Document:

ex10_2.htm

    
    

    
      
        

      

    

    
      	 	
              
                 

                Credit
                  Agreement

              

            

    

    
      

       

      This
        agreement dated as of July 31, 2007 between JPMorgan Chase Bank, N.A. (together
        with its successors and assigns, the "Bank"), whose address is 420 Throckmorton,
        Suite 400, Fort Worth, TX 76102, and The Leather Factory, L.P. (whether one
        or
        more, and if more than one, individually and collectively, the "Borrower"),
        whose address is 3847 East Loop 820 South, Fort Worth, TX 76119-4388.

    

    
       

      1.        Credit
        Facilities.

    

    
       

      
        	
              	
                1.1

              	
                Scope.
                  This agreement, unless otherwise agreed to in writing
                  by the Bank
                  and the Borrower or prohibited by applicable
                  law, governs the Credit Facilities as defined below. Advances under
                  the
                  Credit Facilities shall be subject to the procedures established
                  from time
                  to time by the Bank. Any procedures agreed to by the Bank with
                  respect to
                  obtaining advances including automatic loan sweeps shall not vary
                  the
                  terms or conditions of this agreement or the Related Documents
                  regarding
                  the Credit Facilities.

              

      

    

     

    
      2.        Definitions.
        As used in this agreement, the following terms have the following
        respective meanings:

    

    
       

      
        	
              	
                2.1

              	
                "Credit
                  Facilities" means all extensions of credit from the Bank to the
                  Borrower,
                  whether now existing or hereafter arising, including but not limited
                  to
                  those described in Section 1 if any, and those extended contemporaneously
                  with this agreement.

              

      

    

    
       

      
        	
              	
                2.2

              	
                "Liabilities"
                  means all debts, obligations, indebtedness and liabilities of every
                  kind
                  and character of the Borrower whether individual, joint and several,
                  contingent or otherwise, now or hereafter existing in favor of
                  the Bank,
                  including, without limitation, all liabilities, interest, costs
                  and fees,
                  arising under or from any note, open account, overdraft, credit
                  card,
                  lease, Rate Management Transaction, letter of credit application,
                  endorsement, surety agreement, guaranty, acceptance, foreign exchange
                  contract or depository service contract, whether payable to the
                  Bank or to
                  a third party and subsequently acquired by the Bank, any monetary
                  obligations (including interest) incurred or accrued during the
                  pendency
                  of any bankruptcy, insolvency, receivership or other similar proceedings,
                  regardless of whether allowed or allowable in such proceeding,
                  and all
                  renewals, extensions, modifications, consolidations, rearrangements,
                  restatements, replacements or substitutions of any of the foregoing.
                  The
                  term "Rate Management Transaction" in this agreement means any
                  transaction
                  (including an agreement with respect thereto) that is a rate swap,
                  basis
                  swap, forward rate transaction, commodity swap, commodity option,
                  equity
                  or equity index swap, equity or equity index option, bond option,
                  interest
                  rate option, foreign exchange transaction, cap transaction, floor
                  transaction, collar transaction, forward transaction, currency
                  swap
                  transaction, cross-currency rate swap transaction, currency option,
                  derivative transaction or any other similar transaction (including
                  any
                  option with respect to any of these transactions) or any combination
                  thereof, whether linked to one or more interest rates, foreign
                  currencies,
                  commodity prices, equity prices or other financial
                  measures.

              

      

    

    
       

      
        	
              	
                2.3

              	
                "Notes"
                  means all promissory notes, instruments and/or contracts evidencing
                  the
                  terms and conditions of any of the Credit
                  Facilities.

              

      

    

    
       

      
        	
              	
                2.4

              	
                "Affiliate"
                  means any person, corporation or other entity directly or indirectly
                  controlling, controlled by or under common control with the Borrower
                  and
                  any director or officer of the Borrower or any Subsidiary of the
                  Borrower.

              

      

    

    
       

      
        	
              	
                2.5

              	
                "Distributions"
                  means all dividends and other distributions made by the Borrower
                  to its
                  shareholders, partners, owners or members, as the case may be,
                  other than
                  salary, bonuses, and other compensation for services expended in
                  the
                  current accounting period.

              

      

    

    
       

      
        	
              	
                2.6

              	
                "Subsidiary"
                  means, as to a particular person, any entity of which fifty (50%)
                  or more
                  of the indicia of equity rights is at the time of determination
                  directly
                  or indirectly owned by the person or by one or more persons controlled
                  by,
                  controlling or under common control with the
                  person.

              

      

    

    
       

      
        	
              	
                2.7

              	
                "Related
                  Documents" means the Notes, all loan agreements, credit agreements,
                  reimbursement agreements, security agreements, mortgages, deeds
                  of trust,
                  pledge agreements, assignments, guaranties, and any other instrument
                  or
                  document executed in connection with this agreement or in connection
                  with
                  any of the Liabilities.

              

      

    

    
       

      3.        Conditions
        Precedent to Extensions of Credit.

    

    
       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

        
          
            
              	
                    	
                      3.1

                    	
                      Conditions
                        Precedent to Initial Extension of Credit under each of the
                        Credit
                        Facilities. Before the first extension
                        of credit governed by this agreement, whether by disbursement
                        of a loan,
                        issuance of a letter of credit, or otherwise,
                        the Borrower shall deliver to the Bank, in form and substance
                        satisfactory
                        to the Bank:

                    

            

          

          
             

            
              	
                       

                    	
                      A.
                        Loan Documents. The Notes, and as applicable, the letter of
                        credit applications, reimbursement agreements, the
                        security agreements, the pledge agreements, financing statements,
                        mortgages or deeds of trust, the guaranties, the
                        subordination agreements, and any other documents which the
                        Bank may
                        reasonably require to give effect to the transactions
                        described in this agreement or the other Related
                        Documents;

                    

            

          

          
             

          

          
            
              	
                       

                    	
                      B.
                        Evidence of Due Organization and Good Standing.
                        Evidence, satisfactory to the Bank, of the due organization,
                        valid existence and good standing of the Borrower and every
                        other business
                        entity that is a party to this agreement
                        or any other Related Document;
                        and

                    

            

          

          
             

          

          
            
              	
                       

                    	
                      C.
                        Evidence of Authority to Enter into Loan Documents. Evidence that
                        (i) each party to this agreement and any other
                        document required by this agreement is authorized to enter
                        into the
                        transactions described in this agreement and
                        the other Related Documents, and (ii) the person signing
                        on behalf of each
                        party is authorized to do
                        so.

                    

            

          

          
             

          

        

      

    

    
      
        	
              	
                3.2

              	
                Conditions
                  Precedent to Each Extension of Credit. Before any extension of
                  credit governed by this agreement, whether
                  by disbursement of a loan, issuance of a letter of credit or otherwise,
                  the following conditions must be satisfied:

              

      

    

    
       

    

    
      
        	
              	
                 

              	
                A.
                  Representations. The representations of the Borrower are true on
                  and as of the date of the request for and funding
                  of the extension of
                  credit;

              

      

    

    
       

    

    
      
        	
              	
                 

              	
                B.
                  No Event of Default. No default has occurred in any provision of
                  this agreement, the Notes or any other Related
                  Documents and is continuing or would result from the extension
                  of credit,
                  and no event has occurred which would
                  constitute the occurrence of any default but for the lapse of time
                  until
                  the end of any grace or cure
                  period;

              

      

    

    
       

    

    
      
        	
              	
                 

              	
                C.
                  Additional Approvals, Opinions, and Documents. The Bank has
                  received any other approvals, opinions and documents
                  as it may reasonably request;
                  and

              

      

    

    
       

    

    
      
        	
              	
                 

              	
                D.
                  No Prohibition or Onerous Conditions. The making of the extension
                  of credit is not prohibited by or subjects the
                  Bank to any penalty or onerous condition under any law, ordinance,
                  decree,
                  requirement, order, judgment, rule, regulation
                  (or interpretation of any of the foregoing), foreign governmental
                  authority, the United States of America, any
                  state thereof and any political subdivision of any of the foregoing
                  and
                  any agency, department, commission, board,
                  bureau, court or other tribunal having jurisdiction over the Bank
                  or the
                  Borrower, or any Subsidiary of the Borrower
                  or their respective
                  properties.

              

      

    

    
       

    

    
      
        	
                4.

              	
                Affirmative
                  Covenants. The Borrower agrees to do, and cause each of its
                  Subsidiaries to do, each of the
                  following:

              

      

    

    
       

      
        	
              	
                4.1

              	
                Insurance.
                  Maintain insurance with financially sound and reputable
                  insurers,
                  with such insurance and insurers to be acceptable to the Bank,
                  covering
                  its properties and business against those casualties and contingencies
                  and
                  in the types and amounts as are in accordance with sound business
                  and
                  industry practices.

              

      

    

    
       

      
        	
              	
                4.2

              	
                Existence.
                  Maintain its existence and business operations as presently
                  in
                  effect in accordance with all applicable laws and regulations,
                  pay its
                  debts and obligations when due under normal terms, and pay on or
                  before
                  their due date, all taxes, assessments, fees and other governmental
                  monetary obligations, except as they may be contested in good faith
                  if
                  they have been properly reflected on its books and, at the Bank's
                  request,
                  adequate funds or security has been pledged to insure
                  payment.

              

      

    

    
       

      
        	
              	
                4.3

              	
                Financial
                  Records. Maintain proper books and records of account, in
                  accordance with generally accepted accounting principles, and consistent
                  with financial statements previously submitted to the
                  Bank.

              

      

    

    
       

      
        	
              	
                4.4

              	
                Inspection.
                  Permit the Bank to inspect and copy the Borrower's business
                  records at such times and at such intervals as the Bank may reasonably
                  require, and to discuss the Borrower's business, operations, and
                  financial
                  condition with the Borrower's officers and
                  accountants.

              

      

    

    
       

      
        	
              	
                4.5

              	
                Financial
                  Reports. Furnish to the Bank whatever information, books and
                  records the Bank may from time to time reasonably
                  request.

              

      

    

    
      

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

         

      

    

    
      
        	
              	
                4.6

              	
                Notices
                  of Claims, Litigation, Defaults, etc. Promptly inform the Bank in
                  writing of (1) all existing and all threatened
                  litigation, claims, investigations, administrative proceedings
                  and similar
                  actions affecting the Borrower which could materially affect its
                  business,
                  assets, affairs, prospects or financial condition of the Borrower
                  or its
                  Subsidiaries; (2) the occurrence of any event which gives rise
                  to the
                  Bank's option to terminate the Credit Facilities; (3) the institution
                  of
                  steps by the Borrower to withdraw from, or the institution of any
                  steps to
                  terminate, any employee benefit plan as to which the Borrower may
                  have
                  liability; (4) any reportable event or any prohibited transaction
                  in
                  connection with any employee benefit plan; (5) any additions to
                  or changes
                  in the locations of the Borrower's or any of the Borrower's or
                  Subsidiary's businesses; and (6) any alleged breach of any provision
                  of
                  this agreement or of any other agreement related to the Credit
                  Facilities
                  by the Bank.

              

      

    

    
       

    

    
      
        	
              	
                4.7

              	
                Additional
                  Information. Furnish such additional information and statements,
                  as the Bank may request, from time to
                  time.

              

      

    

    
       

      
        	
              	
                4.8

              	
                Insurance
                  Reports. Furnish to the Bank, upon request of the Bank, reports
                  on each existing insurance policy showing such information as the
                  Bank may
                  reasonably request.

              

      

    

    
       

      
        	
              	
                4.9

              	
                Other
                  Agreements. Comply with all terms and conditions of all other
                  agreements, whether now or hereafter existing, between the Borrower
                  and
                  any other party.

              

      

    

    
       

      
        	
              	
                4.10

              	
                Title
                  to Assets and Property. Maintain good and marketable title to all
                  of the Borrower's assets and
                  properties.

              

      

    

    
       

      
        	
              	
                4.11

              	
                Additional
                  Assurances. Promptly make, execute and deliver any and all
                  agreements, documents, instruments and other records that the Bank
                  may
                  request to evidence any of the Credit Facilities, cure any defect
                  in the
                  execution and delivery of any of the Related Documents, perfect
                  any lien,
                  comply with legal requirements applicable to the Bank or the Credit
                  Facilities or more fully to describe particular aspects of the
                  agreements
                  set forth or intended to be set forth in any of the Related
                  Documents.

              

      

    

    
       

      
        	
              	
                4.12

              	
                Employee
                  Benefit Plans. Maintain each employee benefit plan as to which
                  the Borrower may have any liability, in compliance with all applicable
                  requirements of law and
                  regulations.

              

      

    

    
       

      
        	
              	
                4.13

              	
                Banking
                  Relationship. Establish and maintain its primary banking
                  depository and disbursement relationship with the
                  Bank.

              

      

    

    
       

      5.        Negative
        Covenants.

    

    
       

      
        	
              	
                5.1

              	
                Unless
                  otherwise noted, the financial requirements set forth in this section
                  will
                  be computed in accordance with generally accepted accounting principles
                  applied on a basis consistent with financial statements previously
                  submitted by the Borrower to the
                  Bank.

              

      

    

    
       

      
        	
              	
                5.2

              	
                Without
                  the written consent of the Bank, the Borrower will
                  not:

              

      

    

    
       

      
        	
              	
                A.

              	
                Use
                  of Proceeds. Use, or permit any proceeds of the Credit Facilities
                  to be used, directly or indirectly, for the
                  purpose of "purchasing or carrying any margin stock" within the
                  meaning of
                  Federal Reserve Board Regulation U.
                  At the Bank's request, the Borrower will furnish a completed Federal
                  Reserve Board Form
                  U-l.

              

      

    

    
       

    

    
      
        	
              	
                B.

