Document:

exv10w2

EXHIBIT 10.2

CHANGE OF CONTROL AGREEMENT

     This CHANGE OF CONTROL AGREEMENT (“Agreement”), effective as of April 22, 2010
(the “Effective Date”), by and between Tandy Brands Accessories, Inc., a Delaware
corporation (the “Company”), and N. Roderick McGeachy (the “Executive”), evidences
that;

     WHEREAS, the Executive is a senior executive of the Company and has made and/or is expected to
make or continue to make significant contributions to the strength of the Company;

     WHEREAS, the Company desires to assure itself of both present and future continuity of
management in the event of a Change of Control (as defined hereafter) and desires to establish
certain minimum compensation rights with respect to its key senior executives, including the
Executive, applicable in the event of a Change of Control;

     WHEREAS, the Company wishes to ensure that its senior executives are not practically disabled
from discharging their duties upon a Change of Control;

     WHEREAS, this Agreement is not intended to alter materially the compensation and benefits
which the Executive could reasonably expect to receive from the Company absent a Change of Control
and, accordingly, although effective and binding as of the date hereof, this Agreement shall become
operative only upon the occurrence of a Change of Control; and

     WHEREAS, the Executive is willing to render services to the Company on the terms and subject
to the conditions set forth in this Agreement;

     NOW, THEREFORE, the Company and the Executive agree as follows:

     1. Operation of Agreement:

	 	(a)	 	Sections 1 and 8 through 21 of this Agreement shall be
effective and binding as of the Effective Date, but, anything in this Agreement
to the contrary notwithstanding, Sections 2 through 7 and Sections 22
through 23 of this Agreement shall not be effective and binding unless and
until a Change of Control shall have occurred. For purposes of this Agreement,
a “Change of Control” will be deemed to have occurred if at any time
during the Term (as hereinafter defined) any of the following shall occur:

	 	(i)	 	any consolidation, merger or share exchange of the Company in
which the Company is not the continuing or surviving corporation or
pursuant to which shares of the Company’s common stock would be
converted into cash, securities or other property, other than a
consolidation, merger or share exchange of the Company in which the
holders of the Company’s common stock immediately prior to such
transaction have the same proportionate ownership of common stock of
the surviving corporation immediately after such transaction;
	 
	 	(ii)	 	any sale, lease, exchange or other transfer (excluding
transfer by way of pledge or hypothecation) in one transaction or a
series of related transactions, of all or substantially all of the
assets of the Company;

 

 

	 	(iii)	 	the stockholders of the Company approve any plan or proposal
for the liquidation or dissolution of the Company;
	 
	 	(iv)	 	the cessation of control (by virtue of their not constituting
a majority of directors) of the Board by the individuals (the
“Continuing Directors”) who (x) on the Effective Date were directors or
(y) become directors after the Effective Date and whose election or
nomination for election by the Company’s stockholders was approved by a
vote of at least two-thirds of the directors then in office who were
directors on the Effective Date or whose election or nomination for
election was previously so approved;
	 
	 	(v)	 	the acquisition of beneficial ownership (within the meaning of
Rule 13d-3 under the Securities Exchange Act of 1934 (the “1934 Act”))
of an aggregate of 20% of the voting power of the Company’s outstanding
voting securities by any person or group (as such term is used in
Rule 13d-5 under the 1934 Act) who beneficially owned less than 15% of
the voting power of the Company’s outstanding voting securities on the
Effective Date, or the acquisition of beneficial ownership of an
additional 5% of the voting power of the Company’s outstanding voting
securities by any person or group who beneficially owned at least 15%
of the voting power of the Company’s outstanding voting securities on
the Effective Date, provided, however, that
notwithstanding the foregoing, an acquisition shall not constitute a
Change of Control hereunder if the acquirer is (x) a trustee or other
fiduciary holding securities under an employee benefit plan of the
Company and acting in such capacity, (y) a subsidiary of the Company or
a corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of
voting securities of the Company, or (z) any other person whose
acquisition of shares of voting securities is approved in advance by a
majority of the Continuing Directors; or
	 
	 	(vi)	 	in a Title 11 bankruptcy proceeding, the appointment of a
trustee or the conversion of a case involving the Company to a case
under Chapter 7.

	 	(b)	 	Upon the occurrence of a Change of Control at any time during the
Term, Sections 2 through 7 and Sections 22 through 23 of this Agreement
shall become immediately effective and binding.
	 
	 	(c)	 	The period during which this Agreement shall be in effect (the
“Term”) shall commence as of the date hereof and shall expire as of the
later of (i) the close of business on June 30, 2011 or (ii) the expiration of
the Period of Employment (as hereinafter defined); provided, however, that (A)
subject to Section 9 hereof, if, prior to a Change of Control, the
Executive ceases for any reason to be an employee of the Company, thereupon the
Term shall be deemed to have expired and this Agreement shall immediately
terminate and be of no further effect (except and to the extent otherwise
specifically provided in Section 23 hereof or in a separate agreement
between the Company and the Executive) and (B) commencing on June 30, 2011 and
the last day of each of the Company’s fiscal years commencing thereafter, the
Term of this Agreement shall automatically be extended for an additional
one-year term unless, not later than ninety (90) calendar days prior to such
June 30, the Company or the Executive shall have

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	 	 	 	given notice that the Company or the Executive, as the case may be, does not
wish to have the Term of this Agreement extended.

     2. Employment; Period of Employment:

	 	(a)	 	Subject to the terms and conditions of this Agreement, upon the
occurrence of a Change of Control, the Company shall continue the Executive in
its employ and the Executive shall remain in the employ of the Company for the
period set forth in Section 2(b) hereof (the “Period of
Employment”), in the position and with substantially the same duties and
responsibilities that the Executive had immediately prior to the Change of
Control, or to which the Company and the Executive may hereafter mutually agree
in writing. Throughout the Period of Employment, the Executive shall devote
substantially all of the Executive’s time during normal business hours (subject
to vacations, sick leave and other absences in accordance with the policies of
the Company as in effect for senior executives immediately prior to the Change
of Control) to the business and affairs of the Company, but nothing in this
Agreement shall preclude the Executive from devoting reasonable periods of time
during normal business hours to (i) serving as a director, trustee or member of
or participant in any organization or business so long as such activity would
not constitute Competitive Activity (as hereinafter defined) if conducted by
the Executive after the Executive’s Termination Date (as hereinafter defined),
(ii) engaging in charitable and community activities, or (iii) managing the
Executive’s personal investments.
	 
