<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>5
<FILENAME>tlf8kex103032002.txt
<DESCRIPTION>COLLECTION ACCOUNT AGREEMENT
<TEXT>

                                                  [ACCOUNT RESTRICTED RIGHT AWAY
                                                          - ACH DEBIT TRANSFERS]


                          COLLECTION ACCOUNT AGREEMENT

         This COLLECTION ACCOUNT AGREEMENT ("Agreement"),  dated as of March 20,
2002, among THE LEATHER FACTORY, INC., a Delaware corporation;  ROBERTS, CUSHMAN
& COMPANY,  INC., a New York  corporation;  THE LEATHER FACTORY,  INC., a Nevada
corporation;   THE  LEATHER  FACTORY  OF  NEVADA   INVESTMENTS  INC.,  a  Nevada
corporation;  TANDY LEATHER COMPANY,  INC., a Nevada corporation;  TANDY LEATHER
COMPANY INVESTMENTS,  INC., a Nevada corporation;  THE LEATHER FACTORY,  L.P., a
Texas  limited  partnership;  TANDY  LEATHER  COMPANY,  L.P.,  a  Texas  limited
partnership;  HI-LINE LEATHER & MANUFACTURING COMPANY, a California corporation;
and THE LEATHER FACTORY, INC., an Arizona corporation (collectively, "Borrowers"
and each a "Borrower"), and WELLS FARGO BANK MINNESOTA,  NATIONAL ASSOCIATION, a
national  banking  association  ("Lender") and WELLS FARGO BANK Texas,  NATIONAL
ASSOCIATION  ("Wells  Fargo") sets out (i) the terms and conditions  under which
Wells Fargo will provide its collection account service (the "Collection Account
Service") to  Borrowers  and Lender with  respect to Lender's  wholesale  demand
deposit  account  specified at the end of this document (the "Lender  Account"),
and (ii) the rights of Borrowers and Lender,  and the obligations of Wells Fargo
to Borrowers and Lender, with respect to the Lender Account.

         1. ORIGIN OF LENDER'S  INTEREST IN THE ACCOUNT  FUNDS.  Borrowers  have
entered into a financing  agreement with Lender in which  Borrowers have granted
to  Lender a  security  interest  in  Borrowers'  present  and  future  accounts
receivable  and all proceeds  thereof,  and Borrowers  have agreed to deposit or
cause to be deposited all collections  and proceeds of such accounts  receivable
into the Lender Account. (When such accounts receivable have been deposited into
the Lender  Account as  provided in this  Agreement  they will be referred to in
this  Agreement,  together with all other  proceeds of the  collateral  security
granted to Lender that are  deposited  in the Lender  Account,  as the  "Account
Funds").  Lender and Borrowers would like to use the Collection  Account Service
to block Borrowers'  access to the Lender Account and to provide daily transfers
of ledger  balances in the Lender  Account to Lender's  account with Wells Fargo
Bank Minnesota, N.A.

         2. Commencement of COLLECTION  account Service.  The Collection Account
Service  will  start on the date  arranged  by Wells  Fargo  with  Lender if the
following events have occurred before such date:

         (a)      The Lender Account has been opened and is in good standing;

         (b)      Borrowers  and Lender have  provided to Wells Fargo such other
information  and  documents  as Wells Fargo  requests  to enable  Wells Fargo to
commence and operate the Collection Account Service for Borrowers and Lender.

<PAGE>

         3. ACCESS TO ACCOUNT  FUNDS.  All  Account  Funds shall be the sole and
exclusive property of Lender withdrawable from the Lender Account only by Lender
as provided in this Agreement or in the account documentation  pursuant to which
the Lender  Account  was  opened.  Borrowers  will have no  interest  in, or any
control over,  any Account  Funds,  and Account  Funds shall not bear  interest.
Except as provided in this Agreement,  the Lender Account will not be subject to
deductions,  setoff,  banker's  lien,  or any other right in favor of any person
other than Lender.