              	
                Continuity
                  of Operations. (1) Engage in any business activities
                  substantially different from those in which the
                  Borrower is presently engaged; (2) cease operations, liquidate,
                  merge,
                  transfer, acquire or consolidate with any other
                  entity, change its name, dissolve, or sell any assets out of the
                  ordinary
                  course of business; or (3) enter into any arrangement
                  with any person providing for the leasing by the Borrower or any
                  Subsidiary of real or personal property
                  which has been sold or transferred by the Borrower or Subsidiary
                  to such
                  person.

              

      

    

    
       

    

    
      
        	
              	
                C.

              	
                Limitation
                  on NegativePledge Clauses. Enter into any
                  agreement with any person other than the Bank which
                  prohibits or limits the ability of the Borrower or any of its subsidiaries
                  to create or permit to exist any lien on any
                  of its property, assets or revenues, whether now owned or hereafter
                  acquired.

              

      

    

    
       

    

    
      
        	
              	
                D.

              	
                Conflicting
                  Agreements. Enter into any agreement containing any provision
                  which would be violated or breached
                  by the performance of the Borrower's obligations under this agreement
                  or
                  any of the other Related Documents.

              

      

    

    
       

    

    
      
        	
              	
                E.

              	
                Transfer
                  of Ownership. Permit any pledge of any ownership interest in the
                  Borrower, or any sale or other transfer of any ownership interest
                  in the
                  Borrower.

              

      

    

    
       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

         

      

    

    
      
        	
              	
                F.

              	
                Partnership
                  Agreement. Alter, amend or modify its partnership
                  agreement.

              

      

    

    
       

      
        	
              	
                G.

              	
                Debt
                  Service Coverage Ratio. Permit at any time, its ratio of net
                  income, plus interest expense, amortization
                  expense and depreciation expense, minus Distributions, for the
                  twelve
                  month period then ending to interest expense, prior period current
                  maturities of long term debt and capital leases, for the same such
                  period
                  to be less than 1.20 to 1.00.

              

      

    

    
       

      
        	
              	
                H.

              	
                Government
                  Regulation. (1) Be or become subject at any
                  time to any law, regulation, or list of any government
                  agency (including, without limitation, the U.S. Office of Foreign
                  Asset
                  Control list) that prohibits or limits Bank from making any advance
                  or
                  extension of credit to Borrower or from otherwise conducting business
                  with
                  Borrower, or (2) fail to provide documentary and other evidence of
                  Borrower's identity as may be requested by Bank at any time to
                  enable Bank
                  to verify Borrower's identity or to comply with any applicable
                  law or
                  regulation, including, without limitation, Section 326 of the USA
                  Patriot
                  Act of 2001, 31 U.S.C. Section
                  5318.

              

      

    

    
       

      
        	
              	
                I.

              	
                Subsidiaries.
                  Form, create or acquire any Subsidiary without prior consent of
                  the
                  Bank.

              

      

    

    
       

      
        	
                6.

              	
                Representations
                  and Warranties by the Borrower. To induce the Bank to enter into
                  this agreement and to extend credit or other financial accommodations
                  under the Credit Facilities, the Borrower represents and warrants
                  as of
                  the date of this agreement and as of the date of each request for
                  credit
                  under the Credit Facilities that each of the following statements
                  is and
                  shall remain true and correct throughout the term of this agreement
                  and
                  until all Credit Facilities and all amounts owing under the Notes
                  and
                  other Related Documents are paid in full. The Borrower represents
                  that:
                  (a) the execution and delivery of this agreement and the Notes,
                  and the
                  performance of the obligations they impose, do not violate any
                  law,
                  conflict with any agreement by which it is bound, or require the
                  consent
                  or approval of any governmental authority or other third party,
                  (b) this
                  agreement and the Notes are valid and binding agreements, enforceable
                  according to their terms, (c) all balance sheets, profit and loss
                  statements, and other financial statements and other information
                  furnished
                  to the Bank in connection with the Liabilities are accurate and
                  fairly
                  reflect the financial condition of the organizations and persons
                  to which
                  they apply on their effective dates, including contingent liabilities
                  of
                  every type, which financial condition has not changed materially
                  and
                  adversely since those dates, (d) no litigation, claim, investigation,
                  administrative proceeding or similar action (including those for
                  unpaid
                  taxes) against the Borrower is pending or threatened, and no other
                  event
                  has occurred which may in any one case or in the aggregate materially
                  adversely affect the Borrower's financial condition and properties,
                  other
                  than litigation, claims, or other events, if any, that have been
                  disclosed
                  to and acknowledged by the Bank in writing, (e) all of the Borrower's
                  tax
                  returns and reports that are or were required to be filed, have
                  been
                  filed, and all taxes, assessments and other governmental charges
                  have been
                  paid in full, except those presently being contested by the Borrower
                  in
                  good faith and for which adequate reserves have been provided,
                  (f) the
                  Borrower is not an "investment company" or a company "controlled"
                  by an
                  "investment company", within the meaning of the Investment Company
                  Act of
                  1940, as amended, (g) the Borrower is not a "holding company",
                  or a
                  "subsidiary company" of a "holding company" or an "affiliate" of
                  a
                  "holding company" or of a "subsidiary company" of a "holding company"
                  within the meaning of the Public Utility Holding Company Act of
                  1935, as
                  amended, (h) there are no defenses or counterclaims, offsets or
                  adverse
                  claims, demands or actions of any kind, personal or otherwise,
                  that the
                  Borrower could assert with respect to this agreement or the Credit
                  Facilities, (i) the Borrower owns, or is licensed to use, all trademarks,
                  trade names, copyrights, technology, know-how and processes necessary
                  for
                  the conduct of its business as currently conducted, and (j) no
                  part of the
                  proceeds of the Credit Facilities will be used for "purchasing"
                  or
                  "carrying" any "margin stock" within the respective meanings of
                  each of
                  the quoted terms under Regulation U of the Board of Governors of
                  the
                  Federal Reserve System of the United States (the "Board") as now
                  and from
                  time to time hereafter in effect or for any purpose which violates
                  the
                  provisions of any regulations of the Board. The Borrower, other
                  than a
                  natural person, further represents that: (a) it is duly organized
                  and
                  validly existing under the laws of the state where it is organized
                  and is
                  in good standing in its state of organization and each stale where
                  it is
                  doing business, and (b) the execution and delivery of this agreement
                  and
                  the Notes and the performance of the obligations they impose (i)
                  are
                  within its powers, (ii) have been duly authorized by all necessary
                  action
                  of its governing body, and (iii) do not contravene the terms of
                  its
                  articles of incorporation or organization, its by-laws, or any
                  partnership, operating or other agreement governing its
                  affairs.

              

      

    

    
       

      
        	
                7.

              	
                Default/Remedies.
                  If any of the Credit Facilities are not paid at maturity,
                  whether
                  by acceleration or otherwise, or if a default by anyone occurs
                  under the
                  terms of this agreement, the Notes or any other Related Documents,
                  then
                  the Bank shall have all of the rights and remedies provided by
                  any law,
                  equity or agreement. Events of default shall include but not be
                  limited to
                  the following, which must be received and/or satisfied, which
                  determination shall be at the sole discretion of the Bank, within
                  60 days
                  of closing: (1) receipt and review of the documentation for the
                  removal
                  and closure of the petroleum underground storage tank on the subject
                  property; and (2) receipt and review of an
                  appraisal.

              

      

    

    
       

      8.        Miscellaneous.

    

    
       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

         

      

      
        	
              	
                8.1

              	
                Notice.
                  Any notices and demands under or related to this document
                  shall
                  be in writing and delivered to the intended party at its address
                  stated
                  herein, and if to the Bank, at its main office if no other address
                  of the
                  Bank is specified herein, by one of the following means: (a) by
                  hand, (b)
                  by a nationally recognized overnight courier service, or (c) by
                  certified
                  mail, postage prepaid, with return receipt requested. Notice shall
                  be
                  deemed given: (a) upon receipt if delivered by hand, (b) on the
                  Delivery
                  Day after the day of deposit with a nationally recognized courier
                  service,
                  or (c) on the third Delivery Day after the notice is deposited
                  in the
                  mail. "Delivery Day" means a day other than a Saturday, a Sunday
                  or any
                  other day on which national banking associations are authorized
                  to be
                  closed. Any party may change its address for purposes of the receipt
                  of
                  notices and demands by giving notice of such change in the manner
                  provided
                  in this provision.

              

      

    

    
       

      
        	
              	
                8.2

              	
                No
                  Waiver. No delay on the part of the Bank in the exercise of any
                  right or remedy waives that right or remedy. No single or partial
                  exercise
                  by the Bank of any right or remedy precludes any other future exercise
                  of
                  it or the exercise of any other right or remedy. No waiver or indulgence
                  by the Bank of any default is effective unless it is in writing
                  and signed
                  by the Bank, nor shall a waiver on one occasion bar or waive that
                  right on
                  any future occasion.

              

      

    

    
       

      
        	
              	
                8.3

              	
                Integration.
                  This agreement, the Notes, and the other Related Documents to the
                  Credit
                  Facilities embody the entire agreement and understanding between
                  the
                  Borrower and the Bank and supersede all prior agreements and
                  understandings relating to their subject matter. If any one or
                  more of the
                  obligations of the Borrower under this agreement or the Notes is
                  invalid,
                  illegal or unenforceable in any jurisdiction, the validity, legality
                  and
                  enforceability of the remaining obligations of the Borrower shall
                  not in
                  any way be affected or impaired, and the invalidity, illegality
                  or
                  unenforceability in one jurisdiction shall not affect the validity,
                  legality or enforceability of the obligations of the Borrower under
                  this
                  agreement, the Notes and the other Related Documents in any other
                  jurisdiction.

              

      

    

    
       

      
        	
              	
                8.4

              	
                Joint
                  and Several Liability. Each party executing this agreement as the
                  Borrower is individually, jointly and severally liable under this
                  agreement.

              

      

    

    
       

      
        	
              	
                8.5

              	
                Governing
                  Law and Venue. This agreement shall be governed by and construed
                  in accordance with the laws of the State of Texas (without giving
                  effect
                  to its laws of conflicts). The Borrower agrees that any legal action
                  or
                  proceeding with respect to any of its obligations under this agreement
                  may
                  be brought by the Bank in any state or federal court located in
                  the State
                  of Texas, as the Bank in its sole discretion may elect. By the
                  execution
                  and delivery of this agreement, the Borrower submits to and accepts,
                  for
                  itself and in respect of its property, generally and unconditionally,
                  the
                  non-exclusive jurisdiction of those courts. The Borrower waives
                  any claim
                  that the State of Texas is not a convenient forum or the proper
                  venue for
                  any such suit, action or
                  proceeding.

              

      

    

    
       

      
        	
              	
                8.6

              	
                Captions.
                  Section headings are for convenience of reference only
                  and do not
                  affect the interpretation of
                  this agreement.

              

      

    

    
       

      
        	
              	
                8.7

              	
                Survival
                  ofRepresentations and Warranties. The Borrower
                  understands and agrees that in extending the Credit Facilities,
                  the Bank is relying on all representations, warranties, and covenants
                  made
                  by the Borrower in this agreement or in any certificate or other
                  instrument delivered by the Borrower to the Bank under this agreement.
                  The
                  Borrower further agrees that regardless of any investigation made
                  by the
                  Bank, all such representations, warranties and covenants will survive
                  the
                  making of the Credit Facilities and delivery to the Bank of this
                  agreement, shall be continuing in nature, and shall remain in full
                  force
                  and effect until such time as the Borrower's indebtedness to the
                  Bank
                  shall be paid in full.

              

      

    

    
       

      
        	
              	
                8.8

              	
                Non-Liability
                  of the Bank. The relationship between the Borrower and the Bank
                  created by this agreement is strictly a debtor and creditor relationship
                  and not fiduciary in nature, nor is the relationship to be construed
                  as
                  creating any partnership or joint venture between the Bank and
                  the
                  Borrower. The Borrower is exercising the Borrower's own judgement
                  with
                  respect to the Borrower's business. All information supplied to
                  the Bank
                  is for the Bank's protection only and no other party is entitled
                  to rely
                  on such information. There is no duty for Bank to review, inspect,
                  supervise or inform the Borrower of any matter with respect to
                  the
                  Borrower's business. The Bank and the Borrower intend that the
                  Bank may
                  reasonably rely on all information supplied by the Borrower to
                  the Bank,
                  together with all representations and warranties given by the Borrower
                  to
                  the Bank, without investigation or confirmation by the Bank and
                  that any
                  investigation or failure to investigate will not diminish the Bank's
                  right
                  to so rely.

              

      

    

    
       

      
        	
              	
                8.9

              	
                Indemnification
                  of the Bank. The Borrower agrees to indemnify, defend and hold
                  the Bank, its parent companies, subsidiaries, affiliates, their
                  respective
                  successors and assigns and each of their respective shareholders,
                  directors, officers, employees and agents (collectively, the "Indemnified
                  Persons") harmless from any and against any and all loss, liability,
                  obligation, damage, penalty, judgment, claim, deficiency, expense,
                  interest, penalties, attorneys' fees (including the fees and expenses
                  of
                  attorneys engaged by the Indemnified Person at the Indemnified
                  Person's reasonable discretion) and amounts paid in
                  settlement ("Claims") to which any Indemnified Person may become
                  subject
                  arising out of or relating to this agreement or the Collateral,
                  including any Claims resulting from any Indemnified Person's
                  own
                  negligence, except to the limited extent that the Claims are
                  proximately caused by the Indemnified Person's gross negligence
                  or willful
                  misconduct. The indemnification provided for in this paragraph
                  shall
                  survive the termination of this agreement and shall not be affected
                  by the
                  presence, absence or amount of or the payment or nonpayment of
                  any claim
                  under, any insurance.

