<SEC-DOCUMENT>0000909724-15-000040.txt : 20150924
<SEC-HEADER>0000909724-15-000040.hdr.sgml : 20150924
<ACCEPTANCE-DATETIME>20150924083250
ACCESSION NUMBER:		0000909724-15-000040
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		7
CONFORMED PERIOD OF REPORT:	20150918
ITEM INFORMATION:		Entry into a Material Definitive Agreement
ITEM INFORMATION:		Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20150924
DATE AS OF CHANGE:		20150924

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			TANDY LEATHER FACTORY INC
		CENTRAL INDEX KEY:			0000909724
		STANDARD INDUSTRIAL CLASSIFICATION:	LEATHER & LEATHER PRODUCTS [3100]
		IRS NUMBER:				752543540
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			0610

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-12368
		FILM NUMBER:		151122055

	BUSINESS ADDRESS:	
		STREET 1:		1900 SE LOOP 820
		CITY:			FT WORTH
		STATE:			TX
		ZIP:			76140
		BUSINESS PHONE:		8178723200

	MAIL ADDRESS:	
		STREET 1:		1900 SE LOOP 820
		CITY:			FT WORTH
		STATE:			TX
		ZIP:			76140

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	LEATHER FACTORY INC
		DATE OF NAME CHANGE:	19930723
</SEC-HEADER>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Item 1.01. Entry into a Material Definitive Agreement</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">On September 18, 2015, Tandy Leather Factory, Inc. (the &#8220;Company&#8221;) executed a Promissory Note and Business Loan Agreement with BOKF, NA dba Bank of Texas (&#8220;BOKF&#8221;), pursuant to which BOKF agreed to provide a line of credit facility to the Company of up to $6,000,000 (the &#8220;Debt Facility&#8221;).&#160;&#160;The Debt Facility has a two-year term and is secured by the Company&#8217;s inventory.&#160;&#160;&#160;The Business Loan Agreement contains covenants by the Company that it will maintain a funded debt to EBITDA ratio of no greater than 1.5 to 1, and that it will maintain a Fixed Charge Coverage Ratio greater than or equal to 1.2 to 1.&#160;&#160;Both ratios are calculated quarterly and are based on a trailing four quarter basis.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Further, on September 18, 2015, the Company executed a Promissory Note with BOKF, pursuant to which BOKF agreed to provide a line of credit facility to the Company of up to $10,000,000 for the purpose of purchasing the Company&#8217;s common stock.&#160;&#160;Under the terms of the Promissory Note, the Company may borrow sums up to the lesser of $10,000,000 or the purchase price of a maximum of 1.2 million shares of its common stock from the period September 18, 2015 and ending on the earlier of September 18, 2016 or the date on which the entire amount is drawn (the &#8220;Draw Period&#8221;).&#160;&#160;During the Draw Period, the Company will make interest only payments monthly, at which time the principal balance will be rolled into a 4-year term note.&#160;&#160;This Promissory Note is secured by a Deed of Trust on the real estate located at 1900 SE Loop 820, Fort Worth, Texas.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Amounts drawn under either Promissory Note accrue interest at the London interbank Eurodollar market rate for U.S. dollars (commonly known as &#8220;LIBOR&#8221;) plus 1.85%.&#160;&#160;No proceeds were drawn on either line of credit upon closing.&#160;&#160;There are no unused line fees associated with either facility.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The foregoing description of the Promissory Notes, Business Loan Agreement, and Deed of Trust is not complete and is qualified in its entirety by reference to the full text of such agreements, which are filed as Exhibits 10.1, 10.2, 10.3 and 10.4 to this Current Report on Form 8-K.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">A copy of the press release announcing the transaction is furnished as Exhibit 99.1 to this Current Report on Form 8-K.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Sheet Arrangement of a Registrant</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The information concerning the Promissory Notes, Business Loan Agreement and Deed of Trust set forth above under Item 1.01 is incorporated herein by reference.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Business Loan Agreement, dated September 18, 2015, by and between Tandy Leather Factory, Inc. and BOKF, NA dba Bank of Texas</font></div>
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<td valign="top" width="6%"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160; </font></td>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">10.3*</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Promissory Note, dated September 18, 2015, by and between Tandy Leather Factory, Inc. and BOKF, NA dba Bank of Texas</font></div>
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<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>3
<FILENAME>exhibit10-1.htm
<DESCRIPTION>PROMISSORY NOTE $6,000,000
<TEXT>
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    <title>exhibit10-1.htm</title>
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<div>Exhibit 10.1</div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Borrower:</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Tandy Leather Factory, Inc.</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Lender:</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">BOKF, NA dba Bank of Texas</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">1900 SE Loop 820</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">P.O. Box 29775</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Fort Worth, TX&#160;&#160;76140</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Dallas, TX&#160;&#160;75229-9775</font></div>
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<td valign="top" width="41%"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160; </font></td>
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<td valign="top" width="10%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160; </font></td>
<td valign="top" width="30%" style="PADDING-BOTTOM: 2px">
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Principal Amoujnt:&#160;&#160;$6,000,000.00</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Date of Note:&#160;&#160;September 18, 2015</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 13.85pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">PROMISE TO PAY. Tandy Leather Factory, Inc. ("Borrower") promises to pay to BOKF, NA dba Bank of Texas ("Lender"), or order. in lawful money of the United States of America, the principal amount of Six Million &amp; 00/100 Dollars ($6,000,000.00) or so much as may be outstanding, together with interest on the unpaid outstanding principal balance of each advance. Interest shall be calculated from the date of each advance until repayment of each advance or maturity, whichever occurs first.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 13.85pt" align="justify">CHOICE OF USERY CEILING AND INTEREST RATE:&#160; The interest rate on this Note has been implemented under the "Quarterly Ceiling" as referred to in Section 303.006 of the Texas Finance Code.</div>

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<div style="TEXT-ALIGN: left; MARGIN-LEFT: 27pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">PAYMENT. Borrower will pay this loan in one payment of all outstanding principal plus all accrued unpaid interest on September 18, 2017. In addition, Borrower will pay regular monthly payments of all accrued unpaid interest due as of each payment date. beginning October 18, 2015, with all subsequent interest payments to be due on the same day&#160;of each month after that. Unless otherwise agreed or required by applicable law, payments will be applied first to any accrued unpaid interest; then to principal; then to any late charges; and then to any unpaid collection costs. Borrower will pay Lender at Lender's address shown above or at such other place as Lender may designate in writing. Notwithstanding any other provision of this Note, Lender will not charge interest on any undisbursed loan proceeds. No scheduled payment, whether of principal or interest or both, will be due unless sufficient loan funds have been disbursed by the scheduled payment date to justify the payment.</font></div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">PAYMENT&#160;&#160;INFORMATION.&#160;&#160;PAYMENTS&#160;&#160;SHOULD&#160;&#160;BE REMITTED TO:&#160;&#160;&#160;BOKF,&#160;&#160;NA dba Bank of Texas,&#160;&#160;P.O. Box 248818,&#160;&#160;&#160;Oklahoma&#160;&#160;City, OK 76124-8818.&#160; If a payment is made consistent with the written payment instructions provided by Lender and received on a business day by 5:00 pm Central Time, the payment will be applied that day.&#160; If a payment is received on a business day after 5:00 pm , the payment may be applied on the following business day.</font></div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 12.4pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from time to time based on changes&#160;&#160;in an independent&#160;&#160;index which is the 1 Month LIBOR Interest Rate which is the ICE Benchmark Administration (ICE) (or the successor thereto if the ICE Benchmark Administration is no longer making a London Interbank Offered&#160;Rate available) fixing of London Inter-Bank Offered Rate (LIBOR) based on offered inter-bank deposit rates contributed in accordance with instructions to ICE LIBOR Contributor&#160;&#160;Banks&#160;&#160;(rounded&#160;&#160;upward,&#160;&#160;if&#160;&#160;necessary,&#160;&#160;to&#160;&#160;the nearest 1/100 of 1%) for such interest period; provided,&#160;&#160;however, that&#160;&#160;if the&#160;&#160;Index determined&#160;&#160;as provided above shall&#160;&#160;be less than zero, the&#160;&#160;Index shall be deemed to be zero for the purposes of this Note (the "Index").&#160;&#160;The Index is not necessarily the lowest rate charged by Lender on&#160;its loans. If the Index becomes unavailable during the term of&#160;&#160;this&#160;&#160;loan,&#160;&#160;Lender&#160;&#160;may&#160;&#160;designate&#160;&#160;a substitute&#160;&#160;index&#160;&#160;after&#160;&#160;notifying&#160;&#160;Borrower. Lender will tell Borrower the current Index rate upon Borrower's request. The interest rate change will not occur more often than each month. Borrower understands that Lender may make loans based on other rates as well. The Index&#160;currently&#160;&#160;is&#160;0.210%&#160;per annum.&#160;&#160;Interest prior to maturity on the unpaid principal balance of this Note will be calculated as described in the&#160;&#160;"INTEREST&#160;&#160;CALCULATION&#160;&#160;METHOD"&#160;&#160;paragraph using a rate of 1 .850 percentage points over the Index, resulting in an initial rate of 2.060% per annum based on a year of 360 days. NOTICE:&#160;&#160;Under no circumstances&#160;&#160;will the interest rate on this Note be more than (except for any higher default rate or Post Maturity&#160;&#160;Rate shown below)&#160;&#160;&#160;&#160;&#160;&#160;the lesser of 18.000% per annum or the maximum rate allowed by applicable law. For purposes of this Note, the "maximum rate allowed by applicable law" means the greater of (A) the maximum rate of interest permitted under federal or other law applicable&#160;&#160;to the&#160;&#160;indebtedness&#160;&#160;evidenced by this Note, or&#160;&#160;(B)&#160;&#160;the "Quarterly&#160;&#160;Ceiling"&#160;&#160;as referred to in Section 303.006 of the Texas&#160;Finance Code.</font></div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 11.15pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">INTEREST CALCULATION METHOD. Interest on this Note is computed on a 365/360 basis; that is, by applying the ratio of the interest rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding, unless such calculation would result in a usurious rate, in which case interest shall be calculated on a per diem basis of a year of 365 or 366 days, as the case may be. All interest payable under this Note is computed using this method.</font></div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 11.15pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">PREPAYMENT. Borrower may pay without penalty all or a portion of the amount owed earlier than it is due. Prepayment in full shall consist of payment&#160;of&#160;the&#160;remaining&#160;unpaid&#160;principal&#160;balance&#160;together&#160;with&#160;all&#160;accrued&#160;and&#160;unpaid&#160;interest&#160;and&#160;all&#160;other amounts, costs and&#160;expenses&#160;for which Borrower is responsible under this Note or any other&#160;agreement with&#160;Lender&#160;pertaining&#160;to&#160;this&#160;loan,&#160;and&#160;in&#160;no&#160;event&#160;will Borrower&#160;ever&#160;be required to pay any unearned interest. Early payments will not, unless agreed to by Lender in writing, relieve Borrower of Borrower's obligation to continue to make payments of accrued interest.&#160; Rather, early payments will reduce the principal balance due.&#160; Borrower agrees not to send&#160;Lender payments marked "paid in full", "without recourse", or similar language. If Borrower sends such a payment, Lender may accept it without losing any of Lender's rights under this Note, and Borrower will remain obligated to pay any further amount owed to Lender. All written communications concerning disputed amounts, including any check or other payment instrument that indicates that the payment constitutes "payment in&#160;full" of the amount owed or that is&#160;tendered with other conditions&#160;or limitations&#160;or as full satisfaction&#160;of a disputed&#160;amount must be mailed or delivered to: BOKF, NA dba Bank of Texas, P.O. Box 248818 Oklahoma City, OK&#160;73124-8818.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 14.25pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">LATE CHARGE. It a payment is 15 days or more late, Borrower will be charged 5.000% of the&#160;&#160;unpaid&#160;&#160;portion of the&#160;&#160;regularly&#160;&#160;scheduled&#160;&#160;payment.</font></div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 13.75pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">POST MATURITY RATE. The Post Maturity&#160;&#160;Rate on this&#160;&#160;Note is the&#160;&#160;lesser of&#160;&#160;(A)&#160;&#160;the&#160;&#160;maximum rate allowed&#160;&#160;by law&#160;&#160;or&#160;&#160;(Bl&#160;&#160;18.000% per&#160;&#160;annum based on a year of&#160;&#160;360 days.&#160;&#160;Borrower&#160;&#160;will&#160;&#160;pay interest on all sums due after final maturity, whether&#160;&#160;by acceleration&#160;&#160;or otherwise,&#160;&#160;at&#160;&#160;&#160;that rate.</font></div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 13.75pt" align="justify">&#160;</div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 13.75pt" align="justify">DEFAULT.&#160; Each of the following shall constitute an event of default ("Event of Default") under this Note:&#160; </div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Payment Default.&#160; Borrower fails to make any payment when due under this Note.</div>