	 	(b)	 	The Period of Employment shall commence on the date on which a Change
of Control occurs and, subject only to the provisions of Section 4
hereof, shall continue until the earlier of (i) the second anniversary of the
occurrence of the Change of Control or (ii) the Executive’s death.

     3. Compensation During Period of Employment:

	 	(a)	 	During the Period of Employment, the Executive shall receive annual
base salary at a rate not less than the Executive’s annual fixed or base
compensation or such higher rate as may be determined from time to time by the
Board of Directors of the Company (the “Board”) or the compensation
committee or similar committee thereof (the “Committee”) (which base
salary at such rate is herein referred to as “Base Pay”). The
Executive’s Base Pay shall be payable monthly in accordance with the Company’s
regular payroll practices.
	 
	 	(b)	 	During the Period of Employment, the Executive shall, if and on the
basis as the Executive participated therein immediately prior to the Change of
Control, be a full participant in any annual bonus, incentive, profit-sharing
performance, discretionary pay or similar policy, plan, program or arrangement
of the Company (“Incentive Pay”) which contemplates cash payments other
than Executive Benefits (as hereinafter defined). For these purposes, each
such policy, plan, program or arrangement shall be provided on the same basis
as prior to the Change of Control if the Incentive Pay to be awarded thereunder
is calculated in the same amounts and based on the same performance measures,
threshold specifications, and vesting conditions as in effect immediately prior
to the Change of Control. Except to the extent otherwise provided under an
applicable document governing such Incentive Pay, the Executive’s Incentive Pay

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	 	 	 	shall be paid annually as soon as reasonably practicable, but in no event
later than the date which is two and one-half (21/2) months following the last
day of the fiscal year during which such Incentive Pay is earned.
	 
	 	(c)	 	During the Period of Employment, the Executive shall, if and on the
same basis as the Executive participated therein immediately prior to the
Change of Control, be a full participant in, and shall be entitled to the
perquisites, benefits and service credit for benefits as provided under any and
all employee retirement income and welfare benefit policies, plans, programs or
arrangements in which senior executives of the Company participate generally,
including without limitation any stock option, stock purchase, stock
appreciation, savings, pension, supplemental executive retirement or other
retirement income or welfare benefit, deferred compensation, incentive
compensation, group and/or executive life, accident, health, dental,
medical/hospital or other insurance (whether funded by actual insurance or
self-insured by the Company), disability, salary continuation, and other
employee benefit policies, plans, programs or arrangements that may exist
immediately prior to the Change of Control or any equivalent successor
policies, plans, programs or arrangements that may be adopted thereafter by the
Company (collectively, “Executive Benefits”); provided, however, that,
except as set forth in Section 5(a)(iii) and (iv) hereof, the
Executive’s rights thereunder shall be governed by the terms thereof and shall
not be enlarged hereunder or otherwise affected hereby. Nothing in this
Agreement shall preclude improvement or enhancement of any such Executive
Benefits by the Company, provided that no such improvement shall in any way
diminish any other obligation of the Company under this Agreement, unless and
to the extent otherwise specifically provided under this Agreement.
	 
	 	(d)	 	During the Period of Employment, Executive shall be entitled to
reimbursements of reasonable business expenses in accordance with the Company’s
established policies; provided, however, that the reimbursement of expenses
incurred during any calendar year within the Period of Employment may not
affect the expenses eligible for reimbursement in any other calendar year
during the Period of Employment. Reimbursements of eligible expenses will be
made within sixty (60) days of the date on which the Executive submits proper
substantiation for the expense, but in no event later than the last day of the
calendar year following the calendar year in which the expense was incurred.
The Executive’s right to reimbursement of reasonable business expenses
hereunder is not subject to liquidation or exchange for another benefit.

     4. Termination Following a Change of Control:

	 	(a)	 	In the event of the occurrence of a Change of Control, the Company
may, during the Period of Employment, terminate this Agreement only upon the
occurrence of one or more of the following events:

	 	(i)	 	If the Executive is unable to perform the essential functions
of the Executive’s job (with or without reasonable accommodation)
because the Executive has become permanently disabled within the
meaning of, and actually begins to receive disability benefits pursuant
to, a long-term disability plan maintained by or on behalf of the
Company for senior

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	 	 	 	executives generally or, if applicable, employees of the Company
immediately prior to the Change of Control; or
	 
	 	(ii)	 	For “Cause,” which for purposes of this Agreement shall mean
that, prior to any termination pursuant to Section 4(b) hereof,
the Executive shall have committed:

	 	(A)	 	Executive’s breach of this Agreement [or other
agreement with the Company] (which remains uncured at the end of
a 10-day period after receipt of written notice of the breach);
	 
	 	(B)	 	Executive’s willful misconduct, malfeasance, negligence
in the performance or intentional nonperformance (in either case
continuing for 10 days after receipt of written notice of need
to cure) of any of Executive’s material duties and
responsibilities hereunder;
	 
	 	(C)	 	Executive’s dishonesty or fraud with respect to the
business, reputation or affairs of the Company; (4) fraud,
misappropriation or embezzlement of funds or other property of
the Company,
	 
	 	(D)	 	Executive’s conviction of a felony crime which, in the
opinion of the Board of Directors of the company, brings
Executive or the Company into disrepute or causes harm to the
Company’s business, customer relations, financial condition or
prospects, or
	 
	 	(E)	 	Violation of any statutory or common law duty of
loyalty to the Company.

	 	(iii)	 	For any reason other than a termination in accordance with
Section 4(a)(i) or (ii) hereof.

