<DOCUMENT>
<TYPE>EX-10.5
<SEQUENCE>7
<FILENAME>tlf8kex105032002.txt
<DESCRIPTION>AMENDED AND RESTATED GUARANTY
<TEXT>


                          AMENDED AND RESTATED GUARANTY
                      (The Leather Factory of Canada, Ltd.)

         This  Guaranty,  dated as of March  20,  2002,  is made by The  Leather
Factory of  Canada,  Ltd.,  a Manitoba  corporation  (the  "Guarantor")  for the
benefit of Wells Fargo Bank Minnesota,  National Association, a national banking
association (with its participants, successors and assigns, the "Lender").

         The Lender  and 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 (the  "Borrowers"),  are
parties to an Amended and Restated  Credit and  Security  Agreement of even date
herewith  (as the same may be amended,  supplemented  or  restated  from time to
time, the "Credit Agreement") pursuant to which the Lender may make advances and
extend other financial accommodations to the Borrowers.

         Pursuant to an Assignment of  Indebtedness  and Loan  Documents of even
date herewith,  the Old Lender (as defined in the Credit Agreement)  assigned to
the Lender all of its right,  title and interest in the Old Credit Documents (as
defined  in  the  Credit  Agreement).  As a  condition  to  providing  financial
accommodations to the Borrowers,  the Lender has required the Borrowers to amend
and restate certain Old Credit Documents.

         As a further  condition to providing  financial  accommodations  to the
Borrowers,  the Lender has  required  the  Guarantor  to amend and  restate  its
Guaranty dated as of November 22, 1999 (the "Prior Guaranty").

         ACCORDINGLY,  the Guarantor, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, hereby agrees as follows:

         1. Definitions.  All terms defined in the Credit Agreement that are not
otherwise defined
herein shall have the meanings given them in the Credit Agreement.

         2.  Indebtedness  Guaranteed.   The  Guarantor  hereby  absolutely  and
unconditionally  guarantees to the Lender the full and prompt  payment when due,
whether at maturity or earlier by reason of  acceleration  or otherwise,  of (i)
the  Obligations and (ii) each and every other sum now or hereafter owing to the
Lender by the Borrowers,  including but not limited to, debts,  liabilities  and
obligations arising out of loans, credit transactions, financial accommodations,
discounts,  purchases of property or other transactions with any Borrower or for
any Borrower's  account or out of any other  transaction  or event,  owed to the

<PAGE>

Lender or owed to others by reason of  participations  granted  to or  interests
acquired or created for or sold to them by the Lender,  in each case whether now
existing or hereafter  arising,  whether  arising  directly in a transaction  or
event involving the Lender or acquired by the Lender from another by purchase or
assignment  or as  collateral  security,  whether  owed by a Borrower as drawer,
maker,  endorser,  accommodation  party,  guarantor,  principal,  surety or as a
member  of any  partnership,  syndicate,  association  or group or in any  other
capacity,  whether  absolute  or  contingent,  direct or  indirect,  primary  or
secondary,  sole, joint, several or joint and several, secured or unsecured, due
or not due,  contractual,  tortuous or statutory,  liquidated  or  unliquidated,
arising by  agreement  or imposed  by law or  otherwise  (all of said sums being
hereinafter called the "Indebtedness").

         3. Guarantor's Representations and Warranties. The Guarantor represents
and  warrants  to the  Lender  that (i) the  Guarantor  is a  corporation,  duly
organized and existing in good standing and has full power and authority to make
and deliver this Guaranty; (ii) the execution,  delivery and performance of this
Guaranty by the Guarantor have been duly  authorized by all necessary  action of
its directors and  stockholders  and do not and will not violate the  provisions
of,  or  constitute  a  default  under,  any  presently  applicable  law  or its
Constituent  Documents  or any  agreement  presently  binding on it;  (iii) this
Guaranty has been duly executed and delivered by the authorized  Officers of the
Guarantor  and   constitutes  its  lawful,   binding  and  legally   enforceable
obligation; and (iv) the authorization,  execution,  delivery and performance of
this Guaranty do not require  notification to,  registration with, or consent or
approval  by, any  federal,  state or local  regulatory  body or  administrative
agency.  The Guarantor  represents and warrants to the Lender that the Guarantor
has a direct and substantial  economic  interest in the Borrowers and expects to
derive substantial  benefits therefrom and from any loans, credit  transactions,
financial   accommodations,   discounts,   purchases   of  property   and  other
transactions and events resulting in the creation of the Indebtedness guarantied
hereby,  and that this Guaranty is given for a business  purpose.  The Guarantor
agrees to rely exclusively on the right to revoke this Guaranty prospectively as
to future  transactions,  in accordance with paragraph 4, if at any time, in the
opinion of the directors or officers,  the benefits  then being  received by the
Guarantor in  connection  with this  Guaranty are not  sufficient to warrant the
continuance  of this Guaranty as to the future  Indebtedness  of the  Borrowers.
Accordingly, so long as this Guaranty is not revoked prospectively in accordance
with  paragraph 4, the Lender may rely  conclusively  on a continuing  warranty,
hereby made,  that the Guarantor  continues to be benefited by this Guaranty and
the Lender shall have no duty to inquire into or confirm the receipt of any such
benefits,  and this Guaranty  shall be effective and  enforceable  by the Lender
without regard to the receipt, nature or value of any such benefits.