              

      

    

    
       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

         

      

    

    
      
        	
              	
                8.10

              	
                Counterparts.
                  This agreement may be executed in multiple counterparts,
                  each of
                  which, when so executed, shall be deemed an original, but all such
                  counterparts, taken together, shall constitute one and the same
                  agreement.

              

      

    

    
       

      
        	
              	
                8.11

              	
                Sole
                  Discretion of the Bank. Whenever the Bank's consent or approval
                  is required under this agreement, the decision as to whether or
                  not to
                  consent or approve shall be in the sole and exclusive discretion
                  of the
                  Bank and the Bank's decision shall be final and
                  conclusive.

              

      

    

    
       

      
        	
              	
                8.12

              	
                Advice
                  of Counsel. The Borrower acknowledges that it has been advised by
                  counsel, or had the opportunity to be advised by counsel, in the
                  negotiation, execution and delivery of this agreement and any Related
                  Documents.

              

      

    

    
       

      
        	
              	
                8.13

              	
                Recovery
                  of Additional Costs. If the imposition of or any change in any
                  law, rule, regulation, or guideline, or the interpretation or application
                  of any thereof by any court or administrative or governmental authority
                  (including any request or policy not having the force of law) shall
                  impose, modify, or make applicable any taxes (except federal, state,
                  or
                  local income or franchise taxes imposed on the Bank), reserve
                  requirements, capital adequacy requirements, or other obligations
                  which
                  would (A) increase the cost to the Bank for extending or maintaining
                  the
                  Credit Facilities, (B) reduce the amounts payable to the Bank under
                  the
                  Credit Facilities, or (C) reduce the rate of return on the Bank's
                  capital
                  as a consequence of the Bank's obligations with respect to the
                  Credit
                  Facilities, then the Borrower agrees to pay the Bank such additional
                  amounts as will compensate the Bank therefor, within five (5) days
                  after
                  the Bank's written demand for such payment. The Bank's demand shall
                  be
                  accompanied by an explanation of such imposition or charge and
                  a
                  calculation in reasonable detail of the additional amounts payable
                  by the
                  Borrower, which explanation and calculations shall be conclusive
                  in the
                  absence of manifest error.

              

      

    

    
       

      
        	
              	
                8.14

              	
                Conflicting
                  Terms. Ifthis agreement is inconsistent with
                  any provision in any other Related Documents, the Bank shall determine,
                  in
                  the Bank's sole and absolute discretion, which of the provisions
                  shall
                  control any such
                  inconsistency.

              

      

    

    
       

      
        	
              	
                8.15

              	
                Expenses.
                  The Borrower agrees to pay or reimburse the Bank for all its out-of-pocket
                  costs and expenses and reasonable attorneys' fees incurred in connection
                  with the development, preparation and execution of, and in connection
                  with
                  the enforcement or preservation of any rights under, this agreement,
                  any
                  amendment, supplement, or modification thereto, and any other documents
                  prepared in connection herewith or therewith. These costs and expenses
                  include without limitation any costs or expenses incurred by the
                  Bank in
                  any bankruptcy, reorganization, insolvency or other similar
                  proceeding.

              

      

    

    
       

      
        	
                9.

              	
                USA
                  PATRIOT ACT NOTIFICATION. The following notification is provided
                  to Borrower pursuant to Section 326 of the USA
                  Patriot Act of 2001,31 U.S.C. Section
                  5318:

              

      

    

     

    
      IMPORTANT
        INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT. To help the government
        fight the funding of terrorism and money laundering activities, Federal law
        requires all financial institutions to obtain, verify, and record information
        that identifies each person or entity that opens an account, including any
        deposit account, treasury management account, loan, other extension of credit,
        or other financial services product. What this means for Borrower: When Borrower
        opens an account, if Borrower is an individual Bank will ask for Borrower's
        name, taxpayer identification number, residential address, date of birth,
        and
        other information that will allow Bank to identify Borrower, and if Borrower
        is
        not an individual Bank will ask for Borrower's name, taxpayer identification
        number, business address, and other information that will allow Bank to identify
        Borrower. Bank may also ask, if Borrower is an individual to see Borrower's
        driver's license or other identifying documents, and if Borrower is not an
        individual to see Borrower's legal organizational documents or other identifying
        documents.

    

    
      

       

      (This
        space intentionally left blank)

    

    
       

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

       

    

    
      
        	
                10.

              	
                WAIVER
                  OF SPECIAL DAMAGES. THE BORROWER WAIVES, TO THE MAXIMUM EXTENT
                  NOT PROHIBITED BY LAW, ANY RIGHT THE UNDERSIGNED MAY HAVE TO CLAIM
                  OR
                  RECOVER FROM THE BANK IN ANY LEGAL ACTION OR PROCEEDING ANY SPECIAL,
                  EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
                  DAMAGES.

              

      

    

    
       

      
        	
                11.

              	
                JURY
                  WAIVER. THE BORROWER AND THE BANK HEREBY VOLUNTARILY, KNOWINGLY,
                  IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY
                  PARTICIPATE
                  IN RESOLVING ANY DISPUTE (WHETHER BASED ON CONTRACT, TORT, OR OTHERWISE)
                  BETWEEN THE BORROWER AND THE BANK ARISING OUT OF OR IN ANY WAY
                  RELATED TO
                  THIS DOCUMENT. THIS PROVISION IS A MATERIAL INDUCEMENT TO THE BANK
                  TO
                  PROVIDE THE FINANCING DESCRIBED
                  HEREIN.

              

      

    

    
       

      THIS
        AGREEMENT AND THE OTHER WRITTEN RELATED DOCUMENTS REPRESENT THE FINAL AGREEMENT
        BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
        CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
        PARTIES.

    

    
      THERE
        ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

       

       

      
        
          	Address(es)
                  for Notices: 	 	
                  Borrower:   

                
	 	 	 	 
	
                  3847
                    East Loop 820 South 

                	 	
                  
                    The
                      Leather Factory, L.P.   

                  

                
	Fort
                  Worth, TX 76119-4388 	 	 
	 	 	 	
                  By:

                	
                  
                    The
                      Leather Factory, Inc., its General Partner  

                  

                
	 Attn:	 	 	 	 	 
	 	 	 	 	
                  By:

                	/s/
                  Ron C. Morgan	 
	 	 	 	 	 	
                  
                    Ron
                      Morgan

                  

                	
                  CEO
                    and President

                
	 	 	 	 	 	
                  
                    Printed
                      Name

                  

                	
                  Title

                
	 	 	 	 	 	 	 

        

        
          	 
                  	Date
                  Signed: 	07-31-07

        

        
           

        

      

       

       

      
        
          	Address(es)
                  for Notices: 	 	
                  Bank:

                
	 	 	 	 
	
                  420
                    Throckmorton, Suite 400

                	 	
                  
                    JPMorgan
                      Chase Bank, N.A.  

                  

                
	Fort
                  Worth, TX 76102  	 	 
	 	 	 	
                   

                	
                  
                    
                       

                    

                  

                	 
	Attn:	 	 	By:	/s/
                  Jennifer C. Baggs	 
	 	 	 	 	
                  Jennifer
                    C. Baggs

                	
                   Vice
                    President

                
	 	 	 	 	Printed
                  Name	
                  
                    Title

                  

                
	 	 	 	 	 	
                   

                	
                   

                

        

        
          	 
                  	Date
                  Signed: 	07-31-07

        

        
           

        

      

       

       

       7ex10_3.htm

    
      
        
          

        

      

      PREPARED
        BY:

      Jennifer
        Neville

      

      WHEN
        RECORDED RETURN TO:

      

      Commercial
        Loan Services

      KY1-4340

      P.O.
        Box
        33035

      Louisville,
        KY 40232-3035

      

      
        	
                 

              	
                Deed
                  Of Trust,

                Assignment
                  of Leases and Rents,

                Security
                  Agreement and Financing
                  Statement

              

      

      

      NOTICE
        OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR
        STRIKE
        ANY OR ALL OF THE FOLLOWING INFORMATION FROM ANY INSTRUMENT THAT TRANSFERS
        AN
        INTEREST IN REAL PROPERTY BEFORE IT IS FILED FOR RECORD IN THE PUBLIC RECORDS:
        YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER'S LICENSE
        NUMBER.

       

      
        THIS
          DEED
          OF TRUST is dated as of July 31, 2007, among The Leather Factory, L.P.,
          whose
          address is 3847 East Loop 820 South, Fort Worth, TX 76119-4388 (the "Trustor"),
          Randall B. Durant, whose address is 700 North Pearl St., 8th Fl., Dallas,
          Texas
          75201-7424 (the "Trustee") and JPMorgan Chase Bank, N.A., whose address
          is 420
          Throckmorton, Suite 400, Fort Worth, TX 76102, and its successors and assigns
          (the "Beneficiary").

        
The
          Trustor irrevocably GRANTS, TRANSFERS, CONVEYS AND ASSIGNS to the Trustee,
          in
          trust, with power of sale, for the benefit of the Beneficiary, all of the
          Trustor's right, title and interest, now owned or hereafter acquired, in
          the
          "Premises." The Premises includes the following:

         

      

      (1)   
        The
        real
        property, and all the existing or subsequently affixed or erected buildings,
        structures and improvements on it, described as:

       

              
        Located in the City of Ft. Worth, County of Tarrant, State of
        Texas:

       

      
        
          	
                  TRACT
                    1:

                
	 
	
                  Block
                    1, CAMPUS INDUSTRIAL PARK, an Addition to the City of Fort Worth,
                    Tarrant
                    County, Texas, according to plat recorded in Volume 38849, Page
                    61, Deed
                    Records of Tarrant County, Texas.

                
	 
	
                  TRACT
                    II:

                
	 
	
                  A
                    tract of land out of the S. WOODY SURVEY, Abstract No. 1638,
                    Tarrant
                    County, Texas, and being more particularly described as
                    follows:

                
	 
	
                  Being
                    a tract of land situated in the Samuel Woody Survey, Abstract
                    No. 1638, in
                    the City of Fort Worth, Tarrant County, Texas, being that same
                    tract of
                    land conveyed to Standard Motor Products, Inc. by deed recorded
                    in Volume
                    13156, Page 311 of the Deed Records of Tarrant County, Texas,
                    and being
                    more particularly described by metes and bounds as
                    follows:

                
	 
	
                  Beginning
                    at a 5/8 inch iron rod found for corner in the Northeast line
                    of a tract
                    of land conveyed to Texas Electric Service Company by deed recorded
                    in
                    Volume 2574, Page 545 of the Deed Records of Tarrant County,
                    Texas, said
                    point being the South corner of Block 1 of Campus Industrial
                    Park, an
                    addition to the City of Fort Worth, Tarrant County, Texas, according
                    to
                    the plat thereof recorded in Volume 388-49, Page 61 of the Deed
                    Records of
                    Tarrant County, Texas, same being the West corner of herein described
                    tract;

                

        

        

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

           

        

        
          	
                  Thence
                    North 27 Degrees 57 Minutes 23 Seconds East, along the Southeast
                    line of
                    said addition, a distance of 697.28 feet to a 5/8 inch iron rod
                    found for
                    corner, said point being the West corner of Campus Business Park,
                    an
                    addition to the City of Fort Worth, Tarrant County, Texas, according
                    to
                    the plat thereof recorded in Volume 388-92, Page 6 of the Deed
                    Records of
                    Tarrant County, Texas, same being the North corner of herein
                    described
                    tract;

                
	
                   

                
	
                  Thence
                    South 62 Degrees 00 Minutes 56 Seconds East, along the Southwest
                    line of
                    said Campus Business Park addition, passing the South corner
                    of said
                    Campus Business Park addition, same being the most northerly
                    West corner
                    of a tract of land conveyed to Campus and I-20 Joint Venture
                    by deed
                    recorded in Volume 8342, Page 68 of the Deed Records of Tarrant
                    County,
                    Texas, and continuing along the most northerly Southwest line
                    of said
                    Campus and I-20 Joint Venture tract, for a total distance of
                    329.88 feet
                    to a 5/8 inch iron rod found for corner, said point being the
                    East corner
                    of herein described tract;

                
	 
	
                  Thence
                    South 27 Degrees 57 Minutes 23 Seconds West, along the most southerly
                    Northwest line of said Campus and I-20 Joint Venture tract, a
                    distance of
                    780.11 feet to a 5/8 inch iron rod found for corner, said point
                    being the
                    beginning of a non-tangent curve to the left having a delta of
                    158 Degrees
                    06 Minutes 28 Seconds, a radius of 60.00 feet and a chord bearing
                    and
                    distance of South 51 Degrees 00 Minutes 26 Seconds West, 117.82
                    feet;

                
	 
	
                  Thence,
                    in a southwesterly direction, along said curve to the left, an
                    arc length
                    of 165.57 feet to a 1/2 inch iron rod found for corner in the
                    Northeast
                    line of said Texas Electric Service Company tract, said point
                    being the
                    South corner of herein described tract;

                
	 
	
                  Thence
                    North 28 Degrees 02 Minutes 34 Seconds West, along the Northeast
                    line of
                    said Texas Electric Service Company tract, a distance of 342.27
                    feet to
                    the Point of Beginning and containing 259,182.73 square feet
                    or 5.9500
                    acres of land.