         4. Deposits and Confirmations.  Lender authorizes  Borrowers to endorse
or cause to be endorsed  checks and other payment  instruments and to deposit or
cause to be  deposited  such  items into the Lender  Account.  Wells  Fargo will
provide to Lender and to Borrowers  Wells  Fargo's  regular  statement  covering
deposits  to and  withdrawals  from  the  Lender  Account  at  their  respective
addresses  specified  at the end of this  Agreement  for advice of deposits  and
statements.  Borrowers  and/or  Lender  agree to notify  Wells  Fargo's  Service
Center,  whose  address  and  telephone  number will be given to  Borrowers  and
Lender,  (a) of any error in an advice of deposit  within  thirty (30)  calendar
days after Borrowers and/or Lender receive such advice of deposit and (b) of any
error in a bank  statement  within  thirty (30)  calendar  days after  Borrowers
and/or Lender receive such bank statement. The liability of Wells Fargo for such
errors is limited as provided in Section 19 of this Agreement.

         5. ACCOUNT DOCUMENTATION.  Except as otherwise specifically provided in
this  Agreement,  the  Lender  Account  will be  handled  and items  drawn on or
deposited  into the Lender  Account  will be  processed  by Wells Fargo as Wells
Fargo would  perform  such  responsibilities  with  respect to any other  demand
deposit account at Wells Fargo. As a result,  the Lender Account will be subject
to, and Wells  Fargo's  operation of the Lender  Account  will be in  accordance
with,  the  terms  and  provisions  of Wells  Fargo's  deposit  account  opening
documentation and other Wells Fargo account related documentation (collectively,
"Account  Documentation"),  including,  but not limited to, Wells Fargo's demand
deposit  account  disclosure  statement for the Lender  Account as in effect and
delivered  to Lender  from time to time,  a copy of which  Borrowers  and Lender
acknowledge  having  received.  Notwithstanding  any  provisions  of any Account
Documentation,  however,  all  Account  Funds  shall be the  sole and  exclusive
property of Lender.

         6. CUSTOMER SERVICE. Any questions or problems that Borrowers or Lender
have with respect to the Collection Account Service should be addressed to Wells
Fargo's Service Center.

         7.  RETURNED  ITEMS.  All ACH  entries  and all  checks or other  items
credited to the Lender Account and returned to Wells Fargo unpaid for any reason
will be handled by Wells Fargo in the following manner:

         (a)      Any check with a face  amount less than One  Thousand  Dollars
($1,000.00) which is returned because of insufficient  funds will  automatically
be redeposited by Wells Fargo a second time.

                                      -2-
<PAGE>


         (b)      Any ACH entry returned for any reason, and any check which has
been  returned  a second  time or which  is  returned  for  reasons  other  than
insufficient  funds  or  which  has  a  face  amount  of  One  Thousand  Dollars
($1,000.00) or more and is returned for insufficient  funds will be charged back
to one of Borrowers'  wholesale  demand deposit  accounts  maintained with Wells
Fargo specified at the end of this Agreement (a "Borrower Account").

         (c)      If there are insufficient funds in a Borrower Account to cover
any chargeback, Lender agrees that Wells Fargo may charge the Lender Account for
the amount of the insufficiency, up to the amount of the returned ACH entries or
returned items. If there are insufficient funds in the Lender Account, Borrowers
and Lender agree to pay the amount of the chargeback to the Lender  Account,  in
immediately  available funds,  within one business day after receipt of physical
evidence of said  chargeback  sent by facsimile to Borrowers and Lender at their
facsimile  numbers specified below.

         (d)      Any  returned  checks and debit memos with respect to returned
checks will be sent to Borrowers.