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<div align="center">
<table border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">
</table>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 11.4pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Other Defaults. Borrower fails to comply&#160;&#160;with or to&#160;&#160;perform any other&#160;&#160;term, obligation,&#160;&#160;covenant or&#160;&#160;condition contained&#160;&#160;in this&#160;&#160;Note or&#160;&#160;in&#160;&#160;any of the related documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower&#160;<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font></font></div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 11.35pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Default in Favor of Third Parties. Borrower or any Granter defaults under any&#160;&#160;loan, extension&#160;&#160;of&#160;&#160;credit, security&#160;&#160;agreement,&#160;&#160;purchase or&#160;&#160;sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower's property or Borrower's ability to repay this Note or perform Borrower's obligations under this Note or any of the related documents.</font></div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 12.25pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">False Statements. Any warranty,&#160;&#160;representation or statement&#160;&#160;made or furnished&#160;&#160;to&#160;&#160;Lender&#160;&#160;by Borrower or on&#160;&#160;Borrower's&#160;&#160;behalf, or made by Guarantor, or any other guarantor, endorser, surety, or&#160;&#160;accommodation&#160;&#160;party, under this&#160;&#160;Note or the&#160;&#160;related documents&#160;&#160;in connection with the obtaining of the loan evidenced by this Note or any&#160;security&#160;&#160;document directly&#160;&#160;or&#160;&#160;indirectly&#160;&#160;securing repayment of this Note is false or&#160;misleading&#160;in&#160;any&#160;material&#160;respect,&#160;either&#160;now&#160;or&#160;at&#160;the&#160;time&#160;made&#160;or&#160;furnished&#160;or&#160;becomes&#160;false&#160;or&#160;misleading&#160;at&#160;any&#160;time&#160;thereafter.</font></div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 11.05pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Insolvency. The dissolution or termination of Borrower's existence as a going business, the insolvency of Borrower, the appointment of a receiver for any part of Borrower's property, any assignment for the benefit&#160;&#160;of&#160;&#160;creditors,&#160;&#160;any&#160;&#160;type&#160;&#160;of&#160;&#160;creditor&#160;&#160;workout,&#160;&#160;or&#160;&#160;the commencement&#160;&#160;of any proceeding under any bankruptcy or insolvency laws by or against&#160;&#160;&#160;Borrower.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 18.45pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of&#160;&#160;Borrower&#160;&#160;or by any&#160;&#160;governmental&#160;&#160;agency&#160;&#160;against any&#160;&#160;collateral&#160;&#160;securing the loan. This includes a garnishment of any of&#160;&#160;Borrower's accounts, including&#160;deposit accounts,&#160;&#160;with Lender.&#160;&#160;However, this&#160;&#160;Event of&#160;&#160;Default shall&#160;&#160;not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture&#160;&#160;proceeding and if Borrower gives Lender written notice of the creditor or forfeiture&#160;&#160;proceeding and deposits&#160;with Lender monies or&#160;&#160;&#160;&#160;&#160;a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender,&#160;&#160;in its sole&#160;&#160;discretion,&#160;&#160;as&#160;&#160;being an adequate&#160;&#160;reserve or bond for the&#160;dispute.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 11.7pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Execution; Attachment. Any execution or attachment is levied against the Collateral, and such execution or attachment is not set aside, discharged or stayed within thirty&#160;&#160;(30) days after the same is&#160;&#160;&#160;levied<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font></font></div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 10.85pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Change in Zoning or Public Restriction.&#160;&#160;Any change in any zoning ordinance or regulation or any other public restriction is enacted, adopted&#160;&#160;&#160;or implemented, that limits or defines the uses which may be made of the Collateral such that the present or intended use of the Collateral, </font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">as specified in the related documents, would be in violation of&#160;such zoning ordinance or regulation or public restriction, as changed.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 15.2pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Default Under Other Lien Documents. A default occurs under any other mortgage, deed of trust or security agreement covering all or any portion of&#160;the&#160;Collateral.</font></div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Judgment.&#160;&#160;Unless&#160;adequately&#160;covered&#160;by insurance in the opinion of Lender, the entry of a final judgment for the payment of money involving more than one hundred thousand dollars ($100,000.00) against Borrower and the failure by Borrower to discharge the same, or cause it to be discharged,&#160;or&#160;bonded off to&#160;Lender's satisfaction, within&#160;thirty&#160;(30)&#160;days&#160;from&#160;the&#160;date&#160;of&#160;the&#160;order,&#160;decree&#160;or&#160;process&#160;under&#160;which&#160;or pursuant&#160;to&#160;which&#160;such&#160;judgment&#160;was&#160;entered.</font></div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 15pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Events Affecting Guarantor.&#160;&#160;&#160;Any&#160;&#160;of the&#160;&#160;preceding events occurs with respect to any Guarantor, or&#160;&#160;any other guarantor, endorser,&#160;&#160;surety,&#160;&#160;&#160;&#160;or accommodation party of any of the indebtedness or any&#160;&#160;Guarantor, or any&#160;&#160;other guarantor, endorser,&#160;&#160;surety, or accommodation&#160;&#160;party&#160;&#160;dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any guaranty of the indebtedness evidenced by this&#160;&#160;Note.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Change In Ownership. Any change in ownership of twenty-five percent (25%) or more of the common stock of Borrower.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 0pt" align="justify">Adverse Change.&#160; A material adverse change occurs in Borrower's financial condition, or Lender believes the prospect of payment or performance of this Note isimpaired.</div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Insecurity.&#160;&#160;Lender in good faith believes itself&#160;&#160;insecure.</font></div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 14.6pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Cure Provisions. If any default, other than&#160;&#160;a default in payment, is curable&#160;&#160;and if Borrower has not been given a notice of a breach of the&#160;&#160;same provision of this Note within the preceding twelve (12) months, it may be cured if Borrower, after Lender sends written&#160;&#160;notice to&#160;&#160;Borrower&#160;&#160;demanding&#160;&#160;cure of&#160;&#160;such default:&#160;&#160;&#160;(1)&#160;&#160;&#160;cures the default within twenty&#160;&#160;(20)&#160;&#160;days; or&#160;&#160;&#160;(2)&#160;&#160;&#160;if the&#160;&#160;cure requires more than&#160;twenty </font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(20) days, immediately initiates steps which Lender deems in Lender's sole discretion to be sufficient to cure the default and thereafter continues and completes all reasonable and necessary steps sufficient to produce compliance as soon as reasonably&#160;&#160;practical.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 19.05pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">LENDER'S RIGHTS. Upon default, Lender may declare the entire indebtedness, including the unpaid principal balance&#160;&#160;under this&#160;&#160;Note, all&#160;&#160;accrued unpaid interest, and all other amounts, costs and expenses for which Borrower is responsible under this&#160;&#160;Note or&#160;&#160;any other&#160;&#160;agreement with Lender pertaining to this loan, immediately due, without notice, and then Borrower will pay that amount.hen&#160;Borrower&#160;will&#160;pay&#160;that&#160;amount.</font></div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 14.8pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">ATTORNEYS' FEES: EXPENSES. Lender may hire an attorney to help collect this Note if Borrower does not pay, and Borrower will pay Lender's reasonable. attorneys' fees. Borrower&#160;&#160;also&#160;&#160;will&#160;&#160;pay&#160;&#160;Lender&#160;&#160;all&#160;&#160;other&#160;&#160;amounts&#160;&#160;Lender&#160;&#160;actually&#160;&#160;incurs&#160;&#160;as&#160;&#160;court&#160;&#160;costs,&#160;&#160;lawful&#160;&#160;fees&#160;&#160;for&#160;&#160;filing, recording, releasing to any public office any instrument securing this&#160;&#160;Note;&#160;&#160;the&#160;&#160;reasonable&#160;&#160;cost&#160;&#160;actually&#160;&#160;expended&#160;&#160;for&#160;&#160;repossessing,&#160;&#160;storing,&#160;&#160;preparing for sale, and selling any security; and fees for&#160;&#160;noting&#160;&#160;a&#160;&#160;lien&#160;&#160;on&#160;&#160;or&#160;&#160;transferring&#160;&#160;a&#160;&#160;certificate&#160;&#160;of&#160;&#160;title&#160;&#160;to&#160;&#160;any&#160;&#160;motor&#160;&#160;vehicle&#160;&#160;offered&#160;&#160;as&#160;&#160;security&#160;&#160;for&#160;&#160;this&#160;&#160;Note, or&#160;&#160;premiums&#160;&#160;or&#160;&#160;identifiable&#160;&#160;charges&#160;&#160;received&#160;&#160;inconnection with the sale of authoized insurance.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 14.8pt" align="justify">JURY WAIVER.&#160; Lender and Borrower hereby waive the right to any jury trail in any action, proceeding, or counterclaim brought by either Lender or Borrower against the other.</div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 13.65pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">GOVERNING LAW. This&#160;&#160;Note will be governed by federal&#160;&#160;law applicable to Lender&#160;&#160;and, to the extent not preempted by federal law, the laws of&#160;&#160;the State of Texas without regard to its conflicts of law provisions.&#160;&#160;&#160;&#160;&#160;&#160;&#160;This Note has been accepted by Lender&#160;&#160;in the State of Texas.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 13.65pt" align="justify">CHOICE OF VENUE.&#160; If there is a lawsuit, and if the transaction evidenced by this Note occurred in Dallas County, Borrower agrees upon Lender's request to submit to the jurisdiction of the courts of Dallas County, State of Texas.</div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 13.65pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower's accounts with&#160;&#160;Lender&#160;&#160;(whether&#160;&#160;checking, savings, or some other account).&#160;&#160;This&#160;&#160;includes&#160;&#160;all accounts&#160;&#160;Borrower&#160;&#160;holds jointly&#160;&#160;with&#160;&#160;someone&#160;&#160;else&#160;&#160;and&#160;&#160;all&#160;&#160;accounts&#160;&#160;Borrower&#160;&#160;may open in the future. However, this does not include any&#160;IRA&#160;&#160;or&#160;&#160;Keogh&#160;&#160;accounts,&#160;&#160;or&#160;&#160;any&#160;&#160;trust&#160;&#160;accounts&#160;&#160;for&#160;&#160;which&#160;&#160;setoff&#160;&#160;would&#160;&#160;be&#160;&#160;prohibited&#160;&#160;by law. Borrower authorizes Lender, to&#160;&#160;the&#160;&#160;extent&#160;&#160;permitted by&#160;&#160;applicable&#160;&#160;law, to&#160;&#160;charge&#160;&#160;or&#160;&#160;setoff&#160;&#160;all sums&#160;&#160;owing&#160;&#160;on the&#160;&#160;indebtedness&#160;&#160;against&#160;&#160;any&#160;&#160;and&#160;&#160;all&#160;&#160;such accounts.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 13.65pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">LINE OF CREDIT. This Note evidences a revolving line of credit. Advances under this Note, as&#160;&#160;well&#160;&#160;as&#160;&#160;directions&#160;&#160;for&#160;&#160;payment&#160;&#160;from&#160;&#160;Borrower's accounts,&#160;&#160;may&#160;&#160;be requested&#160;&#160;orally&#160;&#160;or&#160;&#160;in writing&#160;&#160;by&#160;&#160;Borrower&#160;&#160;or&#160;&#160;by&#160;&#160;an authorized&#160;&#160;person.&#160;&#160;Lender&#160;&#160;may,&#160;&#160;but need not, require that&#160;&#160;all oral requests&#160;&#160;be confirmed in writing.&#160; Borrower agrees to be&#160;liable for all sume either&#160;&#160;(A)&#160;&#160;advanced&#160;&#160;in&#160;&#160;accordance&#160;&#160;with&#160;&#160;the&#160;&#160;instructions&#160;&#160;of&#160;&#160;an&#160;&#160;authorized person or (B) credited to any of&#160;&#160;Borrower's&#160;&#160;accounts&#160;&#160;with&#160;&#160;Lender.&#160;&#160;The&#160;&#160;unpaid&#160;&#160;principal&#160;&#160;balance&#160;&#160;owing&#160;&#160;on&#160;&#160;this&#160;&#160;Note&#160;&#160;at&#160;&#160;any&#160;&#160;time&#160;&#160;may&#160;&#160;be&#160;&#160;evidenced by endorsements on this Note or by Lender's internal records including daily computer print-outs.&#160;&#160;&#160;Lender&#160;&#160;will&#160;&#160;have&#160;&#160;no&#160;&#160;obligation&#160;&#160;to advance funds under&#160;&#160;this&#160;&#160;Note if:&#160;&#160;(A)&#160;&#160;Borrower&#160;&#160;or&#160;&#160;any&#160;&#160;guarantor&#160;&#160;is&#160;&#160;in default&#160;&#160;under the&#160;&#160;terms&#160;&#160;of&#160;&#160;this&#160;&#160;Note or&#160;&#160;any&#160;&#160;agreement&#160;&#160;that&#160;&#160;Borrower&#160;&#160;or any guarantor has wuth Lender, icluding any agreement made in connection with the signing of this Note; (B) Borrower or any guarantor ceases doing business or is&#160;insolvent;&#160;&#160;(C)&#160;&#160;any&#160;&#160;guarantor&#160;&#160;seeks,&#160;&#160;claims&#160;&#160;or&#160;&#160;otherwise&#160;&#160;attempts&#160;&#160;to&#160;&#160;limit,&#160;&#160;modify&#160;&#160;or&#160;&#160;revoke&#160;&#160;such&#160;&#160;guarantor's&#160;&#160;guarantee of this Note&#160;&#160;or&#160;&#160;any&#160;&#160;other&#160;&#160;loan with&#160;&#160;Lender;&#160;&#160;(D)&#160;&#160;Borrower&#160;&#160;has applied&#160;&#160;funds&#160;&#160;provided&#160;&#160;pursuant&#160;&#160;to&#160;&#160;this&#160;&#160;Note for&#160;&#160;purposes&#160;&#160;other&#160;&#160;than&#160;those authorized by Lender; or (E) Lender in good faith believes itself&#160;insecure .&#160;&#160;&#160;This&#160;&#160;revolving line of&#160;&#160;credit shall not be subject to&#160;&#160;Ch. 346 of&#160;&#160;the Texas&#160;&#160;Finance&#160;Code.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 13.65pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">FINANCIAL STATEMENTS.&#160;&#160;Borrower&#160;&#160;agrees&#160;&#160;to&#160;&#160;provide&#160;&#160;Lender with such financial&#160;&#160;statements&#160;&#160;and other&#160;&#160;related information at such frequencies&#160;&#160;&#160;and&#160;&#160;in such detail&#160;&#160;as&#160;&#160;Lender&#160;&#160;may&#160;&#160;reasonably request.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 13.65pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">EXPENSES. Borrower agrees to pay to Lender on demand the amount of all costs, fees and expenses paid, incurred or charged by Lender in connection with Lender's administration of the Loan, the preparation of documents and instruments related to the Loan, and&#160;&#160;the&#160;&#160;filing&#160;&#160;or recordation of any financing statements, documents&#160;&#160;and instruments required for perfection of any&#160;collateral.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 13.65pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">SUCCESSOR.&#160;&#160;&#160;Lender&#160;&#160;hereunder,&#160;&#160;BOKF,&#160;&#160;NA dba&#160;&#160;Bank of Texas,&#160;&#160;is successor&#160;&#160;by merger to&#160;&#160;Bank of Texas,&#160;&#160;N.A.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 13.65pt" align="justify">SUCCESSOR INTERESTS.&#160; The terms of this Note shall be binding upon Borrower, and upon Borrower's heirs, personal representatives, successors and assigns, and shall inure to the benefit of Lender and its successors and assigns.</div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 19.05pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">GENERAL PROVISIONS. If any part of this Note cannot be enforced, this fact will not affect the rest of the&#160;&#160;Note.&#160;&#160;Borrower does not agree or&#160;&#160;intend to pay, and Lender does not agree or intend to contract for, charge, collect, take, reserve or receive (collectively&#160;&#160;referred to&#160;&#160;herein as&#160;&#160;"charge or collect"), any amount in the nature of interest or in the nature of a fee for this loan, which&#160;&#160;would&#160;&#160;in any&#160;&#160;way&#160;&#160;or event&#160;&#160;(including&#160;&#160;demand, prepayment, or acceleration) cause Lender to charge or collect more for this loan than the maximum Lender&#160;&#160;would&#160;&#160;be permitted to&#160;&#160;charge or collect by federal law or the law of the State of Texas (as applicable). Any such excess interest or unauthorized fee shall, instead of anything stated to the contrary, be applied first to reduce the principal balance of this&#160;&#160;loan, and when the principal has been paid in full,&#160;&#160;be&#160;&#160;refunded to Borrower.&#160;&#160;The&#160;&#160;right to accelerate&#160;&#160;maturity of sums due under this&#160;&#160;Note does&#160;&#160;not include the right to accelerate any&#160;&#160;interest which&#160;&#160;has not otherwise&#160;&#160;accrued on the date of such acceleration,&#160;&#160;and Lender does not intend to charge or collect any&#160;&#160;unearned interest in the event&#160;&#160;&#160;&#160;&#160;of acceleration. All sums paid or agreed to be paid to Lender for the use, forbearance or detention of sums due hereunder shall, to the extent permitted by applicable law, be amortized, prorated, allocated and spread throughout the full term of the&#160;&#160;loan evidenced&#160;&#160;by this&#160;&#160;Note until&#160;&#160;payment in full so that the rate or amount of interest on account of the loan evidenced hereby&#160;&#160;does&#160;&#160;not exceed the&#160;&#160;applicable&#160;&#160;usury&#160;&#160;ceiling. Lender may delay or forgo enforcing any of its rights or&#160;&#160;remedies&#160;&#160;under this&#160;&#160;Note without&#160;&#160;losing them.&#160;&#160;Borrower&#160;&#160;and any&#160;&#160;other&#160;&#160;person who signs, guarantees or endorses this Note, to the extent allowed by law, waive presentment, demand&#160;&#160;for&#160;&#160;payment, notice of&#160;&#160;dishonor,&#160;&#160;notice of intent to accelerate the maturity of this&#160;&#160;Note, and notice of acceleration of the maturity of this Note.&#160;&#160;Upon any change in the terms of this&#160;&#160;Note,&#160;&#160;&#160;and unless otherwise expressly stated in writing, no party who signs this Note,&#160;&#160;whether&#160;&#160;as&#160;&#160;maker,&#160;&#160;guarantor,&#160;&#160;accommodation&#160;&#160;maker&#160;&#160;or&#160;&#160;endorser, shall be released from liability.&#160;&#160;All such parties agree that&#160;&#160;Lender&#160;&#160;may renew or extend&#160;&#160;(repeatedly&#160;&#160;and for any&#160;&#160;length of time) this&#160;&#160;loan or release any party or guarantor or collateral; or impair, fail to realize upon or perfect Lender's security interest in the collateral without the consent of or notice to anyone . All such parties also agree that Lender may modify this loan without&#160;&#160;the consent&#160;&#160;of or&#160;&#160;notice to&#160;&#160;anyone other&#160;&#160;than the party with whom the modification is made.&#160;&#160;The obligations&#160;&#160;under this Note are joint&#160;&#160;&#160;&#160;and several.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS.&#160; BORROWER AGREES TO THE TERMS OF THE NOTE.</div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THSI PROMISSORY NOTE.</div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;BORROWER:</div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;TANDY LEATHER FACTORY, INC.</div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;By:&#160; <font style="TEXT-DECORATION: underline">/S/ Shannon L. Greene</font></div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Chief Financial Officer of Tandy Leather Factory, Inc.</div>

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<TYPE>EX-10.2
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<FILENAME>exhibit10-2.htm
<DESCRIPTION>BUSINESS LOAN AGREEMENT
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<div>Exhibit 10.2</div>

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<div style="TEXT-ALIGN: center"><font style="FONT-WEIGHT: bold">BUSINESS LOAN AGREEMENT (ASSET BASED)</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Borrower:</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Tandy Leather Factory, Inc.</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Lender:</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">BOKF, NA dba Bank of Texas</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">1900 SE Loop 820</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">P.O. Box 29775</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Fort Worth, TX&#160;&#160;76140</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Dallas, TX&#160;&#160;75229-9775</font></div>
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<td width="100%" style="BORDER-BOTTOM: black 2px solid"><font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font></td>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 15.6pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">THIS BUSINESS LOAN AGREEMENT (ASSET BASED) dated September 18, 2015, is made and executed between Tandy Leather Factory, Inc. ("Borrower") and BOKF, NA dba Bank of Texas&#160;&#160;( "Lender")&#160;&#160;on the&#160;&#160;following terms&#160;&#160;and conditions .&#160;&#160;Borrower&#160;&#160;has&#160;&#160;received prior&#160;&#160;commercial&#160;&#160;loans from Lender or has applied to Lender for a commercial loan or loans or other financial accommodations, including those which may be described on any exhibit or schedule attached to this Agreement.&#160;&#160;Borrower&#160;&#160;understands&#160;&#160;and&#160;&#160;agrees&#160;&#160;that:&#160;&#160;(Al&#160;&#160;in&#160;&#160;granting,&#160;&#160;renewing,&#160;&#160;or extending any Loan, Lender is relying upon Borrower's representations, warranties, and agreements as set forth&#160;&#160;in this&#160;&#160;Agreement;&#160;&#160;(8)&#160;&#160;the granting, renewing, or extending of any Loan by Lender at all times shall be subject to Lender's sole judgment and discretion; and&#160;&#160;(Cl&#160;&#160;all such&#160;&#160;Loans shall be and remain subject to the terms and conditions of this&#160;&#160;&#160;Agreement.</font></div>

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<div align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">TERM. This Agreement shall be effective as of September 18, 2015, and shall continue in full force and effect until such time as all of Borrower's Loans in favor of Lender have been paid in full, including principal, interest, costs, expenses, attorneys' fees, and other fees and charges, or until such time as the parties may agree in writing to terminate this Agreement.</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 14.6pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">LINE OF CREDIT. Lender agrees to make Advances to Borrower from time to time from the date of this&#160;&#160;Agreement&#160;&#160;to the&#160;&#160;Expiration Date,&#160;&#160;provided the aggregate amount of such Advances outstanding at any time does not exceed the Borrowing Base. Within the foregoing limits, Borrower may borrow, partially or wholly prepay, and reborrow under this Agreement as&#160;follows :</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 17.25pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Conditions Precedent to Each Advance.&#160;&#160;Lender's obligation to make any Advance&#160;&#160;to <font style="FONT-STYLE: italic; DISPLAY: inline; FONT-SIZE: 10pt">or&#160;&#160;</font>for&#160;&#160;the account&#160;&#160;of&#160;&#160;Borrower&#160;&#160;under this Agreement&#160;&#160;is subject to the following conditions precedent, with all documents, instruments, opinions, reports, and other items required under this Agreement&#160;&#160;to be in form and substance satisfactory&#160;&#160;to&#160;&#160;Lender:</font></div>

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<div style="TEXT-INDENT: 63pt; MARGIN-LEFT: 63pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(1)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Lender shall have received evidence that this Agreement and all Related Documents have been duly authorized, executed, and delivered by Borrower to&#160;&#160;Lender.</font></div>

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<div style="TEXT-INDENT: 63pt; MARGIN-LEFT: 63pt">(2) Lender shall have received such opinions of counsel, supplemental opinions, and documents as Lender may request.</div>

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<div style="TEXT-INDENT: 63pt; MARGIN-LEFT: 63pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(3)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The security interests in the Collateral shall have been duly authorized,&#160;&#160;created, and perfected with first&#160;&#160;lien priority&#160;&#160;and shall be in&#160;&#160;full force&#160;&#160;and effect.</font></div>

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<div style="TEXT-INDENT: 63pt; MARGIN-LEFT: 63pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(4)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">All guaranties required by Lender for the credit facility(ies)&#160;&#160;shall have been executed&#160;&#160;by each Guarantor,&#160;&#160;delivered to&#160;&#160;Lender, and&#160;&#160;be in full force&#160;&#160;and effect.</font></div>

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<div style="TEXT-INDENT: 63pt; MARGIN-LEFT: 63pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(5)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Lender, at its option and for its sole benefit, shall have conducted an audit of Borrower's&#160;&#160;Inventory,&#160;&#160;books,&#160;&#160;records,&#160;&#160;and&#160;&#160;operations, and Lender shall be satisfied as to their&#160;&#160;&#160;condition<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font></font></div>

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<div style="TEXT-INDENT: 63pt; MARGIN-LEFT: 63pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(6)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Borrower shall have paid to Lender all fees, costs, and expenses specified in this Agreement&#160;&#160;and the&#160;&#160;Related Documents as are&#160;&#160;then due and&#160;payable<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font></font></div>