                

        

      

      
         

      

              
Commonly
        known as 1900
        SE Loop 820, Ft. Worth, Texas 76115;

       

      (2)   
        All
        easements, rights-of-way, licenses, privileges and hereditaments appurtenant
        to
        or used in connection with the Premises;

      

      (3)   
        All
        land
        lying in the bed of any road, street, alley or the like, opened, proposed
        or
        vacated, public or private, or any strip or gore, adjoining the
        Premises;

      

      (4)   
        Subject
        to the rights of the Beneficiary under Section 11 below, all machinery,
        apparatus, equipment, fittings, fixtures and articles of personal property
        of
        every kind and nature whatsoever located now or in the future in or upon
        the
        Premises and used or useable in connection with any present or future operation
        of the Premises (the "Equipment"). It is agreed that all Equipment is part
        of
        the Premises and appropriated to the use of the real estate and, whether
        affixed
        or annexed or not, shall for the purposes of this Deed of Trust, unless the
        Beneficiary shall otherwise elect, be deemed conclusively to be real estate
        that
        has been granted, transferred, conveyed and assigned to the Trustee under
        this
        Deed of Trust;

      

      (5)   
        All
        mineral, coal, oil, gas and water rights, royalties, water courses, ditch
        rights, water and water stock, timber and timber rights, if any;

      

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

         

      

      (6)   
        All
        insurance, condemnation and other awards or payments, including interest,
        made
        as a result of: (a) the exercise of the right of eminent domain; (b) the
        alteration of the grade of any street; (c) any loss of or damage to any building
        or other improvement on the Premises; (d) any other injury to or decrease
        in the
        value of the Premises; (e) any refund due on account of the payment of real
        estate taxes, assessments or other charges levied against or imposed upon
        the
        Premises and (f) the reasonable attorneys' fees, and court costs;

      

      (7)   
        Subject
        to the rights of the Beneficiary under Section 9 below, all present and future
        (a) leases, subleases, licenses and other agreements for the use and/or
        occupancy of the Premises, oral or written, including, without limitation,
        all
        extensions, renewals, replacements and holdovers (collectively, the "Leases")
        and (b) rents, revenues, income, issues, royalties, profits, bonuses, accounts,
        cash, security deposits, advance rents and other payments and/or benefits,
        of
        every kind or nature, derived from the Leases and/or the Premises, including,
        without limitation, the Trustor's right to enforce the Leases and to receive
        and
        collect all payments and proceeds under the Leases (collectively, the
        "Rents");

      

      (8)   
        All
        rights to make divisions of the real estate comprising the Premises that
        are
        exempt from the platting requirements of all applicable land division or
        platting acts, as amended from time to time; and

      

      (9)   
        All
        licenses, contracts, permits and agreements required or used in connection
        with
        the ownership, maintenance or operation of the Premises.

      

      The
        Trustor warrants that it is well and truly seized of good and marketable
        fee
        simple title to the real property comprising the Premises and it is the lawful
        owner of the personal property comprising the Premises, except for liens
        for
        taxes and assessments not yet due and payable, building and use restrictions
        of
        record, zoning ordinances, and any other encumbrances disclosed to the
        Beneficiary in writing as of the date of this Deed of Trust ("Permitted
        Encumbrances"). The Trustor shall forever warrant and defend the same unto
        the
        Beneficiary and its successors and assigns against all claims whatsoever,
        except
        for the Permitted Encumbrances. If the Premises are encumbered by Permitted
        Encumbrances, the Trustor shall perform all obligations and make all payments
        as
        required by the Permitted Encumbrances. The Trustor shall provide the
        Beneficiary copies of all writings pertaining to Permitted Encumbrances and
        the
        Beneficiary is authorized to request and receive that information from any
        other
        person without the consent or knowledge of the Trustor.

      

      The
        term
        "Borrower" means the Trustor or any other person or entity liable to the
        Beneficiary under any instrument or agreement described in the definition
        of
        "Liabilities" herein, whether under any promissory note, guaranty, letter
        of
        credit application, this Deed of Trust, any other Related Documents or
        otherwise.

      

      This
        Deed
        of Trust secures the Liabilities.

      

      The
        term
        "Liabilities" means all indebtedness, liabilities and obligations of every
        kind
        and character of each Borrower to the Beneficiary, whether the indebtedness,
        liabilities and obligations are individual, joint or several, contingent
        or
        otherwise, now or hereafter existing, including, without limitation, all
        liabilities, interest, costs and fees, arising under or from any note, open
        account, overdraft, credit card, lease, Rate Management Transaction, letter
        of
        credit application, endorsement, surety agreement, guaranty, acceptance,
        foreign
        exchange contract or depository service contract, whether payable to the
        Beneficiary or to a third party and subsequently acquired by the Beneficiary,
        any monetary obligations (including interest) incurred or accrued during
        the
        pendency of any bankruptcy, insolvency, receivership or other similar
        proceedings, regardless of whether allowed or allowable in such proceeding,
        and
        all renewals, extensions, modifications, consolidations, rearrangements,
        restatements, replacements or substitutions of any of the foregoing. The
        Trustor
        and the Beneficiary specifically contemplate that Liabilities include
        indebtedness hereafter incurred by the Borrower to the Beneficiary. The term
        "Liabilities" includes, without limitation, the following:

      

      (1)
        That
        certain Term Note, dated July 31, 2007 in the original principal amount of
        Five
        Million Five Hundred Thousand and 00/100 Dollars ($5,500,000.00), executed
        and
        delivered by The Leather Factory, L.P. and Tandy Leather Company, L.P. to
        the
        Beneficiary; and

      

      (2)
        The
        performance of all of the promises and agreements contained in this Deed
        of
        Trust.

      

      This
        Deed
        of Trust shall not apply to any obligation or debt incurred for personal,
        household or family purposes unless the note or guaranty evidencing such
        personal, household or family debt expressly states that it is secured by
        this
        Deed of Trust.

      

      The
        term
        "Rate Management Transaction" in this Deed of Trust means any transaction,
        (including an agreement with respect thereto) now existing or hereafter entered
        into by any Borrower and the Beneficiary, which is a rate swap, basis swap,
        forward rate transaction, commodity swap, commodity option, equity or equity
        index swap, equity or equity index option, bond option, interest rate option,
        foreign exchange transaction, cap transaction, floor transaction, collar
        transaction, forward transaction, currency swap transaction, cross-currency
        rate
        swap transaction, currency option, derivative transaction or any other similar
        transaction (including any option with respect to any of these transactions)
        or
        any combination thereof, whether linked to one or more interest rates, foreign
        currencies, commodity prices, equity prices or other financial
        measures.

      

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

         

      

      The
        term
        "Related Documents" in this Deed of Trust means all loan agreements, credit
        agreements, reimbursement agreements, security agreements, mortgages, deeds
        of
        trust, pledge agreements, assignments, guaranties, or any other instrument
        or
        document executed in connection with any of the Liabilities.

      

      The
        Trustor promises and agrees with the Beneficiary that each of the following
        is
        true and will remain true until termination of this Deed of Trust and full
        and
        final payment of all Liabilities:

      

      1.    
        Payment of Liabilities; Performance of Obligations. The Trustor
        shall promptly pay when due, whether by acceleration or otherwise, the
        Liabilities for which the Trustor is liable, and shall promptly perform all
        obligations to which the Trustor has agreed under the terms of this Deed
        of
        Trust and any of the other Related Documents.

      

      2.    
        Taxes and Liens. The Trustor shall pay, when due, before any
        interest, collection fees or penalties shall accrue, all taxes, assessments,
        fines, impositions, and other charges which may become a lien prior to this
        Deed
        of Trust. Should the Trustor fail to make those payments, the Beneficiary
        may at
        its option and at the expense of the Trustor, pay the amounts due for the
        account of the Trustor. Upon the request of the Beneficiary, the Trustor
        shall
        immediately furnish to the Beneficiary all notices of amounts due and receipts
        evidencing payment. The Trustor shall promptly notify the Beneficiary of
        any
        lien on all or any part of the Premises and shall promptly discharge any
        unpermitted lien or encumbrance.

      

      3.    
        Change in Taxes. In the event of the passage of any law or
        regulation, state, federal or municipal, subsequent to the date of this Deed
        of
        Trust, which changes or modifies the laws now in force governing the taxation
        of
        mortgages, deeds of trust or debts secured by mortgages or deeds of trust,
        or
        the manner of collecting those taxes, the Liabilities shall become due and
        payable immediately at the option of the Beneficiary.

      

      4.     Insurance.
        The Trustor shall keep the Premises and the present and future
        buildings and other improvements (the "Improvements") on the Premises
        continuously insured for the benefit of the Beneficiary, at replacement cost
        for
        the full insurable value, without any reduction based upon the Trustor's
        acts,
        against fire and such other hazards and risks customarily covered by the
        standard form of extended coverage endorsement available in the state where
        the
        Premises are located, including risks of vandalism and malicious mischief.
        The
        Trustor shall further at all times provide flood insurance covering all
        Improvements and tangible personal property, if any, located on the Premises,
        if
        the Premises are at any time determined by the Beneficiary to be situated
        in an
        area designated as a Special Flood Hazard Area under the Flood Disaster
        Protection Act of 1973, as amended by the National Flood Insurance Reform
        Act of
        1994 and regulations issued under it (the "Flood Insurance Act"). Such flood
        insurance policy shall be in the amount required by the Beneficiary (which
        may
        exceed the amount required under the Flood Insurance Act) and include a
        non-contributing mortgagee clause naming the Beneficiary as mortgagee. The
        Trustor shall additionally provide such other appropriate insurance as the
        Beneficiary may require from time to time. All insurance policies and renewals
        must be in form and substance acceptable to the Beneficiary, must provide
        for
        payment to the Beneficiary in the event of loss, regardless of any act or
        omission by the Trustor, must require thirty (30) days notice to the Beneficiary
        in the event of nonrenewal or cancellation and must be delivered to the
        Beneficiary within thirty (30) days prior to their respective effective dates.
        Should the Trustor fail to insure or fail to pay the premiums on any insurance
        or fail to deliver the policies or certificates or renewals to the Beneficiary,
        then the Beneficiary, at its option, may have the insurance written or renewed,
        and may pay the premiums, for the account of the Trustor. In the event of
        loss
        or damage, the proceeds of the insurance shall be paid to the Beneficiary
        alone.
        No loss or damage shall itself reduce the Liabilities. The Beneficiary is
        authorized to adjust and compromise a loss without the consent of the Trustor,
        to collect, receive and receipt for any proceeds in the name of the Beneficiary
        and the Trustor and to endorse the Trustor's name upon any check in payment
        of
        proceeds. The proceeds shall be applied first toward reimbursement of all
        costs
        and expenses of the Beneficiary in collecting the proceeds and then toward
        payment of the Liabilities or any portion of it, whether or not then due
        or
        payable, or the Beneficiary, at its option, may apply the proceeds, or any
        part
        of the proceeds, to the repair or rebuilding of the Premises provided that
        the
        Trustor (a) is not then or at any time during the course of restoration of
        the
        Premises in default under this Deed of Trust and (b) has complied with all
        requirements for application of the proceeds to restoration of the Premises
        as
        the Beneficiary, in its sole discretion may establish. The Trustor shall
        also
        provide and maintain comprehensive general liability insurance in such coverage
        amounts as the Beneficiary may request, with the Beneficiary being named
        as an
        additional insured on such policies. Evidence of the renewal of such liability
        insurance shall be delivered to the Beneficiary at the same time as evidence
        of
        the renewal of the property insurance required above must be delivered to
        the
        Beneficiary. If the Trustor fails to provide such liability insurance, and/or
        the renewals thereof, or fails to pay the premiums on such liability insurance
        when such premiums are due, then the Beneficiary may have such liability
        insurance written or renewed, and may pay the premiums, for the account of
        the
        Trustor.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

         

      

      5.    
        Reserves for Taxes and Insurance. The Trustor shall, if
        requested by the Beneficiary, pay to the Beneficiary, at the time of and
        in
        addition to the scheduled installments of principal and/or interest due under
        the Liabilities, a sum equal to (a) the amount estimated by the Beneficiary
        to
        be sufficient to enable the Beneficiary to pay, at least thirty (30) days
        before
        they become due and payable, all taxes, assessments and other similar charges
        levied against the Premises, plus (b) the amount of the annual premiums on
        any
        policies of insurance required to be carried by the Trustor, divided by (c)
        the
        number of installments due each year ((a) and (b) are collectively referred
        to
        as the "Charges"). Upon notice at any time, the Trustor will, within ten
        (10)
        days, deposit such additional sum as may be required for the payment of
        increased Charges. These sums may be commingled with the general funds of
        the
        Beneficiary and no interest shall be payable on them, nor shall these sums
        be
        deemed to be held in trust for the benefit of the Trustor. Notwithstanding
        payment of any sums by the Trustor to the Beneficiary under the terms of
        this
        Section, the Beneficiary shall have no obligation to pay any Charges. The
        obligation of the Trustor to pay the Charges is not affected or modified
        by the
        arrangements set out in this Section. Payment by the Beneficiary on any one
        or
        more occasions of all or any part of the Charges shall not be construed as
        obligating it to pay any Charges on any other occasion. If the Beneficiary
        elects to pay any Charge, it shall not be required to do so at any time prior
        to
        the date on which penalties, interest or collection fees begin to accrue.
        If the
        Beneficiary elects to pay any premium on any policy of insurance required
        to be
        carried by the Trustor, it may do so at any time prior to the cancellation
        of
        the policy.

      

      In
        the
        event of the sale of the Premises by power of sale, or of the foreclosure
        of
        this Deed of Trust as a mortgage, any of the moneys then remaining on deposit
        with the Beneficiary or its agent shall be applied against the Liabilities
        prior
        to the commencement of such sale or such foreclosure proceedings. Any default
        by
        the Trustor in the performance of the provisions of this Section shall
        constitute a default under this Deed of Trust.