         8. ACH DEBIT  TRANSFERS  FROM  LENDER  ACCOUNT.  On each day when Wells
Fargo is open for business (a "Banking Day") during the term of this  Agreement,
at the specific request of Lender,  Wells Fargo will process automated  clearing
house debits to the Lender Account initiated by banks other than Wells Fargo for
transfers  of funds out of the Lender  Account  (each an "ACH Debit") so long as
any such ACH Debit does not exceed the ledger  balance in the Lender  Account at
the end of the Banking Day immediately preceding the date on which the ACH Debit
is initiated.  These transfers will be made to Lender if Lender's account is the
transfer-to  account  specified in the ACH Debits by the initiating bank. Lender
agrees  to  pay  to  Wells  Fargo  immediately  on  demand,  without  setoff  or
counterclaim, the amount of any overdraft in the Lender Account caused by an ACH
Debit  exceeding the ledger  balance in the Lender  Account at the time such ACH
Debit settles.

         9.  DELAYS  IN  MAKING  ACH  DEBIT  TRANSFERS.   Lender  and  Borrowers
understand  that an ACH Debit  transfer  may be  delayed  or not made if (a) the
transfer  would cause Wells Fargo to exceed any  limitation on its intra-day net
funds  position   established  in  accordance  with  Federal  Reserve  or  other
regulatory  guidelines  or  to  violate  any  other  Federal  Reserve  or  other
regulatory risk control program, or (b) the funds transfer would otherwise cause
Wells  Fargo to  violate  any  applicable  law or  regulation.  If an ACH  Debit
transfer  cannot be made or will be delayed,  Wells Fargo will attempt to notify
Lender by telephone. Notwithstanding anything to the contrary in this Section 9,
Wells Fargo agrees that its response to any court order or other legal  process,
to the claim of any party in bankruptcy,  or the adverse claim of any individual
or entity not a party to this  Agreement  shall be made in  accordance  with the
provisions of Sections 14 and 16 hereof.

         10.  RELIANCE ON ACCOUNT NUMBER OF ACH DEBIT TRANSFER  BENEFICIARY.  If
the bank initiating an ACH Debit out of the Lender Account  indicates a name and

                                      -3-
<PAGE>

an  identifying  number for the bank of the person or entity to receive  the ACH
Debit  transfer,  Lender and Borrowers  understand that Wells Fargo will rely on
the number  indicated by the  initiating  bank even if that number  identifies a
bank different  from the named bank. If the bank  initiating an ACH Debit out of
the Lender  Account  indicates  a name and an  account  number for the person or
entity to receive the ACH Debit transfer,  Lender and Borrowers  understand that
Wells Fargo and the  initiating  bank may rely on the indicated  account  number
even if that account  number is not the account  number for the person or entity
who is to receive the transfer.

         11. REPORTING ERRORS IN TRANSFERS.  If Lender or Borrowers learn of any
error in an ACH Debit  transfer or any  unauthorized  funds  transfer,  then the
party learning of such error or  unauthorized  transfer (the  "Informed  Party")
must  notify  Wells Fargo as soon as possible  by  telephone  at (800)  AT-WELLS
(which is a recorded line),  and provide written  confirmation to Wells Fargo of
such  telephonic  notice within two Business Days at the address given for Wells
Fargo on the  signature  page of this  Agreement.  In no case may such notice to
Wells Fargo by an Informed  Party be made more than  thirty (30)  calendar  days
after Wells Fargo's first  confirmation  of an ACH Debit transfer or other funds
transfer to such Informed Party, whether such first confirmation consists of the
regular  monthly  statement  for the  Lender  Account or  otherwise.  If a funds
transfer  is made in error and Wells  Fargo  suffers  a loss  because  Lender or
Borrowers  breached  their  agreement to notify Wells Fargo of such error within
this thirty (30) calendar day period,  then the party or parties which  breached
this  agreement  shall be  obligated  to  reimburse  Wells  Fargo  for such loss
promptly upon demand by Wells Fargo;  provided,  however, that in the event both
Lender and Borrowers breach this notification  requirement,  Lender shall not be
obligated  to  reimburse  Wells  Fargo for such loss  unless  Borrowers  fail to
satisfy Wells Fargo's demand for such reimbursement within fifteen (15) calendar
days after such demand is made on Borrowers.