         4.  Unconditional  Nature.  No act or thing need occur to establish the
Guarantor's  liability  hereunder,  and no act or thing, except full payment and
discharge of all of the  Indebtedness,  shall in any way exonerate the Guarantor
hereunder  or  modify,  reduce,  limit  or  release  the  Guarantor's  liability
hereunder. This is an absolute, unconditional and continuing guaranty of payment
of the  Indebtedness  and shall  continue to be in force and be binding upon the
Guarantor,  whether or not all of the  Indebtedness is paid in full,  until this
Guaranty is revoked  prospectively as to future transactions,  by written notice

                                      -2-
<PAGE>

actually  received by the Lender,  and such revocation shall not be effective as
to the amount of  Indebtedness  existing or committed  for at the time of actual
receipt  of  such  notice  by the  Lender,  or as to any  renewals,  extensions,
refinancings or refundings thereof.

         5.   Dissolution  or  Insolvency  of  Guarantor.   The  dissolution  or
adjudication  of  bankruptcy of the  Guarantor  shall not revoke this  Guaranty,
except  upon  actual  receipt of written  notice  thereof by the Lender and only
prospectively,  as to future transactions, as herein set forth. If the Guarantor
shall be dissolved or shall be or become insolvent (however  defined),  then the
Lender  shall have the right to declare  immediately  due and  payable,  and the
Guarantor  will  forthwith  pay to the  Lender,  the full  amount  of all of the
Indebtedness whether due and payable or unmatured.  If the Guarantor voluntarily
commences or there is commenced involuntarily against the Guarantor a case under
the United States Bankruptcy Code, the full amount of all Indebtedness,  whether
due and payable or  unmatured,  shall be  immediately  due and  payable  without
demand or notice thereof.

         6.  Subrogation.  The  Guarantor  hereby  waives  all  rights  that the
Guarantor  may  now  have  or  hereafter   acquire,   whether  by   subrogation,
contribution,  reimbursement,  recourse, exoneration,  contract or otherwise, to
recover from any Borrower or from any property of a Borrower any sums paid under
this  Guaranty.  The  Guarantor  will  not  exercise  or  enforce  any  right of
contribution to recover any such sums from any person who is a co-obligor with a
Borrower or a guarantor  or surety of the  Indebtedness  or from any property of
any such  person  until all of the  Indebtedness  shall have been fully paid and
discharged

         7. Enforcement Expenses. The Guarantor will pay or reimburse the Lender
for all costs,  expenses and  attorneys'  fees paid or incurred by the Lender in
endeavoring  to collect and  enforce  the  Indebtedness  and in  enforcing  this
Guaranty.