      

      6.    
        Waste, Abandonment. The Trustor shall not abandon the Premises,
        commit or permit waste on the Premises, or do any other act causing the Premises
        to become less valuable. The Trustor will keep the Premises in good order
        and
        repair and in compliance in all material respects with any law, regulation,
        ordinance or contract affecting the Premises and, from time to time, will
        make
        all needful and proper replacements so that all fixtures, improvements and
        Equipment will at all times be in good condition, fit and proper for their
        respective purposes. Without limitation of the foregoing, nonpayment of the
        Charges shall constitute waste. Should the Trustor fail to effect any necessary
        repairs, the Beneficiary may, at its option and at the expense of the Trustor,
        make the repairs for the account of the Trustor. The Trustor shall use and
        maintain the Premises in conformance with all applicable laws, ordinances
        and
        regulations. The Beneficiary and/or the Trustee, or their authorized agents,
        shall have the right to enter upon and inspect the Premises at all reasonable
        times. The Trustor unconditionally agrees to timely pay all fees with respect
        to
        inspections of the Premises.

      

      7.    
        Alterations, Removal. No building, structure, improvement,
        fixture, personal property or Equipment constituting any part of the Premises
        shall be removed, demolished or substantially altered without the prior written
        consent of the Beneficiary.

      

      8.    
        Payment of Other Obligations. The Trustor shall also pay all
        other obligations which may become liens or charges against the Premises
        for any
        present or future repairs or improvements made on the Premises, or for any
        other
        goods, services, or utilities furnished to the Premises and shall not permit
        any
        lien or charge of any kind securing the repayment of borrowed funds (including
        the deferred purchase price for any property) to accrue and remain outstanding
        against the Premises.

      

      9.    
        Assignment of Leases and Rents. As additional security for the
        Liabilities, the Trustor, by executing and delivering this Deed of Trust,
        absolutely, unconditionally, irrevocably and immediately assigns, grants,
        conveys and sets over unto the Beneficiary all of the Trustor's right, title
        and
        interest in and to all Leases and Rents. Copies of existing Leases and Lease
        amendments have been delivered to the Beneficiary. The Trustor will provide
        copies of any future Leases and Lease amendments to the
        Beneficiary.

      

      Subject
        to the license granted to the Trustor below, the Beneficiary shall have the
        complete right and authority, at any time from and after the occurrence of
        any
        default in the payment or performance of any of the Liabilities or the
        occurrence of any default under this Deed of Trust, to collect and receive
        the
        Rents. For this purpose, the Beneficiary is hereby given and granted the
        following rights, powers and authority: (a) the Beneficiary may send notices
        to
        any and all tenants of the Premises advising them of this assignment and
        directing all the Rents to be paid directly to the Beneficiary or the
        Beneficiary's agent; (b) the Beneficiary may (i) enter upon and take possession
        of the Premises, (ii) demand, collect and receive from the tenants (or from
        any
        other persons liable therefor) all of the Rents, (iii) institute and carry
        on
        all legal proceedings necessary for the protection of the Premises, including
        such proceedings as may be necessary to recover possession of the Premises
        and
        collect the Rents, (iv) remove any tenant or other persons from the Premises,
        (v) enter upon the Premises to maintain the Premises and keep the same in
        repair, and pay the costs thereof and of all services of all employees,
        including their equipment, and of all continuing costs and expenses of
        maintaining the Premises in proper repair and condition and (vi) pay all
        taxes,
        assessments and water utilities and the premiums on fire and other insurance
        effected by the Beneficiary on the Premises; (c) the Beneficiary may do any
        and
        all things necessary or advisable to execute and comply with all applicable
        laws, rules, orders, ordinances and requirements of all governmental agencies;
        (d) the Beneficiary may (i) rent or lease the whole or any part of the Premises
        for such term or terms and on such conditions as the Beneficiary may deem
        appropriate, (ii) modify, terminate or accept the surrender of any Leases
        and/or
        (iii) waive, release, discharge or compromise any Rents or any obligations
        of
        any of the tenants under any Leases; (e) the Beneficiary may make any payment,
        including necessary costs, expenses and reasonable attorneys' fees and court
        costs, or perform any action, required of the Trustor under any Lease, without
        releasing the Trustor from the obligation to do so and without notice to
        or
        demand on the Trustor; (f) the Beneficiary may engage such agent or agents
        as
        the Beneficiary may deem appropriate, either in the Beneficiary's name or
        in the
        Trustor's name, to rent and manage the Premises, including the collection
        and
        application of the Rents; and (g) the Beneficiary may do all such other things
        and acts with respect to the Premises, the Leases and the Rents as the
        Beneficiary may deem appropriate and may act exclusively and solely in the
        place
        and stead of the Trustor. The Beneficiary has all of the powers of the Trustor
        for the purposes stated above. The Beneficiary shall not be required to do
        any
        of the foregoing acts or things and the fact that the Beneficiary shall have
        performed one or more of the foregoing acts or things shall not require the
        Beneficiary to do any other specific act or thing. The foregoing rights and
        remedies of the Beneficiary are in addition to and not in limitation of the
        rights and remedies of the Trustee and/or the Beneficiary at law, in equity,
        under this Deed of Trust or under any of the other Related Documents. The
        exercise by the Beneficiary of any of the foregoing rights and remedies shall
        not constitute a cure or waiver of any default in the payment or performance
        of
        any of the Liabilities or of any default under this Deed of Trust.

      

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

         

      

      Any
        Rents
        received by the Beneficiary shall be applied against the Liabilities in such
        order or manner as the Beneficiary shall elect in its sole
        discretion.

      

      The
        Trustor hereby irrevocably authorizes and directs the tenants under the Leases
        to pay the Rents to the Beneficiary upon written demand by the Beneficiary,
        without further consent of the Trustor. The tenants may rely upon any written
        statement delivered by the Beneficiary to the tenants. Any such payment to
        the
        Beneficiary shall constitute payment to the Trustor under the Leases. The
        provisions of this paragraph are intended solely for the benefit of the tenants
        and shall never inure to the benefit of the Trustor or any person claiming
        through or under the Trustor, other than a tenant who has not received such
        notice. This assignment is not contingent upon any notice or demand by the
        Beneficiary to the tenants.

      

      This
        assignment shall not, prior to entry upon and taking possession of the Premises
        by the Beneficiary, be deemed to constitute the Beneficiary a "mortgagee
        in
        possession", nor obligate the Beneficiary to: (a) appear in or defend any
        proceedings relating to any of the Leases, the Rents or to the Premises;
        (b)
        take any action hereunder; (c) expend any money, incur any expense or perform
        any obligation or liability under the Leases; or (d) assume any obligation
        for
        any deposits delivered to the Trustor by any tenant and not delivered to
        the
        Beneficiary.

      

      The
        Trustor consents to the appointment of a receiver for the Premises, without
        notice, if this is believed necessary or desirable by the
        Beneficiary.

      

      The
        Rents
        constitute cash collateral as defined under federal bankruptcy law.

      

      This
        assignment shall continue to be operative during the exercise of any power
        of
        sale, during any foreclosure or other proceeding taken to enforce this Deed
        of
        Trust and during any redemption period.

      

      Until
        the
        occurrence of any default in the payment or performance of any of the
        Liabilities or the occurrence of a default under this Deed of Trust or under
        any
        loan papers related to the Liabilities the Trustor shall have a license,
        subject
        to the other covenants of the Trustor set forth in this assignment, to (a)
        remain in possession and control of the Premises, (b) operate and manage
        the
        Premises and (c) collect the Rents; provided that the granting of such license
        shall not constitute the Beneficiary's consent to the use of cash collateral
        in
        any bankruptcy proceedings. The foregoing license shall automatically and
        immediately terminate, without notice to the Trustor, upon the occurrence
        of any
        default in the payment or performance of any of the Liabilities or upon the
        occurrence of any default under this Deed of Trust or under any loan papers
        related to the Liabilities. Thereafter, the Trustor shall promptly pay or
        otherwise deliver to the Beneficiary all Rents that the Trustor may receive,
        and
        the Trustor shall hold such Rents in trust for the benefit of the Beneficiary
        until so paid or delivered to the Beneficiary.

      

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

         

      

      The
        Trustor covenants, represents and warrants to the Beneficiary that the following
        statements are true and will remain true until the Deed of Trust is terminated
        and the Liabilities are paid in full:

      

      (i)       The
        Trustor will fulfill and perform its obligations under all the Leases and
        give
        the Beneficiary prompt notice of any default in the performance of the terms
        and
        conditions of the Leases by either the Trustor or the tenant, together with
        copies of notices sent or received by the Trustor in connection with any
        Lease;

      

      (ii)       Without
        the prior written consent of the Beneficiary, the Trustor shall not in any
        way
        (a) enter into any new Lease, (b) amend, modify, assign its interest under,
        cancel or terminate any Lease, (c) accept a surrender of any Lease, (d) accept
        any payment of Rent under any Lease more than thirty (30) days in advance
        or (e)
        waive, release, discharge or compromise any Rent or any of the tenant's
        obligations under any Lease, except that the Trustor may increase Lease rentals
        without the Beneficiary's consent;

      

      (iii)      The
        Trustor will appear and defend or prosecute any action growing out of any
        Lease
        at the Trustor's cost and expense;

      

      (iv)     
        The Beneficiary may, but shall not be required to, make any payment including
        necessary costs, expenses and reasonable attorneys' fees and court costs,
        or
        perform any action required of the Trustor under any Lease, without releasing
        the Trustor from the obligation to do so and without notice to or demand
        on the
        Trustor. The Trustor will, immediately upon demand, reimburse the Beneficiary
        for all such costs, expenses and fees, together with interest at the highest
        rate permitted by any instrument evidencing any of the Liabilities, all of
        which
        shall be added to the Liabilities;

      

      (v)       The
        Trustor has not previously assigned any of its rights under any Lease. The
        Trustor has not accepted Rent more than thirty (30) days in advance of accrual.
        There is no present default under any Lease by either the Trustor or any
        tenant.
        All existing Leases are in full force and effect and unmodified. To the best
        of
        the Trustor's knowledge, no person or entity is in possession of the Premises,
        except pursuant to a valid and fully executed Lease that has been assigned
        to
        the Beneficiary pursuant to this assignment. The Trustor owns the Leases,
        is
        entitled to receive the Rents and has authority to assign the Leases and
        the
        Rents to the Beneficiary as set forth in this assignment. The Trustor will
        enforce the tenant's obligations under their respective Leases;

      

      (vi)     
        The Beneficiary shall not be obligated by this assignment to perform or
        discharge any obligation under any Lease; and

      

      (vii)     The
        Trustor covenants not to execute any other assignment of the Leases or the
        Rents
        as security for any debt without the prior written consent of the
        Beneficiary.

      

      10.   Assignment
        of Interest as Tenant or Purchaser. If the Trustor's interest in the
        Premises is that of a tenant or a purchaser, the Trustor also grants, transfers,
        conveys and assigns to the Beneficiary and/or the Trustee, as additional
        security for the Liabilities, all of the Trustor's right, title and interest
        in
        and to any Leases, land contracts or other agreements by which the Trustor
        is
        leasing or purchasing all or any part of the Premises, including all
        modifications, renewals and extensions, and all of the Trustor's right, title
        and interest in and to any purchase options contained in any such Leases
        or
        other agreements. The Trustor agrees to pay each installment of rent, principal
        and interest required to be paid by it under any such Lease, land contract
        or
        other agreement when each installment becomes due and payable, whether by
        acceleration or otherwise. The Trustor further agrees to pay and perform
        all of
        its other obligations under any such Lease, land contract or other
        agreement.

      

      If
        the
        Trustor defaults in the payment of any installment of rent, principal or
        interest, or in the payment or performance of any other obligation, under
        any
        such Lease, land contract or other agreement, the Beneficiary shall have
        the
        right, but not the obligation, to pay the installment or installments and
        to pay
        or perform the other obligations on behalf of and at the expense of the Trustor.
        If the Beneficiary receives a written notice of the Trustor's default under
        any
        such Lease, land contract or other agreement, the Beneficiary may rely on
        that
        notice as cause to take any action it deems necessary or reasonable to cure
        the
        default, even if the Trustor questions or denies the existence or nature
        of the
        default.

      

      11.   Security
        Agreement. This Deed of Trust also constitutes a security agreement
        within the meaning of the Uniform Commercial Code as is in effect from time
        to
        time in the state in which the Premises is located (the "UCC"). In addition,
        to
        the extent that any Equipment or other personal property, tangible or
        intangible, that is included within the definition of the Premises, and all
        proceeds, products and supporting obligations of any of the foregoing (the
        "Collateral") is not real property but is covered by the UCC, the Trustor
        grants
        to the Beneficiary a security interest in any such Collateral. Accordingly,
        the
        Beneficiary and/or the Trustee shall each have all of the rights and remedies
        available to a secured party under the UCC.