         12. CONTACTS. Any contacts regarding operational matters with any party
to this Agreement  shall be made to the person and address  specified  below for
advice of deposits and statements.

         13.  WELLS  FARGO  FEES.  Borrowers  agree  to pay  the  fees  for  the
Collection  Account  Service  charged by Wells Fargo (the "Wells  Fargo  Fees"),
which fees will be based on the charges  specified  in the  standard  collection
account fee  schedule  current at the time the fees are  charged.  As changes in
Wells Fargo's operating costs, procedural requirements or service volumes affect
future costs of processing, Wells Fargo will periodically review the Wells Fargo
Fees. Should the results of such periodic review warrant adjustment of the Wells
Fargo Fees,  Borrowers and Lender will receive a minimum of thirty (30) calendar
day's written notice prior to  implementing  such  adjustment.  Wells Fargo will

                                      -4-
<PAGE>

collect the Wells  Fargo Fees by  debiting a Borrower  Account for the amount of
the Wells Fargo Fees,  without  prior notice to Borrowers or Lender,  on the day
such Wells Fargo Fees are due.  Lender agrees to pay the Wells Fargo Fees within
thirty (30) calendar days after Lender  receives a billing  statement from Wells
Fargo for such fees,  without setoff or  counterclaim,  to the extent that Wells
Fargo is  unsuccessful  in any attempt to  automatically  debit such fees from a
Borrower Account.

         14.  COURT  ORDER.  If Wells  Fargo is served  with a court order which
affects the Lender  Account,  Wells Fargo will act in accordance with such court
order.  Subject to the  provisions  of Section  16,  Wells  Fargo  shall not, in
response to the adverse claim of Borrowers or any third party, have the right to
place a hold,  nor will it place a hold, on funds in, or in the process of being
deposited to, the Lender Account, and Wells Fargo will process the Account Funds
in strict accordance with the terms and conditions of this Agreement, unless and
until Wells Fargo  receives a court order to the contrary,  whether  issued by a
U.S.  Bankruptcy  Court or any other  court of  competent  jurisdiction.  Lender
represents,  warrants,  and agrees that upon filing of voluntary or  involuntary
proceedings under the U.S. Bankruptcy Code involving Borrowers,  Lender shall at
all times comply with applicable  bankruptcy statutes,  rules, and other laws as
they may relate to the Account Funds.

         15.  OWNERSHIP  OF  SPECIFICATIONS,   RECORDS,  SYSTEMS  AND  PROGRAMS.
Borrowers  and  Lender  agree  that any  specifications,  records,  systems  and
programs,  including,  among other things, computer software programs, which are
utilized  or  developed  by Wells Fargo in  connection  with the Service or this
Agreement are and will remain the sole property of Wells Fargo.

         16.  CLAIMS,  LEGAL  PROCESS AND NOTICES.  If Wells Fargo  receives any
claim, notice, legal process or court order relating to the Account Funds or the
Lender  Account,  Wells Fargo will notify  Lender and Borrowers of such receipt,
unless Wells Fargo knows that Lender,  with respect to so notifying  Lender,  or
Borrowers,  with respect to so  notifying  Borrowers,  is already  aware of such
claim,  notice,  legal process or court order. Wells Fargo will notify Lender of
such  process,  claim or notice prior to its  compliance.  Lender and  Borrowers
understand  and agree that Wells Fargo will comply with any such legal  process,
legal  notice or court order it receives  (including,  without  limitation,  any
summons,  subpoena,  levy,  garnishment,  or  withholding  order) if Wells Fargo
determines in its sole discretion that such legal process, legal notice or court
order is legally  binding on it. If any claim or notice  received by Wells Fargo
is not legally binding on it, as determined in its sole discretion,  Wells Fargo
agrees to follow any  instructions  of Lender to comply or not comply  with such
claim or notice if (a) such  instructions  are given  promptly  after  Lender is
notified of such claim or notice and (b) such  instructions do not require Wells
Fargo to violate any applicable  law,  regulation or court order.  Each Borrower
hereby irrevocably agrees that Wells Fargo is to follow any such instructions of
Lender with respect to any such  non-binding  claim or notice even if such claim
or notice is from Borrowers. If Wells Fargo does not receive prompt instructions
from Lender  regarding  compliance or  non-compliance  with any such non-binding
claim or notice,  Lender and  Borrowers  agree that Wells Fargo may determine in
its sole discretion to comply or not to comply with such claim or notice, except
that Wells Fargo will not comply  with any such claim or notice  from  Borrowers
conflicting with the terms of this Agreement.