         8. Lender's Rights.  The Lender shall not be obligated by reason of its
acceptance  of this  Guaranty  to  engage  in any  transactions  with or for any
Borrower. Whether or not any existing relationship between the Guarantor and any
Borrower  has been  changed or ended and whether or not this  Guaranty  has been
revoked,  the Lender may enter into  transactions  resulting  in the creation or
continuance of the Indebtedness  and may otherwise  agree,  consent to or suffer
the creation or continuance of any of the  Indebtedness,  without any consent or
approval by the  Guarantor  and without  any prior or  subsequent  notice to the
Guarantor. The Guarantor's liability shall not be affected or impaired by any of
the following  acts or things  (which the Lender is expressly  authorized to do,
omit or suffer  from time to time,  both  before  and after  revocation  of this
Guaranty,  without consent or approval by or notice to the  Guarantor):  (i) any
acceptance of collateral security, guarantors, accommodation parties or sureties
for any or all of the  Indebtedness;  (ii) one or more extensions or renewals of
the  Indebtedness  (whether or not for longer than the  original  period) or any
modification of the interest  rates,  maturities,  if any, or other  contractual
terms  applicable to any of the Indebtedness or any amendment or modification of
any of the terms or provisions of any loan  agreement or other  agreement  under
which the Indebtedness or any part thereof arose; (iii) any waiver or indulgence
granted to any Borrower,  any delay or lack of diligence in the  enforcement  of
the Indebtedness or any failure to institute proceedings, file a claim, give any

                                      -3-
<PAGE>

required notices or otherwise protect any of the Indebtedness;  (iv) any full or
partial release of,  compromise or settlement with, or agreement not to sue, any
Borrower  or any  guarantor  or other  person  liable in  respect  of any of the
Indebtedness; (v) any release, surrender, cancellation or other discharge of any
evidence of the  Indebtedness  or the acceptance of any instrument in renewal or
substitution therefor; (vi) any failure to obtain collateral security (including
rights of setoff) for the  Indebtedness,  or to see to the proper or  sufficient
creation and perfection  thereof,  or to establish the priority  thereof,  or to
preserve,  protect,  insure,  care  for,  exercise  or  enforce  any  collateral
security; or any modification,  alteration,  substitution,  exchange, surrender,
cancellation, termination, release or other change, impairment, limitation, loss
or discharge of any collateral  security;  (vii) any collection,  sale, lease or
disposition  of, or any other  foreclosure or enforcement of or realization  on,
any collateral security; (viii) any assignment,  pledge or other transfer of any
of the Indebtedness or any evidence thereof; (ix) any manner, order or method of
application  of any  payments  or  credits  upon the  Indebtedness;  and (x) any
election by the Lender under  Section  1111(b) of the United  States  Bankruptcy
Code. The Guarantor  waives any and all defenses and  discharges  available to a
surety, guarantor or accommodation co-obligor.

         9. Waivers by  Guarantor.  The  Guarantor  waives any and all defenses,
claims, setoffs and discharges of any Borrower, or any other obligor, pertaining
to the Indebtedness, except the defense of discharge by payment in full. Without
limiting the generality of the foregoing,  the Guarantor will not assert,  plead
or enforce  against  the Lender any  defense of waiver,  release,  discharge  or
disallowance  in bankruptcy,  statute of limitations,  res judicata,  statute of
frauds, anti-deficiency statute, fraud, incapacity,  minority, usury, illegality
or  unenforceability  which may be available to any Borrower or any other person
liable in respect of any of the  Indebtedness,  or any setoff available  against
the Lender to any Borrower or any other such  person,  whether or not on account
of a related  transaction.  The  Guarantor  expressly  agrees that the Guarantor
shall be and remain liable for any deficiency remaining after foreclosure of any
mortgage or security  interest  securing  the  Indebtedness,  whether or not the
liability of any Borrower or any other obligor for such deficiency is discharged
pursuant to statute or judicial  decision.  The liability of the Guarantor shall
not be  affected  or  impaired  by any  voluntary  or  involuntary  liquidation,
dissolution,  sale  or  other  disposition  of all or  substantially  all of the
assets,  marshalling  of  assets  and  liabilities,   receivership,  insolvency,
bankruptcy,   assignment   for  the   benefit  of   creditors,   reorganization,
arrangement,   composition  or  readjustment  of,  or  other  similar  event  or
proceeding affecting,  any Borrower or any of its assets. The Guarantor will not
assert,  plead or  enforce  against  the  Lender  any  claim,  defense or setoff
available  to  the  Guarantor   against  any  Borrower.   The  Guarantor  waives
presentment, demand for payment, notice of dishonor or nonpayment and protest of
any  instrument  evidencing the  Indebtedness.  The Lender shall not be required
first to  resort  for  payment  of the  Indebtedness  to any  Borrower  or other
persons, or their properties,  or first to enforce,  realize upon or exhaust any
collateral security for the Indebtedness, before enforcing this Guaranty.