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<div style="TEXT-INDENT: 63pt; MARGIN-LEFT: 63pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(7)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">There shall not exist at the time of any Advance a condition which would constitute an Event of Default under this Agreement, and Borrower shall have delivered to Lender the compliance certificate called for in the paragraph below titled "Compliance Certificate."</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 16.8pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Making Loan Advances. Advances under this credit facility, as well as directions for payment from Borrower's accounts,&#160;&#160;may be requested&#160;&#160;orally <font style="FONT-STYLE: italic; DISPLAY: inline; FONT-SIZE: 10pt">or </font>in writing by authorized persons . Lender&#160;&#160;may, but need not, require that&#160;&#160;all oral requests&#160;&#160;be confirmed&#160;&#160;in writing.&#160;&#160;Each Advance&#160;&#160;shall be conclusively deemed to have been made at the request of and for the benefit&#160;&#160;of&#160;&#160;Borrower&#160;&#160;( 1)&#160;&#160;when&#160;&#160;credited to&#160;&#160;any&#160;&#160;deposit&#160;&#160;account of&#160;&#160;Borrower maintained with Lender or&#160;&#160;(2)&#160;&#160;when advanced in accordance&#160;&#160;with the instructions of an authorized&#160;&#160;person.&#160;&#160;Lender, at&#160;&#160;its option, may set a cutoff time, after which all requests for Advances will be treated as&#160;&#160;having been requested on the&#160;&#160;next succeeding Business&#160;Day.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 17.3pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Mandatory Loan Repayments. If at any time the aggregate principal amount of the outstanding Advances shall exceed&#160;&#160;the&#160;&#160;applicable&#160;&#160;Borrowing Base, Borrower, immediately upon written <font style="FONT-STYLE: italic; DISPLAY: inline; FONT-SIZE: 10pt">or </font>oral notice from Lender, shall pay to Lender&#160;&#160;an amount&#160;&#160;equal to&#160;&#160;the difference&#160;&#160;between the outstanding principal balance of the Advances&#160;&#160;and the&#160;&#160;Borrowing&#160;&#160;Base.&#160;&#160;On the&#160;&#160;Expiration Date, Borrower&#160;&#160;shall pay to&#160;&#160;Lender in full the aggregate unpaid principal amount of all Advances then outstanding and all accrued unpaid interest,&#160;&#160;together&#160;&#160;with&#160;&#160;all&#160;&#160;other applicable fees, costs and charges, if any, not yet&#160;&#160;&#160;paid.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 17.5pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Loan Account. Lender shall maintain on its books a record of account in which Lender shall make entries for each Advance and such other debits and credits as shall be appropriate in connection with the credit facility . Lender shall provide Borrower with periodic statements of Borrower's account, which statements shall be considered to be correct and&#160;&#160;conclusively&#160;&#160;binding on&#160;&#160;Borrower&#160;&#160;unless&#160;&#160;Borrower&#160;&#160;notifies Lender to the&#160;&#160;contrary&#160;&#160;within thirty&#160;&#160;(30) days&#160;&#160;after&#160;&#160;Borrower's&#160;&#160;receipt of&#160;&#160;any&#160;&#160;such statement&#160;&#160;which Borrower deems to be incorrect&#160;<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 18pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">COLLATERAL. To secure payment of the Primary Credit Facility and performance of all other Loans, obligations and duties owed by Borrower to Lender, Borrower (and others, if required) shall grant to Lender Security Interests in such property and assets as Lender may require. Lender's Security Interests in the Collateral shall be continuing liens and shall include the proceeds and products of the&#160;&#160;Collateral,&#160;&#160;including&#160;&#160;without&#160;&#160;limitation the proceeds of any insurance.&#160;&#160;&#160;&#160;&#160;&#160;&#160;With respect to the Collateral, Borrower agrees and represents and warrants to Lender :</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 16.5pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Perfection of Security Interests. Borrower agrees to execute all&#160;&#160;documents&#160;&#160;perfecting&#160;&#160;Lender's&#160;&#160;Security&#160;&#160;Interest&#160;&#160;and&#160;&#160;to&#160;&#160;take&#160;&#160;whatever actions are requested by Lender to perfect and continue Lender's Security Interests in the Collateral. Upon request of Lender, Borrower will deliver to Lender any and all of the documents evidencing <font style="FONT-STYLE: italic; DISPLAY: inline; FONT-SIZE: 10pt">or&#160;&#160;</font>constituting&#160;&#160;the Collateral,&#160;&#160;and Borrower&#160;&#160;will note Lender's interest&#160;&#160;upon any&#160;&#160;and all chattel paper and instruments if not delivered to Lender for possession by Lender. Contemporaneous with the execution of this Agreement, Borrower will execute one or more UCC financing statements and any similar statements&#160;&#160;as may be required by applicable&#160;&#160;law,&#160;&#160;and Lender will file such financing statements and all such similar statements in the appropriate location or&#160;&#160;locations.&#160;&#160;Borrower&#160;&#160;hereby&#160;&#160;appoints&#160;&#160;Lender&#160;&#160;as&#160;&#160;its irrevocable&#160;&#160;attorney-in<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">-</font>fact&#160;&#160;for&#160;&#160;the&#160;&#160;purpose&#160;&#160;of&#160;&#160;executing&#160;&#160;any&#160;&#160;documents&#160;&#160;necessary&#160;&#160;to&#160;&#160;perfect <font style="FONT-STYLE: italic; DISPLAY: inline; FONT-SIZE: 10pt">or&#160;&#160;</font>to continue&#160;&#160;any </font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Security Interest. Lender may at any time, and without further authorization from Borrower, file a carbon, photograph, facsimile, or other reproduction of any financing statement for use as a financing statement. Borrower&#160;&#160;will&#160;&#160;reimburse&#160;&#160;Lender&#160;&#160;for&#160;&#160;all&#160;&#160;expenses&#160;&#160;for&#160;&#160;the&#160;&#160;perfection, termination, and the continuation of the perfection of Lender's security interest in the Collateral.&#160;&#160;Borrower&#160;&#160;promptly&#160;&#160;will notify&#160;&#160;Lender before any change in Borrower's name including any change to the assumed business names of&#160;&#160;Borrower.&#160;&#160;Borrower&#160;&#160;also promptly&#160;&#160;&#160;will notify Lender before any change in Borrower's Social Security Number or Employer&#160;&#160;Identification Number.&#160;&#160;Borrower further&#160;&#160;agrees to&#160;&#160;notify Lender in writing prior to any change in address or location of Borrower's principal governance office or should Borrower merge or consolidate&#160;&#160;with any&#160;&#160;other entity.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 21.5pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Collateral Records. Borrower does now, and at all times hereafter shall, keep correct and accurate records of the&#160;&#160;Collateral,&#160;&#160;all of&#160;&#160;which&#160;&#160;records shall be available to Lender or Lender's representative upon demand for&#160;&#160;inspection&#160;&#160;and&#160;&#160;copying&#160;&#160;at&#160;&#160;any&#160;&#160;reasonable&#160;&#160;time.&#160;&#160;With respect to the Inventory, Borrower agrees to keep and maintain such records as Lender may require, including without limitation information concerning Eligible Inventory and records itemizing and describing the&#160;&#160;kind, type,&#160;&#160;quality,&#160;&#160;and quantity&#160;&#160;of&#160;&#160;Inventory, Borrower's&#160;&#160;Inventory costs&#160;&#160;and selling prices,&#160;&#160;and the daily&#160;&#160;withdrawals&#160;&#160;and additions to&#160;&#160;Inventory.&#160;&#160;Records&#160;&#160;related to&#160;&#160;Inventory are or will&#160;&#160;be located at&#160;&#160;1900&#160;&#160;SE Loop 820, Fort Worth, TX 76140. The above is an accurate and complete list of all locations at which Borrower&#160;&#160;keeps&#160;&#160;or&#160;&#160;maintains&#160;&#160;business records concerning&#160;&#160;Borrower's collateral.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 14.95pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Collateral Schedules. Concurrently with the execution and delivery of this Agreement, Borrower shall&#160;&#160;execute&#160;&#160;and&#160;&#160;deliver&#160;&#160;to&#160;&#160;Lender&#160;&#160;schedules of Inventory and schedules of Eligible Inventory in form and substance satisfactory to the Lender.&#160;&#160;Thereafter&#160;&#160;supplemental&#160;&#160;schedules&#160;&#160;shall be delivered&#160;&#160;according to the following&#160;&#160;schedule:&#160;&#160;&#160;With respect to&#160;&#160;Eligible&#160;&#160;Inventory, schedules&#160;&#160;shall be delivered&#160;&#160;&#160;Forty-five </font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(45) days after the end of each quarter and consist of a borrowing base report.</font></div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 15.1pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Representations and Warranties Concerning Inventory. With respect to the Inventory,&#160;&#160;Borrower&#160;&#160;represents&#160;&#160;and&#160;&#160;warrants&#160;&#160;to&#160;&#160;Lender:&#160;&#160;(1)&#160;&#160;All Inventory represented by Borrower to be Eligible Inventory for purposes of this&#160;&#160;Agreement&#160;&#160;conforms&#160;&#160;to&#160;&#160;the&#160;&#160;requirements&#160;&#160;of&#160;&#160;the&#160;&#160;definition&#160;&#160;of&#160; Eligible Inventory; (2) All Inventory values listed on&#160;&#160;schedules&#160;&#160;delivered&#160;&#160;to&#160;&#160;Lender&#160;&#160;will&#160;&#160;be&#160;&#160;true&#160;&#160;and&#160;&#160;correct,&#160;&#160;subject&#160;&#160;to&#160;&#160;immaterial variance; </font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(3)&#160;&#160;The value of the&#160;&#160;Inventory will&#160;&#160;be determined&#160;&#160;on a consistent accounting&#160;&#160;basis;&#160;&#160;(4)&#160;&#160;Except as agreed to the contrary&#160;&#160;by Lender in&#160;&#160;writing, all Eligible Inventory is now and at all times hereafter will be in Borrower's physical possession and shall not be held by others on consignment, sale on approval, or sale or return; (5) Except&#160;&#160;as&#160;&#160;reflected&#160;&#160;in the&#160;&#160;Inventory&#160;&#160;schedules&#160;&#160;delivered&#160;&#160;to&#160;&#160;Lender,&#160;&#160;all&#160;&#160;Eligible Inventory is now&#160;&#160;and at&#160;&#160;all times&#160;&#160;hereafter&#160;&#160;will&#160;&#160;be of good and merchantable&#160;&#160;quality, free&#160;&#160;from defects;&#160;&#160;(6)&#160;&#160;Eligible&#160;&#160;Inventory&#160;&#160;is not now&#160;&#160;and will not at any time hereafter be stored with a&#160;&#160;bailee,&#160;&#160;warehouseman,&#160;&#160;or similar&#160;&#160;party&#160;&#160;without&#160;&#160;Lender's prior&#160;&#160;written consent,&#160;&#160;and,&#160;&#160;in such event,&#160;&#160;Borrower&#160;&#160;will concurrently&#160;&#160;at the time of bailment&#160;&#160;cause&#160;&#160;any such bailee, warehouseman,&#160;&#160;or similar&#160;&#160;party to issue and deliver&#160;&#160;&#160;to Lender, in form acceptable to Lender, warehouse receipts in Lender name evidencing&#160;&#160;the&#160;&#160;storage&#160;&#160;of&#160;&#160;Inventory;&#160;&#160;and&#160;&#160;(7)&#160;&#160;Lender,&#160;&#160;its assigns, or agents shall&#160;&#160;have the&#160;&#160;right at any time&#160;&#160;and at&#160;&#160;Borrower's expense to inspect and examine the&#160;&#160;Inventory and to check and test&#160;&#160;&#160;&#160;the same as to quality, quantity, value,&#160;&#160;and&#160;&#160;&#160;condition.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 17.35pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make the initial Advance and each subsequent Advance under this Agreement shall be subject to the fulfillment to Lender's satisfaction of all of the conditions set forth in this Agreement&#160;&#160;and&#160;&#160;in the&#160;&#160;Related Documents.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 17.35pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Loan Documents. Borrower shall provide to Lender&#160;&#160;the&#160;&#160;following&#160;&#160;documents&#160;&#160;for&#160;&#160;the&#160;&#160;Loan:&#160;&#160;( 1)&#160;&#160;the&#160;&#160;Note;&#160;&#160;( 2)&#160;&#160;Security&#160;&#160;Agreements granting to Lender security interests in the Collateral; (3) financing statements and&#160;&#160;all&#160;&#160;other&#160;&#160;documents&#160;&#160;perfecting&#160;&#160;Lender's&#160;&#160;Security Interests; (4) evidence of insurance&#160;&#160;as&#160;&#160;required below;&#160;&#160;(5)&#160;&#160;guaranties;&#160;&#160;(6)&#160;&#160;together&#160;&#160;with all such Related Documents&#160;&#160;as&#160;&#160;Lender&#160;&#160;may require for the Loan; all in form and substance&#160;&#160;satisfactory&#160;&#160;to Lender and Lender's&#160;&#160;&#160;counsel.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 16.2pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Borrower's Authorization. Borrower shall have provided in form and substance satisfactory to Lender properly certified resolutions, duly authorizing the execution and delivery of this Agreement, the Note and the Related Documents.&#160;&#160;In addition,&#160;&#160;Borrower&#160;&#160;shall have provided&#160;&#160;such other resolutions, authorizations,&#160;&#160;documents and instruments as Lender or its counsel,&#160;&#160;&#160;&#160;may require.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 17.35pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Fees and Expenses&#160;&#160;Under This Agreement.&#160;&#160;Borrower shall have paid to&#160;&#160;Lender all fees,&#160;&#160;costs, and expenses&#160;&#160;specified in this Agreement&#160;&#160;and the Related Documents as are then due and&#160;&#160;payable.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 17.5pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Representations and Warranties. The representations and warranties set forth in this Agreement, in the Related Documents, and in any document or certificate&#160;&#160;delivered to Lender under this Agreement&#160;&#160;are true and&#160;&#160;&#160;correct.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 16.65pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">No Event of Default. There shall not exist at the time of any Advance a condition which would constitute an Event of Default under this Agreement or under any Related&#160;&#160;Document.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 15.25pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Limitation on Advances. Notwithstanding anything to the contrary contained herein, availability under the revolving line of credit may be reduced by the amount of unrealized losses related to foreign exchange transactions entered into by Borrower.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 17.3pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as of the date of this Agreement, as of the date of each disbursement of loan proceeds, as of the date of any renewal, extension or modification of any Loan, and at all times any Indebtedness exists:</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 15.85pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Organization. Borrower is a corporation for profit which is, and at all times&#160;&#160;shall be, duly organized,&#160;&#160;validly&#160;&#160;existing,&#160;&#160;and in good standing&#160;&#160;under and by virtue of the laws of the State of Delaware. Borrower is duly&#160;&#160;authorized&#160;&#160;to&#160;&#160;transact&#160;&#160;business&#160;&#160;in all&#160;&#160;other&#160;&#160;states&#160;&#160;in which Borrower is doing business, having obtained all necessary filings, governmental licenses and approvals for each state in which&#160;&#160;Borrower is&#160;&#160;doing business.&#160;&#160;Specifically,&#160;&#160;Borrower&#160;&#160;is, and at all times shall be, duly qualified as a foreign corporation&#160;&#160;in all states&#160;&#160;in which the failure to&#160;&#160;&#160;so qualify would have a material adverse effect on its business or financial condition. Borrower has the full power and authority to own its properties and to transact the business in which it is presently engaged or presently&#160;&#160;proposes to&#160;&#160;engage.&#160;&#160;Borrower&#160;&#160;maintains&#160;&#160;an office&#160;&#160;at 1900 SE Loop 820, Fort Worth,&#160;&#160;TX&#160;&#160;76140.&#160;&#160;Unless&#160;&#160;Borrower&#160;&#160;has&#160;&#160;designated&#160;&#160;otherwise&#160;&#160;in writing,&#160;&#160;the&#160;&#160;principal&#160;&#160;office&#160;&#160;is the&#160;&#160;office&#160;&#160;at&#160;&#160;which Borrower&#160;&#160;keeps its books and records including its records concerning the Collateral.&#160;&#160;&#160;Borrower will notify Lender prior to any change&#160;&#160;&#160;&#160;&#160;in the&#160;&#160;location of&#160;&#160;Borrower's state of organization&#160;&#160;or any change&#160;&#160;in Borrower's name.&#160;&#160;Borrower&#160;&#160;shall do all things&#160;&#160;necessary&#160;&#160;to&#160;&#160;preserve&#160;&#160;and to keep in full force and effect its existence, rights and privileges,&#160;&#160;and shall&#160;&#160;comply&#160;&#160;with all regulations,&#160;&#160;rules,&#160;&#160;ordinances,&#160;&#160;statutes,&#160;&#160;orders and decrees of any governmental or quasi-governmental authority or court applicable to Borrower and Borrower's business activities.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 15.85pt" align="left">Assumed Business Names.&#160; Borrower has filed or recorded all documents or filings required by law relating to all assumed business names used by Borrower.&#160; Excluding the name of Borrower, the following is a complete list of all assumed business names under which Borrower does business:&#160; None.</div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 15.85pt" align="left">Authorization.&#160; Borrower's execution, delivery, and performance of this Agreement and all the Related Documents have been duly authorized by all necessary action by Borrower and do not conflict with, result in a violation of, or constitute a default under (1) any provision of (a) Borrower's articles of incorporation or organization, or bylaws, or (b) any agreement or other instrument binding upon Borrower or (2) any law, governmental regulation, court decree, or order&#160;applicable to Borrower or to Borrower's properties.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 18.1pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Financial Information. Each of Borrower's financial statements supplied to Lender truly and&#160;&#160;completely&#160;&#160;disclosed&#160;&#160;Borrower's&#160;&#160;financial&#160;&#160;condition as of the date of the statement, and there&#160;&#160;has been no material adverse&#160;&#160;change&#160;&#160;in Borrower's&#160;&#160;financial&#160;&#160;condition&#160;&#160;subsequent to&#160;&#160;the date of the most recent financial statement supplied to Linder.&#160;&#160;Borrower&#160;&#160;has no material contingent&#160;&#160;obligations&#160;&#160;except&#160;&#160;as disclosed in </font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">such financial statements.</font></div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 18.1pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Legal Effect. This Agreement constitutes, and any instrument or agreement Borrower is required to&#160;&#160;give&#160;&#160;under&#160;&#160;this&#160;&#160;Agreement&#160;&#160;when delivered will constitute legal, valid, and binding obligations of Borrower enforceable against Borrower in accordance with their&#160;&#160;respective&#160;&#160;terms.</font></div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 18.1pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Properties. Except as contemplated by this Agreement&#160;&#160;or as previously&#160;&#160;disclosed in Borrower's financial statements&#160;&#160;or in writing to&#160;&#160;Lender&#160;&#160;and as accepted by Lender, and except for&#160;&#160;property tax&#160;&#160;liens for taxes&#160;&#160;not presently due and payable, Borrower owns and has good title to&#160;&#160;all of Borrower's properties free and clear of all Security Interests, and has not executed any security documents&#160;&#160;or financing&#160;&#160;statements relating to such properties. All of Borrower's properties are titled in Borrower's legal name, and Borrower has not used or filed a financing statement&#160;&#160;under any other name for at least the last five (5)&#160;&#160;&#160;years.</font></div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 18.1pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Hazardous Substances.&#160;&#160;Except as disclosed to and acknowledged&#160;&#160;by Lender in writing, Borrower represents and warrants that:&#160;&#160;(1)&#160;&#160;During&#160;&#160;the period of&#160;&#160;Borrower's ownership of the Collateral, there&#160;&#160;has been no use, generation,&#160;&#160;manufacture, storage, treatment,&#160;&#160;disposal,&#160;&#160;release&#160;&#160;or threatened release of any Hazardous Substance by any person on, under, about or from any of the Collateral. ( 2) Borrower has no knowledge of, or reason to believe that there has been (a) any breach or violation of any Environmental Laws; (b) any use, generation, manufacture , storage, treatment, disposal, release or threatened release of any Hazardous Substance on,&#160;&#160;under,&#160;&#160;about&#160;&#160;or&#160;&#160;from&#160;&#160;the&#160;&#160;Collateral by any prior owners or occupants of any of the Collateral; or (c)&#160;&#160;any actual or threatened litigation or claims of any&#160;&#160;kind by any&#160;&#160;person relating to such matters. (3)&#160;&#160;Neither&#160;&#160;Borrower nor&#160;&#160;any&#160;&#160;tenant,&#160;&#160;contractor,&#160;&#160;agent or other authorized&#160;&#160;user of any of&#160;&#160;the&#160;&#160;Collateral&#160;&#160;shall use, generate, manufacture, store, treat, dispose of or release any Hazardous Substance on,&#160;&#160;under,&#160;&#160;about&#160;&#160;or&#160;&#160;from&#160;&#160;any&#160;&#160;of&#160;&#160;the&#160;&#160;Collateral; and any such activity shall be conducted in compliance with all applicable federal, state, and local&#160;&#160;laws,&#160;&#160;regulations,&#160;&#160;and&#160;&#160;ordinances, including without limitation all Environmental Laws. Borrower authorizes Lender&#160;&#160;and its agents&#160;&#160;to enter&#160;&#160;upon the&#160;&#160;Collateral to make such inspections and tests as Lender may deem appropriate to determine compliance of the Collateral with this&#160;&#160;section&#160;&#160;of&#160;&#160;the Agreement. Any inspections or tests made by Lender shall be at Borrower's expense and for Lender's purposes only&#160;&#160;and shall&#160;&#160;not be&#160;&#160;construed to create any responsibility or liability on the part of Lender to Borrower&#160;&#160;or&#160;&#160;to&#160;&#160;any&#160;&#160;other&#160;&#160;person.&#160;&#160;The&#160;&#160;representations&#160;&#160;and warranties contained herein are based on Borrower's due diligence in investigating the Collateral for hazardous waste and Hazardous Substances. Borrower hereby ( 1) releases and waives any&#160;&#160;future&#160;&#160;claims&#160;&#160;against&#160;&#160;Lender&#160;&#160;for&#160;&#160;indemnity&#160;&#160;or&#160;&#160;contribution&#160;&#160;in&#160;&#160;the&#160;&#160;event Borrower becomes liable for cleanup or other costs under any such laws, and (2) agrees to indemnify, defend, and hold harmless Lender&#160;&#160;against any and all claims, losses, liabilities, damages, penalties, and expenses which Lender may directly or indirectly sustain or suffer&#160;&#160;resulting from a breach of this section of the Agreement or as&#160;&#160;a&#160;&#160;consequence&#160;&#160;of&#160;&#160;any&#160;&#160;use, generation,&#160;&#160;manufacture,&#160;&#160;storage,&#160;&#160;disposal, release or threatened release of a hazardous waste or substance on the Collateral.&#160;&#160;The&#160;&#160;provisions&#160;&#160;of&#160;&#160;this&#160;&#160;section&#160;&#160;of&#160;&#160;the&#160;&#160;Agreement, including the obligation to indemnify and defend, shall survive the payment&#160;&#160;of&#160;&#160;the&#160;&#160;Indebtedness&#160;&#160;and&#160;&#160;the&#160;&#160;termination,&#160;&#160;expiration&#160;&#160;or satisfaction of this Agreement and shall not be affected by Lender's acquisition of any interest in&#160;&#160;any&#160;&#160;of&#160;&#160;the&#160;&#160;Collateral,&#160;&#160;whether&#160;&#160;by&#160;&#160;foreclosure&#160;&#160;or&#160;otherwise.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 17.7pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Litigation and Claims. No litigation, claim, investigation, administrative proceeding&#160;&#160;or&#160;&#160;similar&#160;&#160;action&#160;&#160;(including&#160;&#160;those&#160;&#160;for&#160;&#160;unpaid&#160;&#160;taxes) against Borrower is pending or threatened, and no other event has occurred which may materially adversely affect Borrower's financial&#160;&#160;condition or properties, other than litigation, claims, or other events, if any, that have been disclosed to and acknowledged&#160;&#160;by&#160;&#160;Lender&#160;&#160;in&#160;&#160;writing.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 17.45pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Taxes. To the&#160;&#160;best of&#160;&#160;Borrower's&#160;&#160;knowledge,&#160;&#160;all of&#160;&#160;Borrower's&#160;&#160;tax&#160;&#160;returns and reports that&#160;&#160;are or&#160;&#160;were&#160;&#160;required to be filed, have&#160;&#160;been&#160;&#160;filed, and all taxes, assessments and other governmental charges have been paid in full, except those presently being or to be contested by Borrower&#160;in good&#160;faith&#160;in&#160;the&#160;ordinary&#160;course&#160;of&#160;business&#160;and&#160;for&#160;which&#160;adequate&#160;reserves&#160;have&#160;been&#160;provided.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 17.95pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Lien Priority. Unless otherwise previously disclosed to Lender in writing, Borrower&#160;&#160;has&#160;&#160;not&#160;&#160;entered&#160;&#160;into&#160;&#160;or&#160;&#160;granted&#160;&#160;any&#160;&#160;Security&#160;&#160;Agreements, or permitted the filing or attachment of any Security Interests on&#160;&#160;or&#160;&#160;affecting&#160;&#160;any&#160;&#160;of&#160;&#160;the&#160;&#160;Collateral&#160;&#160;directly&#160;&#160;or&#160;&#160;indirectly&#160;&#160;securing repayment of Borrower's Loan and Note, that would be prior or that may in any way be superior to Lender's Security Interests and&#160;&#160;rights in and to such Collateral.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 20.45pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Binding Effect. This Agreement, the Note, all Security Agreements (if any), and&#160;&#160;all&#160;&#160;Related&#160;&#160;Documents&#160;&#160;are&#160;&#160;binding&#160;&#160;upon the&#160;&#160;signers&#160;&#160;thereof, as well as upon their successors, representatives and assigns, and are&#160;&#160;legally&#160;&#160;enforceable&#160;&#160;in accordance&#160;&#160;with their&#160;&#160;respective&#160;&#160;terms.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 21.5pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">AFFIRMATIVE COVENANTS.&#160;&#160;&#160;&#160;&#160;&#160;Borrower covenants and agrees with Lender that, so long as this Agreement&#160;&#160;remains in effect, Borrower will:</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 19.05pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Notices of Claims and Litigation.&#160;&#160;Promptly&#160;&#160;inform&#160;&#160;Lender&#160;&#160;in writing&#160;&#160;of&#160;&#160;(1)&#160;&#160;all material adverse&#160;&#160;changes&#160;&#160;in Borrower's&#160;&#160;financial condition,&#160;&#160;and (2) all existing and all threatened litigation, claims, investigations,&#160;&#160;administrative&#160;&#160;proceedings&#160;&#160;or similar&#160;&#160;actions&#160;&#160;affecting&#160;&#160;Borrower&#160;&#160;or any Guarantor which could materially affect the financial condition of Borrower or the financial condition of any Guarantor.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 21pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Financial Records. Maintain its books and records&#160;&#160;in accordance&#160;&#160;with&#160;&#160;GAAP,&#160;&#160;applied&#160;&#160;on&#160;&#160;a&#160;&#160;consistent&#160;&#160;basis,&#160;&#160;and&#160;&#160;permit&#160;&#160;Lender&#160;&#160;to&#160;&#160;examine&#160;&#160;and&#160;&#160;audit&#160;&#160;Borrower's&#160;&#160;books&#160;&#160;and&#160;&#160;records&#160;&#160;at all&#160;&#160;reasonable&#160;times <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font></font></div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 20.55pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Financial Statements. Furnish Lender with such financial statements and other related information at such frequencies and in such detail as Lender may reasonably&#160;request<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font></font></div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Additional&#160;&#160;Information.&#160;&#160;&#160;Furnish such additional information and statements,&#160;&#160;as Lender may request from time to&#160;&#160;&#160;&#160;time.</font></div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 19.45pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Insurance. Maintain fire and other risk insurance, public liability insurance, and such other insurance as Lender may require&#160;&#160;with&#160;&#160;respect to&#160;&#160;Borrower's properties and operations, in form, amounts, and&#160;&#160;coverages&#160;&#160;reasonably&#160;&#160;acceptable&#160;&#160;to&#160;&#160;Lender&#160;&#160;and&#160;&#160;by&#160;&#160;insurance&#160;&#160;companies&#160;&#160;authorized to transact business in Texas . BORROWER MAY FURNISH THE INSURANCE REQUIRED BY THIS AGREEMENT&#160;&#160;WHETHER THROUGH&#160;&#160;&#160;EXISTING&#160;&#160;POLICIES&#160;&#160;&#160;OWNED&#160;&#160;OR&#160;&#160;CONTROLLED&#160;&#160;&#160;BY&#160;&#160;&#160;BORROWER&#160;&#160;&#160;OR&#160;&#160;THROUGH&#160;&#160;&#160;EQUIVALENT&#160;&#160;&#160;COVERAGE&#160;&#160;&#160;FROM&#160;ANY</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 19.3pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">INSURANCE COMPANY AUTHORIZED TO TRANSACT BUSINESS IN TEXAS . Borrower, upon request of Lender, will deliver to Lender from time to time the policies or certificates of insurance in form satisfactory&#160;&#160;to&#160;&#160;Lender,&#160;&#160;including&#160;&#160;stipulations&#160;&#160;that&#160;&#160;coverages&#160;&#160;will&#160;&#160;not&#160;&#160;be&#160;&#160;cancelled or diminished without at least ten ( 10) days prior written notice to Lender. Each&#160;&#160;insurance&#160;&#160;policy&#160;&#160;also&#160;&#160;shall&#160;&#160;include&#160;&#160;an&#160;&#160;endorsement providing that coverage in favor of Lender will not be impaired in any way by any&#160;&#160;act, omission or default of&#160;&#160;Borrower or any&#160;&#160;other person. In connection with all policies covering assets&#160;&#160;in which&#160;&#160;Lender&#160;&#160;holds or is offered&#160;&#160;a security&#160;&#160;interest for&#160;&#160;the&#160;&#160;Loans, Borrower will provide Lender with such lender's loss payable or other endorsements&#160;&#160;as Lender may&#160;&#160;&#160;require.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 19.15pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Insurance Reports. Furnish to Lender, upon request of Lender, reports&#160;&#160;on each existing&#160;&#160;insurance&#160;&#160;policy&#160;&#160;showing&#160;&#160;such&#160;&#160;information&#160;&#160;as Lender may reasonably request, including without&#160;&#160;limitation the&#160;&#160;following:&#160;&#160;(1)&#160;&#160;the&#160;&#160;name of&#160;&#160;the&#160;&#160;insurer;&#160;&#160;(2)&#160;&#160;the&#160;&#160;risks&#160;&#160;insured;&#160;&#160;(3)&#160;&#160;the amount&#160;&#160;of the policy;&#160;&#160;(4)&#160;&#160;the&#160;&#160;properties&#160;&#160;insured;&#160;&#160;(5)&#160;&#160;the then current property&#160;&#160;values on the basis of which insurance has been obtained,&#160;&#160;and the manner of determining those values; and (6)&#160;&#160;the expiration date of the&#160;&#160;policy.&#160;&#160;In addition,&#160;&#160;upon request of&#160;&#160;Lender&#160;&#160;(however&#160;&#160;not&#160;&#160;more often than annually), Borrower will have an independent appraiser satisfactory to&#160;&#160;Lender determine,&#160;&#160;as applicable,&#160;&#160;the&#160;&#160;actual&#160;&#160;cash&#160;&#160;value or replacement cost of any Collateral.&#160;&#160;&#160;&#160;&#160;&#160;The cost of such appraisal shall be paid by Borrower.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Guaranties.&#160;&#160;&#160;&#160;&#160;&#160;Prior to disbursement of any Loan proceeds, furnish executed guaranties of the Loans in <font style="FONT-STYLE: italic; DISPLAY: inline">favor&#160;&#160;</font>of Lender, executed by the </font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">guarantors&#160;named&#160;below,&#160;on&#160;Lender's&#160;forms,&#160;and&#160;in&#160;the&#160;amounts&#160;and&#160;under&#160;the&#160;conditions&#160;set&#160;forth&#160;in&#160;those&#160;guaranties.</font></div>