                                      -5-
<PAGE>

         17.  INDEMNIFICATION FOR FOLLOWING  INSTRUCTIONS.  Lender and Borrowers
each agree that,  notwithstanding  any other provision of this Agreement,  Wells
Fargo will not be liable to Lender or  Borrowers  for any  losses,  liabilities,
damages,  claims (including,  but not limited to, third party claims),  demands,
obligations, actions, suits, judgments, penalties, costs or expenses, including,
but not limited to,  attorneys' fees,  (collectively,  "Losses and Liabilities")
suffered  or incurred by Lender or  Borrowers  as a result of, or in  connection
with,  (a) Wells  Fargo  following  any  instruction  of Lender to comply or not
comply with any  non-binding  claim or notice  referred to in Section 16 of this
Agreement,  (b) if no such instruction from Lender is promptly  received,  Wells
Fargo complying or not complying, as determined in its sole discretion, with any
such  non-binding  claim  or  notice,   (c)  Wells  Fargo  following  any  other
instruction  or  request  of  Lender,  or (d)  Wells  Fargo  complying  with its
obligations under this Agreement. Further, Borrowers, and to the extent not paid
by Borrowers  within  fifteen (15)  calendar  days after  demand,  Lender,  will
indemnify Wells Fargo against any Losses and Liabilities  Wells Fargo suffers or
incurs as a result of, or in connection with, any of the circumstances  referred
to in subsections (a) through (d) in the preceding sentence.

         18. NO  REPRESENTATIONS  OR WARRANTIES OF WELLS FARGO. Wells Fargo will
perform its  obligations  under this Agreement in a manner  consistent  with the
quality provided when Wells Fargo performs similar services for its own account.
However,  Wells Fargo cannot be responsible for the errors, acts or omissions of
others,  such  as  communications  carriers,  correspondents  or  clearinghouses
through which Wells Fargo may perform its  obligations  under this  Agreement or
receive  or  transmit  information  in  performing  its  obligations  under this
Agreement. Further, Wells Fargo cannot be responsible for any loss, liability or
delay caused by wars, failures in communications  networks, labor disputes, work
stoppages,  legal  constraints,  fires,  power surges or failures,  earthquakes,
civil  disturbances,  acts or omissions  of the U.S.  Postal  Service,  or other
events   beyond  its   control.   WELLS   FARGO  MAKES  NO  EXPRESS  OR  IMPLIED
REPRESENTATIONS  OR WARRANTIES WITH RESPECT TO THE COLLECTION ACCOUNT SERVICE OR
ANY OTHER  SERVICE  IT IS TO  PERFORM  UNDER  THIS  AGREEMENT  OTHER  THAN THOSE
EXPRESSLY SPECIFIED IN THIS AGREEMENT.

