Exhibit 10.3
 

PROMISSORY NOTE
 

Borrower:
Tandy Leather Factory, Inc.
Lender:
BOFK, NA dba Bank of Texas
 
1900 SE Loop 820
 
P.O. Box 29773
 
Fort Worth, TX  76140
 
Dallas, TX  75229-9775

 Principal Amount:  $ 10,000,000.00  Date of Note:  September 18, 2015

 

    PROMISE TO PAY. Tandy Leather Factory, Inc. ("Borrower") promises to pay to
BOKF, NA dba Bank of Texas ("Lender"), or order, in lawful money of the United
State of America, the principal amount of Ten Million & 00/100 Dollars
($10,000,000.00), together with interest on the unpaid principal balance from
September 18, 2015, until maturity.
   
PAYMENT. Subject to any payment changes resulting from changes in the Index,
Borrower will pay this loan in accordance with the following payment schedule:

 
Prior to the Conversion Date:
 
Prior to the Conversion Date (defined below), Borrower will pay twelve (12)
consecutive monthly payments of interest, with the first
payment being due October 18, 2015, and all subsequent
interest payments due on the same day of each month thereafter .
 
Following the Conversion Date:
 
Following the Conversion Date, Borrower will pay forty-eight (48) consecutive
monthly payments of principal and interest, commencing October 18. 2016, and on
the same day of each month thereafter, with each payment except the last equal
to the Payment Amount (defined below), and the last payment, due four (4) years
from the Conversion Date, and in any event no later than September 18, 2020,
equal to the remaining unpaid balance of principal and accrued interest
hereunder.
 
The term "Conversion Date" shall mean the earlier of (i) September 18, 2016, or
(ii) the date on which the loan is fully funded.
 
The "Payment Amount" shall be an amount determined on the Conversion Date based
on the principal amount outstanding hereunder on the Conversion date and the
interest rate in effect on the Conversion Date, amortized over a term of four
(4) years; provided, however, the Payment Amount will be recalculated on an
annual basis based on the interest rate in effect at the time of recalculation,
and the months remaining in the original four (4) year amortization.
 
Straight Line of Credit:
 
This Note evidences a straight line of credit for the initial twelve (12) months
of the loan term ("Draw Period"). Borrower is not entitled to further loan
advances once the total amount of principal has been advanced or the Draw Period
has expired, whichever occurs first. Advances under this Note, as well as
directions for payment from Borrower's accounts, may be requested orally or in
writing by an authorized person. Lender may, but need not, require that all oral
requests be confirmed in writing.  Borrower agrees to be liable for all sums
either: (A) advanced in accordance with the instructions of an authorized person
or (B) credited to any of Borrower's accounts with Lender. The unpaid principal
balance owing on this Note at any time may be evidenced by endorsements on this
Note or by Lender's internal records, including daily computer print-outs.
Lender will have no obligation to advance funds under this Note if: (A) Borrower
or any guarantor is in default under the terms of this Note or any agreement
that Borrower or any guarantor has with Lender, including any agreement made in
connection with the signing of this Note; (B) Borrower or any guarantor ceases
doing business or is insolvent; (C) any guarantor seeks, claims or otherwise
attempts to limit, modify or revoke such guarantor's guarantee of this Note or
any other loan with Lender; or (D) Borrower has applied funds provided pursuant
to this Note for purposes other than those authorized by Lender.

 
Unless otherwise agreed or required by applicable law, payments will be applied
first to any accrued unpaid interest; then to principal; then to any late
charges; and then to any unpaid collection costs. Borrower will pay Lender at
Lender's address shown above or at such other place as Lender may designate in
writing.
 
PAYMENT INFORMATION. PAYMENTS SHOULD BE REMITTED TO:   BOKF, NA dba Bank of
Texas, P.O. Box 248818,   Oklahoma City, OK 73124-8818. If a payment is made
consistent with the written payment instructions provided by Lender and received
on a business day by 5:00 p.m. Central Time, the payment will be applied that
day. If a payment is received on a business day after 5:00 p.m., the payment may
be applied the following business day.
 
