	First Amendment to 2007 Director Non-Qualified Stock Option Plan dated May 3, 2010, filed as Exhibit 10.2 to the Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission on May 4, 2010 and incorporated by reference herein.

10.4	Second Amendment to 2007 Director Non-Qualified Stock Option Plan dated October 7, 2010, filed as Exhibit 10.3 to the Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission on October 12, 2010 and incorporated by reference herein.

10.5	Third Amendment to 2007 Director Non-Qualified Stock Option Plan.

10.6	Form of Employee Restricted Stock Agreement under Tandy Leather Factory Inc.’s 2013 Restricted Stock Plan.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	TANDY LEATHER FACTORY, INC.

Date: February 14, 2014	BY: /s/ Jon Thompson
	Chief Executive Officer and President

Exhibit 10.1

RESTRICTED STOCK AGREEMENT

(NON-EMPLOYEE DIRECTOR)

GRANTED TO:

DATE OF GRANT:

GRANTED PURSUANT TO: Tandy Leather Factory, Inc. 2013 Restricted Stock Plan

NUMBER OF SHARES:

VESTING SCHEDULE:

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

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

3. Vesting . This grant of Restricted Stock shall vest in accordance with the following schedule:

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

4. Restrictions Prior to Vesting . The Restricted Stock granted hereunder shall be promptly issued and evidenced by a certificate or certificates for such shares issued in the Participant’s name or by book entry at the Company’s option. The Participant shall thereupon have all the rights of a shareholder with respect to such shares, including, but not limited to, the right to vote such shares and to receive all dividends and other distributions paid with respect to them; provided , however , that the shares shall be subject to the restrictions on transferability in Sections 6 and 7 below. Unless otherwise provided in this Section 4 , the Company shall hold the certificate or certificates for such shares until the date the restrictions on transferability are removed in accordance with Sections 6 and 8 below. The Company may, in its sole discretion and at any time prior to the date the restrictions on transferability are removed in accordance with Sections 6 and 8 below, require (i) that the stock certificate or certificates representing such shares shall be imprinted with a legend stating that the shares represented thereby are the restricted shares subject to the terms and conditions of this Agreement and, as such, may not be sold, exchanged, transferred, pledged, hypothecated or otherwise disposed of except in accordance with the terms of this Agreement, and/or (ii) that the Participant shall, upon receipt of the certificate or certificates therefor, deposit such certificate or certificates together with a stock power or other like instrument of transfer, appropriately endorsed in blank, with an escrow agent designated by the Company, which may be the Company, under a deposit agreement containing such terms and conditions as the Company shall approve, with the expenses of such escrow to be borne by the Company.

5. Adjustment Provisions . If under Section 9 of the Plan the Participant, as the owner of the shares of the Restricted Stock, shall be entitled to new, additional or different shares of stock or securities, (i) the Company may require that the certificate or certificates for, or other evidences of, such new, additional or different shares or securities, together with a stock power or other instrument of transfer appropriately endorsed, shall be imprinted with a legend as provided in Section 4 above, be deposited by the Participant under the deposit agreement provided for therein, and (ii) such certificate or certificates for, or other evidences of, such new, additional or different shares or securities shall be subject to the restrictions on transferability as provided in Sections 6 and 7 below.

6. Removal of Transfer Restrictions . The shares of the Restricted Stock shall be subject to restrictions on transferability. Subject to Section 8 below, such restrictions shall be removed from such shares according to the vesting schedule set forth above. Notwithstanding anything contained in this Agreement to the contrary, if there is a Change in Control of the Company, all unvested shares of Restricted Stock granted under this Agreement shall become fully vested immediately upon the occurrence of the Change in Control and such vested shares of Restricted Stock shall be paid out or settled, as applicable, within 60 days upon the occurrence of the Change in Control, subject to requirements of applicable laws and regulations.

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

8. Termination of Service as a Director .

a. Death or Disability . If the Participant’s ceases to serve as a member of the Board due to death or Disability all unvested shares of Restricted Stock held by the Participant on the date of the Participant’s termination of service due to death or the date of the termination of his or her service related to Disability, as the case may be, shall immediately become vested as of such date.

b. Other Termination . If a Participant ceases to serve as a member of the Board for any reason, including, without limitation, retirement, other than due to death or Disability, all unvested shares of Restricted Stock held by the Participant on the date that the Participant ceases to serve as a member of the Board shall immediately be forfeited by such Participant as of such date.

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

d. Section 11 of the Plan . The Company and the Participant acknowledge and agree that the Participant is receiving the Restricted Stock described in Section 2 of this Agreement by virtue of the Participant’s service as a non-employee member of the Board and, therefore, the provisions of Section 11 of the Plan shall not apply to the Restricted Stock granted to the Participant pursuant to this Agreement.

9. Tax Withholding . All payments or distributions of an award made pursuant to this Agreement shall be net of any amounts required to be withheld pursuant to applicable federal, state and local tax withholding requirements. If the Company proposes or is required to distribute Common Stock pursuant to this Agreement, it may require the Participant receiving such Common Stock to remit to it or to the Affiliate that employs such Participant an amount sufficient to satisfy such tax withholding requirements prior to the delivery of any certificates for such Common Stock. In lieu thereof, the Company or the Affiliate employing the Participant shall have the right to withhold the amount of such taxes from any other sums due or to become due from the Company or the Affiliate, as the case may be, to the Participant receiving Common Stock, as the Committee shall prescribe. The Committee may, in its discretion, and subject to such rules as the Committee may adopt (including any as may be required to satisfy applicable tax and/or non-tax regulatory requirements), permit a Participant to pay all or a portion of the federal, state and local withholding taxes arising in connection with this award consisting of shares of Common Stock by electing to have the Company withhold shares of Common Stock having a Fair Market Value equal to the amount of tax to be withheld, such tax calculated at rates required by statute or regulation.