         19. LIMITATION OF LIABILITY.  If any party to this Agreement suffers or
incurs any Losses and Liabilities as a result of, or in connection  with, its or
any other party's  performance or failure to perform its obligations  under this
Agreement,  the affected  parties  will  negotiate in good faith in an effort to
reach a mutually  satisfactory  allocation  of such Losses and  Liabilities,  it
being  understood  that Wells Fargo will not be  responsible  for any Losses and
Liabilities  due to any cause  other than its own  negligence  or breach of this
Agreement, in which case if such negligence or breach results from any action or
failure to act by Wells Fargo,  the liability of Wells Fargo shall be limited to
direct  money  damages  in an amount  not to exceed ten (10) times all the Wells
Fargo Fees charged or incurred during the calendar month  immediately  preceding
the  calendar  month in which such Losses and  Liabilities  occurred  (or, if no
Wells  Fargo Fees were  charged or incurred in the  preceding  month,  the Wells
Fargo Fees charged or incurred in the month in which the Losses and  Liabilities

                                      -6-
<PAGE>

occurred).  Borrowers,  and to the extent not paid by Borrowers  within  fifteen
(15)  calendar  days after demand  Lender within thirty (30) calendar days after
demand,  will indemnify Wells Fargo against any Losses and Liabilities  suffered
or incurred by Wells Fargo as a result of third party  claims to the extent such
Losses  and  Liabilities  exceed  the  liability  limitations  specified  in the
preceding sentence. The limitation of Wells Fargo's liability and Borrowers' and
Lender's  indemnification of Wells Fargo set forth above shall not be applicable
to the  extent any Losses and  Liabilities  of any party to this  Agreement  are
directly caused by Wells Fargo's gross negligence or willful  misconduct.  IN NO
EVENT  WILL  WELLS  FARGO OR LENDER BE LIABLE  FOR ANY  SPECIAL,  CONSEQUENTIAL,
INCIDENTAL, INDIRECT OR PUNITIVE DAMAGES, WHETHER ANY CLAIM IS BASED ON CONTRACT
OR TORT,  WHETHER  THE  LIKELIHOOD  OF SUCH  DAMAGES WAS KNOWN TO WELLS FARGO OR
LENDER,  AND REGARDLESS OF THE FORM OF THE CLAIM OR ACTION,  INCLUDING,  BUT NOT
LIMITED TO, ANY CLAIM OR ACTION ALLEGING GROSS NEGLIGENCE,  WILLFUL  MISCONDUCT,
FAILURE TO EXERCISE  REASONABLE CARE OR FAILURE TO ACT IN GOOD FAITH. Any action
against Wells Fargo by Borrowers or Lender under or related to this Agreement or
the Collection  Account  Service must be brought within twelve (12) months after
the cause of action accrues.

         20.  AMENDMENTS,  SUCCESSORS  AND ASSIGNS.  With the exception of price
changes,  which require  written notice to Borrowers and Lender,  and changes to
the funds transfer  instructions in Section 8 of this  Agreement,  which require
the written  approval of only Lender,  this Agreement may not be modified or any
provision thereof waived,  except in a writing signed by all the parties to this
Agreement.  This Agreement shall be binding on the parties and their  successors
or assigns.

         21. TERMINATION. This Agreement, the Collection Account Service and the
other  services to be provided  under this Agreement may be terminated by Lender
or Wells Fargo at any time by any of them giving thirty (30) calendar days prior
written  notice of such  termination  to the other parties to this  Agreement at
their  contact  addresses  specified  at the  end of this  Agreement;  provided,
however,  that this  Agreement,  the  Collection  Account  Service and the other
services to be provided under this Agreement may be terminated  immediately  (a)
upon written  notice from Wells Fargo to Borrowers and Lender should Lender fail
to make any payment  when due to Wells Fargo under the terms of this  Agreement,
or (b) upon  written  confirmation  by Wells Fargo to Lender of receipt by Wells
Fargo of written  notice from Lender  requesting  immediate  termination of this
Agreement.  Borrowers and Lender agree that the Lender  Account may be closed as
provided  in the  Account  Documentation.  The  rights  of Wells  Fargo  and the
obligations  of Lender  under  Sections  5, 14,  16,  17,  18, 19 and 21 of this
Agreement will survive the  termination of this Agreement  and/or the closure of
the  Lender  Account,  and any  liability  of any  party to this  Agreement,  as
determined  under the  provisions  of this  Agreement,  with  respect to acts or
omissions of such party prior to such  termination  or closure will also survive
such termination or closure.  Upon any such  termination or closure,  all ledger
balances in the Lender  Account on the date of the closure of the Lender Account

                                      -7-
<PAGE>

will be  transferred to Lender as requested by Lender in writing to Wells Fargo.
Notice of termination  shall be transmitted  by Certified  Mail,  Return Receipt
Requested,  courier, or by personal delivery to the notice address designated at
the end of this Agreement.  No such  termination  shall impair the rights of any
party  with  respect  to  items   processed  prior  to  the  effective  date  of
termination.  Borrowers may not terminate this  Agreement  without prior written
consent of Lender.