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from
time to time based on changes in an independent index which is the 1 Month LIBOR
Interest Rate which is the ICE Benchmark Administration (ICE) (or the successor
thereto if the ICE Benchmark Administration is no longer making a London
Interbank Offered Rate available) fixing of London Inter-Bank Offered Rate
(LIBOR) based on offered inter-bank deposit rates contributed in accordance with
instructions to ICE LJBOR Contributor Banks (rounded upward, if necessary, to
the nearest 1/100 of 1%) for such interest period; provided, however, that if
the Index determined as provided above shall be less than zero, the Index shall
be deemed to be zero for the purposes of this Note (the "Index"). The Index is
not necessarily the lowest rate charged by Lender on its loans. If the Index
becomes unavailable during the term of this loan, Lender may designate a
substitute index after notifying Borrower . Lender will tell Borrower the
current Index rate upon Borrower's request. The interest rate change will not
occur more often than each month. Borrower understands that Lender may make
loans based on other rates as well. The Index currently is 0.210% per annum.
Interest prior to maturity on the unpaid principal balance of this Note will be
calculated as described in the "INTEREST CALCULATION METHOD" paragraph using a
rate of 1 .850 percentage points over the Index, resulting in an initial rate of
2.060% per annum based on a year of 360 days. NOTICE: Under no circumstances
will the interest rate on this Note be more than (except for any higher default
rate or Post Maturity Rate shown below) the lesser of 18.000% per annum or the
maximum rate allowed by applicable law. For purposes of this Note, the "maximum
rate allowed by applicable law" means the greater of (A) the maximum rate of
interest permitted under federal or other law applicable to the indebtedness
evidenced by this Note, or (B) the "Quarterly Ceiling" as referred to in Section
303.006 of the Texas Finance Code. Whenever increases occur in the interest
rate, Lender, at its option, may do one or more of the following: (A) increase
Borrower's payments to ensure Borrower's loan will pay off by its original final
maturity date, (B) increase Borrower's payments to cover accruing interest, (C)
increase the number of Borrower's payments, and (D) continue Borrower's payments
at the same amount and increase Borrower's final payment.

 
INTEREST CALCULATION METHOD. Interest on this Note is computed on a 365/360
basis; that is, by applying the ratio of the interest rate over a year of 360
days, multiplied by the outstanding principal balance, multiplied by the actual
number of days the principal balance is outstanding, unless such calculation
would result in a usurious rate, in which case interest shall be calculated on a
per diem basis of a year of 365 or 366 days, as the case may be. All interest
payable under this Note is computed using this method.
 
PREPAYMENT. Borrower may pay without penalty all or a portion of the amount owed
earlier than it is due. Prepayment in full shall consist of payment of the
remaining unpaid principal balance together with all accrued and unpaid interest
and all other amounts, costs and expenses for which Borrower is responsible
under this Note or any other agreement with Lender pertaining to this loan, and
in no event will Borrower ever be required to pay any unearned interest.  Early
payments will not, unless agreed to by Lender in writing, relieve Borrower of
Borrower's obligation to continue to make payments under the payment schedule.
Rather, early payments will reduce the principal balance due and may result in
Borrower's making fewer payments. Borrower agrees not to send Lender payments
marked "paid in full", "without recourse", or similar language. If Borrower
sends such a payment, Lender may accept it without losing any of Lender's rights
under this Note, and Borrower will remain obligated to pay any further amount
owed to Lender. All written communications concerning disputed amounts,
including any check or other payment instrument that indicates that the payment
constitutes "payment in full" of the amount owed or that is tendered with other
conditions or limitations or as full satisfaction of a disputed amount must be
mailed or delivered to: BOKF, NA dba Bank of Texas, P.O. Box 248818 Oklahoma
City, OK   73124-8818.
 
LATE CHARGE. If a payment is 15 days or more late, Borrower will be charged
5.000% of the unpaid portion of the regularly scheduled payment.
 
POST MATURITY RATE.  The Post Maturity Rate on this Note is the lesser of (A)
the maximum rate allowed by law or (B) 18.000% per annum based on a year of 360
days. Borrower will pay interest on all sums due after final maturity, whether
by acceleration or otherwise, at that rate.
 
DEFAULT.  Each of the following shall constitute an event of defaul ("Event of
Default") under this Note:
 
Default. Borrower fails to make any payment when due under this Note.
 
Other Defaults.  Borrower fails to comply with or to perform any other term,
obligation, covenant or condition contained in this Note or in any of the
related documents or to comply with or to perform any term, obligation, covenant
or condition contained in any other agreement between Lender and Borrower.
 
Default in Favor of Third Parties. Borrower or any Grantor defaults under
any  loan, extension  of credit, security  agreement,  purchase or  sales
agreement, or any other agreement, in favor of any other creditor or person that
may materially affect any of Borrower's property or Borrower's ability to repay
this Note or perform Borrower's obligations under this Note or any of the
related documents.
 