<div>&#160;</div>

<div align="center">
<table bgcolor="white" cellpadding="0" cellspacing="0" width="100%" style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">
<tr bgcolor="#cceeff">
<td width="50%"><font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;<font style="FONT-WEIGHT: bold">Name of Guarantor</font><font style="FONT-WEIGHT: bold"><font style="FONT-WEIGHT: normal"><font style="FONT-WEIGHT: normal">s</font></font></font></font></td>
<td width="50%"><font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"><font style="FONT-WEIGHT: bold; TEXT-DECORATION: underline">Amounts</font></font></td>
</tr><tr bgcolor="white">
<td width="50%"><font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;The Leather Factory, Inc. (AZ)</font></td>
<td width="50%"><font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Unlimited</font></td>
</tr><tr bgcolor="#cceeff">
<td width="50%"><font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;Roberts, Cushman and Company, Inc.</font></td>
<td width="50%"><font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;Unlimited</font></td>
</tr><tr bgcolor="white">
<td width="50%">
<div><font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;Tandy Leather Factory Espana, SL</font></div>
</td>
<td width="50%"><font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;Unlimited</font></td>
</tr><tr bgcolor="#cceeff">
<td width="50%"><font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;Tandy Leather Factory UK Limited</font></td>
<td width="50%"><font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;Unlimited</font></td>
</tr><tr bgcolor="white">
<td width="50%"><font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;Tandy Leather Factory Autralia PTY LTD</font></td>
<td width="50%"><font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;Unlimited</font></td>
</tr><tr bgcolor="#cceeff">
<td width="50%"><font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;The Leather Factory of Canada Ltd.</font></td>
<td width="50%"><font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;Unlimited</font></td>
</tr><tr bgcolor="white">
<td width="50%"><font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;Tandy Letaher Company Investments, Inc.</font></td>
<td width="50%"><font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;Unlimited</font></td>
</tr><tr bgcolor="#cceeff">
<td width="50%"><font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;The Leatther Factory, Inc. (NV)</font></td>
<td width="50%"><font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;Unlimited</font></td>
</tr><tr bgcolor="white">
<td width="50%"><font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;Hi-Line Leather &amp; Manufacturing Company</font></td>
<td width="50%"><font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;Unlimited</font></td>
</tr><tr bgcolor="#cceeff">
<td width="50%"><font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;The Leather Factory, L.P.</font></td>
<td width="50%"><font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;Unlimited</font></td>
</tr><tr bgcolor="white">
<td width="50%"><font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;The Leather Factory of Neada investments, Inc.</font></td>
<td width="50%"><font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;Unlimited</font></td>
</tr><tr bgcolor="#cceeff">
<td width="50%"><font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;Tandy Leather Company, Inc.</font></td>
<td width="50%"><font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;Unlimited</font></td>
</tr><tr bgcolor="white">
<td width="50%"><font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;Tandy Leather Company, L.P.</font></td>
<td width="50%"><font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;Unlimited</font></td>
</tr></table>
</div>

<div>&#160;</div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 18.25pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Other Agreements. Comply with all terms and conditions&#160;&#160;of&#160;&#160;all other&#160;&#160;agreements,&#160;&#160;whether&#160;&#160;now&#160;&#160;or&#160;&#160;hereafter&#160;&#160;existing,&#160;&#160;between Borrower and any other party and notify&#160;&#160;Lender immediately&#160;&#160;in writing of any default in connection&#160;&#160;with any&#160;&#160;&#160;&#160;other such agreements.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 15.95pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Loan Proceeds. Use all Loan proceeds solely tor Borrower's business operations, unless specifically consented to the contrary by Lender in writing.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 17.2pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Taxes,&#160;Charges&#160;and&#160;Liens.&#160;Pay&#160;and&#160;discharge&#160;when&#160;due&#160;all&#160;of&#160;its&#160;indebtedness&#160;and&#160;obligations,&#160;including&#160;without&#160;limitation&#160;all&#160;assessments, taxes, governmental charges, levies and liens, of every kind and nature, imposed upon Borrower or its properties, income, or profits, prior to the date on which penalties would attach, and all lawful claims that, it unpaid, might become a lien or charge upon any of Borrower's properties, income, or profits. Provided however, Borrower will not be required to pay and discharge any such assessment, tax, charge, levy, lien or claim so long as ( 1) the legality of the same shall be contested in good faith by appropriate proceedings, and (2) Borrower shall&#160;have&#160;established&#160;on&#160;Borrower's&#160;books&#160;adequate&#160;reserves&#160;with&#160;respect&#160;to&#160;such&#160;contested assessment,&#160;tax,&#160;charge,&#160;levy,&#160;lien,&#160;or&#160;claim in&#160;accordance with GAAP.</font></div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 17.65pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Performance. Perform and comply, in a timely manner, with all terms, conditions, and provisions set forth in this Agreement, in the Related Documents, and in all other instruments and agreements between&#160;&#160;Borrower&#160;&#160;and&#160;&#160;Lender.&#160;&#160;Borrower&#160;&#160;shall&#160;&#160;notify&#160;&#160;Lender&#160;&#160;immediately&#160;&#160;in writing&#160;&#160;of&#160;&#160;any default&#160;&#160;in connection&#160;&#160;with any agreement.</font></div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 16.5pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Operations. Maintain executive and management personnel with substantially the same qualifications and experience&#160;&#160;as&#160;&#160;the&#160;&#160;present&#160;&#160;executive and management personnel; provide written notice to Lender of any change in executive and management personnel; conduct its business affairs in a reasonable and prudent manner.</font></div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 21.5pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Environmental Studies. Promptly conduct and complete, at Borrower's expense, all such&#160;&#160;investigations,&#160;&#160;studies,&#160;&#160;samplings&#160;&#160;and testings&#160;&#160;as may be requested by Lender or any governmental authority&#160;&#160;relative to any substance,&#160;&#160;or any&#160;&#160;waste&#160;&#160;or by-product of any substance&#160;&#160;defined&#160;&#160;as toxic or a hazardous substance under applicable federal, state, or local&#160;&#160;law,&#160;&#160;rule,&#160;&#160;regulation,&#160;&#160;order&#160;&#160;or&#160;&#160;directive,&#160;&#160;at&#160;&#160;or&#160;&#160;affecting&#160;&#160;any property or any facility&#160;&#160;owned, leased or used by&#160;&#160;&#160;Borrower.</font></div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 16.9pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Compliance with Governmental Requirements. Comply with all laws, ordinances, and regulations, now or hereafter in effect,&#160;&#160;of&#160;&#160;all&#160;&#160;governmental authorities applicable to the conduct of Borrower's properties, businesses and operations, and to the use or occupancy of the Collateral,&#160;&#160;including&#160;&#160;without&#160;&#160;limitation, the Americans&#160;&#160;With&#160;&#160;Disabilities&#160;&#160;Act.&#160;&#160;Borrower&#160;&#160;may&#160;&#160;contest&#160;&#160;in good faith&#160;&#160;any&#160;&#160;such law, ordinance, or regulation and withhold compliance during any proceeding, including appropriate appeals,&#160;&#160;so long as&#160;&#160;Borrower&#160;&#160;has notified Lender in&#160;&#160;writing prior to doing so and so long as, in Lender's&#160;&#160;sole&#160;&#160;opinion,&#160;&#160;Lender's interests&#160;&#160;in the&#160;&#160;Collateral&#160;&#160;are&#160;&#160;not jeopardized.&#160;&#160;Lender&#160;&#160;may require Borrower to post adequate security&#160;&#160;or a surety&#160;&#160;bond, reasonably&#160;&#160;satisfactory to Lender, to&#160;&#160;&#160;&#160;protect Lender's interest.</font></div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 17.85pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Inspection. Permit employees or agents of Lender at any reasonable time to inspect any and all Collateral tor the Loan or&#160;&#160;Loans&#160;&#160;and Borrower's other properties and to examine or audit Borrower's books, accounts, and records and to make copies and memoranda of&#160;&#160;Borrower's books, accounts, and records. It Borrower now or at any time hereafter maintains&#160;&#160;any&#160;&#160;records&#160;&#160;(including&#160;&#160;without&#160;&#160;limitation computer generated records and computer software programs tor the generation of such records) in the possession&#160;&#160;of&#160;&#160;a&#160;&#160;third&#160;&#160;party,&#160;&#160;Borrower, upon request of Lender, shall notify such party to permit&#160;&#160;Lender tree&#160;&#160;access&#160;&#160;to&#160;&#160;such records&#160;&#160;at all reasonable&#160;&#160;times&#160;&#160;and to&#160;&#160;provide&#160;Lender&#160;with&#160;copies&#160;of&#160;any&#160;records&#160;it&#160;may&#160;request,&#160;all&#160;at&#160;Borrower's&#160;expense.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 17.75pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Compliance Certificates. Unless waived in writing by Lender, provide&#160;&#160;Lender within forty-five&#160;&#160;(45) days&#160;&#160;after the end of each fiscal quarter,&#160;&#160;with a certificate executed by Borrower's chief financial officer, or other officer or person acceptable to Lender, certifying that&#160;&#160;the&#160;&#160;representations&#160;&#160;and warranties&#160;&#160;set forth&#160;&#160;in this&#160;&#160;Agreement&#160;&#160;are true&#160;&#160;and correct as of the&#160;&#160;date of the certificate&#160;&#160;and further&#160;&#160;certifying that,&#160;&#160;as of the date of the certificate,&#160;&#160;no Event of&#160;&#160;&#160;&#160;Default exists under this Agreement.</font></div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 17.55pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Environmental Compliance and Reports. Borrower shall comply in all respects with any and all Environmental Laws; not cause or&#160;&#160;permit to&#160;&#160;exist, as a result of an intentional or unintentional action or omission&#160;&#160;on&#160;&#160;Borrower's&#160;&#160;part or&#160;&#160;on the&#160;&#160;part of&#160;&#160;any&#160;&#160;third&#160;&#160;party,&#160;&#160;on property&#160;&#160;owned and/or occupied by Borrower, any environmental activity where damage may result to the environment, unless such environmental activity is pursuant to and in compliance with the conditions of a permit issued by the appropriate federal, state&#160;&#160;or&#160;&#160;local governmental authorities; shall furnish to Lender promptly and in any event within thirty&#160;&#160;(30)&#160;&#160;days&#160;&#160;after&#160;&#160;receipt thereof&#160;&#160;a&#160;&#160;copy&#160;&#160;of any&#160;&#160;notice,&#160;&#160;summons, lien, citation, directive, letter or other communication from any governmental agency or instrumentality concerning any intentional or&#160;&#160;unintentional action or omission on Borrower's part in connection with any environmental activity whether or not there is damage to the environment&#160;&#160;and/or other natural resources.</font></div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 17.55pt" align="justify">&#160;</div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 17.55pt" align="justify">
<div align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Additional Assurances. Make, execute and deliver to Lender such promissory notes, mortgages, deeds of trust, security agreements, assignments, financing statements, instruments, documents and other agreements as Lender or its attorneys may reasonably request to evidence and secure the Loans and to perfect all Security Interests.</font></div>

<div align="justify">&#160;</div>

<div align="justify">Financial Statements.&#160; Furnish Lender with the following:</div>

<div align="justify">&#160;</div>

<div align="justify">For Borrower:</div>
</div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;</font></div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Annual&#160;&#160;Business&#160;&#160;Financial Statements.&#160;&#160;As&#160;&#160;soon as&#160;&#160;available&#160;&#160;but&#160;&#160;in no event&#160;&#160;later&#160;&#160;than&#160;&#160;one&#160;&#160;hundred&#160;&#160;twenty&#160;&#160;( 120)&#160;&#160;days&#160;&#160;after&#160;&#160;the&#160;&#160;end of&#160;&#160;each </font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">fiscal year, annual financial statements, including a balance sheet and profit and loss statement for the period ended, audited by a certified </font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">public accountant&#160;&#160;satisfactory&#160;&#160;to Lender.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 17pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Interim Business Financial Statements. As soon as available but in no event later than forty-five (45) days after the end of each quarter, consolidated financial statements, including a balance sheet and profit and loss statement for&#160;&#160;the&#160;&#160;period&#160;&#160;ended,&#160;&#160;prepared&#160;&#160;in&#160;&#160;form&#160;&#160;satisfactory&#160;&#160;to Lender.</font></div>