         22. NOTICES. All notices from one party to another shall be in writing,
or be made by a telecommunications  device capable of creating a written record,
shall be delivered to Borrowers,  Lender  and/or Wells Fargo at their  addresses
for all notices specified at the end of this Agreement,  or any other address of
any party notified to the other parties in writing,  and shall be effective upon
receipt.  Any notice sent by one party to this  Agreement to another party shall
also be sent to the other parties to this  Agreement.  Wells Fargo is authorized
by Borrowers and Lender to act on any instructions and notices received by Wells
Fargo if (a) such  instructions  or  notices  purport  to be made in the name of
Lender, (b) Wells Fargo reasonably  believes that they are so made, and (c) they
do not  conflict  with  the  terms of this  Agreement  unless  such  conflicting
instructions or notices are supported by a court order.

         23.  USURY.  It is never the  intention  of Wells  Fargo to violate any
applicable usury or interest rate laws. Wells Fargo does not agree to, or intend
to  contract  for,  charge,  collect,  take,  reserve or receive  (collectively,
"charge or collect")  any amount in the nature of interest or in the nature of a
fee,  penalty or other  charge which would in any way or event cause Wells Fargo
to charge or collect  more than the maximum  Wells Fargo would be  permitted  to
charge or  collect by any  applicable  federal  or state  law.  Any such  excess
interest  or  unauthorized  fee shall,  notwithstanding  anything  stated to the
contrary in this Agreement,  be applied first to reduce the amount owed, if any,
and then any excess amounts will be refunded.

         24. SUCCESSORS AND ASSIGNS. Neither a Borrower nor Lender may assign or
transfer its rights or obligations  under this Agreement to any person or entity
without the prior  written  consent of Wells  Fargo,  which  consent will not be
unreasonably  withheld.  Wells  Fargo may not assign  its rights or  obligations
under this Agreement to any person or entity  without the prior written  consent
of Lender, which consent will not be unreasonably withheld;  provided,  however,
that no such  consent  will be  required  if,  in the case of Wells  Fargo,  the
assignee is a bank affiliate of Wells Fargo.

         25. GOVERNING LAW.  Borrowers and Lender  understand that Wells Fargo's
provision  of the  Collection  Account  Service and the other  services it is to
provide under this Agreement are subject to federal laws and regulations. To the
extent that such federal laws and regulations are not applicable, this Agreement
shall be governed by and be construed in  accordance  with the laws of the State
of California.

         26.  SEVERABILITY.  To the extent that this  Agreement,  the Collection
Account  Service or the other  services to be provided  under this Agreement are
inconsistent  with, or prohibited or unenforceable  under, any applicable law or
regulation,  they  will  be  deemed  ineffective  only  to the  extent  of  such
prohibition or  unenforceability  and be deemed modified and applied in a manner
consistent with such law or regulation. Any provision of this Agreement which is

                                      -8-
<PAGE>

deemed  unenforceable  or  invalid  in any  jurisdiction  shall not  effect  the
enforceability or validity of the remaining  provisions of this Agreement or the
same provision in any other jurisdiction.