False Statements. Any  warranty,  representation or statement  made or
furnished  to  Lender  by Borrower or on Borrower's behalf, or made  by
Guarantor, or any other guarantor, endorser, surety, or accommodation  party,
under this  Note or the related documents  in connection  with the obtaining of
the loan evidenced by this Note or any security document directly or indirectly
securing repayment of this Note is
false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter.
 
Insolvency. The dissolution or termination of Borrower's existence as a going
business, the insolvency of Borrower, the appointment of a receiver for any part
of Borrower's property, any assignment for the benefit of
creditors,  any  type  of  creditor  workout,  or  the  commencement of any
proceeding under any bankruptcy or insolvency  laws by or against Borrower.
 
Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture
proceedings, whether by judicial proceeding, self-help, repossession or any
other method, by any creditor of Borrower or by any governmental agency against
any collateral securing the loan. This includes a garnishment of any of
Borrower's accounts, including deposit accounts, with Lender.   However,
this  Event of Default shall   not apply it there is a good faith dispute by
Borrower as to the validity or reasonableness of the claim which is the basis of
the creditor or forfeiture  proceeding and if Borrower gives Lender written
notice of the creditor or forfeiture proceeding and deposits with Lender monies
or a surety bond for the creditor or forfeiture proceeding, in an amount
determined by Lender, in its sole discretion,  as  being  an adequate  reserve
or bond for the  dispute.
 
Execution; Attachment. Any execution or attachment is levied against the
Collateral, and such execution or attachment is not set aside, discharged or
stayed within thirty (30) days after the same is   levied.
 
Change in Zoning or Public Restriction.  Any change in any zoning ordinance or
regulation or any other public restriction is enacted, adopted or implemented,
that limits or defines the uses which may be made of the Collateral such that
the present or intended use of the Collateral,  as specified in the related
documents, would be in violation of such zoning ordinance or regulation or
public restriction, as changed.
 
Judgement.  Unless adequately covered by insurance in the opinion of Lender, the
entry of a final judgment for the payment of money involving more than one
hundred thousand dollars ($100,000.00) against Borrower and the failure by
Borrower to discharge the same, or cause it to be discharged, or bonded off to
Lender’s satisfaction, without thirty (30) days from the date of the order,
decree or process under which or pursuant to which such judgment was entered.
 
Events Affecting Guarantor. Any  of the preceding events occurs with  respect
to  any  Guarantor,  or  any other  guarantor,  endorser,  surety, or
accommodation party of any of the indebtedness or any  Guarantor, or any  other
guarantor, endorser,  surety, or accommodation  party  dies or becomes
incompetent, or revokes or disputes the validity of, or liability under, any
guaranty of the indebtedness evidenced by this  Note.
 
Change In Ownership. Any change in ownership of twenty-five percent (25%) or
more of the common stock of Borrower.
 
Adverse Change. A material adverse change occurs in Borrower's financial
condition, or Lender believes the prospect of payment or performance of this
Note is impaired.

 
Insecurity. Lender in good faith believes itself insecure.
 
Cure Provisions. If any default, other than a default in payment, is curable and
if Borrower  has not been given a notice of  a breach of the  same provision of
this Note within the preceding twelve ( 12) months, it may be cured if Borrower,
after Lender sends written notice to  Borrower  demanding  cure of such
default:   (1)   cures the  default  within twenty  (20) days;  or   (2)   if
the  cure requires  more than    twenty
(20) days, immediately initiates steps which Lender deems in Lender's sole
discretion to be sufficient to cure the default and thereafter continues and
completes all reasonable and necessary steps sufficient to produce compliance as
soon as reasonably   practical.
 
LENDER'S RIGHTS. Upon default, Lender may declare the entire indebtedness,
including the unpaid principal balance  under this  Note, all  accrued unpaid
interest, and all other amounts, costs and expenses for which Borrower is
responsible under this Note or any  other  agreement  with Lender pertaining to
this loan, immediately due, without notice, and then Borrower will pay that
amount.
 
ATTORNEYS' FEES; EXPENSES. Lender may hire an attorney to help collect this Note
if Borrower does not pay, and Borrower will pay Lender's reasonable attorneys'
fees. Borrower also will pay Lender all other amounts Lender actually incurs as
court costs, lawful fees for filing, recording, releasing to any public office
any instrument securing this Note; the reasonable cost actually expended for
repossessing, storing, preparing for sale, and selling any security; and tees
for noting a lien on or transferring a certificate of title to any motor vehicle
offered as security for this Note, or premiums or identifiable charges received
in connection with the sale of authorized insurance.
 