	 	(b)	 	In the event of the occurrence of a Change of Control, the Executive
may, during the Period of Employment, terminate this Agreement upon the
termination by the Executive of the Executive’s employment with the Company
during the Period of Employment upon the occurrence of any of the following
events, without the consent of the Executive:

	 	(i)	 	A material diminution in the nature or scope of the
authorities, powers, functions, responsibilities or duties attached to
the position(s) which the Executive held with the Company immediately
prior to the Change of Control;
	 
	 	(ii)	 	A material diminution in the Executive’s Base Pay received
from the Company;
	 
	 	(iii)	 	The Company requires that the principal place of work of the
Executive be changed to any location which is in excess of fifty (50)
miles from the location thereof immediately prior to the Change of
Control; or

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	 	(iv)	 	Any material breach of this Agreement by the Company (or any
successor thereto), which shall include, but not be limited to a
failure under Section 11 hereof or a breach by the Company of
Section 12;

	 	 	 	provided, the Executive delivers written notice to the Company within thirty
(30) calendar days of the initial existence of the condition and the Company
fails to remedy the condition within thirty (30) calendar days following
receipt by the Company of such written notice.
	 
	 	(c)	 	A termination by the Company pursuant to Section 4(a) hereof
or by the Executive pursuant to Section 4(b) hereof shall not affect
any rights which the Executive may have pursuant to any agreement, policy,
plan, program or arrangement of the Company providing Executive Benefits, which
rights shall be governed by the terms thereof, unless and to the extent
otherwise specifically provided under this Agreement. If this Agreement or the
employment of the Executive is terminated under circumstances in which the
Executive is not entitled to any payments under Sections 3 or 5 hereof,
the Executive shall have no further obligation or liability to the Company
hereunder with respect to the Executive’s prior or any future employment by the
Company.

     5. Severance Compensation:

	 	(a)	 	If, following the occurrence of a Change of Control, the Company shall
terminate the Executive’s employment during the Period of Employment pursuant
to an event described in Section 4(a)(iii) hereof, or if the Executive
shall terminate the Executive’s employment pursuant to an event described in
Section 4(b) hereof, the Company shall, except to the extent payment is
required to be delayed in accordance with Section 5(c) hereof, pay to
the Executive the amounts specified in this Section 5(a) within the specified
period following the date (the “Termination Date”) that the Executive’s
employment is terminated (which shall, subject to Section 5(f) hereof,
be the date of termination or, if applicable, the expiration of the period for
remedy provided under Section 4(b) hereof):

	 	(i)	 	On the payroll date concurrent with or next following such
Termination Date, the sum of (A) the Executive’s Base Salary through
the Termination Date to the extent not theretofore paid and (B) any
accrued vacation pay to the extent not theretofore paid, and, within
the period specified in Section 3(b) hereof, a pro rata amount
of the Incentive Pay equal to the product of such Incentive Pay (based
upon actual performance through the Termination Date) and a fraction,
the numerator of which is the number of days in the current fiscal year
through the Termination Date and the denominator of which is 365.
	 
	 	(ii)	 	Subject to Section 5(b) below, on the sixtieth
(60th) day following the Termination Date, a lump sum
payment (the “Severance Payment”) in an amount equal 200% of
the sum of (A) the aggregate Base Pay (at the rate in effect for the
year in which the Termination Date occurs) plus (B) the Incentive Pay
(based upon the target amount of Incentive Pay payable to the Executive
for the year in which the Termination Date occurs); provided, however,
that if the Severance Payment otherwise payable hereunder is a
“parachute payment” (as determined under Section 280G

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	 	 	 	of the Code or any successor provision thereto), then in no event
will the Severance Payment, when added to the “present value” (as
determined under Section 280G of the Code or any successor provision
thereto) of any other “parachute payments” (as that term is defined
in Section 280G of the Code or any successor provision thereto) from
the Company, exceed an amount equal to 299% (the “299%
Amount”) of the Executive’s “base amount” (as that term is
defined in Section 280G of the Code or any successor provision
thereto), and if the amount otherwise payable hereunder would exceed
the 299% Amount, the Severance Payment shall be reduced to the extent
necessary so that the aggregate present value of all “parachute
payments” does not exceed the 299% Amount.
	 
	 	(iii)	 	Subject to Section 5(b) below, except to the extent
that the payments or benefits provided pursuant to this Section
5(a)(iii) would result in a reduction of the amount or benefits
provided in the preceding paragraphs of this Section 5(a),
because they, when added to such amounts or benefits, and the present
value of any other parachute payments from the Company, would exceed
the 299% Amount, the following shall occur immediately on the date the
Release (described in Section 5(b) below) becomes irrevocable
and final under applicable law), in the following order:

	 	(A)	 	all Company stock options held by the Executive on his
Termination Date shall become immediately exercisable,
regardless of whether or not the vesting/performance conditions
set forth in the relevant agreements shall have been satisfied
in full;
	 
	 	(B)	 	all restrictions on any restricted securities granted
by the Company to the Executive shall be removed and the
securities shall be fully vested and freely transferable,
regardless of whether the vesting/performance conditions set
forth in the relevant agreements shall have been satisfied in
full;
	 
	 	(C)	 	the Executive shall have an immediate right to receive
all performance shares, and such performance shares shall be
fully vested and freely transferable without restrictions,
regardless of whether or not specific performance goals set
forth in the relevant agreements shall have been attained; and
	 
	 	(D)	 	all performance units granted to the Executive shall be
immediately vested and shall, notwithstanding any provision of
an award agreement governing such performance units, be settled
on the later of the sixtieth (60th) day after the
Executive’s Termination Date and the date specified in the
applicable award agreements, regardless of whether or not the
relevant performance cycle has been completed, and regardless of
whether any other terms and conditions of the relevant
agreements shall have been satisfied in full.

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	 	 	 	The acceleration of awards, as provided under this Section
5(a)(iii), shall occur in the order in which such awards were
granted, commencing with the award that has the earliest grant date.
	 