         10. If Payments Set Aside, etc. If any payment applied by the Lender to
the Indebtedness is thereafter set aside, recovered, rescinded or required to be
returned  for  any  reason  (including,   without  limitation,  the  bankruptcy,

                                      -4-
<PAGE>

insolvency  or  reorganization  of any  Borrower  or  any  other  obligor),  the
Indebtedness  to which such  payment was  applied  shall for the purpose of this
Guaranty  be  deemed  to  have  continued  in  existence,  notwithstanding  such
application,  and this Guaranty shall be enforceable as to such  Indebtedness as
fully as if such application had never been made.

         11. No Duties Owed by Lender.  The  Guarantor  acknowledges  and agrees
that the Lender (i) has not made any  representations or warranties with respect
to, (ii) does not assume any  responsibility to the Guarantor for, and (iii) has
no duty to provide information to the Guarantor regarding, the enforceability of
any of the  Indebtedness  or the  financial  condition  of any  Borrower  or any
guarantor.  The Guarantor has independently  determined the  creditworthiness of
each  Borrower  and  the  enforceability  of  the  Indebtedness  and  until  the
Indebtedness  is paid in full will  independently  and  without  reliance on the
Lender continue to make such determinations.

         12. Additional Obligation of Guarantor. The Guarantor's liability under
this  Guaranty  is in  addition  to and  shall  be  cumulative  with  all  other
liabilities  of the  Guarantor  to the Lender as  guarantor,  surety,  endorser,
accommodation  co-obligor or otherwise of any of the Indebtedness or obligations
of the Borrowers,  without any limitation as to amount, unless the instrument or
agreement evidencing or creating such other liability  specifically  provides to
the contrary.

         13.  Miscellaneous.  This Guaranty  shall be effective upon delivery to
the Lender, without further act, condition or acceptance by the Lender, shall be
binding upon the Guarantor and the  successors  and assigns of the Guarantor and
shall inure to the benefit of the Lender and its  participants,  successors  and
assigns.  Any invalidity or  unenforceability of any provision or application of
this Guaranty shall not affect other lawful provisions and application  thereof,
and to this end the  provisions  of this  Guaranty are declared to be severable.
This  Guaranty may not be waived,  modified,  amended,  terminated,  released or
otherwise  changed  except by a writing  signed by the Guarantor and the Lender.
This  Guaranty  shall  be  governed  by and  construed  in  accordance  with the
substantive  laws  (other than  conflict  laws) of the State of  Minnesota.  The
Guarantor  hereby (i)  consents to the  personal  jurisdiction  of the state and
federal  courts  located  in the  State  of  Minnesota  in  connection  with any
controversy related to this Guaranty; (ii) waives any argument that venue in any
such forum is not convenient,  (iii) agrees that any litigation initiated by the
Lender or the  Guarantor in  connection  with this  Guaranty  shall be venued in
either the District Court of Hennepin  County,  Minnesota,  or the United States
District Court, District of Minnesota,  Fourth Division;  and (iv) agrees that a
final  judgment in any such suit,  action or proceeding  shall be conclusive and
may be enforced in other  jurisdictions  by suit on the judgment or in any other
manner provided by law.

         14. Restatement. This Agreement is executed for the purpose of amending
and restating the Prior Guaranty

                                      -5-
<PAGE>

         15. Waiver of Jury Trial. THE GUARANTOR HEREBY  IRREVOCABLY  WAIVES ALL
RIGHTS TO TRIAL BY JURY IN ANY ACTION,  PROCEEDING OR  COUNTERCLAIM  ARISING OUT
OF, BASED ON OR PERTAINING TO THIS GUARANTY.

         IN  WITNESS  WHEREOF,  this  Guaranty  has been  duly  executed  by the
Guarantor the date first written above.

                                             THE LEATHER FACTORY OF CANADA, LTD.



                                             By /s/ Wray Thompson
                                               ------------------
                                               Wray Thompson
                                               Its Chief Executive Officer

                                             Address:     3825 E. Loop 820 South
                                                          P.O. Box 50429
                                                          Ft. Worth, Texas 76105

STATE OF TEXAS            )

COUNTY OF TARRANT         )


         The foregoing  instrument was  acknowledged  before me this 20th day of
March, 2002 by Wray Thompson, the Chief Executive Officer of The Leather Factory
of Canada, Ltd., a Manitoba corporation, on behalf of the corporation.



                                                              /s/ Cheryl Landry
                                                              -----------------
                                                              Notary Public



</TEXT>
</DOCUMENT>