JURY WAIVER. Lender and Borrower hereby waive the right to any jury trial in any
action, proceeding, or counterclaim brought by either Lender or Borrower against
the other.

 
GOVERNING LAW.  This Note will be governed by federal law applicable to Lender
and, to the extent not preempted by federal law, the laws of the State of Texas
without regard to its conflicts of law provisions.  This Note has been accepted
by Lender in the State of Texas.
 
CHOICE OF VENUE. If there is a lawsuit, and if the transaction evidenced by this
Note occurred in Dallas County, Borrower agrees upon Lender's request to submit
to the jurisdiction of the courts of Dallas County, State of Texas.
 

RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a
right of setoff in all Borrower's accounts with Lender (whether checking,
savings, or some other account).  This  includes  all accounts  Borrower  holds
jointly  with someone  else  and  all accounts  Borrower  may  open in the
future.
However,  this  does  not  include  any  IRA  or  Keogh  accounts,  or  any  trust  accounts  for  which  setoff  would  be  prohibited  by
law. Borrower authorizes Lender, to the  extent  permitted  by  applicable  law,
to  charge  or  setoff  all sums  owing  on the  indebtedness  against  any
and  all  such accounts.
 
FINANCIAL STATEMENTS. Borrower agrees  to  provide  Lender  with such
financial  statements  and  other  related  information at such
frequencies  and  in such detail  as  Lender  may  reasonably request.
 
EXPENSES. Borrower agrees to pay to Lender on demand the amount of all costs,
fees and expenses paid, incurred or charged by Lender in connection with
Lender's administration of the Loan, the preparation of documents and
instruments related to the Loan, and the filing or recordation of any financing
statements, documents and instruments required for perfection of any collateral.
 
SUCCESSOR.   Lender hereunder, BOKF, NA dba Bank of Texas, is successor by
merger to Bank of Texas, N.A.
 
SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower, and
upon Borrower's heirs, personal representatives, successors and assigns, and
shall inure to the benefit of Lender and its successors and assigns.
 
GENERAL PROVISIONS. If any part of this Note cannot be enforced, this fact will
not affect the rest of the Note. Borrower does not agree or intend to pay, and
Lender does not agree or intend to contract for, charge, collect, take, reserve
or receive (collectively referred to herein as "charge or collect"), any amount
in the nature of interest or in the nature of a fee for this loan, which would
in any way or event (including demand, prepayment, or acceleration) cause Lender
to charge or collect more for this loan than the maximum Lender would be
permitted to charge or collect by federal law or the law of the State of Texas
(as applicable) . Any such excess interest or unauthorized tee shall, instead of
anything stated to the contrary, be applied first to reduce the principal
balance of this loan, and when the principal has been paid in full, be refunded
to Borrower. The right to accelerate maturity of sums due under this Note does
not include the right to accelerate any interest which has not otherwise accrued
on the date of such acceleration, and Lender does not intend to charge or
collect any unearned interest in the event of acceleration. All sums paid or
agreed to be paid to Lender for the use, forbearance or detention of sums due
hereunder shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full term of the loan evidenced by
this Note until payment in full so that the rate or amount of interest on
account of the loan evidenced hereby does not exceed the applicable usury
ceiling. Lender may delay or forgo enforcing any of its rights or remedies under
this Note without losing them. Borrower and any other person who signs,
guarantees or endorses this Note, to the extent allowed by law, waive
presentment, demand for payment, notice of dishonor, notice of intent to
accelerate the maturity of this Note, and notice of acceleration of the maturity
of this Note. Upon any change in the terms of this Note, and unless otherwise
expressly stated in writing, no party who signs this Note, whether as maker,
guarantor, accommodation maker or endorser, shall be released from liability.
All such parties agree that Lender may renew or extend (repeatedly and for any
length of time) this loan or release any party or guarantor or collateral; or
impair, fail to realize upon or perfect Lender's security interest in the
collateral without the consent of or notice to anyone .  All such parties also
agree that Lender may modify this loan without the consent of or notice to
anyone other     than the party with whom the modification is made.  The
obligations under this Note are joint and several.
 
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THE NOTE.
 
BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.
BORROWER:

    BORROWER:
 
    TANDY LEATHER FACTORY, INC.
 
 
    By:  /s/ Shannon L. Greene
    Chief Financial Officer of Tandy Leather Factory, Inc.