	 	(iv)	 	Except to the extent that the payments or benefits provided
pursuant to this Section 5(a)(iv) would result in a reduction
of the amount or benefits provided in the preceding paragraphs of this
Section 5(a), because they, when added to such amounts or
benefits, and the present value of any other parachute payments from
the Company, would exceed the 299% Amount, the Company shall, during
the two-year period following the Termination Date (the “Benefits
Period”), provide the Executive and his eligible dependents with
medical, dental and vision coverage (the “Health Care Benefits”) and
life insurance benefits no less favorable to those which the Executive
and his eligible dependents were receiving immediately prior to the
Termination Date or, if more favorable to such persons, as in effect
generally at any time thereafter with respect to other peer executives
of the Company; provided, however, that if the Executive becomes
re-employed with another employer and is eligible to receive Health
Care Benefits under another employer-provided plan, the Health Care
Benefits provided hereunder shall be terminated. The receipt of the
Health Care Benefits shall be conditioned upon the Executive continuing
to pay the monthly premium as in effect at the Company from time to
time for coverage provided to former employees under Section 4980B of
the Code in respect of the applicable level of coverage (i.e., single,
single plus one, or family) (the “Applicable COBRA Premium”). During
the portion of the Benefits Period in which the Executive and his
eligible dependents continue to receive coverage under the Company’s
Health Care Benefits plans, the Company shall pay to the Executive a
monthly amount equal to the excess of (x) the Applicable COBRA Premium
over (y) the monthly employee contribution rate that is paid by Company
employees generally for the same or similar coverage, as in effect from
time to time (and which amount shall in no event be greater
than the employee contribution rate for the applicable level of
coverage as in effect immediately prior to the Termination Date), which
payment shall be paid in advance on the first payroll day of each
month, commencing with the month immediately following the Executive’s
Termination Date. If Executive continues to receive Health Care
Benefits pursuant to this Section 5(a)(iv) when, in the absence
of the extension of coverage provided in this Section 5(a)(iv)
Executive would not be entitled to continuation coverage under Section
4980B of the Code, (A) Executive shall receive payment or reimbursement
for all medical, dental and vision expenses no later than the end of
the calendar year immediately following the calendar year in which the
applicable expenses were incurred (B) the amount of medical, dental and
vision expenses eligible for payment or reimbursement under the Health
Care Benefits plans during the Executive’s taxable year will not affect
the expenses eligible for payment or reimbursement in any other taxable
year, except as otherwise permitted under Section 409A of the Code for
medical reimbursement arrangements, and (C) the Executive’s right to
payment or reimbursement of medical, dental or vision expenses under
the Health Care Benefits plans is not subject to liquidation or
exchange. The Benefit

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	 	 	 	Period shall run concurrently with the continuation coverage period
provided under Section 4980B of the Code or other applicable law.
	 
	 	(v)	 	Except to the extent that the payments or benefits provided
pursuant to this Section 5(a)(v) would result in a reduction of
the amount or benefits provided in the preceding paragraphs of this
Section 5(a), because they, when added to such amounts or
benefits, and the present value of any other parachute payments from
the Company, would exceed the 299% Amount, the Company shall pay or
reimburse the Executive for expenses for outplacement services, the
scope and provider of which shall be selected by the Executive in the
Executive’s sole discretion, provided that (A) such outplacement
benefits shall end not later than the last day of the second calendar
year that begins after the Executive’s Termination Date and (B) the
amount of the outplacement services to be paid or reimbursed by the
Company shall not, in the aggregate, exceed $15,000.
	 
	 	(vi)	 	The determination of whether any amount otherwise payable
under Section 5 is a “parachute payment” and shall cause the
299% Amount to be exceeded shall be made, if requested by the Executive
or the Company, by a public accounting firm retained by the Company
(the “Accounting Firm”). The costs of obtaining such
determination shall be borne by the Company.

	 	(b)	 	The obligation of the Company to make any payment or provide any
benefit pursuant to Section 5(a)(ii) or (iii) is conditioned upon (i)
execution and delivery by Executive to the Company of a release agreement in
favor of the Company and its respective officers, directors, employees, agents
and equity holders in respect of Executive’s employment with the Company and
the termination thereof (the “Release”), and (ii) such Release, once executed
by Executive and delivered to the Company, becoming irrevocable and final under
applicable law within sixty (60) days of Executive’s Termination Date.
Promptly following Executive’s termination, the Company shall deliver to him an
execution-ready Release and, in the event that Executive fails to deliver the
executed Release to Company or the Executive delivers an executed Release but
such Release does not become irrevocable and final under applicable law on or
before the date on which such payments or benefits must be made under the
foregoing provisions of Section 5(a)(ii) and (iii), then Executive
shall forfeit the payments and benefits provided under such paragraphs.
Additionally, Executive shall forfeit entitlement to all amounts and benefits
under this Section 5 in the event the Company, acting in good faith,
determines that Executive has breached any of the provisions of Section
7 of this Agreement or any of the provisions of the Release.
	 
	 	(c)	 	Notwithstanding any provision herein to the contrary, if and to the
extent that any portion of the amounts payable or benefits provided to the
Executive under this Section 5 constitute payments pursuant to a
“nonqualified deferred compensation plan” (as such term is defined under
Section 409A(d)(1) of the Code) and, at the time of his termination of
employment, the Executive is a “specified employee” (as such term is defined
under Section 409A(a)(2)(B)(i) of the Code), then the Company shall delay
making such payments until the first day of the seventh calendar month
following the Executive’s Termination Date or, if earlier, the date of the
Executive’s death.

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	 	(d)	 	There shall be no right of set-off or counterclaim in respect of any
claim, debt or obligation against any payment to or benefit (including
Executive Benefits) of the Executive provided for in this Agreement.
	 
	 	(e)	 	Without limiting the rights of the Executive at law or in equity, if
the Company fails to make any payment required to be made hereunder on a timely
basis, the Company shall pay interest on the amount thereof at an annualized
rate of interest equal to the applicable Federal rate then in effect under
Section 7872(f)(2)(A) of the Code (or any successor provision thereof) or, if
lesser, the highest rate allowed by applicable usury laws.
	 
	 	(f)	 	Except as otherwise specifically provided under
Section 22 hereof, to the extent applicable, the rights of the
Executive to continue to participate in any Executive Benefit following the
Executive’s Termination Date shall be determined in accordance with the terms
of the applicable plan documents and shall not be modified by the terms of this
Agreement.
	 
	 	(g)	 	For purposes of determining the timing of any payment to which the
Executive is entitled under this Section 5 on or following his
Termination Date, such event shall not have occurred, and such payment shall
not be made, unless the Executive has experienced a “separation from service”
as defined under Treasury Regulations § 1.409A-1(h), without regard to the
alternative definitions provided thereunder.