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<div align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">All financial reports required to be provided under this Agreement shall be prepared in accordance with GAAP, applied on a consistent basis, and certified by Borrower as being true and correct.</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Financial&#160;&#160;Covenants&#160;&#160;and Ratios.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Comply&#160;&#160;with the following&#160;&#160;covenants&#160;&#160;and ratios:</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 16.35pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Fixed Charge Coverage Ratio. Borrower must maintain a Fixed Charge Coverage Ratio greater than or equal to 1 .20 to 1 .00, calculated quarterly&#160;&#160;on the consolidated financial statements of Borrower and based on a trailing four quarter basis.&#160;&#160;Fixed Charge coverage&#160;&#160;Ratio shall&#160;&#160;be defined as net income plus interest expense plus taxes plus depreciation and amortization minus cash taxes paid minus cash capital expenditures minus distributions divided by current maturities of long term debt and current maturities of&#160;&#160;long term&#160;&#160;leases&#160;&#160;plus&#160;&#160;interest expense&#160;<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 16.9pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Funded Debt to EBITDA. Borrower must maintain a funded debt to EBITDA&#160;&#160;(Earnings&#160;&#160;before Interest Taxes&#160;&#160;Depreciation Amortization)&#160;&#160;ratio&#160;&#160;of no greater than 1.50 to 1.00, calculated quarterly on the consolidated financial statements&#160;&#160;of&#160;&#160;Borrower&#160;&#160;and&#160;&#160;based on&#160;&#160;a&#160;&#160;trailing&#160;&#160;four&#160;&#160;quarter basis.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 16.1pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Except as provided above, all computations made to determine compliance with requirements&#160;&#160;contained&#160;&#160;in the&#160;&#160;above&#160;&#160;Financial Covenants&#160;&#160;and Ratios shall be made in accordance with generally accepted accounting principles, applied on a&#160;&#160;consistent&#160;&#160;basis,&#160;&#160;and&#160;&#160;certified&#160;&#160;by Borrower as being true and&#160;&#160;correct.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 20.45pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">RECOVERY OF ADDITIONAL COSTS. If the imposition of or any change in any law, rule, regulation or guideline,&#160;&#160;or the&#160;&#160;interpretation&#160;&#160;or&#160;&#160;application of any thereof by any court or administrative or governmental authority&#160;&#160;(including&#160;&#160;any&#160;&#160;request or policy&#160;&#160;not having the force&#160;&#160;of&#160;&#160;law)&#160;&#160;shall impose, modify or make applicable any taxes (except federal, state or local income or franchise taxes imposed on Lender), reserve requirements, capital adequacy requirements or other obligations which would&#160;&#160;(A)&#160;&#160;increase the cost to Lender tor&#160;&#160;extending or maintaining the&#160;&#160;credit facilities to&#160;&#160;which this Agreement&#160;&#160;relates,&#160;&#160;&#160;(B)&#160;&#160;&#160;reduce the amounts&#160;&#160;payable to&#160;&#160;Lender&#160;&#160;under this Agreement&#160;&#160;or&#160;&#160;&#160;the&#160;&#160;Related Documents, or (C) reduce the rate of return on Lender's capital as a consequence of Lender's obligations with respect to the credit facilities to which this Agreement relates, then Borrower agrees to pay Lender such additional amounts as will compensate Lender therefor, within five (5) days after Lender's written demand for such payment, which demand shall be accompanied by an explanation&#160;&#160;of&#160;&#160;such&#160;&#160;imposition&#160;&#160;or&#160;&#160;charge&#160;&#160;and&#160;&#160;a&#160;&#160;calculation in reasonable detail of the additional amounts payable by Borrower, which explanation and calculations shall&#160;&#160;be conclusive&#160;&#160;in the&#160;&#160;absence of manifest&#160;error.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 16.25pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">LENDER 'S EXPENDITURES. If any action or proceeding is commenced that would materially affect Lender's interest in the&#160;&#160;Collateral&#160;&#160;or&#160;&#160;it&#160;&#160;Borrower fails to comply with any provision of this Agreement or any Related Documents, including&#160;&#160;but&#160;&#160;not&#160;&#160;limited&#160;&#160;to&#160;&#160;Borrower's&#160;&#160;failure&#160;&#160;to discharge or pay when due any amounts Borrower is required to discharge or pay under this Agreement or any Related Documents, Lender on Borrower's behalf may (but shall not be obligated to) take any action that Lender deems&#160;&#160;appropriate,&#160;&#160;including but not limited to discharging or&#160;&#160;paying all taxes, liens, security interests, encumbrances and other claims, at any time levied or placed on any Collateral and paying all costs for insuring, maintaining and preserving&#160;&#160;any&#160;&#160;Collateral.&#160;&#160;All such expenditures&#160;&#160;paid by Lender for such purposes will then bear interest at the&#160;&#160;Note&#160;&#160;&#160;rate from the date paid by Lender to the date of repayment by Borrower.&#160;&#160;To the&#160;&#160;extent&#160;&#160;permitted&#160;&#160;by&#160;&#160;applicable&#160;&#160;law, all such&#160;&#160;expenses&#160;&#160;will&#160;&#160;become a part of the Indebtedness and, at Lender's option, will (A) be payable on demand; (B) be added to the balance of the Note and be apportioned among and be payable with any&#160;&#160;installment payments to become due during either&#160;&#160;&#160;( 1)&#160;&#160;the term of any applicable&#160;&#160;insurance&#160;&#160;policy;&#160;&#160;&#160;or&#160;&#160;&#160;(2)&#160;&#160;the remaining term of the Note; or&#160;&#160;&#160;(C)&#160;&#160;&#160;&#160;&#160;&#160;&#160;be treated as a balloon payment which will be due and payable at the Note's maturity <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 18.35pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">NEGATIVE COVENANTS. Borrower covenants and agrees with&#160;&#160;Lender that&#160;&#160;while&#160;&#160;this&#160;&#160;Agreement&#160;&#160;is in effect,&#160;&#160;Borrower&#160;&#160;shall not, without&#160;&#160;the prior written&#160;&#160;consent of Lender:</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 18.3pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Indebtedness and Liens. (1)&#160;&#160;Except for trade debt incurred in the normal course of business and indebtedness&#160;&#160;to Lender contemplated&#160;&#160;by&#160;&#160;this Agreement, create, incur or assume additional indebtedness for borrowed money, including capital leases, in excess of the aggregate amount of $250,000.00,&#160;&#160;(2)&#160;&#160;sell, transfer,&#160;&#160;mortgage, assign,&#160;&#160;pledge, lease, grant&#160;&#160;a security&#160;&#160;interest in, or encumber&#160;&#160;any of&#160;&#160;Borrower's&#160;&#160;assets&#160;&#160;(except as allowed as Permitted Liens), or&#160;&#160;&#160;(3) &#160;sell with recourse any of Borrower's accounts, except to Lender.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Continuity&#160;&#160;of Operations.&#160;&#160;&#160;(1)&#160;&#160;&#160;Engage in any&#160;&#160;business&#160;&#160;activities&#160;&#160;substantially&#160;&#160;different&#160;&#160;than those&#160;&#160;in which&#160;&#160;Borrower&#160;&#160;is presently engaged, </font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(2) cease operations, liquidate, merge, transfer, acquire or consolidate with any other entity, change its name, dissolve or transfer or sell Collateral out of the ordinary course of business, or (3) pay any dividends on Borrower's stock (other than dividends payable in its stock), provided, however that notwithstanding the foregoing,&#160;&#160;but only&#160;&#160;so&#160;&#160;long&#160;&#160;as no&#160;&#160;Event of&#160;&#160;Default has occurred and is continuing&#160;&#160;or&#160;&#160;would&#160;&#160;result from the payment of dividends, if Borrower is a "Subchapter S Corporation" (as defined in the Internal Revenue Code of 1986, as amended), Borrower may pay cash dividends on its stock to its shareholders from time to time in amounts necessary&#160;&#160;to&#160;&#160;enable&#160;&#160;the&#160;&#160;shareholders to pay income taxes and make estimated income tax payments to satisfy&#160;&#160;their&#160;&#160;liabilities&#160;&#160;under&#160;&#160;federal&#160;&#160;and state&#160;&#160;law&#160;&#160;which&#160;&#160;arise solely from their status as Shareholders of a Subchapter S Corporation because of their ownership of shares of Borrower's stock, or purchase&#160;or&#160;retire&#160;any&#160;of&#160;Borrower's&#160;outstanding&#160;shares&#160;or&#160;alter&#160;or&#160;amend&#160;Borrower's&#160;capital&#160;structure&#160;<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 17.65pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Loans, Acquisitions and Guaranties. ( 1) Except as expressly stated hereafter, loan, invest in or advance&#160;&#160;money&#160;&#160;or&#160;&#160;assets to&#160;&#160;any&#160;&#160;other person, enterprise or entity, (2)&#160;&#160;purchase, create or acquire any&#160;&#160;interest in any&#160;&#160;other enterprise&#160;&#160;or entity, or&#160;&#160;(3)&#160;&#160;incur any&#160;&#160;obligation&#160;&#160;as&#160;&#160;surety or guarantor other than in the ordinary course of business. The following exceptions are expressly exempted from the foregoing restrictions:&#160;&#160;&#160;&#160;&#160;$250,000.00.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 18.3pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Agreements. Enter into any agreement containing any provisions which would be violated or breached by the performance of Borrower's obligations&#160;&#160;under this Agreement&#160;&#160;or&#160;&#160;in connection&#160;herewith<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 17.95pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to Borrower, whether&#160;&#160;under this Agreement or under any&#160;&#160;other agreement, Lender shall have no obligation to make Loan Advances or to disburse Loan proceeds if: (A) Borrower or any Guarantor&#160;&#160;is in&#160;&#160;default under the terms of this Agreement or any of the Related Documents or any other agreement that Borrower&#160;&#160;or any&#160;&#160;Guarantor&#160;&#160;has&#160;&#160;with Lender;&#160;&#160;&#160;(B)&#160;&#160;&#160;Borrower or any Guarantor&#160;&#160;dies, becomes&#160;&#160;incompetent or becomes insolvent, files a petition in bankruptcy&#160;&#160;or similar proceedings,&#160;&#160;&#160;&#160;or is adjudged a bankrupt; (C) there occurs a material adverse change in&#160;&#160;Borrower's&#160;&#160;financial&#160;&#160;condition,&#160;&#160;in the&#160;&#160;financial&#160;&#160;condition&#160;&#160;of&#160;&#160;any Guarantor, or in the value of any Collateral securing any&#160;&#160;Loan; or&#160;&#160;(D)&#160;&#160;any&#160;&#160;Guarantor&#160;&#160;seeks,&#160;&#160;claims or otherwise&#160;&#160;attempts&#160;&#160;to limit, modify or&#160;&#160;revoke such Guarantor's guaranty of the Loan or any other loan with Lender; or&#160;&#160;(E)&#160;&#160;Lender in good faith deems&#160;&#160;itself insecure, even though no&#160;&#160;Event of Default shall have&#160;&#160;occurred.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 19.25pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower's accounts with Lender (whether checking, savings,&#160;&#160;or some other&#160;&#160;account).&#160;&#160;&#160;This&#160;&#160;includes all accounts&#160;&#160;Borrower&#160;&#160;holds jointly&#160;&#160;with someone&#160;&#160;else and all accounts&#160;&#160;Borrower may </font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">open in the future. However, this does not include any IRA or&#160;&#160;Keogh accounts, or any&#160;&#160;trust&#160;&#160;accounts&#160;&#160;for&#160;&#160;which setoff&#160;&#160;would&#160;&#160;be prohibited&#160;&#160;by&#160;&#160;law. Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff&#160;&#160;all sums owing on the Indebtedness&#160;&#160;against&#160;&#160;any&#160;&#160;and all such accounts.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 19.25pt" align="justify">DEFAULT.&#160; Each of the following shall constitute an Event of Default under this Agreement:&#160;</div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 15.15pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Payment Default.&#160; Borrower fails to make any payment when due under the Loan.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 15.15pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Other&#160;&#160;Defaults.&#160;&#160;Borrower&#160;&#160;fails to comply&#160;&#160;with or to&#160;&#160;perform any&#160;&#160;other term, obligation,&#160;&#160;covenant&#160;&#160;or condition contained in this Agreement&#160;&#160;&#160;or in any of the Related Documents or to comply with or to perform any term, obligation, covenant or condition contained in any other&#160;&#160;agreement between Lender and Borrower.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 14.05pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Default in Favor of Third Parties. Borrower or any Grantor defaults under&#160;&#160;any&#160;&#160;loan, extension&#160;&#160;of credit, security&#160;&#160;agreement,&#160;&#160;purchase&#160;&#160;or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect&#160;&#160;any of&#160;&#160;Borrower's&#160;&#160;or&#160;&#160;any&#160;&#160;Grantor's property or Borrower's or any Grantor's ability to repay the Loans or&#160;&#160;perform their&#160;&#160;respective obligations&#160;&#160;under this&#160;&#160;Agreement&#160;&#160;or any of the Related Documents&#160;<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 15.7pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower's behalf under this Agreement or the Related Documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time&#160;&#160;thereafter.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 14pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Insolvency. The dissolution or termination of Borrower's existence as a going business, the insolvency of Borrower, the appointment of a&#160;&#160;receiver for any part of Borrower's property, any assignment for the benefit of&#160;&#160;creditors,&#160;&#160;any&#160;&#160;type&#160;&#160;of&#160;&#160;creditor&#160;&#160;workout,&#160;&#160;or&#160;&#160;the&#160;&#160;commencement&#160;&#160;of any proceeding under any bankruptcy or insolvency laws by or against&#160;&#160;&#160;&#160;Borrower.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 14.9pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Defective Collateralization. This Agreement or any of the Related Documents ceases to be in full force and effect (including failure of any collateral&#160;document&#160;to&#160;create&#160;a&#160;valid&#160;and&#160;perfected&#160;security&#160;interest&#160;or&#160;lien)&#160;at&#160;any&#160;time&#160;and&#160;for&#160;any&#160;reason<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 20.25pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower&#160;&#160;or by any governmental&#160;&#160;agency&#160;&#160;against&#160;&#160;any&#160;&#160;collateral securing the&#160;&#160;Loan.&#160;&#160;This includes a garnishment of any of&#160;&#160;Borrower's accounts, including deposit&#160;&#160;accounts,&#160;&#160;with&#160;&#160;Lender.&#160;&#160;However, this&#160;&#160;Event of&#160;&#160;Default shall&#160;&#160;not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture&#160;&#160;proceeding&#160;&#160;and if Borrower gives Lender written notice of the creditor&#160;&#160;or forfeiture&#160;&#160;proceeding and deposits with Lender monies or&#160;&#160;&#160;&#160;a surety bond for the creditor or forfeiture proceeding, in an amount determined&#160;&#160;by&#160;&#160;Lender,&#160;&#160;in its sole&#160;&#160;discretion,&#160;&#160;as&#160;&#160;being&#160;&#160;an adequate reserve or bond for the &#160;dispute.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 14.9pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Events Affecting Guarantor. Any of the preceding events occurs with respect to&#160;&#160;any&#160;&#160;Guarantor&#160;&#160;of&#160;&#160;any&#160;&#160;of&#160;&#160;the&#160;&#160;Indebtedness&#160;&#160;or&#160;&#160;any&#160;&#160;Guarantor dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any Guaranty of the Indebtedness.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Change in Ownership.&#160;&#160;Any&#160;&#160;change&#160;&#160;in ownership&#160;&#160;of twenty-five&#160;&#160;percent ( 25%)&#160;&#160;or&#160;&#160;more of the common stock of&#160;&#160;Borrower.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 0pt" align="justify">Adverse Change.&#160; A material adverse change occurs in Borrower's financial condition, or Lender believes the prospect of payment or performance of the Loan is impaired.</div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Insecurity.&#160;&#160;&#160;Lender in good faith believes itself &#160;insecure<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 20.25pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Right to Cure. If any default, other than a default on Indebtedness, is curable and if Borrower or Grantor, as the case may be, has not been&#160;&#160;given a notice of a similar default within the preceding&#160;&#160;twelve&#160;&#160;(12)&#160;&#160;months, it may&#160;&#160;be cured if Borrower or&#160;&#160;Grantor,&#160;&#160;as the&#160;&#160;case&#160;&#160;may&#160;&#160;be,&#160;&#160;after Lender sends written notice to Borrower or Grantor, as the case may be, demanding cure of such default:&#160;&#160;(1)&#160;&#160;cure the default within&#160;&#160;twenty (20) days; or ( 2) if the cure requires more than twenty (20) days, immediately initiate steps which Lender deems in Lender's sole discretion to be sufficient to cure the default and thereafter continue and complete all reasonable and necessary steps sufficient to produce compliance as soon as reasonably&#160;practical.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 20.25pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where otherwise provided in this Agreement or the Related Documents, all commitments and obligations of Lender under this Agreement or the Related Documents or any other agreement immediately will terminate (including any obligation to make further Loan Advances or disbursements), and, at Lender's option, all Indebtedness immediately will become due and payable, all without notice of any kind to Borrower, except that in the case of an Event of Default of the type described in the "Insolvency" subsection above, such acceleration shall be automatic and not optional. In addition, Lender shall have all the rights and remedies provided in the Related Documents or available at law, in equity, or otherwise.&#160;&#160;Except as&#160;&#160;may&#160;&#160;be prohibited&#160;&#160;by&#160;&#160;applicable&#160;&#160;law, all of&#160;&#160;Lender's rights and remedies shall be cumulative and may be exercised singularly or concurrently.&#160;&#160;Election by&#160;&#160;Lender to pursue any&#160;&#160;remedy shall not&#160;&#160;exclude pursuit of any other remedy, and an election to make expenditures or to take action to&#160;&#160;perform an obligation&#160;&#160;of&#160;&#160;Borrower&#160;&#160;or&#160;&#160;of&#160;&#160;any&#160;&#160;Grantor shall not affect&#160;&#160;Lender's right to declare a default and to exercise&#160;&#160;its rights&#160;&#160;&#160;&#160;and remedies<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font></font></div>

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<div align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">ADDENDUM TO BUSINESS LOAN AGREEMENT. An exhibit, titled "Addendum to Business Loan Agreement," is attached to this Agreement and by this reference is made a part of this Agreement just as if all the provisions, terms and conditions of the Exhibit had been fully set forth in this Agreement <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font></font></div>