         27. ENTIRE AGREEMENT. This Agreement, together with the Account
Documentation, contains the entire and only agreement among any or all of the
parties to this Agreement with respect to (a) the services to be provided by
Wells Fargo under this Agreement, (b) the interest of Lender and Borrowers in
the Account Funds and the Lender Account, and (c) the obligations of Wells Fargo
to Lender and Borrowers in connection with the Account Funds and the Lender
Account, except that Lender and Borrowers may have one or more agreements
between themselves concerning such subject matter, which shall not be binding
on, or affect Wells Fargo in any way, and with which Wells Fargo need not be
concerned.

         This  Agreement  has been  signed by the duly  authorized  officers  or
representatives  of each of the parties to this  Agreement on the date specified
below.

DATE:  March 20, 2002

Lender Account: Account No. 4166577288, ABA No. 121000248

Borrowers Accounts: Account No. 4311266522  ABA No. 121000248
                    Account No. 4166577288  ABA No. 121000248

                                      -9-
<PAGE>

THE  LEATHER  FACTORY,  INC.,  a                WELLS FARGO BANK TEXAS, NATIONAL
Delaware  corporation;  ROBERTS,                         ASSOCIATION
CUSHMAN & COMPANY,  INC.,  a New
York  corporation;  THE  LEATHER                By:
FACTORY,    INC.,    a    Nevada                   -----------------------------
corporation; THE LEATHER FACTORY                Name:
OF NEVADA  INVESTMENTS  INC.,  a                     ---------------------------
Nevada    corporation;     TANDY                Title:
LEATHER COMPANY,  INC., a Nevada                      --------------------------
corporation;    TANDY    LEATHER
COMPANY  INVESTMENTS,   INC.,  a                Address for all Notices:
Nevada   corporation;    HI-LINE                -----------------------
LEATHER & MANUFACTURING COMPANY,
a  California  corporation;  and                --------------------------------
THE LEATHER  FACTORY,  INC.,  an
Arizona corporation                             --------------------------------

                                                --------------------------------
                                                Attention:
                                                          ----------------------
                                                Facsimile:
                                                          ----------------------
                                                Telephone:
                                                          ----------------------

By /s/ Wray Thompson
  ------------------
  Wray Thompson
  Its Chief Executive Officer                   WELLS FARGO BANK MINNESOTA,
                                                   NATIONAL ASSOCIATION



                                                By /s/ Thomas W. Tosney
                                                  ---------------------
                                                  Thomas W. Tosney
                                                  Its Senior Vice President

                                                Address for all Notices:
                                                ------------------------
THE LEATHER FACTORY, L.P., a
Texas limited partnership
                                                Wells Fargo Bank Minnesota,
By  THE LEATHER FACTORY, INC., a                National Association
    Nevada corporation                          c/o Wells Fargo Business Credit,
    Its General Partner                         Inc.
                                                4975 Preston Park Blvd.,
                                                Suite 280
                                                Plano, Texas  75093
                                                Attention: Thomas J. Krueger
By /s/ Wray Thompson                            Facsimile: (972) 867-7838
  ------------------                            Telephone: (972) 599-5304
  Wray Thompson
  Its Chief Executive Officer


                                      -10-
<PAGE>

                                                Address for Advice of Deposits
                                                -------------------------------
Address for all Notices:                        and Statements:
-----------------------                         ----------------

The Leather Factory, Inc.                       Wells Fargo Bank Minnesota,
3825 E. Loop 820 South                          National Association
P.O. Box 50429                                  c/o Wells Fargo Business Credit,
Ft. Worth, Texas  76105                         Inc.
Attention: Wray Thompson                        4975 Preston Park Blvd.,
Facsimile: (817) 446-3713                       Suite 280Plano, Texas  75093
Telephone: (817) 496-4414                       Attention: Thomas J. Krueger
                                                Facsimile: (972) 867-7838
                                                Telephone: (972) 599-5304
Address for Advice of Deposits and
----------------------------------
Statements:
-----------

The Leather Factory, Inc.
3825 E. Loop 820 South
P.O. Box 50429
Ft. Worth, Texas  76105
Attention: Shannon Greene
Facsimile: (817) 446-3713
Telephone: (817) 496-4414





</TEXT>
</DOCUMENT>