     6. No Mitigation Obligation: The Company hereby acknowledges that it will
be difficult, and may be impossible, for the Executive to find reasonably comparable employment
following the Termination Date and that the restrictive covenants contained in Section 7
hereof will further limit the employment opportunities for the Executive. Accordingly, the parties
hereto expressly agree that the payment of the severance compensation by the Company to the
Executive in accordance with the terms of this Agreement will be liquidated damages, and that the
Executive shall not be required to mitigate the amount of any payment provided for in this
Agreement by seeking other employment or otherwise, nor shall any profits, income, earnings or
other benefits from any source whatsoever create any mitigation, offset, reduction or any other
obligation on the part of the Executive hereunder or otherwise.

     7. Restrictive Covenants:

     (a) Confidential Information. Executive acknowledges and the Company
agrees that it has and shall continue to provide to Executive, both prior to and during the
Employment Period, information regarding Company’s methods of business, and was also
provided with, and had access to, other Confidential Information. “Confidential
Information” includes, but is not limited to, customer lists, customer information,
business plans, marketing plans, cost information, sourcing information, compensation
figures, product pricing information, product design specification, future business plans,
any and all documents, memoranda, records and files, correspondence, notes, specifications,
and plans, policies and procedures, computer programs, software, and other proprietary data
of whatever type or nature. Executive understands that this Confidential Information is in
the nature of a trade secret, and is the sole property of Company. Executive promises and
agrees that he will not directly or indirectly, use for his benefit, use to the injury of
Company, or divulge to persons other than authorized representatives of Company, any
Confidential Information of the Company.

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     (b) Competitive Activity. In further consideration of the
Confidential Information that the Company shall provide to Executive hereunder and of the
Company entering into this Agreement and providing Executive with a defined employment term,
during a period ending one (1) year following the Termination Date (the “Non-Compete
Period”), if the Executive shall have received or shall be receiving benefits under
Section 5(a) hereof, the Executive shall not, without the prior written consent by
the Company, directly or indirectly engage in the business of developing products
competitive with the business of the Company within the United States of America and any
other geographical area served by the Company (the “Applicable Area”) during the twelve (12)
month period immediately preceding termination of the Executive’s employment with the
Company nor will the Executive engage, within such geographical area(s), in the design,
development, distribution, manufacture, assembly or sale of a product or service in
competition with any product or service marketed or planned by the Company immediately prior
to the Termination Date, the plans, designs or specifications of which have been revealed to
the Executive. The Executive acknowledges that these limited prohibitions are reasonable as
to time, geographical area and scope of activities to be restrained and that the limited
prohibitions do not impose a greater restraint than is necessary to protect the Company’s
goodwill, proprietary information and other business interests. “Competitive Activity”
shall not include (i) the mere ownership of a de minimis amount of securities in any such
enterprise and exercise of rights appurtenant thereto or (ii) participation in management of
any such enterprise or business operation thereof other than in connection with the
competitive operation of such enterprise.

     (c) Non-Solicitation. Executive understands and agrees that he will
not solicit or hire, directly or indirectly, any individual employed by Company, or any
individual who worked for Employer during the previous twelve (12) months, for a period of
twenty-four (24) months following Executive’s Termination Date.

     8. Legal Fees and Expenses: It is the intent of the Company that the
Executive not be required to incur the expenses associated with the enforcement of the Executive’s
rights under this Agreement by litigation or other legal action because the cost and expense
thereof would substantially detract from the benefits intended to be extended to the Executive
hereunder. Accordingly, if it should appear to the Executive that the Company has failed to comply
with any of its obligations under this Agreement or in the event that the Company or any other
person takes any action to declare this Agreement void or unenforceable, or institutes any
litigation designed to deny, or to recover from, the Executive the benefits intended to be provided
to the Executive hereunder, the Company irrevocably authorizes the Executive from time to time to
retain counsel of the Executive’s choice, at the expense of the Company as hereafter provided, to
represent the Executive in connection with the litigation or defense of any litigation or other
legal action, whether by or against the Company or any director, officer, stockholder or other
person affiliated with the Company, in any jurisdiction. Notwithstanding any existing or prior
attorney-client relationship between the Company and such counsel, the Company irrevocably consents
to the Executive’s entering into an attorney-client relationship with such counsel (other than
Winstead PC), and in that connection the Company and the Executive agree that a confidential
relationship shall exist between the Executive and such counsel. The Company shall pay or cause to
be paid and shall be solely responsible for any and all attorneys’ and related fees and expenses
incurred by the Executive as a result of the Company’s failure to perform this Agreement or any
provision thereof or as a result of the Company or any person contesting the validity or
enforceability of this Agreement or any provision thereof as aforesaid. Expenses paid or
reimbursed pursuant to this Section 8 shall be made in the manner prescribed, and subject
to the conditions of, Section 3(d) hereof.

     9. Employment Rights: Nothing expressed or implied in this Agreement shall
create any right or duty on the part of the Company or the Executive to have the Executive remain
in the employment of the Company prior to any Change of Control; provided, however, that any
termination of

-11-

 

employment of the Executive or removal of the Executive as an officer of the Company following
the commencement of any discussion with a third person that ultimately results in a Change of
Control shall be deemed to be a termination or removal of the Executive after a Change of Control
for purposes of this Agreement.

     10. Withholding of Taxes: The Company may withhold from any amounts payable
under this Agreement all federal, state, city or other taxes as shall be required pursuant to any
law or government regulation or ruling.

     11. Successors and Binding Agreement:

     (a) The Company shall require any successor (whether direct or indirect, by
purchase, merger, consolidation, reorganization or otherwise) to all or substantially all of
the business and/or assets of the Company, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent the Company would be required to perform
if no such succession had taken place. This Agreement shall be binding upon and inure to
the benefit of the Company and any successor to the Company, including without limitation
any persons acquiring directly or indirectly all or substantially all of the business and/or
assets of the Company whether by purchase, merger, consolidation, reorganization or
otherwise (and such successor shall thereafter be deemed the “Company” for the purposes of
this Agreement). This Agreement shall not otherwise be assignable, transferable or
delegable by the Company.

     (b) This Agreement shall inure to the benefit of and be enforceable by the
Executive’s personal or legal representatives, executors, administrators, successors, heirs,
distributees and/or legatees.