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<div align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">MISCELLANEOUS&#160;&#160;PROVISIONS.&#160;&#160;&#160;The&#160;&#160;following&#160;&#160;miscellaneous&#160;&#160;provisions&#160;&#160;are&#160;&#160;a&#160;&#160;part of&#160;&#160;this Agreement:</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 20.25pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Amendments.&#160; This Agreement,&#160; together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Agreement. No alteration of or amendment to this Agreement shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 20.25pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Attorneys' Fees; Expenses. Borrower agrees to pay upon demand all of Lender's costs&#160;&#160;and&#160;&#160;expenses,&#160;&#160;including&#160;&#160;Lender's&#160;&#160;reasonable attorneys' fees and Lender's legal expenses, incurred in connection with the enforcement of this&#160;&#160;Agreement.&#160;&#160;Lender&#160;&#160;may&#160;&#160;hire&#160;&#160;or&#160;&#160;pay someone else to help enforce this Agreement, and Borrower shall pay the costs and expenses of such enforcement . Costs and expenses include Lender's reasonable attorneys' fees and legal expenses&#160;&#160;whether&#160;&#160;or not there&#160;&#160;is a&#160;&#160;lawsuit, including&#160;&#160;Lender's&#160;&#160;reasonable attorneys' fees and legal expenses for bankruptcy&#160;&#160;proceedings&#160;&#160;(including efforts to modify or vacate&#160;&#160;any&#160;&#160;automatic&#160;&#160;stay or injunction), appeals,&#160;&#160;and&#160;&#160;any&#160;&#160;anticipated&#160;&#160;post-judgment&#160;&#160;collection services .&#160;&#160;Borrower also shall pay all court costs and such additional&#160;&#160;fees&#160;&#160;as may&#160;&#160;be directed by&#160;&#160;the&#160;court.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 20.25pt" align="left">Caption Heading.&#160; Caption heading in this Agreement are for convenience purposes only and are not to e used to interpret or define the provisions of this Agreement.</div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 16.1pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Consent to Loan Participation. Borrower agrees and consents to Lender's sale or transfer,&#160;&#160;whether&#160;&#160;now&#160;&#160;or&#160;&#160;later,&#160;&#160;of&#160;&#160;one&#160;&#160;or&#160;&#160;more&#160;&#160;participation interests in the Loan to one or more purchasers, whether related or unrelated to Lender. Lender&#160;&#160;may provide, without&#160;&#160;any&#160;&#160;limitation whatsoever, to any one or more purchasers, or potential purchasers, any information or&#160;&#160;knowledge&#160;&#160;Lender&#160;&#160;may&#160;&#160;have&#160;&#160;about Borrower or about any other matter relating to the Loan, and Borrower hereby waives any rights to privacy Borrower may have with respect </font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">to such matters.&#160;&#160;&#160;Borrower additionally&#160;&#160;waives&#160;&#160;any and all notices of sale of participation interests, as well as all notices of any&#160;&#160;repurchase&#160;&#160;&#160;&#160;&#160;of such participation interests. Borrower also agrees that the purchasers of any&#160;&#160;such&#160;&#160;participation&#160;&#160;interests&#160;&#160;will&#160;&#160;be considered&#160;&#160;as the&#160;&#160;absolute owners of such interests in the Loan and will have all the rights granted&#160;&#160;under&#160;&#160;the&#160;&#160;participation&#160;&#160;agreement&#160;&#160;or&#160;&#160;agreements&#160;&#160;governing the sale of such participation interests. Borrower further waives all rights of offset or counterclaim&#160;&#160;that it may have now or later&#160;&#160;against Lender or against any purchaser of such a participation interest and unconditionally agrees that either Lender or such purchaser may enforce Borrower's obligation under the Loan irrespective of the failure or insolvency of any holder of any&#160;&#160;interest in the&#160;&#160;Loan.&#160;&#160;Borrower&#160;&#160;further agrees that the purchaser of any such participation interests may enforce its&#160;&#160;interests&#160;&#160;irrespective&#160;&#160;of&#160;&#160;any&#160;&#160;personal&#160;&#160;claims&#160;&#160;or&#160;&#160;defenses that Borrower may have against &#160;Lender.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 16.55pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Governing Law. This Agreement will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of Texas without regard to its conflicts of law provisions. This Agreement has been accepted by Lender <font style="FONT-STYLE: italic; DISPLAY: inline; FONT-SIZE: 10pt">in </font>the State of Texas.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 16.55pt" align="justify">Choice of Venue.&#160; If there is a lawsuit, and if the transaction evidenced by this Agreement occurred in Dallas County, Borrower agrees upon Lender's request to submit to the jurisdiction of the courts of Dallas County, State of Texas.</div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 26.4pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">No Waiver by Lender. Lender shall not be deemed to&#160;&#160;have waived&#160;&#160;any&#160;&#160;rights under this Agreement&#160;&#160;unless&#160;&#160;such waiver&#160;&#160;is given in writing and signed by Lender. No delay or omission on the part of&#160;&#160;Lender&#160;&#160;in exercising&#160;&#160;any&#160;&#160;right shall operate&#160;&#160;as&#160;&#160;a waiver&#160;&#160;of such right or&#160;&#160;any&#160;&#160;other right. A waiver by Lender of a provision of this Agreement shall not prejudice or constitute&#160;&#160;a waiver&#160;&#160;of&#160;&#160;Lender's&#160;&#160;right otherwise&#160;&#160;to demand strict compliance with that provision or any other provision of&#160;&#160;this&#160;&#160;Agreement.&#160;&#160;No&#160;&#160;prior&#160;&#160;waiver&#160;&#160;by&#160;&#160;Lender,&#160;&#160;nor&#160;&#160;any&#160;&#160;course&#160;&#160;of dealing between Lender and Borrower, or between Lender and any Grantor, shall constitute a waiver of any of Lender's rights or of any of Borrower's or any Grantor's obligations as to any&#160;&#160;future transactions.&#160;&#160;Whenever&#160;&#160;the&#160;&#160;consent of&#160;&#160;Lender&#160;&#160;is required under this&#160;&#160;Agreement,&#160;&#160;the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent&#160;&#160;instances where such consent&#160;&#160;&#160;&#160;&#160;is required and in all cases such consent may be granted or withheld&#160;&#160;in the sole discretion of&#160;&#160;&#160;Lender.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 20.45pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Notices. Any notice required to be given under this&#160;&#160;Agreement&#160;&#160;shall&#160;&#160;be given&#160;&#160;in writing, and&#160;&#160;shall&#160;&#160;be effective&#160;&#160;when&#160;&#160;actually&#160;&#160;delivered, when actually received by telefacsimile&#160;&#160;(unless otherwise&#160;&#160;required by law). when deposited&#160;&#160;with a&#160;&#160;nationally&#160;&#160;recognized overnight&#160;&#160;courier,&#160;&#160;or, if mailed, when deposited in the United States mail, as first class, certified or registered mail postage prepaid, directed to the addresses shown near the beginning of this Agreement. Any&#160;&#160;party may change its address for notices under this Agreement&#160;&#160;by giving formal written&#160;&#160;notice to the other parties, specifying that&#160;&#160;the&#160;&#160;purpose&#160;&#160;of&#160;&#160;the&#160;&#160;notice&#160;&#160;is to&#160;&#160;change&#160;&#160;the&#160;&#160;party's&#160;&#160;address.&#160;&#160;For&#160;&#160;notice&#160;&#160;purposes,&#160;&#160;Borrower agrees to keep Lender&#160;&#160;informed at all times of&#160;&#160;Borrower's current address.&#160;&#160;Unless otherwise&#160;&#160;provided or required by law, if there&#160;&#160;is more&#160;&#160;than&#160;one&#160;Borrower,&#160;any&#160;notice&#160;given&#160;by&#160;Lender&#160;to&#160;any&#160;Borrower&#160;is&#160;deemed&#160;to&#160;be&#160;notice&#160;given&#160;to&#160;all&#160;Borrowers.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 16.85pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Payment of Interest and Fees. Notwithstanding any other provision of this Agreement or any provision of any&#160;&#160;Related Document, Borrower&#160;&#160;does not agree or intend to pay, and Lender does not agree or intend to charge, collect,&#160;&#160;take,&#160;&#160;reserve or&#160;&#160;receive&#160;&#160;(collectively&#160;&#160;referred to&#160;&#160;herein as "charge or collect"), any amount in the nature of interest or in the nature of a fee for the Loan which would in any way&#160;&#160;or event (including demand, prepayment, or acceleration) cause Lender to contract for,&#160;&#160;charge&#160;&#160;or&#160;&#160;collect&#160;&#160;more&#160;&#160;for&#160;&#160;the&#160;&#160;Loan than&#160;&#160;the&#160;&#160;maximum Lender would be permitted to charge or collect by any applicable federal or Texas state&#160;&#160;law.&#160;&#160;Any&#160;&#160;such excess&#160;&#160;interest or unauthorized fee&#160;&#160;will, instead of anything stated to the&#160;&#160;contrary,&#160;&#160;be applied&#160;&#160;first to&#160;&#160;reduce the&#160;&#160;unpaid principal balance of the&#160;&#160;Loan, and when the&#160;&#160;principal&#160;&#160;has been paid in full,&#160;&#160;be refunded to Borrower.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 17.7pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Severability. If a court of competent jurisdiction finds any provision of this Agreement to be illegal, invalid, or unenforceable as to any circumstance, that finding shall not make the offending&#160;&#160;provision illegal,&#160;&#160;invalid, or unenforceable&#160;&#160;as to any&#160;&#160;other&#160;&#160;circumstance.&#160;&#160;If feasible, the offending provision shall be considered modified so that it becomes legal, valid and enforceable. If the offending provision cannot be so modified,&#160;&#160;it shall be considered deleted from this Agreement.&#160;&#160;&#160;Unless otherwise&#160;&#160;required by law, the&#160;&#160;illegality, invalidity, or&#160;&#160;unenforceability&#160;&#160;&#160;of&#160;&#160;any&#160;&#160;provision of this Agreement&#160;&#160;shall not affect the&#160;&#160;legality, validity&#160;&#160;or enforceability&#160;&#160;of&#160;&#160;any other&#160;&#160;provision of this&#160;&#160;Agreement.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 18.1pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Subsidiaries and Affiliates of Borrower. To the extent the context of any provisions of this&#160;&#160;Agreement&#160;&#160;makes&#160;&#160;it appropriate,&#160;&#160;including without limitation any representation, warranty or covenant, the word "Borrower" as used in this Agreement shall include all of Borrower's subsidiaries and affiliates. Notwithstanding the foregoing however, under no circumstances shall this Agreement be construed to require Lender to make any Loan or other financial accommodation to any of Borrower's subsidiaries or affiliates.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 18.45pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Successors and Assigns. All covenants and agreements by or on behalf of Borrower&#160;&#160;contained&#160;&#160;in&#160;&#160;this&#160;&#160;Agreement&#160;&#160;or&#160;&#160;any&#160;&#160;Related&#160;&#160;Documents shall bind Borrower's successors and assigns and shall inure to the benefit of Lender and its successors and assigns. Borrower&#160;&#160;shall not, however, have the right to assign Borrower's rights under&#160;&#160;this&#160;&#160;Agreement&#160;&#160;or&#160;&#160;any&#160;&#160;interest&#160;&#160;therein,&#160;&#160;without&#160;&#160;the&#160;&#160;prior&#160;&#160;written&#160;&#160;consent of&#160;Lender.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 26.4pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Survival of Representations and Warranties. Borrower understands and agrees that in extending Loan Advances, Lender is relying on all representations, warranties, and covenants made by Borrower in this Agreement or in any certificate&#160;&#160;or&#160;&#160;other&#160;&#160;instrument&#160;&#160;delivered&#160;&#160;by Borrower to Lender under this Agreement or the Related Documents. Borrower further agrees that regardless of any investigation made by Lender, all such representations, warranties and covenants will survive the extension of&#160;&#160;Loan Advances&#160;&#160;and&#160;&#160;delivery&#160;&#160;to&#160;&#160;Lender&#160;&#160;of&#160;&#160;the Related Documents, shall be continuing in nature, shall be deemed made and redated by Borrower at the time each Loan Advance is made,&#160;&#160;&#160;and shall remain in full force and effect until such time as Borrower's Indebtedness shall be paid in full, or until this Agreement&#160;&#160;shall&#160;&#160;be terminated in the&#160;&#160;manner provided above, whichever&#160;&#160;is the&#160;&#160;last to&#160;&#160;occur.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Time is of the Essence.&#160;&#160;Time&#160;&#160;is of the essence&#160;&#160;in the performance of this&#160;&#160;Agreement.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 17.45pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Waive Jury. All parties to this Agreement hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by any party against any other party.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 19.35pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this&#160;&#160;Agreement.&#160;&#160;Unless specifically stated to the contrary, all references to dollar amounts shall mean amounts in lawful money of the&#160;&#160;United States of America.&#160;&#160;Words&#160;&#160;and terms&#160;&#160;used in the singular shall include the plural, and the plural shall include the singular, as the context may require. Words and terms not otherwise defined in this Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code. Accounting words and terms not otherwise defined in this Agreement shall have the meanings assigned to them in accordance with generally accepted accounting principles as in effect on the date of this&#160;&#160;&#160;Agreement:</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 19.45pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Advance. The word "Advance" means a disbursement of Loan funds made, or to be made, to Borrower or on Borrower's&#160;&#160;behalf&#160;&#160;under the&#160;&#160;terms&#160;&#160;and conditions of this Agreement&#160;<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 19.45pt" align="justify">Agreement.&#160; The word "Agreement" means this Business Loan Agreement (Asset Bsed), as this Business Loan Agreement (Asset Based) may be amended or modified from time to time, together with all exhibits and schedules attached to this Business Loan Agreement (Asset Based) from time to time.</div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 20.45pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Borrower. The word "Borrower" means Tandy Leather Factory, Inc. and includes all co-signers and co-makers signing the Note and all their successors and assigns.</font></div>

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<div align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Borrowing Base. </font>The words "Borrowing Base" mean As determined by Lender from time to time, the lesser of (1) $6,000,000.00 or ( 2) 50.000% of the aggregate amount of Eligible Inventory.</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 12.75pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Notwithstanding the above, availability under the Borrowing Base may be reduced by the amount of unrealized losses related to&#160;&#160;foreign exchange&#160;&#160;transactions&#160;&#160;entered into by Borrower.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Business Day.&#160;&#160;</font>The words&#160;&#160;"Business Day" mean a day on which commercial banks are open in the State of&#160;&#160;&#160;Texas.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 13.1pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Collateral. </font>The word "Collateral" means all property and assets granted as collateral security for a Loan, whether real or personal property, whether granted directly or indirectly, whether granted now or in the future, and&#160;&#160;whether&#160;&#160;granted&#160;&#160;in&#160;&#160;the&#160;&#160;form&#160;&#160;of&#160;&#160;a&#160;&#160;security&#160;&#160;interest,&#160;&#160;mortgage, collateral mortgage, deed of trust, assignment, pledge, crop pledge, chattel mortgage, collateral chattel&#160;&#160;mortgage,&#160;&#160;chattel trust, factor's lien, equipment trust, conditional sale, trust receipt, lien, charge, lien or title retention contract, lease or consignment intended as a security device, or any other security or lien interest whatsoever, whether created by law, contract, or otherwise. The word Collateral also includes without&#160;&#160;limitation all collateral described&#160;&#160;in the&#160;&#160;Collateral section of this&#160;&#160;Agreement.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Eligible Inventory.&#160;&#160;&#160;&#160;&#160;</font><font style="DISPLAY: inline; FONT-WEIGHT: bold">&#160;</font>The words&#160;&#160;"Eligible Inventory" mean, at any time, all of Borrower's Inventory as defined below, except:</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 72pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-WEIGHT: bold">( 1)&#160;&#160;&#160;</font>Inventory&#160;&#160;which is not owned by Borrower free&#160;&#160;and clear of&#160;&#160;all security&#160;&#160;interests, liens, encumbrances,&#160;&#160;and claims of third&#160;&#160;&#160;&#160;parties.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 72pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(2)&#160;&#160;&#160;Inventory which&#160;&#160;Lender, in its sole discretion,&#160;&#160;deems to be obsolete,&#160;&#160;unsalable, damaged, defective, or unfit for&#160;&#160;further&#160;&#160;&#160;&#160;processing.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 14.6pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Environmental Laws. </font>The words "Environmental Laws" mean any and all state, federal and&#160;&#160;local statutes,&#160;&#160;regulations&#160;&#160;and&#160;&#160;ordinances relating to the protection of human health or the environment, including without limitation the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499 ("SARA"),&#160;&#160;the&#160;&#160;Hazardous&#160;&#160;Materials Transportation&#160;&#160;Act,&#160;&#160;49&#160;&#160;U.S.C.&#160;&#160;Section&#160;&#160;1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., or other&#160;&#160;applicable&#160;&#160;state&#160;&#160;or&#160;&#160;federal&#160;&#160;laws,&#160;&#160;rules,&#160;&#160;or&#160;&#160;regulations&#160;&#160;adopted pursuant thereto.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 14pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Event of Default. </font>The words "Event of Default" mean any of the events of default set forth in this Agreement in the default section of this Agreement.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 14pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Expiration Date.&#160;&#160;</font>The words&#160;&#160;"Expiration&#160;&#160;Date"&#160;&#160;mean the date of termination of&#160;&#160;Lender's commitment to lend under this&#160;&#160;Agreement.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">GAAP.&#160;&#160;</font>The word "GAAP"&#160;&#160;means generally&#160;&#160;accepted accounting&#160;&#160;principles.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 14.05pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Grantor. </font>The word "Grantor" means each and all of the persons or entities granting&#160;&#160;a&#160;&#160;Security&#160;&#160;Interest in any&#160;&#160;Collateral for the&#160;&#160;Loan,&#160;&#160;including&#160;&#160;without&#160;&#160;limitation all Borrowers&#160;&#160;granting&#160;&#160;such a&#160;&#160;Security Interest.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Guarantor.&#160;&#160;</font>The word&#160;&#160;&#160;&#160;"Guarantor"&#160;&#160;means any guarantor, surety, or accommodation&#160;&#160;party of any or all of the Loan.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 15.1pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Guaranty. </font>The word "Guaranty" means the guaranty from Guarantor to&#160;&#160;Lender, including without&#160;&#160;limitation a guaranty&#160;&#160;of all or&#160;&#160;part of the Note.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 15.4pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Hazardous Substances. </font>The words "Hazardous Substances" mean materials that, because of their quantity, concentration or physical, chemical or infectious characteristics, may cause or pose a present or potential hazard&#160;&#160;to&#160;&#160;human&#160;&#160;health&#160;&#160;or&#160;&#160;the&#160;&#160;environment&#160;&#160;when&#160;&#160;improperly used, treated, stored, disposed of, generated, manufactured, transported or otherwise handled. The&#160;&#160;words&#160;&#160;"Hazardous&#160;&#160;Substances" are used in their very broadest sense and include without limitation any and all hazardous&#160;&#160;or toxic&#160;&#160;substances,&#160;&#160;materials&#160;&#160;or&#160;&#160;waste as defined by or listed under the Environmental Laws. The term "Hazardous Substances"&#160;&#160;also includes, without&#160;&#160;limitation, petroleum&#160;&#160;and petroleum by-products or any fraction thereof&#160;&#160;and&#160;&#160;asbestos.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 14.95pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Indebtedness. </font>The word "Indebtedness" means the indebtedness evidenced by the Note or Related Documents, including all principal and interest together with all other&#160;&#160;indebtedness&#160;&#160;and costs and expenses for&#160;&#160;which Borrower&#160;&#160;is responsible&#160;&#160;under this Agreement&#160;&#160;or under&#160;&#160;any&#160;&#160;of the Related Documents.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 14.1pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Inventory. </font>The word&#160;&#160;"Inventory"&#160;&#160;means&#160;&#160;all of&#160;&#160;Borrower's raw&#160;&#160;materials, work&#160;&#160;in process, finished&#160;&#160;goods,&#160;&#160;merchandise,&#160;&#160;parts and supplies, of every kind and description, and goods held for sale or lease or furnished&#160;&#160;under&#160;&#160;contracts&#160;&#160;of&#160;&#160;service&#160;&#160;in which&#160;&#160;Borrower&#160;&#160;now&#160;&#160;has&#160;&#160;or hereafter acquires any right, whether held by&#160;&#160;Borrower&#160;&#160;or&#160;&#160;others,&#160;&#160;and all documents&#160;&#160;of title,&#160;&#160;warehouse&#160;&#160;receipts, bills of&#160;&#160;lading,&#160;&#160;and all&#160;&#160;other documents of every type&#160;&#160;covering all or any&#160;&#160;part of the foregoing.&#160;&#160;&#160;Inventory includes inventory temporarily&#160;&#160;out of Borrower's&#160;&#160;custody&#160;&#160;&#160;&#160;or possession and all returns on&#160;&#160;Accounts.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Lender.&#160;&#160;</font>The word "Lender"&#160;&#160;means BOKF, NA dba Bank of Texas, its successors and&#160;&#160;assigns.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 15.2pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Loan. </font>The word "Loan" means any and all loans and financial&#160;&#160;accommodations&#160;&#160;from&#160;&#160;Lender&#160;&#160;to&#160;&#160;Borrower&#160;&#160;whether&#160;&#160;now&#160;&#160;or&#160;&#160;hereafter&#160;&#160;existing, and however evidenced, including without limitation those&#160;&#160;loans&#160;&#160;and financial&#160;&#160;accommodations&#160;&#160;described&#160;&#160;herein or described&#160;&#160;on any exhibit or schedule&#160;&#160;attached to this Agreement&#160;&#160;from time to&#160;&#160;&#160;time.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 15.9pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Note. </font>The word "Note" means the Promissory Note in the principal amount of&#160;&#160;$6,000,000.00&#160;&#160;dated&#160;&#160;September&#160;&#160;18,&#160;&#160;201 5&#160;&#160;and&#160;&#160;the&#160;&#160;Promissory Note in the principal amount of $10,000,000.00 dated September 18, 2015 together with all renewals of, extensions&#160;&#160;of,&#160;&#160;modifications&#160;&#160;of, refinancings&#160;&#160;of, consolidations&#160;&#160;of, and substitutions&#160;&#160;for&#160;&#160;the&#160;&#160;note or&#160;&#160;credit agreement.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Permitted Liens.&#160;&#160;</font>The words&#160;&#160;"Permitted Liens"&#160;&#160;mean&#160;&#160;&#160;(1)&#160;&#160;&#160;liens and security&#160;&#160;interests securing&#160;&#160;Indebtedness owed by Borrower to&#160;&#160;&#160;Lender; </font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(2) liens for taxes, assessments, or similar charges either not yet due&#160;&#160;or&#160;&#160;being&#160;&#160;contested&#160;&#160;in&#160;&#160;good&#160;&#160;faith;&#160;&#160;(3)&#160;&#160;liens&#160;&#160;of&#160;&#160;materialmen, mechanics,&#160;&#160;warehousemen,&#160;&#160;or carriers, or other&#160;&#160;like liens arising in the ordinary&#160;&#160;course of business and securing obligations&#160;&#160;which are not&#160;&#160;yet delinquent; (4) purchase money liens or purchase money security interests upon or in any property acquired or held by Borrower in the ordinary course of business to secure indebtedness outstanding on the date of this Agreement or&#160;&#160;permitted&#160;&#160;to&#160;&#160;be&#160;&#160;incurred&#160;&#160;under&#160;&#160;the paragraph of this Agreement titled "Indebtedness&#160;&#160;and Liens";&#160;&#160;(5)&#160;&#160;liens&#160;&#160;and security&#160;&#160;interests&#160;&#160;which,&#160;&#160;as&#160;&#160;of the&#160;&#160;date&#160;&#160;of&#160;&#160;this&#160;&#160;Agreement,&#160;&#160;have been disclosed to and approved by the&#160;&#160;Lender in writing;&#160;&#160;and&#160;&#160;(6)&#160;&#160;those&#160;&#160;liens and security&#160;&#160;interests&#160;&#160;which&#160;&#160;in the aggregate&#160;&#160;constitute an immaterial and insignificant&#160;&#160;monetary&#160;&#160;amount&#160;&#160;with respect to the&#160;&#160;net value&#160;&#160;of&#160;&#160;Borrower's assets.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 14.7pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Primary Credit Facility. </font>The words "Primary Credit Facility" mean the credit facility described in&#160;&#160;the&#160;&#160;Line&#160;&#160;of&#160;&#160;Credit&#160;&#160;section&#160;&#160;of&#160;&#160;this&#160;&#160;Agreement.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 16.45pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Related Documents. </font>The words "Related Documents" mean all promissory notes, credit agreements, loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements&#160;&#160;and documents, whether&#160;&#160;now&#160;&#160;or hereafter&#160;&#160;existing, executed&#160;&#160;in connection&#160;&#160;with the Loan.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 15.95pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Security Agreement. </font>The words "Security Agreement" mean and include without limitation any agreements, promises, covenants, arrangements, understandings or other agreements, whether created by law, contract, or otherwise, evidencing, governing, representing, or creating&#160;&#160;a Security Interest.</font></div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 15.95pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-WEIGHT: bold">Security&#160;&#160;Interest.</font>&#160;&#160;The&#160;&#160;words&#160;&#160;"Security&#160;&#160;Interest"&#160;&#160;mean,&#160;&#160;without&#160;&#160;limitation,&#160;&#160;any&#160;&#160;and&#160;&#160;all&#160;&#160;types&#160;&#160;of&#160;&#160;collateral&#160;&#160;security,&#160;&#160;present&#160;&#160;and&#160;&#160;future, whether in the form of a lien, charge, encumbrance, mortgage,&#160;&#160;deed&#160;&#160;of&#160;&#160;trust,&#160;&#160;security&#160;&#160;deed,&#160;&#160;assignment,&#160;&#160;pledge,&#160;&#160;crop&#160;&#160;pledge,&#160;&#160;chattel&#160;&#160;mortgage,&#160; collateral chattel mortgage, chattel trust, factor's lien, equipment&#160;&#160;trust,&#160;&#160;conditional&#160;&#160;sale,&#160;&#160;trust&#160;&#160;receipt,&#160;&#160;lien&#160;&#160;or&#160;&#160;title&#160;&#160;retention contract, lease or consignment intended as a security device, or any&#160;&#160;other&#160;&#160;security&#160;&#160;or&#160;&#160;lien&#160;&#160;interest&#160;&#160;whatsoever&#160;&#160;whether&#160;&#160;created&#160;&#160;by&#160;&#160;law,&#160;&#160;contract,&#160;&#160;or &#160;otherwise.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 16.55pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN AGREEMENT (ASSET BASED) AND BORROWER AGREES TO ITS TERMS.&#160;&#160;THIS BUSINESS LOAN AGREEMENT (ASSET BASED) IS DATED SEPTEMBER 18,&#160;&#160;2015.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 16.55pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">BORROWER :</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 16.55pt" align="left">TANDY LEATHER FACTORY, INC.</div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 16.55pt" align="left">By:&#160; <font style="TEXT-DECORATION: underline">/s/ Shannon L. Greene</font></div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 16.55pt" align="left">Shannon Greene, Chief Financial Officer of Tandy Leather Factory, Inc.</div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 16.55pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">LENDER&#160;:</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 16.55pt" align="left">BOKKF, NA DBA BANK OF TEXAS</div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 16.55pt" align="left">By:&#160; <font style="TEXT-DECORATION: underline">/s/ Jennifer Baggs</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: -0.9pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt">Borrower:</font>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Tandy Leather Factory, Inc.</font></div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 90pt; MARGIN-RIGHT: -0.9pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">1900 SE Loop 820</font></div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 90pt; MARGIN-RIGHT: -0.9pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Fort Worth, TX&#160;&#160;76140</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt">Lender:</font>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;BOKF, NA dba&#160;&#160;Bank of&#160;&#160;Texas</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 15.75pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">This ADDENDUM TO BUSINESS LOAN AGREEMENT is attached to and by this reference is made a part of the Business Loan Agreement (Asset Based), dated September 18, 2015, and executed in connection with a loan or other financial accommodations between BOKF, NA DBA BANK OF TEXAS and Tandy Leather Factory, Inc.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 15.75pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The Business Loan Agreement dated September 18, 2015 ("Loan Agreement") between Tandy Leather Factory, lnc.("Borrower") and BOKF, NA dba Bank of Texas ("Lender") is hereby amended to incorporate the following. Capitalized terms used below and not defined herein shall have the meanings given in the Business Loan Agreement.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Definitions</font>:</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 16.7pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">"Commodity Exchange Act" means the Commodity Exchange Act (7 U.S.C. <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#167;&#160;&#160;</font>1 et seq.),&#160;&#160;as amended&#160;&#160;from time to time,&#160;&#160;and any&#160;&#160;successor&#160;&#160;statute.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">"Effective&#160;&#160;Date" means the date of the&#160;&#160;Loan&#160;Agreement.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 21.5pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">"Excluded Swap Obligation" means (a) with respect to any Guarantor, any Swap Obligation if, and to the extent that,&#160;&#160;all or&#160;&#160;a&#160;&#160;portion of&#160;&#160;the guarantee of such Guarantor of, or the grant by such Guarantor of a security interest to secure, as applicable, such Swap Obligation (or any guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation, or order of the Commodity Futures Trading Commission&#160;&#160;(or the application or official interpretation of any thereof)&#160;&#160;and&#160;&#160;(b) with respect to any&#160;&#160;Borrower, any&#160;&#160;Swap Obligation of&#160;&#160;another&#160;&#160;&#160;Loan Party if, and to the extent that, all or a portion of the joint&#160;&#160;and several&#160;&#160;liability&#160;&#160;of&#160;&#160;such Borrower&#160;&#160;with&#160;&#160;respect to, or the grant of&#160;&#160;such&#160;&#160;Borrower of a security interest to secure, as applicable, such Swap Obligation is or becomes illegal under the&#160;&#160;Commodity&#160;&#160;Exchange Act&#160;&#160;or&#160;&#160;any rule, regulation, or order of the Commodity Futures Trading Commission&#160;&#160;(or the application&#160;&#160;or official interpretation of any thereof),&#160;&#160;by virtue of&#160;&#160;such Guarantor's (in the case of (a)) or Borrower's (in the case of (b)) failure to constitute an "eligible contract participant," as defined in the Commodity Exchange Act and the regulations thereunder, at the time the guarantee of such Guarantor,&#160;&#160;joint&#160;&#160;and&#160;&#160;several&#160;&#160;liability&#160;&#160;of&#160;&#160;such&#160;&#160;Borrower, or grant of such security interest by such Guarantor or&#160;&#160;Borrower, as applicable,&#160;&#160;becomes or&#160;&#160;would&#160;&#160;become effective&#160;&#160;with respect to&#160;&#160;such Swap Obligation. If a Swap Obligation arises under a master&#160;&#160;agreement governing&#160;&#160;more than one&#160;&#160;Swap Obligation, such exclusion shall&#160;&#160;apply only to the&#160;&#160;portion of&#160;&#160;such Swap&#160;&#160;Obligation that is attributable to&#160;&#160;Swap Obligations&#160;&#160;for&#160;&#160;which such guarantee&#160;&#160;or security&#160;&#160;interest or joint&#160;&#160;and several liability, as applicable,&#160;&#160;is or becomes&#160;illegal.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 21.5pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">"Guarantee Obligation" means as to any Person (the "guaranteeing person"), any&#160;&#160;obligation,&#160;&#160;including&#160;&#160;a reimbursement,&#160;&#160;counterindemnity&#160;&#160;or similar obligation, of the guaranteeing Person that guarantees or in effect guarantees, or which is given to induce the&#160;&#160;creation of&#160;&#160;a&#160;&#160;separate obligation by another Person (including any bank under any letter of credit) that guarantees or in effect guarantees, any Indebtedness, leases, dividends or other obligations (the "primary obligations") of any other third Person (the "primary obligor") in any manner, whether&#160;&#160;directly&#160;&#160;or&#160;&#160;indirectly, including any obligation of the guaranteeing person, whether or not contingent, (i) to purchase&#160;&#160;any&#160;&#160;such primary&#160;&#160;obligation or&#160;&#160;any property constituting direct or indirect security therefor, (ii) to advance or supply funds ( 1) for the purchase or payment of&#160;&#160;any&#160;&#160;such primary obligation or (2) to maintain working capital or equity capital of the primary obligor&#160;&#160;or otherwise&#160;&#160;to&#160;&#160;maintain the&#160;&#160;net&#160;&#160;worth or solvency&#160;&#160;of&#160;&#160;the primary obligor, (iii) to purchase property, securities&#160;&#160;or services&#160;&#160;primarily for the purpose of assuring the owner of&#160;&#160;any such primary&#160;&#160;obligation of&#160;&#160;the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the owner of any such primary obligation against loss in respect thereof; provided, however, that the term Guarantee Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business. For the avoidance of doubt, for purposes of determining any Guarantee Obligations of any Guarantor pursuant to the&#160;&#160;Loan Agreement&#160;&#160;and any&#160;&#160;Related Documents, the definition of&#160;&#160;"Specified Swap Agreement"&#160;&#160;shall&#160;&#160;not create any guarantee by any Guarantor of (or grant of security interest by any Guarantor to support, if&#160;&#160;applicable)&#160;&#160;any&#160;&#160;Excl\.lded&#160;&#160;Swap Obligation of such Guarantor.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 21.5pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">"Loan&#160;Party"&#160;means&#160;any&#160;Borrower,&#160;Guarantor,&#160;or&#160;Grantor&#160;under&#160;the&#160;Loan&#160;Agreement&#160;or&#160;any&#160;of&#160;the&#160;Related&#160;Documents.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 21.5pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">"Person" means any natural person, corporation, association, limited liability company, partnership, joint venture, trust, and every other entity of&#160;&#160;every kind.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 21.5pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">"Qualified&#160;&#160;&#160;ECP&#160;&#160;Guarantor"&#160;&#160;&#160;means,&#160;&#160;&#160;in&#160;&#160;respect&#160;&#160;&#160;of&#160;&#160;&#160;any&#160;&#160;&#160;Swap&#160;&#160;Obligation,&#160;&#160;&#160;each&#160;&#160;Borrower&#160;&#160;&#160;and&#160;&#160;Guarantor&#160;&#160;&#160;that&#160;&#160;&#160;has&#160;&#160;total&#160;&#160;assets&#160;exceeding </font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">$10,000,000 at the time the relevant Guarantee or grant of the relevant&#160;&#160;security&#160;&#160;interest&#160;&#160;becomes&#160;&#160;effective&#160;&#160;with&#160;&#160;respect&#160;&#160;to&#160;&#160;such&#160;&#160;Swap&#160;&#160;Obligation or such other person as constitutes an "eligible contract participant" under the Commodity&#160;&#160;Exchange&#160;&#160;Act&#160;&#160;or&#160;&#160;any&#160;&#160;regulations&#160;&#160;promulgated thereunder and can cause another person to qualify as an "eligible contract participant"&#160;&#160;at such time&#160;&#160;by entering&#160;&#160;into a&#160;&#160;keepwell&#160;&#160;under Section 1a(18)(A)(v) (II) of the Commodity Exchange &#160;Act.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 21.5pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">"Specified Swap Agreement" means any&#160;&#160;Swap Agreement&#160;&#160;in respect of&#160;&#160;interest&#160;&#160;rates, currency&#160;&#160;exchange&#160;&#160;rates, commodities,&#160;&#160;weather,&#160;&#160;power or emissions entered into by any Borrower or any Guarantor and any Person that is a Lender or an affiliate of a Lender at the time such Swap Agreement is entered into (or, in respect of any Swap Agreement entered into prior to the Effective Date, any Person that&#160;&#160;is a&#160;&#160;Lender&#160;&#160;or&#160;&#160;any&#160;&#160;affiliate of a Lender on the Effective Date), which has been designated as a "Specified Swap Agreement" by such Lender and such Borrower, by notice to the Administrative Agent not later than 15 days after the later of <font style="DISPLAY: inline; FONT-SIZE: 10pt">(i) </font>the Effective Date and (ii)&#160;&#160;the&#160;&#160;execution&#160;&#160;and delivery&#160;&#160;by&#160;&#160;such&#160;&#160;Borrower or such Guarantor&#160;&#160;of such Swap Agreement&#160;&#160;(or such later date agreed&#160;&#160;by Lender&#160;&#160;and such Borrower, but in no event&#160;&#160;more than 30&#160;&#160;days after such later date referred to above); provided that for&#160;&#160;purposes of determining&#160;&#160;any Guarantee Obligations of any Guarantor&#160;&#160;pursuant to&#160;&#160;the Loan Agreement and any Related Documents, the definition of "Specified Swap Agreement"&#160;&#160;shall&#160;&#160;not&#160;&#160;create&#160;&#160;any&#160;&#160;guarantee&#160;&#160;by&#160;&#160;any&#160;&#160;Guarantor&#160;of&#160;(or&#160;grant&#160;of&#160;security&#160;interest&#160;by&#160;any&#160;Guarantor&#160;to&#160;support,&#160;if&#160;applicable)&#160;any&#160;Excluded&#160;Swap&#160;Obligation&#160;of&#160;such&#160;Guarantor.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 21.5pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">"Swap Agreement" means, any agreement, contract or transaction that constitutes a "swap" within the meaning of&#160;&#160;section&#160;&#160;1a(47)&#160;&#160;of&#160;&#160;the&#160;&#160;Commodity Exchange Act, including any agreement with respect to any swap, forward, future or derivative transaction or&#160;&#160;option&#160;&#160;or&#160;&#160;similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity&#160;&#160;or&#160;&#160;debt&#160;&#160;instruments&#160;&#160;or&#160;&#160;securities,&#160;&#160;or&#160;&#160;economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of&#160;&#160;these transactions; provided that no phantom stock or similar plan providing for payments only on account&#160;&#160;of services&#160;&#160;provided by current&#160;&#160;or&#160;&#160;former&#160;&#160;directors, officers, employees or consultants&#160;&#160;of any&#160;&#160;Borrower or any of its subsidiaries&#160;&#160;shall be a&#160;&#160;"Swap&#160;&#160;&#160;Agreement".</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 21.5pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">"Swap Obligations"&#160;&#160;means with respect to any&#160;&#160;Person, any&#160;&#160;and all obligations of such Person, whether&#160;&#160;absolute or contingent&#160;&#160;and howsoever&#160;&#160;and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor), under (a) any and all Swap Agreements, and (b) any and all cancellations, buy backs, reversals, terminations or assignments of any Swap Agreement&#160;transaction.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Representations&#160;&#160;and</font><font style="DISPLAY: inline; TEXT-DECORATION: underline">&#160;</font><font style="DISPLAY: inline; TEXT-DECORATION: underline">Warranties:</font></font></div>