      

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

         

      

      Upon
        the
        occurrence of any default under this Deed of Trust, the Beneficiary and the
        Trustee shall have, in addition to the remedies provided by this Deed of
        Trust,
        the right to use any method of disposition of collateral authorized by the
        UCC
        with respect to any portion of the Premises subject to the UCC. The Beneficiary
        and/or the Trustee shall have the right to require the Trustor to assemble
        the
        Collateral and make it available to the Beneficiary and/or the Trustee at
        a
        place designated by the Beneficiary and/or the Trustee which is reasonably
        convenient to both parties, the right to take possession of the Collateral
        with
        or without demand and with or without process of law, and the right to sell
        and
        dispose of the Collateral and distribute the proceeds according to law. Should
        a
        default occur, the Trustor will pay to the Beneficiary and/or the Trustee
        all
        costs reasonably incurred by the Beneficiary and/or the Trustee for the purpose
        of enforcing its rights hereunder, to the extent not prohibited by law,
        including, without limitation: costs of foreclosure; costs of obtaining money
        damages; and a reasonable fee for the services of internal and outside attorneys
        employed or engaged by the Beneficiary and/or the Trustee for any purpose
        related to this security agreement, including, without limitation, consultation,
        drafting documents, sending notices or instituting, prosecuting or defending
        litigation or any proceeding. The Trustor agrees that upon default the
        Beneficiary and/or the Trustee may dispose of any of the Collateral in its
        then
        present condition, that the Beneficiary and/or the Trustee has no duty to
        repair
        or clean the Collateral prior to sale, and that the disposal of the Collateral
        in its present condition or without repair or clean-up shall not affect the
        commercial reasonableness of such sale or disposition. The Beneficiary's
        and/or
        the Trustee's compliance with any applicable state or federal law requirements
        in connection with the disposition of the Collateral will not adversely affect
        the commercial reasonableness of any sale of the Collateral. In connection
        with
        the right of the Beneficiary and/or the Trustee to take possession of the
        Collateral, the Beneficiary and/or the Trustee may, without liability on
        the
        part of the Beneficiary and/or the Trustee, take possession of any other
        items
        of property in or on the Collateral at the time of taking possession and
        hold
        them for the Trustor. If there is any statutory requirement for notice, that
        requirement shall be met if the Beneficiary and/or the Trustee sends notice
        to
        the Trustor at least ten (10) days prior to the date of the sale, disposition,
        or other event giving rise to the required notice. Upon the request of the
        Beneficiary and/or the Trustee, the Trustor shall execute and file such
        financing statements or similar records and shall take any other action
        requested by the Beneficiary and/or the Trustee to perfect and continue as
        perfected the Beneficiary's and/or the Trustee's security interests in the
        Equipment and other personal property included in the definition of the
        Premises. The Trustor shall pay (and shall reimburse the Beneficiary and/or
        the
        Trustee for) all costs, including attorneys' fees and court costs, of the
        preparation and filing of any financing statements and the taking of any
        such
        other actions. A carbon, photographic or other reproduction of this Deed
        of
        Trust is sufficient as, and can be filed as, a financing statement. The
        Beneficiary and/or the Trustee is irrevocably appointed the Trustor's
        attorney-in-fact to execute any financing statement or similar record on
        the
        Trustor's behalf covering the Equipment and other personal property, tangible
        or
        intangible, that is included within the definition of Premises. Additionally,
        if
        permitted by applicable law, the Trustor authorizes the Beneficiary and/or
        the
        Trustee to file one or more financing statements or similar records related
        to
        the security interests created by this Deed of Trust and further authorizes
        the
        Beneficiary and/or the Trustee, instead of the Trustor, to sign such financing
        statements or similar records. The Trustor shall execute and deliver, or
        cause
        to be executed and delivered, such other documents as the Beneficiary and/or
        the
        Trustee may from time to time request to perfect or to further evidence the
        security interest created in the Collateral by this Deed of Trust. The Trustor
        further represents and warrants to the Beneficiary that (a) its principal
        residence or chief executive office is at the address shown above and (b)
        the
        Trustor's name as it appears in this Deed of Trust is identical to the name
        of
        the Trustor appearing in the Trustor's organizational documents, as amended,
        including trust documents. The Trustor will not, without the Beneficiary's
        prior
        written consent, change (a) the Trustor's name, (b) the Trustor's business
        organization, (c) the jurisdiction under which the Trustor's business
        organization is formed or organized, or (d)
        the
        address of the Trustor's chief executive office or principal residence or
        of any
        additional places of the Trustor's business.

      

      This
        Deed of Trust shall be effective as a financing statement filed as a fixture
        filing with respect to all fixtures included within the Premises and is to
        be
        filed for record in the real property records in the Office of the County
        Clerk
        for the county or counties where the Premises (including said fixtures) are
        situated. This Deed of Trust shall also be effective as a financing statement
        covering minerals or the like (including oil and gas) and accounts subject
        to
        Subsection 9.103(e) of the Texas Business and Commerce Code and is to be
        filed
        for record in the real property records of the county where the Premises
        are
        situated. The mailing address of the Trustor and the address of the Beneficiary
        from which information concerning the security interest may be obtained are
        set
        forth on the first page of this Deed of Trust.

      

      12.   Reimbursement
        of Advances. If the Trustor fails to perform any of its obligations
        under this Deed of Trust, or if any action or proceeding is commenced which
        materially affects the Trustee's or the Beneficiary's interest in the Premises
        (including but not limited to a lien priority dispute, eminent domain, code
        enforcement, insolvency, bankruptcy or probate proceedings), then the
        Beneficiary at its sole option may make appearances, disburse sums and take
        any
        action it deems necessary to protect the Beneficiary's and/or the Trustee's
        interests (including but not limited to disbursement of reasonable attorneys'
        fees and court costs and entry upon the Premises to make repairs). Any amounts
        disbursed shall become additional Liabilities, shall be immediately due and
        payable upon notice from the Beneficiary to the Trustor, and shall bear interest
        at the highest rate permitted under any of the instruments evidencing any
        of the
        Liabilities. The Beneficiary's rights under this Section shall be in addition
        to
        all other rights and remedies of the Beneficiary and/or the Trustee under
        this
        Deed of Trust and the other Related Documents. Any action taken by the
        Beneficiary under this Section shall not be construed as curing any default
        that
        gave rise to such action by the Beneficiary.

      

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

      

      13.   Due
        on Transfer. If all or any part of the Premises or any interest in the
        Premises is transferred without the Beneficiary's prior written consent,
        the
        Beneficiary may, at its sole option, declare the Liabilities to be immediately
        due and payable.

      

      14.   No
        Additional Lien. The Trustor covenants not to execute any mortgage,
        deed of trust, security agreement, assignment of leases and rentals or other
        agreement granting a lien against the interest of the Trustor in the Premises
        without the prior written consent of the Beneficiary, and then only when
        the
        document granting that lien expressly provides that it shall be subject to
        the
        lien of this Deed of Trust for the full amount secured by this Deed of Trust
        and
        shall also be subject and subordinate to all present and future leases affecting
        the Premises.

      

      15.   Eminent
        Domain. Notwithstanding any taking under the power of eminent domain,
        alteration of the grade of any road, alley, or the like, or other injury
        or
        damage to or decrease in value of the Premises by any public or quasi-public
        authority or corporation, the Trustor shall continue to pay the Liabilities
        in
        accordance with the terms of the Related Documents. By executing this Deed
        of
        Trust, the Trustor assigns, transfers and conveys the entire proceeds of
        any
        award or payment and any interest to the Beneficiary. The Trustor will notify
        the Beneficiary of any action or proceeding related to any taking of all
        or any
        part of the Premises, shall defend that action or proceeding in consultation
        with the Beneficiary and shall, if requested by the Beneficiary, deliver
        to the
        Beneficiary all documents and instruments that may be required to allow the
        Beneficiary to directly participate in or control such action or proceeding.
        The
        proceeds of any taking or grant in lieu of any taking shall be applied first
        toward reimbursement of all costs and expenses of the Beneficiary in collecting
        the proceeds, including reasonable attorneys' fees and court costs, and then
        toward payment of the Liabilities, whether or not then due or payable, or
        the
        Beneficiary, at its option, may apply the proceeds, or any part, to the
        alteration, restoration or rebuilding of the Premises.

      

      16.   Environmental
        Provisions. As used herein: the term "Hazardous Substance" shall mean
        any substance, material, or waste that is (a) included within the definitions
        of
        "hazardous substances," "hazardous materials," "hazardous waste," "toxic
        substances," "toxic materials," "toxic waste," or words of similar import
        in any
        Environmental Law, (b) listed as hazardous substances by the United States
        Department of Transportation or by the Environmental Protection Agency, or
        (c)
        petroleum, petroleum-related, or a petroleum by-product, asbestos or
        asbestos-containing material, polychlorinated biphenyls, flammable, explosive,
        radioactive, freon gas, radon, or a pesticide, herbicide, or any other
        agricultural chemical. The term "Environmental Law" shall mean any federal,
        state or local law, rule, regulation, decision, policy or guideline, pertaining
        to Hazardous Substances, or protection of the environment, and all present
        and
        future amendments thereto. Except as disclosed in writing by the Trustor
        to the
        Beneficiary, the Trustor represents and warrants to the Beneficiary that
        (i)
        neither the Premises nor the Trustor are in violation of any Environmental
        Law
        applicable to the Premises, or are subject to any existing, pending or
        threatened governmental investigation pertaining to the Premises, or are
        subject
        to any remedial obligation or lien under or in connection with any Environmental
        Law, (ii) the Trustor has no actual knowledge or notice of the presence or
        release of Hazardous Substances in, on or around any part of the Premises
        or the
        soil, groundwater or soil vapor on or under the Premises, or the migration
        of
        any Hazardous Substance, from or to any other property in the vicinity of
        the
        Premises, and (iii)
        the
        Trustor's intended future use of the Premises will not result in the release
        of
        any Hazardous Substance in, on or around any part of the Premises or in the
        soil, groundwater or soil vapor on or under the Premises, or the migration
        of
        any Hazardous Substance from or to any other property in the vicinity of
        the
        Premises.

      

      The
        Trustor shall neither use nor permit any third party to use, generate,
        manufacture, produce, store, or release, on, under or about the Premises,
        or
        transfer to or from the Premises, any Hazardous Substance, except in compliance
        with all Environmental Laws, and shall otherwise comply, at the Trustor's
        sole
        expense and responsibility, with all Environmental Laws, provided that if
        any
        such occurrence shall nevertheless happen, the Trustor shall promptly remedy
        such condition, at its sole expense and responsibility. The Trustor shall
        not
        permit any environmental liens to be placed on any portion of the Premises.
        The
        Trustor shall promptly notify the Beneficiary in writing if (a) any of the
        representations and warranties herein are no longer accurate, (b) there may
        be
        any Hazardous Substance in, on or around the Premises or the soil, groundwater
        or soil vapor on or under the Premises, or (c) any violation of any
        Environmental Law on or affecting or otherwise in respect of the Premises
        has
        occurred. The Beneficiary and its agents shall have the right, and are hereby
        authorized, at any reasonable time to enter upon the Premises for the purposes
        of observing the Premises, taking and removing soil or groundwater samples,
        and
        conducting tests and/or site assessments on the Premises, or taking such
        other
        actions as the Beneficiary deems necessary or advisable to cleanup, remove,
        resolve, or minimize the impact of, or otherwise deal with, any Hazardous
        Substances on or affecting the Premises following receipt of any notice from
        any
        person or entity asserting the existence or possible existence of any Hazardous
        Substances pertaining to the Premises, that, if true, could jeopardize the
        Beneficiary's security for the Liabilities. All reasonable costs and expenses
        paid or incurred by the Beneficiary in the exercise of any such rights shall
        be
        secured hereby and shall be payable by the Trustor upon demand.

      

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

         

      

      The
        Trustor shall indemnify and hold the Beneficiary harmless from, for and against
        any and all actions, causes of action, claims, liabilities, damages (including
        foreseeable and unforeseeable consequential damages), losses, fines, penalties,
        judgments, awards, settlements, and costs and expenses (including, without
        limitation, reasonable attorneys' fees, experts', engineers' and consultants'
        fees, and costs and expenses of investigation, testing, remediation and dispute
        resolution) (collectively referred to as "Environmental Costs") that directly
        or
        indirectly arise out of or relate in any way to: (a) Any investigation, cleanup,
        removal, remediation, or restoration work of site conditions of the Premises
        relating to Hazardous Substances; (b) Any resulting damages, harm, or injuries
        to the person or property of any third parties or to any natural resources
        involving Hazardous Substances relating to the Premises; (c) Any actual or
        alleged past or present disposal, generation, manufacture, presence, processing,
        production, release, storage, transportation, treatment, or use of any Hazardous
        Substance on, under, or about the Premises; (d) Any actual or alleged past
        or
        present violation of any Environmental Law relating to the Premises; (e)
        Any
        lien on any part of the Premises under any Environmental Law; or (f) Breach
        of
        any representation or warranty by or covenant of the Trustor herein.
        Notwithstanding anything contained herein to the contrary, the foregoing
        indemnity shall not apply to (i) matters resulting from the gross negligence
        or
        willful misconduct of the Beneficiary, or (ii) matters resulting solely from
        the
        actions of the Beneficiary taken after the Beneficiary has taken title to,
        or
        exclusive possession of the Premises, provided that, in both cases, such
        matters
        shall not arise from or be accumulated with any condition of the Premises,
        which
        condition was not caused by the Beneficiary. The foregoing indemnity is
        expressly intended to include, and does include, any Environmental Costs
        arising
        as a result of any strict liability imposed or threatened to be imposed on
        the
        Beneficiary in connection with any of the indemnified matters described in
        this
        Section or arising as a result of the negligence of the Beneficiary in
        connection with such matters. This indemnity shall continue in full
        force and effect and shall survive the payment and performance of the
        Liabilities, the release of record of the lien, or any foreclosure (or action
        in
        lieu thereof), of this Mortgage, the exercise by the Beneficiary of any other
        remedy under this Mortgage or any other document or instrument evidencing
        or
        securing the Liabilities, and any suit, proceeding or judgment against the
        Trustor by the Beneficiary hereon.

      

      17.   Events
        of Default; Remedies. If any of the Liabilities are not paid at
        maturity, whether by acceleration or otherwise, or if a default occurs by
        anyone
        under the terms of this Deed of Trust, or any Related Documents, then the
        Beneficiary and/or the Trustee may exercise all of the rights, powers and
        remedies expressly or impliedly conferred on or reserved to them under this
        Deed
        of Trust or any other Related Document, or now or later existing at law or
        in
        equity, including without limitation the following: (i) the Beneficiary may
        declare the Liabilities to be immediately due, (ii) the Beneficiary and/or
        the
        Trustee may proceed at law or in equity to collect the Liabilities, sell
        the
        Premises by power of sale, foreclose this Deed of Trust as a mortgage or
        otherwise pursue any of their rights or remedies available at law, in equity,
        pursuant to this Deed of Trust or pursuant to any of the other Related Documents
        and (iii) the Beneficiary and/or the Trustee may exercise any of their rights,
        powers or remedies pursuant to the UCC. The Beneficiary, shall be entitled
        to
        the appointment of a receiver for the Premises as a matter of right and without
        notice (without regard to the value of the Premises) and the Trustor
        specifically consents to that appointment without notice. Without limitation,
        the receiver shall have the power to protect and preserve the Premises, operate
        the Premises prior to and during any foreclosure proceedings, to collect
        the
        Rents and apply the proceeds, over and above the costs of the receivership,
        to
        the Liabilities. The receiver shall serve without bond, if permitted by
        law.