     (c) This Agreement is personal in nature and neither of the parties hereto
shall, without the consent of the other, assign, transfer or delegate this Agreement or any
rights or obligations hereunder except as expressly provided in Section 11(a)
hereof. Without limiting the generality of the foregoing, the Executive’s right to receive
payments hereunder shall not be assignable, transferable or delegable, whether by pledge,
creation of a security interest or otherwise, other than by a transfer by the Executive’s
will or by the laws of descent and distribution and, in the event of any attempted
assignment or transfer contrary to this Section 11(c), the Company shall have no
liability to pay any amount so attempted to be assigned, transferred or delegated.

     (d) The Company and the Executive recognize that each Party will have no
adequate remedy at law for breach by the other of any of the agreements contained herein
and, in the event of any such breach, the Company and the Executive hereby agree and consent
that the other shall be entitled to a decree of specific performance, mandamus or other
appropriate remedy to enforce performance of this Agreement.

     12. Illegal Acts. The Company shall not require or request that the
Executive perform, directly or indirectly, any act of fraud, embezzlement, theft, or other illegal
act in connection with the Executive’s duties or in the course of the Executive’s employment with
the Company.

     13. Applicable Law: THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS (EXCLUSIVE OF CONFLICTS OF LAW PRINCIPLES) AND THE
LAWS OF THE UNITED STATES OF AMERICA AND WILL, TO THE MAXIMUM EXTENT PRACTICABLE, BE DEEMED TO CALL
FOR PERFORMANCE IN DALLAS COUNTY, TEXAS. COURTS

-12-

 

WITHIN THE STATE OF TEXAS WILL HAVE JURISDICTION OVER ANY AND ALL DISPUTES BETWEEN THE PARTIES
HERETO, WHETHER IN LAW OR EQUITY, ARISING OUT OF OR RELATING TO THIS AGREEMENT. THE PARTIES
CONSENT TO AND AGREE TO SUBMIT TO THE JURISDICTION OF SUCH COURTS. VENUE IN ANY SUCH DISPUTE,
WHETHER IN FEDERAL OR STATE COURT, WILL BE LAID IN DALLAS COUNTY, TEXAS. EACH OF THE PARTIES HEREBY
WAIVES, AND AGREES NOT TO ASSERT IN ANY SUCH DISPUTE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY CLAIM THAT (i) SUCH PARTY IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURTS,
(ii) SUCH PARTY AND SUCH PARTY’S PROPERTY IS IMMUNE FROM ANY LEGAL PROCESS ISSUED BY SUCH COURTS OR
(iii) ANY LITIGATION COMMENCED IN SUCH COURTS IS BROUGHT IN AN INCONVENIENT FORUM.

     14. Notices: All notices, demands, requests or other communications that
may be or are required to be given, served or sent by either party to the other party pursuant to
this Agreement will be in writing and will be mailed by first-class, registered or certified mail,
return receipt requested, postage prepaid, or transmitted by hand delivery, telegram or facsimile
transmission addressed as follows:

	 	 	 	 	 

	If to the Company:

	 	Tandy Brands Accessories, Inc.	 	 
	 

	 	3631 W. Davis Street, Suite # A	 	 
	 

	 	Dallas, Texas 75225	 	 
	 

	 	Facsimile Transmission No.: (214) 330-6640	 	 
	 

	 	Attn: Chief Financial Officer	 	 
	 
	 	 	 	 
	with a copy (which will
not constitute notice) to: Winstead PC	 	 
	 

	 	5400 Renaissance Tower	 	 
	 

	 	1201 Elm Street	 	 
	 

	 	Dallas, Texas 75270	 	 
	 

	 	Facsimile Transmission No.: (214) 745-5390	 	 
	 

	 	Attn: Christopher D. Williams	 	 
	 
	 	 	 	 
	If to the Executive:

	 	N. Roderick McGeachy, III.	 	 
	 
	 

	 	 

	 	 
	 

	 	 

	 	 
	 

	 	 

	 	 
	 

	 	Facsimile Transmission No.: 
	 	 
	 
	 	 	 	 
	with a copy (which will not constitute notice) to:
	 	 	 	 
	 

	 	 

	 	 
	 

	 	 

	 	 
	 

	 	 

	 	 
	 

	 	 

Facsimile Transmission No.: 

	 	 
	 

	 	Attn: 
	 	 

Either party may designate by written notice a new address to which any notice, demand, request or
communication may thereafter be given, served or sent. Each notice, demand, request or
communication that is mailed, delivered or transmitted in the manner described above will be deemed
sufficiently given, served, sent and received for all purposes at such time as it is delivered to
the addressee with the return receipt, the delivery receipt, the affidavit of messenger or (with
respect to a facsimile transmission) the

-13-

 

answer back being deemed conclusive evidence of such delivery or at such time as delivery is
refused by the addressee upon presentation.

     15. Gender: Words of any gender used in this Agreement will be held and
construed to include any other gender, and words in the singular number will be held to include the
plural, unless the context otherwise requires.

     16. Amendment: This Agreement may not be amended or supplemented except
pursuant to a written instrument signed by the party against whom such amendment or supplement is
to be enforced. Nothing contained in this Agreement will be deemed to create any agency, joint
venture, partnership or similar relationship between the parties to this Agreement. Nothing
contained in this Agreement will be deemed to authorize either party to this Agreement to bind or
obligate the other party.

     17. Counterparts: This Agreement may be executed in multiple counterparts,
each of which will be deemed to be an original and all of which will be deemed to be a single
agreement. This Agreement will be considered fully executed when all parties have executed an
identical counterpart, notwithstanding that all signatures may not appear on the same counterpart.

     18. Severability: If any of the provisions of this Agreement are determined
to be invalid or unenforceable, such invalidity or unenforceability will not invalidate or render
unenforceable the remainder of this Agreement, but rather the entire Agreement will be construed as
if not containing the particular invalid or unenforceable provision or provisions, and the rights
and obligations of the parties will be construed and enforced accordingly. The parties acknowledge
that if any provision of this Agreement is determined to be invalid or unenforceable, it is their
desire and intention that such provision be reformed and construed in such manner that it will, to
the maximum extent practicable, be deemed to be valid and enforceable.