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<div style="TEXT-INDENT: 45pt; MARGIN-LEFT: 27pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">a)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">the rate, asset, liability or other notional item underlying any Specified Swap&#160;&#160;Agreement&#160;&#160;regarding&#160;&#160;an interest or&#160;&#160;monetary&#160;&#160;rate, or&#160;&#160;foreign exchange swap, entered into or executed in connection&#160;&#160;with this&#160;&#160;Loan Agreement&#160;&#160;is, or is directly&#160;&#160;related to, a financial&#160;&#160;&#160;term hereof;</font></div>

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<div style="TEXT-INDENT: 45pt; MARGIN-LEFT: 27pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">b)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">the aggregate notional amount of all Swap Agreements entered into or executed&#160;&#160;by&#160;&#160;Borrower&#160;&#160;in connection&#160;&#160;with the financial terms&#160;&#160;of this Loan Agreement, whether entered into or executed with Borrower or any other individual&#160;&#160;or&#160;&#160;entity,&#160;&#160;will&#160;&#160;not&#160;&#160;at&#160;&#160;any&#160;&#160;time&#160;&#160;exceed&#160;&#160;the&#160;&#160;aggregate principal amount outstanding hereunder, as such amounts may be determined or calculated&#160;&#160;contemporaneously&#160;&#160;from&#160;&#160;time&#160;&#160;to time during and throughout the term of this Loan&#160;&#160;&#160;Agreement;</font></div>

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<div style="TEXT-INDENT: 45pt; MARGIN-LEFT: 27pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">c)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">each Swap Agreement entered into or executed in connection&#160;&#160;with&#160;&#160;the&#160;&#160;financial&#160;&#160;terms&#160;&#160;of&#160;&#160;this&#160;&#160;Loan&#160;&#160;Agreement&#160;&#160;has&#160;&#160;been&#160;&#160;or&#160;&#160;will&#160;&#160;be&#160;&#160;entered into no earlier than ninety (90) days before and no later than one hundred eighty ( 180) days after the&#160;&#160;Effective&#160;&#160;Date or of&#160;&#160;any&#160;&#160;transfer&#160;&#160;of&#160;&#160;principal&#160;&#160;hereunder;</font></div>

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<div style="TEXT-INDENT: 45pt; MARGIN-LEFT: 27pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">d)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">the purpose of any Swap Agreements&#160;&#160;in respect of any commodity&#160;&#160;entered into or executed&#160;&#160;in connection&#160;&#160;with this&#160;&#160;Loan Agreement&#160;&#160;is&#160;&#160;to hedge commodity&#160;&#160;price risks incidental to the&#160;&#160;Borrower's business and arising from potential changes&#160;&#160;in the&#160;&#160;price of such commodity;&#160;&#160;&#160;&#160;and</font></div>

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<div style="TEXT-INDENT: 45pt; MARGIN-LEFT: 27pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">e)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">each Swap Agreement entered into or executed in connection with this Loan Agreement&#160;&#160;mitigates against the risk of repayment&#160;&#160;hereof&#160;&#160;and is not for the purpose of &#160;speculation <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 16.3pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">For purposes hereof, the term&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt">(i)&#160;&#160;</font>"financial term"&#160;&#160;shall include,&#160;&#160;without&#160;&#160;limitation, the duration or term of the&#160;&#160;Loan Agreement,&#160;&#160;rate of&#160;&#160;interest,&#160;&#160;the currency or currencies in which the Loan is made and its principal amount,&#160;&#160;and&#160;&#160;(ii)&#160;&#160;"transfer&#160;&#160;of principal" means any draw&#160;&#160;of principal under&#160;&#160;the Loan Agreement,&#160;&#160;any amendment , restructuring, extension or other modification of the Loan&#160;&#160;&#160;Agreement.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Agreement:</font></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 15.75pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Keepwel</font>l. Each Qualified ECP Guarantor hereby jointly and severally absolutely, unconditionally&#160;&#160;and irrevocably undertakes to provide such funds&#160;&#160;or other support as may be needed from time to time by each other Guarantor to honor all of its Guarantee Obligations in respect of Swap&#160;&#160;Obligations (provided, however, that each Qualified ECP Guarantor shall only&#160;&#160;be liable under&#160;&#160;this&#160;&#160;section for the&#160;&#160;maximum&#160;&#160;amount of&#160;&#160;such&#160;&#160;liability that can be hereby incurred without rendering its obligations under this section, or&#160;&#160;otherwise&#160;&#160;under&#160;&#160;any&#160;&#160;Guarantee&#160;&#160;Obligations,&#160;&#160;as&#160;&#160;it relates to such other Guarantor, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount). The obligations of each Qualified ECP Guarantor under this section shall remain in full force and effect until discharged pursuant to the terms of the Loan Agreement&#160;&#160;and&#160;&#160;Related Documents.&#160;&#160;Each Qualified ECP Guarantor&#160;&#160;intends that this section&#160;&#160;constitute,&#160;&#160;and this section shall&#160;&#160;be deemed to constitute, a "keepwell,&#160;&#160;support,&#160;&#160;or&#160;&#160;other&#160;&#160;agreement"&#160;&#160;for&#160;&#160;the&#160;&#160;benefit&#160;&#160;of&#160;&#160;each&#160;&#160;other&#160;&#160;Guarantor&#160;&#160;for&#160;&#160;all&#160;&#160;purposes&#160;&#160;of&#160;&#160;Section&#160;&#160;1a(18) (A) (v)(II) of the Commodity Exchange Act.</font></div>

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<div align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">THIS ADDENDUM TO BUSINESS LOAN AGREEMENT IS EXECUTED ON SEPTEMBER 18, 2015.</font></div>

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<div align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold">TANDY LEATHER FACTORY, INC.</font></div>

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<div align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold">By:&#160; <font style="TEXT-DECORATION: underline">/s/ Shannon L. Greene</font></font></div>

<div align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Shannon Greene, Chief Financial Officer of Tandy Leather Factory, Inc.</font></div>

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<div align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold">BOKF, NA DBA BANK Of TEXAS</font></div>

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<div align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold">By:&#160; <font style="TEXT-DECORATION: underline">/s/ Jennifer Baggs</font></font></div>

<div align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Authorized Officer</font></div>
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<TYPE>EX-10.3
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<DESCRIPTION>PROMISSORY NOTE $10,000,000
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<div>Exhibit 10.3</div>

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<font style="FONT-WEIGHT: bold">PROMISSORY NOTE</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">P.O. Box 29773</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Fort Worth, TX&#160;&#160;76140</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Dallas, TX&#160;&#160;75229-9775</font></div>
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<td width="50%"><font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;Principal Amount:&#160; $ 10,000,000.00</font></td>
<td width="50%"><font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;Date of Note:&#160; September 18, 2015</font></td>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;PROMISE TO PAY. Tandy Leather Factory, Inc. ("Borrower") promises to pay to BOKF, NA dba Bank of Texas ("Lender"), or order, in lawful money of the United State of America, the principal amount of Ten Million &amp; 00/100 Dollars ($10,000,000.00), together with interest on the unpaid principal balance from September 18, 2015, until maturity.</div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 13.5pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">PAYMENT. Subject to any payment changes resulting from changes in the Index, Borrower will pay this loan in accordance with the following payment schedule:</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Prior to the Conversion Date</font>:</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 13.4pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Prior to the Conversion Date (defined below), Borrower will pay twelve <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(12) </font>consecutive monthly payments of interest, with the first payment&#160;being&#160;due&#160;October&#160;<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">18,</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">2015, </font>and&#160;all&#160;subsequent interest&#160;payments&#160;due&#160;on&#160;the&#160;same&#160;day&#160;of&#160;each&#160;month&#160;thereafter&#160;<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Following the Conversion Date</font>:</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 12.85pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Following the Conversion Date, Borrower will pay forty-eight (48) consecutive monthly payments of principal and interest, commencing October <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">18. 2016, </font>and on the same day of each month thereafter, with each payment except the last equal to the Payment Amount (defined below), and the last payment, due four <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(4) </font>years from the Conversion Date, and in any event no later than September <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">18, 2020, </font>equal to the remaining unpaid balance of principal and accrued interest hereunder.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The term "Conversion Date" shall mean the earlier of (i) September <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">18,</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">2016,</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;</font>or <font style="DISPLAY: inline; FONT-SIZE: 10pt">(ii)</font><font style="DISPLAY: inline; FONT-SIZE: 10pt">&#160;</font>the date on which the loan is fully funded.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 13.7pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The "Payment Amount" shall be an amount determined on the Conversion Date based on the principal amount outstanding hereunder on the Conversion date and the interest rate in effect on the Conversion Date, amortized over a term of four (4) years; provided, however, the Payment Amount will be recalculated on an annual basis based on the interest rate in effect at the time of recalculation, and the months remaining in the original four (4) year&#160;amortization.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Straight Line of</font><font style="DISPLAY: inline; TEXT-DECORATION: underline">&#160;</font><font style="DISPLAY: inline; TEXT-DECORATION: underline">Credit:</font></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 13.4pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">This Note evidences a straight line of credit for the initial twelve <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(12) </font>months of the loan term ("Draw Period"). Borrower is not entitled to further loan advances once the total amount of principal has been advanced or the Draw Period has expired, whichever occurs first. Advances under this Note, as well as directions for payment from Borrower's accounts, may be requested orally or in writing by an authorized person. Lender may, but need not, require that all oral requests be confirmed in writing.&#160;&#160;Borrower agrees to be liable for all sums either: (A) advanced in accordance with the instructions of an authorized person or (B) credited to any of Borrower's accounts with Lender. The unpaid principal balance owing on this Note at any time may be evidenced by endorsements on this Note or by Lender's internal records, including daily computer print-outs. Lender will have no obligation to advance funds under this Note if: (A) Borrower or any guarantor is in default under the terms of this Note or any agreement that Borrower or any guarantor has with Lender, including any agreement made in connection with the signing of this Note; (B) Borrower or any guarantor ceases doing business or is insolvent; (C) any guarantor seeks, claims or otherwise attempts to limit, modify or revoke such guarantor's guarantee of this Note or any other loan with Lender; or (D) Borrower has applied funds provided pursuant to this Note for purposes other than those authorized by Lender.</font><br>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 12.6pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Unless otherwise agreed or required by applicable law, payments will be applied first to any accrued unpaid interest; then to principal; then to any late charges; and then to any unpaid collection costs. Borrower will pay Lender at Lender's address shown above or at such other place as Lender may designate in writing.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">PAYMENT INFORMATION. PAYMENTS SHOULD BE REMITTED TO:&#160;&#160;&#160;BOKF, NA dba Bank of Texas, P.O. Box 248818,&#160;&#160;&#160;Oklahoma&#160;City, OK </font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">73124-8818. If a payment is made consistent with the written payment instructions provided by Lender and received on a business day by 5:00 p.m. Central Time, the payment will be applied that day. If a payment is received on a business day after 5:00 p.m., the payment may be applied the following business day.</font></div>