      

      Upon
        the
        occurrence of a default hereunder, the Trustee, his successor or substitute,
        is
        authorized and empowered and it shall be the Trustee's special duty at the
        request of the Beneficiary to sell the Premises or any part thereof in
        accordance with the procedures and requirements of Texas Property Code §51.002
        as then existing. After each sale, the Trustee shall make to the purchaser
        or
        purchasers at such sale good and sufficient conveyances in the name of the
        Trustor, conveying the property so sold to the purchaser or purchasers in
        fee
        simple with general warranty of title, and shall receive the proceeds of
        said
        sale or sales and apply the same as herein provided. Any and all statements
        of
        fact or other recitals made in any deed or deeds given by the Trustee or
        any
        successor or substitute appointed hereunder related to the Liabilities or
        the
        exercise of rights and remedies by the Beneficiary hereunder, or as to the
        refusal, failure or inability to act of the Trustee or any substitute or
        successor, shall be taken as prima facie evidence of the truth of the facts
        so
        stated and recited. The Trustee, his successor or substitute, may appoint
        or
        delegate any one or more persons as agent to perform any act or acts necessary
        or incident to any sale held by the Trustee, including, without limitation,
        the
        posting of notices and the conducting of sales, but in the name and on behalf
        of
        the Trustee, his successor or substitute.

      

      The
        proceeds of any sale of the Premises, whether by power of sale or foreclosure,
        shall be retained by the Beneficiary, up to the amount due on the Liabilities,
        including costs of sale and any environmental remediation or other costs
        and
        expenses incurred by the Beneficiary and/or the Trustee in connection with
        the
        Liabilities and/or the Premises, including without limitation, attorneys'
        fees
        and court costs. By executing this Deed of Trust, the Trustor waives, in
        the
        event of a sale of the Premises by power of sale, a foreclosure of this Deed
        of
        Trust as a mortgage or the enforcement by the Beneficiary and/or the Trustee
        of
        any other rights and remedies in this Deed of Trust, any right otherwise
        available in respect to marshalling of assets which secure the Liabilities
        or to
        require the Beneficiary or the Trustee to pursue their remedies against any
        other such assets. The Trustor waives all errors and imperfections in any
        proceedings instituted by the Beneficiary and/or the Trustee to enforce any
        of
        their rights and remedies. The exercise of any one right or remedy by the
        Beneficiary and/or the Trustee under this Deed of Trust or any of the other
        Related Documents shall not impair or waive the Beneficiary's and/or the
        Trustee's right to exercise any other rights or remedies available to either
        of
        them at law, in equity, under this Deed of Trust or under any of the other
        Related Documents, all such rights and remedies being cumulative. All fees,
        costs and expenses incurred by the Beneficiary and/or the Trustee in pursuing
        or
        enforcing their rights and remedies at law, in equity, under this Deed of
        Trust
        or under any of the other Related Documents, whether or not a lawsuit or
        legal
        action is filed, including attorneys' and paralegals' fees, shall be payable
        by
        the Trustor to the Beneficiary on demand and shall be secured by this Deed
        of
        Trust.

      

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

         

      

      18.  
        Pledge. If the Trustor is not liable for all or any part of the
        Liabilities, then the Trustor agrees that:

      

      
        	
                1.

              	
                If
                  any moneys become available from any source other than the Premises
                  that
                  the Beneficiary can apply to the Liabilities, the Beneficiary may
                  apply
                  them in any manner it chooses, including but not limited to applying
                  them
                  against obligations, indebtedness or liabilities which are not
                  secured by
                  this Deed of Trust.

              

      

      
        	
                2.

              	
                The
                  Beneficiary may take any action against the Borrower, the Premises
                  or any
                  other collateral for the Liabilities, or any other person or entity
                  liable
                  for any of the Liabilities.

              

      

      
        	
                3.

              	
                The
                  Beneficiary may release the Borrower or anyone else from the Liabilities,
                  either in whole or in part, or release the Premises in whole or
                  in part or
                  any other collateral for the Liabilities, and need not perfect
                  a security
                  interest in the Premises or any other collateral for the
                  Liabilities.

              

      

      
        	
                4.

              	
                The
                  Beneficiary does not have to exercise any rights that it has against
                  the
                  Borrower or anyone else, or make any effort to realize on the Premises
                  or
                  any other collateral for the Liabilities, or exercise any right
                  of
                  setoff.

              

      

      
        	
                5.

              	
                Without
                  notice or demand and without affecting the Trustor's obligations
                  hereunder, from time to time, the Beneficiary is authorized to:
                  (a) renew,
                  modify, compromise, rearrange, restate, consolidate, extend, accelerate
                  or
                  otherwise change the time for payment of, or otherwise change the
                  terms of
                  the Liabilities or any part thereof, including increasing or decreasing
                  the rate of interest thereon; (b) release, substitute or add any
                  one or
                  more sureties, endorsers, or guarantors; (c) take and hold other
                  collateral for the payment of the Liabilities, and enforce, exchange,
                  substitute, subordinate, impair, waive or release any such collateral;
                  (d)
                  proceed against the Premises or any other collateral for the Liabilities
                  and direct the order or manner of sale as the Beneficiary in its
                  discretion may determine; and (e) apply any and all payments received
                  by
                  the Beneficiary in connection with the Liabilities, or recoveries
                  from the
                  Premises or any other collateral for the Liabilities, in such order
                  or
                  manner as the Beneficiary in its discretion may
                  determine.

              

      

      
        	
                6.

              	
                The
                  Trustor's obligations hereunder shall not be released, diminished
                  or
                  affected by (a) any act or omission of the Beneficiary, (b) the
                  voluntary
                  or involuntary liquidation, sale or other disposition of all or
                  substantially all of the assets of the Borrower, or any receivership,
                  insolvency, bankruptcy, reorganization, or other similar proceedings
                  affecting the Borrower or any of its assets or any other obligor
                  on the
                  Liabilities or that obligor's assets, (c) any change in the composition
                  or
                  structure of the Borrower or any other obligor on the Liabilities,
                  including a merger or consolidation with any other person or entity,
                  or
                  (d) any payments made upon the
                  Liabilities.

              

      

      
        	
                7.

              	
                The
                  Trustor expressly consents to any impairment of any other collateral
                  for
                  the Liabilities, including, but not limited to, failure to perfect
                  a
                  security interest and release of any other collateral for the Liabilities
                  and any such impairment or release shall not affect the Trustor's
                  obligations hereunder.

              

      

      
        	
                8.

              	
                The
                  Trustor waives and agrees not to enforce any rights of subrogation,
                  contribution or indemnification that it may have against the Borrower,
                  any
                  person or entity liable on the Liabilities, or the Premises, until
                  the
                  Borrower and the Trustor have fully performed all their obligations
                  to the
                  Beneficiary, even if those obligations are not covered by this
                  Deed of
                  Trust.

              

      

      
        	
                9.

              	
                The
                  Trustor waives (a) to the extent not prohibited by applicable law,
                  all
                  rights and benefits under any laws or statutes regarding sureties,
                  as may
                  be amended, (b) any right the Trustor may have to receive notice
                  of the
                  following matters before the Beneficiary enforces any of its rights:
                  (i)
                  the Beneficiary's acceptance of this Deed of Trust, (ii) incurrence
                  or
                  acquisition of any Liabilities, any credit that the Beneficiary
                  extends to
                  the Borrower, (iii) the Borrower's default, (iv) any
                  demand,  intent to accelerate, diligence, presentment, dishonor
                  and protest, or (v) any action that the Beneficiary takes regarding
                  the
                  Borrower, anyone else, any other collateral for the Liabilities,
                  or any of
                  the Liabilities, which it might be entitled to by law or under
                  any other
                  agreement, (c) any right it may have to require the Beneficiary
                  to proceed
                  against the Borrower, any guarantor or other obligor on the Liabilities,
                  the Premises or any other collateral for the Liabilities, or pursue
                  any
                  remedy in the Beneficiary's power to pursue, (d) any defense based
                  on any
                  claim that the Trustor's obligations exceed or are more burdensome
                  than
                  those of the Borrower, (e) the benefit of any statute of limitations
                  affecting the Trustor's obligations hereunder or the enforcement
                  hereof,
                  (f) any defense arising by reason of any disability or other defense
                  of
                  the Borrower or by reason of the cessation from any cause whatsoever
                  (other than payment in full) of the obligation of the Borrower
                  for the
                  Liabilities, and (g) any defense based on or arising out of any
                  defense
                  that the Borrower may have to the payment or performance of the
                  Liabilities or any portion thereof. The Beneficiary may waive or
                  delay
                  enforcing any of its rights without losing them. Any waiver affects
                  only
                  the specific terms and time period stated in the
                  waiver.

              

      

      

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

         

      

      
        	
                10.

              	
                The
                  Trustor agrees that to the extent any payment or transfer is received
                  by
                  the Beneficiary in connection with the Liabilities, and all or
                  any part of
                  such payment or transfer is subsequently invalidated, declared
                  to be
                  fraudulent or preferential, set aside or required to be transferred
                  or
                  repaid by the Beneficiary or paid over to a trustee, receiver or
                  any other
                  person or entity, whether under any bankruptcy act or otherwise
                  (any of
                  those payments or transfers is hereinafter referred to as a "Preferential
                  Payment"), then this Deed of Trust shall continue to be effective
                  or shall
                  be reinstated, as the case may be, even if all Liabilities have
                  been paid
                  in full, and whether or not the Beneficiary is in possession of
                  this Deed
                  of Trust or whether this Deed of Trust has been marked paid, cancelled,
                  released or returned to the Trustor, and, to the extent of the
                  payment or
                  repayment or other transfer by the Beneficiary, the Liabilities
                  or part
                  intended to be satisfied by the Preferential Payment shall be revived
                  and
                  continued in full force and effect as if the Preferential Payment
                  had not
                  been made. If this Deed of Trust must be reinstated, the Trustor
                  agrees to
                  execute and deliver to the Beneficiary any new deeds of trust and
                  agreements, if necessary or if requested by the Beneficiary, in
                  form and
                  substance acceptable to the Beneficiary, covering the
                  Premises.

              

      

      
        	
                11.

              	
                The
                  Trustor agrees to fully cooperate with the Beneficiary and not
                  to delay,
                  impede or otherwise interfere with the efforts of the Beneficiary
                  to
                  secure payment from the assets which secure the Liabilities including
                  actions, proceedings, motions, orders, agreements or other matters
                  relating to relief from automatic stay, abandonment of property,
                  use of
                  cash collateral and sale of the Beneficiary's collateral free and
                  clear of
                  all liens.

              

      

      
        	
                12.

              	
                The
                  Trustor has (a) without reliance on the Beneficiary or any information
                  received from the Trustor and based upon the records and information
                  the
                  Trustor deems appropriate, made an independent investigation of
                  the
                  Borrower, the Borrower's business, assets, operations, prospects
                  and
                  condition, financial or otherwise, and any circumstances that may
                  bear
                  upon those transactions, the Borrower or the obligations, liabilities
                  and
                  risks undertaken pursuant to this agreement; (b) adequate means
                  to obtain
                  from the Borrower on a continuing basis information concerning
                  the
                  Borrower and the Beneficiary has no duty to provide any information
                  concerning the Borrower or other obligor on the Liabilities to
                  the
                  Trustor; (c) full and complete access to the Borrower and any and
                  all
                  records relating to any Liabilities now or in the future owing
                  by the
                  Borrower; (d) not relied and will not rely upon any representations
                  or
                  warranties of the Trustor not embodied in this agreement or any
                  acts taken
                  by the Trustor prior to or after the execution or other authentication
                  and
                  delivery of this agreement (including but not limited to any review
                  by the
                  Trustor of the business, assets, operations, prospects and condition,
                  financial or otherwise, of the Borrower); and (e) determined that
                  the
                  Trustor will receive benefit, directly or indirectly, and has or
                  will
                  receive fair and reasonably equivalent value, for the execution
                  and
                  delivery of this agreement and the rights provided to the Beneficiary.
                  By
                  entering into this agreement, the Trustor does not intend: (i)
                  to incur or
                  believe that the Trustor will incur debts that would be beyond
                  the
                  Trustor's ability to pay as those debts mature; or (ii) to hinder,
                  delay
                  or defraud any creditor of the Trustor. The Trustor is neither
                  engaged in
                  nor about to engage in any business or transaction for which the
                  remaining
                  assets of the Trustor are unreasonably small in relation to the
                  business
                  or transaction, and any property remaining with the Trustor after
                  the
                  execution or other authentication of this agreement is not unreasonably
                  small capital.

              

      

      
        	
                13.

              	
                Without
                  limiting any foregoing waiver, consent or agreement, the Trustor
                  further
                  waives all rights, if any, of the Trustor under Rule 31, Texas
                  Rules of
                  Civil Procedure, or Chapter 34 of the Texas Business and Commerce
                  Code, or
                  Section 17.001
                  of the Texas Civil Practice and Remedies Code; and (i) to the extent
                  the
                  Trustor is subject to the Texas Revised Partnership Act ("TRPA")
                  or
                  Section 152.306 of the Texas Business Organizations Code ("BOC"),
                  compliance by the Trustor with Section 3.05(d) of TRPA and Section
                  152.306(b) of BOC.