     19. Third Parties: Except as expressly set forth or referred to in this
Agreement, nothing in this Agreement is intended or will be construed to confer upon or give to any
party other than the parties to this Agreement and their successors and permitted assigns, if any,
any rights or remedies under or by reason of this Agreement.

     20. Waiver: No failure or delay in exercising any right hereunder will
operate as a waiver thereof, nor will any single or partial exercise thereof preclude any other or
further exercise or the exercise of any other right.

     21. Ambiguity: To the extent an ambiguity exists under this Agreement, the
parties shall interpret the Agreement in a manner necessary to comply with Section 409A of the
Code.

     22. Concurrent Agreements: This Agreement is voluntarily entered into and,
upon the occurrence of a Change of Control, will supersede and take the place of any change of
control, severance or employment agreements between the parties hereto, unless and to the extent
otherwise specifically provided therein to the contrary. Accordingly, the parties hereto expressly
agree and hereby declare that any and all such other change of control, severance or employment
agreements between the parties are terminated and of no force or effect as of the date of the
Change of Control.

     23. Survival: Sections 6 through 23 shall survive and continue in full
force in accordance with their terms notwithstanding the termination of Executive’s employment with
the Company.

     IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered
as of the date first above written.

-14-

 

	 	 	 	 	 
	 	

COMPANY:

TANDY BRANDS ACCESSORIES, INC.

 	 
	 	By:  	/s/ W. Grady Rosier
 	 
	 	 	Name:  	W. Grady Rosier 	 
	 	 	Title:  	Lead Independent Director 	 
	 
	 
	 	EXECUTIVE:

 	 
	 	/s/ N. Roderick McGeachy, III
 	 
	 	N. Roderick McGeachy, III 	 
	 	 	 
	 

-15-exv10w3

EXHIBIT 4.6 and 10.3

AMENDMENT NO. 3 TO CREDIT AGREEMENT

This Amendment No. 3 to Credit Agreement (“Amendment”) is dated May 10, 2010 (“Effective Date”)
between Tandy Brands Accessories, Inc., a Delaware corporation (“Borrower”) and Comerica Bank, a
Texas banking association (“Bank”).

Borrower and Bank entered into a Credit Agreement dated as of February 12, 2008, as amended
(“Credit Agreement”) providing terms and conditions governing certain loans and other credit
accommodations extended by Bank to Borrower (“Indebtedness”). Borrower and Bank have agreed to
amend the terms of the Credit Agreement as provided in this Amendment.

Accordingly, Borrower and Bank agree as follows:

1. Capitalized Terms. In this Amendment, capitalized terms that are used without separate
definition shall have the meanings given to them in the Credit Agreement.

2. Amendments. The Credit Agreement is amended as follows:

(a) The following term, which is defined in the Defined Terms Addendum attached to the
Credit Agreement, is given the following amended definition:

     “Revolving Credit Maturity Date” shall mean October 31, 2012 or such earlier
date on which the Bank’s commitment to fund Loans and to issue Letters of Credit
hereunder is terminated pursuant to this Agreement; provided, however, if any such
date is not a Business Day, then the Revolving Credit Maturity Date shall be the
next succeeding Business Day.

   (b) Section 5.17 of the Credit Agreement is amended to read in its entirety as follows:

     “5.17 Acquire Fixed Assets. Acquire or expend for, or commit to
acquire or expend for, fixed assets by lease (including any Capitalized Lease
Obligations), purchase or otherwise, in an aggregate amount in excess of (i)
$5,500,000 in the Fiscal Year ending June 30, 2010, but excluding any fixed assets
acquired pursuant to the terms of the Asset Purchase Agreement dated as of April 23,
2009 between Borrower and Chambers Belt Company, as amended by that certain Amended
and Restated Asset Purchase Agreement dated as of July 9, 2009, and (ii) $2,000,000
in any Fiscal Year thereafter.”

(c) Section 1.1 of the Financial Covenants Addendum attached to the Credit Agreement is
amended to read in its entirety as follows:

     “1.1 Tangible Net Worth. Maintain a Tangible Net Worth as of the end
of each of Borrower’s fiscal quarters, to be tested as of the end of each such
fiscal quarter, of not less than the amount set forth below for such quarter:

	 	(a)	 	as of June 30, 2010, $35,000,000;

 

 

	 
	 	(b)	 	as of September 30, 2010,
$33,000,000;
	 
	 	(c)	 	as of December 31, 2010,
$36,500,000;
	 
	 	(d)	 	as of March 31, 2011,
$35,000,000;
	 
	 	(e)	 	as of June 30, 2011, $35,000,000;
	 
	 	(f)	 	as of September 30, 2011,
$33,000,000;
	 
	 	(g)	 	as of December 31, 2011,
$36,500,000;
	 
	 	(h)	 	as of March 31, 2012,
$35,000,000;
	 
	 	(i)	 	as of June 30, 2012, $35,000,000;
and
	 
	 	(j)	 	as of September 30, 2012 and each
quarter thereafter, $33,000,000.

3. Representations. Borrower represents and agrees that:

(a) Except as expressly modified in this Amendment, (i) the representations and warranties
set forth in the Credit Agreement and in each related document, agreement, and instrument
remain true and correct in all respects, except to the extent that they expressly speak as
of a specific prior date, and (ii) the covenants set forth in the Credit Agreement continue
to be satisfied in all respects, and are legal, valid and binding obligations with the same
force and effect as if entirely restated in this Amendment.

(b) When executed, this Amendment will be a duly authorized, legal, valid, and binding
obligation of Borrower enforceable in accordance with its terms.

(c) There is no default continuing under the Credit Agreement, or any related document,
agreement, or instrument, and no event has occurred or condition exists that is or, with the
giving of notice or lapse of time or both, would be such a default.

4. Conditions Precedent. The effectiveness of this Amendment is subject to Bank’s receipt
of all of the following:

(a) this Amendment and such other agreements and instruments reasonably requested by Bank
pursuant hereto (including such documents as are necessary to create and perfect Bank’s
interest in the Collateral), each duly executed by Borrower; and

(b) such other documents and completion of such other matters as Bank may reasonably deem
necessary or appropriate, including those items set forth on the Documentation Checklist
attached hereto as Exhibit “A”.