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

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

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

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

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

12. Conflicts . This Agreement is subject to all terms, conditions, limitations and restrictions contained in the Plan, which shall be controlling in the event of any conflicting or inconsistent provisions. In the event, however, of any conflict between the provisions of this Agreement or the Plan and the provisions of an employment or change-in-control agreement between the Company and the Participant, as applicable, the provisions of the latter shall prevail.

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

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

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

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

TANDY LEATHER FACTORY, INC.

By:

Name:

Title:

ACCEPTED:

By:

[Insert the name of the Participant]

Exhibit 10.5

TANDY LEATHER FACTORY, INC.

THIRD AMENDMENT TO

2007 DIRECTOR NON-QUALIFIED STOCK OPTION PLAN

This Third Amendment (this “ Amendment ”), was adopted by the Board of Directors (the “ Board ”) of Tandy Leather Factory, Inc., a Delaware corporation (the “ Company ”), as of February 11, 2014 (the “ Effective Date ”) and amends the 2007 Director Non-Qualified Stock Option Plan of the Company dated as of March 22, 2007 (the “ Original Plan ”), as amended by that certain Amendment to 2007 Director Non-Qualified Stock Option Plan dated as of May 3, 2010 (the “ First Amendment ”), and as further amended by that certain Second Amendment to 2007 Director Non-Qualified Stock Option Plan dated as of October 7, 2010 (the “ Second Amendment ” and, together with the Original Plan and the First Amendment, the “ Plan ”).

Recitals

A. The Company adopted the Original Plan as of March 22, 2007.

B. On May 22, 2007, at a duly held meeting of the stockholders of the Company, the stockholders of the Company ratified and affirmed the Original Plan.

C. The Company adopted the First Amendment as of May 3, 2010.

D. The Company adopted the Second Amendment as of October 7, 2010.

E. The Board has deemed it to be in its best interest of the Company to modify the Stock Option grant schedule set forth in Article 4 of the Plan.

F. Article 10 of the Plan provides that the Plan may be amended by the Board without the approval of the stockholders of the Company with certain exceptions.

G. The Plan is being amended to set forth a new Stock Option grant schedule as more particularly set forth below.

Amendment

The Plan is hereby amended as follows:

1. Definitions . Unless otherwise defined herein, terms utilized herein which are defined in the Plan shall have the meanings ascribed to them in the Plan.

2. Amendment to Article 4 of the Plan . The first paragraph of Article 4 of the Plan is hereby amended to read in its entirety as follows:

The Committee may grant Stock Options as follows: (i) on March 22, 2014, and on March 22 of each calendar year thereafter, a Stock Option for 3,000 shares of Common Stock may be granted to each individual who is serving as an outside director of the Company or any Subsidiary on that date; and (ii) if an individual first becomes an outside director of the Company or any Subsidiary within six months after March 22 of a year, such individual may be granted a Stock Option for 3,000 shares of Common Stock immediately upon becoming an outside director. The Committee shall not grant Stock Options under any other circumstances. Notwithstanding the foregoing, the decision to grant or not grant Stock Options in any given year as provided herein shall be made by the Committee in the Committee’s discretion.

3. Effective Date . This Amendment shall become effective as of the Effective Date.

4. No Other Amendments . Except as expressly amended hereby, the Plan shall continue in full force and effect in accordance with the terms and provisions thereof.

5. Headings . The headings of the various sections of this Amendment are for convenience of reference only and do not constitute a part hereof and shall not be interpreted or construed to affect the meanings or construction of any provision hereof.

6. Governing Law . This Amendment shall be governed by and construed in accordance with the laws of the State of Delaware without regard to its conflict-of-laws principles.

IN WITNESS WHEREOF , the undersigned has executed this Amendment as of the Effective Date.

TANDY LEATHER FACTORY, INC.

By: /s/ Shannon L. Greene

Shannon L. Greene,

Chief Financial Officer and Treasurer

ATTEST:

/s/ William M. Warren

William M. Warren,

General Counsel and Secretary

Exhibit 10.6

RESTRICTED STOCK AGREEMENT

(EXECUTIVE OFFICER)

GRANTED TO:

DATE OF GRANT:

GRANTED PURSUANT TO: Tandy Leather Factory, Inc. 2013 Restricted Stock Plan

NUMBER OF SHARES:

VESTING SCHEDULE:

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

3. Vesting . This grant of Restricted Stock shall vest in accordance with the following schedule:

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

8. Termination of Employment .

a. Death or Disability . If the Participant’s employment is terminated due to death or Disability all unvested shares of Restricted Stock held by the Participant on the date of the Participant’s termination of employment due to death or the date of the termination of his or her employment related to Disability, as the case may be, shall immediately become vested as of such date.

b. Other Termination . If a Participant’s employment is terminated for any reason, including, without limitation, retirement, other than due to death or Disability, all unvested shares of Restricted Stock held by the Participant on the date of the termination of his or her employment shall immediately be forfeited by such Participant as of such date.

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

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

13. No Employment Contract . This Agreement is not a contract of employment, as applicable, and the terms of the Participant’s employment shall not be affected hereby or by any agreement referred to herein except to the extent specifically so provided herein or therein. Nothing herein shall be construed to impose any obligation on the Company to continue the Participant’s employment, and it shall not impose any obligation on the Participant’s part to remain in the employ of the Company or any of its Affiliates.

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

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

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

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

TANDY LEATHER FACTORY, INC.

By:

Name:

Title:

ACCEPTED:

By:

[Insert the name of the Participant]