              

      

      

      19.   Representations
        by the Trustor. Each Trustor represents that: (a) it owns the Premises
        in fee title subject only to the Permitted Encumbrances; (b) the execution
        and
        delivery of this Deed of Trust and the performance of the obligations it
        imposes
        do not violate any law, conflict with any agreement by which it is bound
        or
        require the consent or approval of any governmental authority or any third
        party; (c) this Deed of Trust is a valid and binding agreement enforceable
        according to its terms; (d) any balance sheets, profit and loss statements,
        and
        other financial statements furnished to the Beneficiary in connection with
        the
        Liabilities are accurate and fairly reflect the financial condition of the
        organizations and persons to which they apply on their effective dates,
        including contingent liabilities of every type, which financial condition
        has
        not changed materially and adversely since those dates; (e) it shall not
        permit
        any proceedings in foreclosure or otherwise that would affect the Premises,
        and
        (f) no portion of the Premises is being used as the Trustor's business or
        residential homestead. Each Trustor, other than a natural person, further
        represents that: (i) it is duly organized, validly existing and in good standing
        under the laws of the state where it is organized and in good standing in
        each
        state where it is doing business; and (ii) the execution and delivery of
        this
        Deed of Trust and the performance of the obligations it imposes (A) are within
        its powers and have been duly authorized by all necessary action of its
        governing body and (B) do not contravene the terms of its articles of
        incorporation or organization, its by-laws, or any partnership, operating
        or
        other agreement governing its affairs.

      

      20.   Notice.
        Any notices and demands under or related to this Deed of Trust shall
        be
        in writing and delivered to the intended party at its address stated herein,
        and
        if to the Beneficiary, at its main office if no other address of the Beneficiary
        is specified herein, by one of the following means: (a) by hand; (b) by a
        nationally recognized overnight courier service; or (c) by certified mail,
        postage prepaid, with return receipt requested. Notice shall be deemed given:
        (a) upon receipt if delivered by hand; (b) on the Delivery Day after the
        day of
        deposit with a nationally recognized courier service; or (c) on the third
        Delivery Day after the notice is deposited in the mail. "Delivery Day" means
        a
        day other than a Saturday, a Sunday or any other day on which national banking
        associations are authorized to be closed. Any party may change its address
        for
        purposes of the receipt of notices and demands by giving notice of such change
        in the manner provided in this provision. This notice provision shall be
        inapplicable to any judicial or non-judicial proceeding where state law governs
        the manner and timing of notices in foreclosure or receivership
        proceedings.

      

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

         

      

      21.   Miscellaneous.
        If any provision of this Deed of Trust is in conflict with any statute
        or rule of law or is otherwise unenforceable for any reason whatsoever, then
        that provision is null and void to the extent of the conflict or
        unenforceability and shall be severed from but shall not invalidate any other
        provision of this Deed of Trust. No waiver by the Beneficiary or the Trustee
        of
        any right or remedy granted or failure to insist on strict performance by
        the
        Trustor waives any other right or remedy of the Beneficiary and/or the Trustee
        or waives or bars the subsequent exercise of the same right or remedy by
        the
        Beneficiary and/or the Trustee for any subsequent default by the Trustor.
        All
        rights and remedies of the Beneficiary and the Trustee are cumulative.
These
        promises and agreements bind and these rights benefit the parties and their
        respective successors and assigns. If there is more than one Trustor, the
        obligations under this Deed of Trust are joint and several and their agreements,
        representations, warranties and covenants shall be individual, joint and
        several. The Trustor agrees that the Beneficiary may at any time sell or
        transfer interests in all or any part of the Liabilities to one or more
        purchasers whether or not related to the Beneficiary.

      

      This
        Deed
        of Trust and the Related Documents constitute the entire understanding of
        the
        parties hereto and may not be amended or altered except by a written instrument
        that has been signed by the party(ies) against which enforcement of the
        amendment or alteration is sought.

      

      Captions
        in this Deed of Trust are for convenience of reference only and do not limit
        the
        provisions of this Deed of Trust.

      

      Time
        is
        of the essence in this Deed of Trust.

      

      There
        shall be no merger of the estate or interest created by this Deed of Trust
        with
        any other estate or interest in the Premises at any time held by or for the
        benefit of the Beneficiary, in any capacity, without the written consent
        of the
        Beneficiary.

      

      The
        Beneficiary, at its option, from time to time, and more than once, may appoint
        in writing a successor or substitute trustee, with or without cause, including
        the resignation, absence, death, inability, refusal or failure to act of
        the
        Trustee. The successor or substitute trustee may be appointed without ever
        requiring the resignation of the former trustee and without any formality
        except
        for the execution and acknowledgment of the appointment by the Beneficiary
        of
        this Deed of Trust. The successor or substitute trustee shall then succeed
        to
        all rights, obligations, and duties of the Trustee. If the Beneficiary is
        a
        national banking association or corporation and such appointment is executed
        on
        its behalf by an officer of such national banking association or corporation,
        such appointment shall be conclusively presumed to be executed with authority
        and shall be valid and sufficient without proof of any action by the board
        of
        directors or any superior officer of the association or corporation. The
        Trustee
        shall not be liable for any error or judgment or act done by the Trustee
        in good
        faith, or be otherwise responsible or accountable under any circumstances
        whatsoever (including, without limitation, the Trustee's negligence) except
        for
        the Trustee's gross negligence or willful misconduct. The Trustee shall have
        the
        right to rely on any instrument, document or signature authorizing or supporting
        any action taken or proposed to be taken by him hereunder, believed by him
        in
        good faith to be genuine.

      

      22.   Governing
        Law and Venue. This Deed of Trust shall be governed by and construed in
        accordance with the laws of the State of Texas (without giving effect to
        its
        laws of conflicts); provided, however, that if the real estate that is the
        subject of this Deed of Trust is located in another state, the laws of such
        other state shall govern the validity, enforceability, perfection, priority,
        construction, effect, enforcement and remedies with respect to this Deed
        of
        Trust, but nothing herein shall be construed to provide that the laws of
        any
        state other than the State of Texas shall apply to the obligations and
        indebtedness secured by this Deed of Trust. The Trustor agrees that any legal
        action or proceeding with respect to any of its obligations under this Deed
        of
        Trust may be brought by the Beneficiary in any state or federal court located
        in
        the State of Texas, as the Beneficiary in its sole discretion may elect.
        By the
        execution and delivery of this Deed of Trust, the Trustor submits to and
        accepts, for itself and in respect of its property, generally and
        unconditionally, the non-exclusive jurisdiction of those courts. The Trustor
        waives any claim that the State of Texas is not a convenient forum or the
        proper
        venue for any such suit, action or proceeding.

      

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

         

      

      23.   Indemnification.
        In addition to the indemnification provisions described in the Section
        captioned "Environmental Provisions" of this Deed of Trust, the Trustor agrees
        to indemnify, defend and hold the Beneficiary, its parent companies,
        subsidiaries, affiliates, their respective successors and assigns and each
        of
        their respective shareholders, directors, officers, employees and agents
        (collectively the "Indemnified Persons") harmless from and against any and
        all
        loss, liability, obligation, damage, penalty, judgment, claim, deficiency,
        expense, interest, penalties, attorneys' fees (including the fees and expenses
        of attorneys engaged by the Indemnified Person at the Indemnified Person's
        reasonable discretion) and amounts paid in settlement ("Claims") to which
        any
        Indemnified Person may become subject arising out of or relating to this
        agreement or the Collateral, except to the limited extent that the Claims
        are
        proximately caused by the Indemnified Person's gross negligence or willful
        misconduct. The indemnification provided for in this Section shall survive
        the
        termination of this agreement and shall not be affected by the presence,
        absence
        or amount of or the payment or nonpayment of any claim, under, any
        insurance.

      

      The
        Trustor's indemnity obligations under this Section shall not in any way be
        affected by the presence or absence of covering insurance, or by the amount
        of
        such insurance or by the failure or refusal of any insurance carrier to perform
        any obligation on its part under any insurance policy or policies affecting
        the
        Trustor's assets or the Trustor's business activities. Should any Claim be
        made
        or brought against any Indemnified Person by reason of any event as to which
        Trustor's indemnification obligations apply, then, upon any Indemnified Person's
        demand, the Trustor, at its sole cost and expense, shall defend such Claim
        in
        the Trustor's name, if necessary, by the attorneys for the Trustor's insurance
        carrier (if such Claim is covered by insurance), or otherwise by such attorneys
        as any Indemnified Person shall approve. Any Indemnified Person may also
        engage
        its own attorneys at its reasonable discretion to defend the Indemnified
        Person
        and to assist in its defense and the Trustor agrees to pay the fees and
        disbursements of such attorneys.

      

      WITHOUT
        LIMITATION OF THE FOREGOING, IT IS THE INTENTION OF TRUSTOR AND TRUSTOR AGREES
        THAT THE FOREGOING INDEMNITIES SHALL APPLY TO EACH INDEMNIFIED PERSON WITH
        RESPECT TO CLAIMS, OBLIGATIONS, DAMAGES, LOSSES, COSTS, EXPENSES (INCLUDING,
        WITHOUT LIMITATION, ATTORNEYS' FEES), DEMANDS, LIABILITIES, PENALTIES, FINES
        AND
        FORFEITURES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF THE
        NEGLIGENCE OF SUCH (AND/OR ANY OTHER) INDEMNIFIED PERSON.

      

      24.   Information
        Waiver. The Trustor agrees that the Beneficiary may provide any
        information or knowledge the Beneficiary may have about the Trustor or about
        any
        matter relating to this Deed of Trust or the Related Documents to JPMorgan
        Chase
& Co., or any of its subsidiaries or affiliates or their successors, or to
        any one or more purchasers or potential purchasers of all or any part of
        the
        Liabilities and/or the Related Documents.

      

      

      (This
        space intentionally left blank)

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

         

      

      25.   WAIVER
        OF SPECIAL DAMAGES. THE TRUSTOR WAIVES, TO THE MAXIMUM EXTENT NOT
        PROHIBITED BY LAW, ANY RIGHT THE UNDERSIGNED MAY HAVE TO CLAIM OR RECOVER
        FROM
        THE BENEFICIARY IN ANY LEGAL ACTION OR PROCEEDING ANY SPECIAL, EXEMPLARY,
        PUNITIVE OR CONSEQUENTIAL DAMAGES.

      

      26.   JURY
        WAIVER. THE TRUSTOR AND THE BENEFICIARY (BY THEIR ACCEPTANCE HEREOF)
        HEREBY VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY
        RIGHT
        TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED ON CONTRACT,
        TORT, OR OTHERWISE) BETWEEN THE TRUSTOR AND THE BENEFICIARY ARISING OUT OF
        OR IN
        ANY WAY RELATED TO THIS DOCUMENT. THIS PROVISION IS A MATERIAL INDUCEMENT
        TO THE
        BENEFICIARY TO PROVIDE THE FINANCING DESCRIBED HEREIN.

      

      THIS
        AGREEMENT AND THE OTHER WRITTEN LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
        BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
        CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
        PARTIES.

             
        THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
        PARTIES.

      

      
        	 	Trustor:	 
	 	 	 	 	 
	 	The
                Leather Factory, L.P.	 
	 	 	 	 	 
	 	By:
                The Leather Factory, Inc.	 
	 	 	 	 	 
	 	 	By:	
                 

              	 
	 	 	 	 	 
	 	 	 	
                Ron
                  Morgan      

              	
                CEO
                  and President

              
	 	 	 	
                Printed
                  Name 

              	
                Title

              

      

      

      The
        Beneficiary is executing this agreement for the purpose of acknowledging
        and
        agreeing to the foregoing Jury Waiver, the notice given under §26.02 of the
        Texas Business and Commerce Code and the Beneficiary's failure to execute
        or
        authenticate this agreement will not invalidate this agreement.

       

      
        
          	Beneficiary:	 	 
	 	 	 	 
	JPMorgan
                  Chase Bank, N.A.	 	 
	 	 	 	 
	By:	
                   

                	 	 
	 	 	 	 
	 	
                  Printed
                    Name 

                	
                   Title

                	 

        

      

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

         

      

      ACKNOWLEDGMENT

      

      
        	State
                of	
                 

              	
                )

              
	 	 	
                )
                  ss

              
	County
                of	
                 

              	
                )

              

      

      

      
        	
                The
                  foregoing instrument was acknowledged before me on

              	 	
                ,
                  20

              	 	
                ,
                  by

              	
                 

              
	 	 	 	 	 	 
	 	.	
                 

              	 	 	 

      

       

      
        	
                Given
                  under my hand and notarial seal this

              	 	
                day
                  of

              	 	
                ,
                  20

              	
                 

              	
                .

              

      

      

      
        	
                My
                  Commission Expires:

              	
                 

              	 	
                 

              	
                 

              
	 	 	 	
                Notary
                  Public, State of

              	
                 

              
	 	 	 	
                 

              	
                 

              
	 	 	 	
                Notary's
                  Printed Name:

              	
                 

              

      

      

      

      
        

        
          	State
                  of	
                   

                	
                  )

                
	 	 	
                  )
                    ss

                
	County
                  of	
                   

                	
                  )

                

        

        

        
          	
                  The
                    foregoing instrument was acknowledged before me on

                	 	
                  ,
                    20

                	 	
                  ,
                    by

                	
                   

                
	 	 	 	 	 	 
	 	.	
                   

                	 	 	 

        

         

        
          	
                  Given
                    under my hand and notarial seal this

                	 	
                  day
                    of

                	 	
                  ,
                    20

                	
                   

                	
                  .

                

        

        

        
          	
                  My
                    Commission Expires:

                	
                   

                	 	
                   

                	
                   

                
	 	 	 	
                  Notary
                    Public, State of

                	
                   

                
	 	 	 	
                   

                	
                   

                
	 	 	 	
                  Notary's
                    Printed Name:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00127-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00127-of-00352.parquet"}]]