5. No Other Changes. Except as specifically provided in this Amendment, this Amendment
does not vary the terms and provisions of any note, mortgage, security agreement, or other
document, instrument, or agreement evidencing, securing or relating to the Indebtedness or the
Credit Agreement (“Loan Documents”). This Amendment shall not impair the rights, remedies, and
security given in and by the Loan Documents. The terms of this Amendment shall control any
conflict between its terms and those of the Credit Agreement.

 - 2 - 

 

6. Ratification. Except for the modifications under this Amendment, the parties ratify and
confirm the Credit Agreement and the Loan Documents and agree that they remain in full force and
effect.

7. Further Modification; No Reliance. This Amendment may be altered or modified only by
written instrument duly executed by Borrower and Bank. In executing this Amendment, Borrower is
not relying on any promise or commitment of Bank that is not in writing signed by Bank. This
Amendment shall not be more strictly construed against one of the parties as compared to the other.

8. Confirmation of Lien Upon Collateral. Borrower acknowledges and agrees that
Indebtedness and the individual advances under the Indebtedness are secured by the Collateral (as
defined in the Credit Agreement) and that the Loan Documents constitute valid, legal, and binding
agreements and obligations of Borrower. The Collateral is and shall remain subject to and
encumbered by the lien, charge, and encumbrance of any applicable Loan Document, and nothing herein
contained shall affect or be construed to affect the lien or encumbrance created by any applicable
Loan Document respecting the Collateral, or its priority over other liens or encumbrances.

9. Successors and Assigns. This Amendment shall inure to the benefit of and be binding
upon the parties and their respective successors and assigns.

10. Governing Law. The parties agree that the terms and provisions of this Amendment shall
be governed by and construed in accordance with the internal laws of the State of Michigan, without
regard to principles of conflicts of law.

11. No Defenses. Borrower acknowledges, confirms, and warrants to Bank that as of the date
hereof Borrower has absolutely no defenses, claims, rights of set-off, or counterclaims against
Bank under, arising out of, or in connection with, this Amendment, the Credit Agreement, the Loan
Documents and/or the individual advances under the Indebtedness, or against any of the indebtedness
evidenced or secured thereby.

12. Expenses. Borrower upon request shall promptly pay all out-of-pocket fees, costs,
charges, expenses, and disbursements of Bank, including, without limitation, reasonable attorneys’
fees and legal expenses, incurred in connection with the preparation, execution, and delivery of
this Amendment, and the other documents contemplated by this Amendment.

13. Counterparts. This Amendment may be executed in one or more counterparts, and by
separate parties on separate counterparts, all of which shall constitute one and the same
agreement.

[Remainder of Page Intentionally Blank]

 - 3 - 

 

     This Amendment No. 3 to Credit Agreement is executed and delivered as of the Effective Date.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Comerica Bank	 	 	 	TANDY BRANDS ACCESSORIES, INC.	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:	 	/s/ Steven Colwick	 	 	 	By:	 	/s/ Craig Mackey	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Steven Colwick
	 	 	 	 	 	Name:
	 	Craig Mackey	 	 
	 

	 	Title:
	 	Vice President — Texas Division
	 	
	 	 	 	Title:
	 	Chief Financial Officer
	 	

Acknowledgement and Consent of Guarantors

     Each of the undersigned has guaranteed the payment and performance of the Indebtedness by
Borrower pursuant to a Guaranty dated as of February 12, 2008 (“Guaranty”). Each of the
undersigned acknowledges and consents to the execution, delivery and performance of the foregoing
Amendment No. 3 to Credit Agreement and the Amendment No. 1 to Master Revolving Note of even date
between Borrower and Bank amending the $27,500,000 Master Revolving Note dated as of October 6,
2009 from Borrower to Bank, and agrees that its guaranty remains in full force and effect. Each of
the undersigned further represents that it is in compliance with all of the terms and conditions of
its Guaranty.

	 	 	 	 	 
	 	TBAC INVESTMENT TRUST

TANDY BRANDS ACCESSORIES HANDBAGS, INC.

TBAC — TOREL, INC.

 	 
	 	By:  	/s/ Craig Mackey
 	 
	 	 	Craig Mackey, as Vice President of each of the above 	 
	 	 	 	 

 - 4 - 

 

	 	 	 	 	 

Exhibit “A”

DOCUMENTATION CHECKLIST

	 	 	 

	Borrower:

	 	Tandy Brands Accessories, Inc.
	 
	 	 
	Lender:

	 	Comerica Bank
	 
	 	 
	Guarantor:

	 	TBAC Investment Trust (“TBAC Trust”) 

Tandy Brands Accessories Handbags, Inc. (“TBA Handbags”) 

TBAC—Torel, Inc. (“Torel”)
	 
	 	 
	Transaction:

	 	Third Amendment to $27,500,000 (originally $35,000,000)
Secured Formula Based Revolving Credit Facility
	 
	 	 
	Effective Date:

	 	May 10, 2010

      

ITEM

ORGANIZATION DOCUMENTATION

	 
	1.	 	Tandy Brands Accessories, Inc.     

	 	(a)	 	Recertification of Authority
	 
	 	(b)	 	Certificate of Good Standing

	2.	 	TBAC Investment Trust (“TBAC Trust”)

	 	(a)	 	Recertification of Authority
	 
	 	(b)	 	Certificate of Good Standing

	3.	 	Tandy Brands Accessories Handbags, Inc. (“TBA Handbags”)

	 	(a)	 	Recertification of Authority
	 
	 	(b)	 	Certificate of Good Standing

	4.	 	TBAC—Torel, Inc. (“Torel”)

	 	(a)	 	Recertification of Authority
	 
	 	(b)	 	Certificate of Good Standing

DUE DILIGENCE DOCUMENTATION

	5.	 	UCC and Tax Lien Search

	 	(a)	 	Borrower
	 
	 	(b)	 	TBAC Trust
	 
	 	(c)	 	TBA Handbags
	 
	 	(d)	 	Torel

LOAN DOCUMENTATION

	6.	 	Amendment No. 3 to Credit Agreement
	 
	7.	 	Amendment No. 1 to Master Revolving Note

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