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<div align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from time to time based on changes in an independent index which is the 1 Month LIBOR Interest Rate which is the ICE Benchmark Administration (ICE) (or the successor thereto if the ICE Benchmark Administration is no longer making a London Interbank Offered Rate available) fixing of London Inter-Bank Offered Rate (LIBOR) based on offered inter-bank deposit rates contributed in accordance with instructions to ICE LJBOR Contributor Banks (rounded upward, if necessary, to the nearest 1/100 of 1%) for such interest period; provided, however, that if the Index determined as provided above shall be less than zero, the Index shall be deemed to be zero for the purposes of this Note (the "Index"). The Index is not necessarily the lowest rate charged by Lender on its loans. If the Index becomes unavailable during the term of this loan, Lender may designate a substitute index after notifying Borrower . Lender will tell Borrower the current Index rate upon Borrower's request. The interest rate change will not occur more often than each month. Borrower understands that Lender may make loans based on other rates as well. The Index currently is <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">0.210% </font>per annum. Interest prior to maturity on the unpaid principal balance of this Note will be calculated as described in the "INTEREST CALCULATION METHOD" paragraph using a rate of 1 .850 percentage points over the Index, resulting in an initial rate of 2.060% per annum based on a year of 360 days. NOTICE: Under no circumstances will the interest rate on this Note be more than (except for any higher default rate or Post Maturity Rate shown below) the lesser of 18.000% per annum or the maximum rate allowed by applicable law. For purposes of this Note, the "maximum rate allowed by applicable law" means the greater of (A) the maximum rate of interest permitted under federal or other law applicable to the indebtedness evidenced by this Note, or (B) the "Quarterly Ceiling" as referred to in Section 303.006 of the Texas Finance Code. Whenever increases occur in the interest rate, Lender, at its option, may do one or more of the following: (A) increase Borrower's payments to ensure Borrower's loan will pay off by its original final maturity date, (B) increase Borrower's payments to cover accruing interest, (C) increase the number of Borrower's payments, and (D) continue Borrower's payments at the same amount and increase Borrower's final payment.</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 10.95pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">INTEREST CALCULATION METHOD. Interest on this Note is computed on a <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">365/360 </font>basis; that is, by applying the ratio of the interest rate over a year of <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">360 </font>days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding, unless such calculation would result in a usurious rate, in which case interest shall be calculated on a per diem basis of a year of <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">365 </font>or <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">366 </font>days, as the case may be. All interest payable under this Note is computed using this method.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 10.4pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt">PREPAYMENT. Borrower may pay without penalty all or a portion of the amount owed earlier than it is due. Prepayment in full shall consist of payment of the remaining unpaid principal balance together with all accrued and unpaid interest and all other amounts, costs and expenses for which Borrower is responsible under this Note or any other agreement with Lender pertaining to this loan, and in no event will Borrower ever be required to pay any unearned interest.&#160;&#160;Early payments will not, unless agreed to by Lender in writing, relieve Borrower of Borrower's obligation to continue to make payments under the payment schedule. Rather, early payments will reduce the principal balance due and may result in Borrower's making fewer payments. Borrower agrees not to send Lender payments marked "paid in full", "without recourse", or similar language</font><font style="DISPLAY: inline; FONT-SIZE: 10pt">. </font><font style="DISPLAY: inline; FONT-SIZE: 10pt">If Borrower sends such a payment</font><font style="DISPLAY: inline; FONT-SIZE: 10pt">, </font><font style="DISPLAY: inline; FONT-SIZE: 10pt">Lender may accept it without losing any of Lender's rights under this Note, and Borrower </font>will <font style="DISPLAY: inline; FONT-SIZE: 10pt">remain obligated to pay any further amount owed to Lender. All written communications concerning disputed amounts, </font><font style="DISPLAY: inline; FONT-SIZE: 10pt">including </font><font style="DISPLAY: inline; FONT-SIZE: 10pt">any check or </font><font style="DISPLAY: inline; FONT-SIZE: 10pt">other </font><font style="DISPLAY: inline; FONT-SIZE: 10pt">payment </font><font style="DISPLAY: inline; FONT-SIZE: 10pt">instrument</font><font style="DISPLAY: inline; FONT-SIZE: 10pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt">that </font><font style="DISPLAY: inline; FONT-SIZE: 10pt">indicates</font><font style="DISPLAY: inline; FONT-SIZE: 10pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt">that </font><font style="DISPLAY: inline; FONT-SIZE: 10pt">the </font><font style="DISPLAY: inline; FONT-SIZE: 10pt">payment </font><font style="DISPLAY: inline; FONT-SIZE: 10pt">constitutes</font><font style="DISPLAY: inline; FONT-SIZE: 10pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt">"payment </font><font style="DISPLAY: inline; FONT-SIZE: 10pt">in</font><font style="DISPLAY: inline; FONT-SIZE: 10pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt">full" </font><font style="DISPLAY: inline; FONT-SIZE: 10pt">of </font><font style="DISPLAY: inline; FONT-SIZE: 10pt">the </font><font style="DISPLAY: inline; FONT-SIZE: 10pt">amount </font><font style="DISPLAY: inline; FONT-SIZE: 10pt">owed </font><font style="DISPLAY: inline; FONT-SIZE: 10pt">or </font><font style="DISPLAY: inline; FONT-SIZE: 10pt">that </font><font style="DISPLAY: inline; FONT-SIZE: 10pt">is</font><font style="DISPLAY: inline; FONT-SIZE: 10pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt">tendered </font><font style="DISPLAY: inline; FONT-SIZE: 10pt">with</font><font style="DISPLAY: inline; FONT-SIZE: 10pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt">other </font><font style="DISPLAY: inline; FONT-SIZE: 10pt">conditions or limitations or as full satisfaction of a disputed amount must be mailed or </font><font style="DISPLAY: inline; FONT-SIZE: 10pt">delivered </font><font style="DISPLAY: inline; FONT-SIZE: 10pt">to: BOKF, NA dba Bank of Texas, P.O. Box </font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">248818 </font><font style="DISPLAY: inline; FONT-SIZE: 10pt">Oklahoma </font><font style="DISPLAY: inline; FONT-SIZE: 10pt">City, </font><font style="DISPLAY: inline; FONT-SIZE: 10pt">OK&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">73124-8818.</font></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 12.85pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">LATE CHARGE. If a payment is 15 days or more late, Borrower will be charged <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">5.000% </font>of the unpaid portion of the regularly scheduled payment.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 12.05pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">POST MATURITY RATE.&#160;&#160;The Post Maturity Rate on this Note is the lesser of (A) the maximum rate allowed by law or (B) 18.000% per annum based on a year of 360 days. Borrower will pay interest on all sums due after final maturity, whether by acceleration or otherwise, at that rate.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 12.05pt" align="left">DEFAULT.&#160; Each of the following shall constitute an event of defaul ("Event of Default") under this Note:</div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 14.9pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Default. Borrower fails to make any payment when due under this Note.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 14.9pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Other Defaults.&#160; Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Note or in any of the related documents&#160;or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 14.9pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Default in Favor of Third Parties. Borrower or any Grantor defaults under any&#160;&#160;loan, extension&#160;&#160;of credit, security&#160;&#160;agreement,&#160;&#160;purchase or&#160;&#160;sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower's property or Borrower's ability to repay this Note or perform Borrower's obligations under this Note or any of the related documents.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 15.35pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">False Statements. Any&#160;&#160;warranty,&#160;&#160;representation or statement&#160;&#160;made or furnished&#160;&#160;to&#160;&#160;Lender&#160;&#160;by Borrower or on Borrower's behalf, or made&#160;&#160;by Guarantor, or any other guarantor, endorser, surety, or accommodation&#160;&#160;party, under this&#160;&#160;Note or the related documents&#160;&#160;in connection&#160;&#160;with the obtaining of the loan evidenced by this Note or any security document directly or indirectly securing repayment of this Note is false&#160;or&#160;misleading&#160;in&#160;any&#160;material&#160;respect,&#160;either&#160;now&#160;or&#160;at&#160;the&#160;time&#160;made&#160;or&#160;furnished&#160;or&#160;becomes&#160;false&#160;or&#160;misleading&#160;at&#160;any&#160;time&#160;thereafter.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 14.95pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Insolvency. The dissolution or termination of Borrower's existence as a going business, the insolvency of Borrower, the appointment of a receiver for any part of Borrower's property, any assignment for the benefit of creditors,&#160;&#160;any&#160;&#160;type&#160;&#160;of&#160;&#160;creditor&#160;&#160;workout,&#160;&#160;or&#160;&#160;the&#160;&#160;commencement of any proceeding under any bankruptcy or insolvency&#160;&#160;laws by or against Borrower.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 23.15pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the loan. This includes a garnishment of any of Borrower's accounts, including deposit accounts, with Lender.&#160;&#160;&#160;However, this&#160;&#160;Event of Default shall&#160;&#160;&#160;not apply it there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture&#160;&#160;proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or&#160;a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion,&#160;&#160;as&#160;&#160;being&#160;&#160;an adequate&#160;&#160;reserve or bond for the&#160;&#160;dispute.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 15.2pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Execution; Attachment. Any execution or attachment is levied against the Collateral, and such execution or attachment is not set aside, discharged or stayed within thirty (30) days after the same is&#160;&#160;&#160;levied.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 23.15pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Change in Zoning or Public Restriction.&#160;&#160;Any change in any zoning ordinance or regulation or any other public restriction is enacted, adopted&#160;or implemented, that limits or defines the uses which may be made of the Collateral such that the present or intended use of the Collateral,&#160;&#160;as specified in the related documents, would be in violation of such zoning ordinance or regulation or public restriction, as changed.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 23.15pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Judgement.&#160;&#160;Unless adequately covered by insurance in the opinion of Lender, the entry of a final judgment for the payment of money involving more than one hundred thousand dollars ($100,000.00) against Borrower and the failure by Borrower to discharge the same, or cause it to be discharged, or bonded off to Lender&#8217;s satisfaction, without thirty (30) days from the date of the order, decree or process under which or pursuant to which such judgment was entered.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 14.6pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Events Affecting Guarantor. Any&#160;&#160;of the preceding events occurs with&#160;&#160;respect to&#160;&#160;any&#160;&#160;Guarantor,&#160;&#160;or&#160;&#160;any other&#160;&#160;guarantor,&#160;&#160;endorser,&#160;&#160;surety, or accommodation party of any of the indebtedness or any&#160;&#160;Guarantor, or any&#160;&#160;other guarantor, endorser,&#160;&#160;surety, or accommodation&#160;&#160;party&#160;&#160;dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any guaranty of the indebtedness evidenced by this&#160;&#160;Note.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Change In Ownership. Any change in ownership of twenty-five percent (25%) or more of the common stock of Borrower.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 0pt" align="left">Adverse Change. A material adverse change occurs in Borrower's financial condition, or Lender believes the prospect of payment or performance of this Note is impaired.</div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Insecurity. Lender in good faith believes itself insecure.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 14.5pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Cure Provisions. If any default, other than a default in payment, is curable and if Borrower&#160;&#160;has not been given a notice of&#160;&#160;a breach of the&#160;&#160;same provision of this Note within the preceding twelve ( 12) months, it may be cured if Borrower, after Lender sends written notice to&#160;&#160;Borrower&#160;&#160;demanding&#160;&#160;cure of such default:&#160;&#160;&#160;(1)&#160;&#160;&#160;cures the&#160;&#160;default&#160;&#160;within twenty&#160;&#160;(20) days;&#160;&#160;or&#160;&#160;&#160;(2)&#160;&#160;&#160;if the&#160;&#160;cure requires&#160;&#160;more than&#160;&#160;&#160;&#160;twenty</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 23.15pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">LENDER'S RIGHTS. Upon default, Lender may declare the entire indebtedness, including the unpaid principal balance&#160;&#160;under this&#160;&#160;Note, all&#160;&#160;accrued unpaid interest, and all other amounts, costs and expenses for which Borrower is responsible under this Note or any&#160;&#160;other&#160;&#160;agreement&#160;&#160;with Lender pertaining to this loan, immediately due, without notice, and then Borrower will pay that amount.</font></div>

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<div align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">ATTORNEYS' FEES; EXPENSES. Lender may hire an attorney to help collect this Note if Borrower does not pay, and Borrower will pay Lender's reasonable attorneys' fees. Borrower also will pay Lender all other amounts Lender actually incurs as court costs, lawful fees for filing, recording, releasing to any public office any instrument securing this Note; the reasonable cost actually expended for repossessing, storing, preparing for sale, and selling any security; and tees for noting a lien on or transferring a certificate of title to any motor vehicle offered as security for this Note, or premiums or identifiable charges received in connection with the sale of authorized insurance.</font></div>

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<div align="left">JURY WAIVER. Lender and Borrower hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by either Lender or Borrower against the other.</div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 13.2pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">GOVERNING LAW.&#160;&#160;This Note will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of Texas without regard to its conflicts of law provisions.&#160;&#160;This Note has been accepted by Lender in the State of Texas.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 13.2pt" align="left">CHOICE OF VENUE. If there is a lawsuit, and if the transaction evidenced by this Note occurred in Dallas County, Borrower agrees upon Lender's request to submit to the jurisdiction of the courts of Dallas County, State of Texas.</div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 13.1pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower's accounts with Lender (whether checking, savings, or some other account).&#160;&#160;This&#160;&#160;includes&#160;&#160;all accounts&#160;&#160;Borrower&#160;&#160;holds jointly&#160;&#160;with someone&#160;&#160;else&#160;&#160;and&#160;&#160;all accounts&#160;&#160;Borrower&#160;&#160;may&#160;&#160;open in the future. However,&#160;&#160;this&#160;&#160;does&#160;&#160;not&#160;&#160;include&#160;&#160;any&#160;&#160;IRA&#160;&#160;or&#160;&#160;Keogh&#160;&#160;accounts,&#160;&#160;or&#160;&#160;any&#160;&#160;trust&#160;&#160;accounts&#160;&#160;for&#160;&#160;which&#160;&#160;setoff&#160;&#160;would&#160;&#160;be&#160;&#160;prohibited&#160;&#160;by law. Borrower authorizes Lender, to the&#160;&#160;extent&#160;&#160;permitted&#160;&#160;by&#160;&#160;applicable&#160;&#160;law, to&#160;&#160;charge&#160;&#160;or&#160;&#160;setoff&#160;&#160;all sums&#160;&#160;owing&#160;&#160;on the&#160;&#160;indebtedness&#160;&#160;against&#160;&#160;any and&#160;&#160;all&#160;&#160;such&#160;accounts.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 15.2pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">FINANCIAL STATEMENTS. Borrower agrees&#160;&#160;to&#160;&#160;provide&#160;&#160;Lender&#160;&#160;with such financial&#160;&#160;statements&#160;&#160;and&#160;&#160;other&#160;&#160;related&#160;&#160;information at such frequencies&#160;&#160;and&#160;&#160;in such detail&#160;&#160;as&#160;&#160;Lender&#160;&#160;may&#160;&#160;reasonably request.</font></div>

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<div align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">EXPENSES. Borrower agrees to pay to Lender on demand the amount of all costs, fees and expenses paid, incurred or charged by Lender in connection with Lender's administration of the Loan, the preparation of documents and instruments related to the Loan, and the filing or recordation of any financing statements, documents and instruments required for perfection of any collateral.</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">SUCCESSOR.&#160;&#160;&#160;Lender hereunder, BOKF, NA dba Bank of Texas, is successor by merger to Bank of Texas, N.A.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 14.55pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower, and upon Borrower's heirs, personal representatives, successors and assigns, and shall inure to the benefit of Lender and its successors and assigns.</font></div>

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<div align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">GENERAL PROVISIONS. If any part of this Note cannot be enforced, this fact will not affect the rest of the Note. Borrower does not agree or intend to pay, and Lender does not agree or intend to contract for, charge, collect, take, reserve or receive (collectively referred to herein as "charge or collect"), any amount in the nature of interest or in the nature of a fee for this loan, which would in any way or event (including demand, prepayment, or acceleration) cause Lender to charge or collect more for this loan than the maximum Lender would be permitted to charge or collect by federal law or the law of the State of Texas (as applicable) . Any such excess interest or unauthorized tee shall, instead of anything stated to the contrary, be applied first to reduce the principal balance of this loan, and when the principal has been paid in full, be refunded to Borrower. The right to accelerate maturity of sums due under this Note does not include the right to accelerate any interest which has not otherwise accrued on the date of such acceleration, and Lender does not intend to charge or collect any unearned interest in the event of acceleration. All sums paid or agreed to be paid to Lender for the use, forbearance or detention of sums due hereunder shall, to the extent permitted by applicable law, be amortized, prorated, allocated and spread throughout the full term of the loan evidenced by this Note until payment in full so that the rate or amount of interest on account of the loan evidenced hereby does not exceed the applicable usury ceiling. Lender may delay or forgo enforcing any of its rights or remedies under this Note without losing them. Borrower and any other person who signs, guarantees or endorses this Note, to the extent allowed by law, waive presentment, demand for payment, notice of dishonor, notice of intent to accelerate the maturity of this Note, and notice of acceleration of the maturity of this Note. Upon any change in the terms of this Note, and unless otherwise expressly stated in writing, no party who signs this Note, whether as maker, guarantor, accommodation maker or endorser, shall be released from liability. All such parties agree that Lender may renew or extend (repeatedly and for any length of time) this </font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">loan or release any party or guarantor or collateral; or impair, fail to realize upon or perfect Lender's security interest in the collateral without the consent of or notice to anyone .&#160;&#160;All such parties also agree that Lender may modify this loan without the consent of or notice to anyone other&#160;&#160;&#160;&#160;&#160;than the party with whom the modification is made.&#160;&#160;The obligations under this Note are joint&#160;and several.</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 16.6pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO THE TERMS OF THE NOTE.</font></div>

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<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;BORROWER:</div>

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<div><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;TANDY LEATHER FACTORY, INC.</div>

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<div><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;By:&#160; <font style="TEXT-DECORATION: underline">/s/ Shannon L. Greene</font></div>

<div><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Chief Financial Officer of Tandy Leather Factory, Inc.<br>
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<TYPE>EX-10.4
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<DESCRIPTION>DEED OF TRUST
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<div>Exhibit 10.4</div>

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<font style="FONT-WEIGHT: bold">DEED OF TRUST</font><br>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">CT&#160;&#160;Lien Solutions</font></div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 0pt" align="justify">Attn:&#160; Mortgage Recroding Team</div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 0pt" align="justify">330 N. Brand Blvd., Ste 700</div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 0pt" align="justify">Glendale, CA&#160; 91203</div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">SPACE ABOVE THIS LINE </font><font style="DISPLAY: inline; TEXT-DECORATION: underline">IS </font><font style="DISPLAY: inline; TEXT-DECORATION: underline">FOR RECORDER'S USE</font><font style="DISPLAY: inline; TEXT-DECORATION: underline">&#160;</font><font style="DISPLAY: inline; TEXT-DECORATION: underline">ONLY</font></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block">THIS DEED OF TRUST is dated September 18, 2015, among TandyLleather Factory, Inc., A Delaware Corporation <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">("Grantor "); BOKF, NA dba Bank of Texas, whose address is P.O. Box 29775, Dallas, TX 75229-9775 (referred to below sometimes as "Beneficiary"); and Jeffrey L. Seasor, whose address is 5956 Sherry Lane, Suite 1100, Dallas, TX&#160;&#160;75225 (referred to below as "Trustee").</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 8.25pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">CONVEYANCE AND GRANT. For valuable consideration, Granter conveys to Trustee in trust, with power of sale, for the benefit of Lender as Beneficiary, the following described real property, together with all existing or subsequently erected or&#160;&#160;affixed&#160;&#160;buildings,&#160;&#160;improvements&#160;&#160;and fixtures;&#160;&#160;and&#160;&#160;all easements,&#160;&#160;rights of&#160;&#160;way,&#160;&#160;and appurtenances;&#160;&#160;all water&#160;&#160;and water&#160;&#160;rights; and all other&#160;&#160;rights,&#160;&#160;royalties, and profits&#160;&#160;relating &#160;to the&#160;&#160;real property,&#160;&#160;including&#160;&#160;without&#160;&#160;limitation such rights as&#160;&#160;Granter&#160;&#160;may&#160;&#160;have in all&#160;&#160;minerals,&#160;&#160;oil, gas,&#160;&#160;geothermal&#160;&#160;and similar&#160;&#160;matters, <font style="DISPLAY: inline; FONT-WEIGHT: bold">(the </font></font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">"Real Property") located in Tarrant County, State of Texas:</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 10.85pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">See Exhibit "A", which is attached to this Deed of Trust and made a part of this Deed of Trust as if fully set forth herein.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">The Real Property or its address is commonly known as 1900 SE Loop 820, Fort Worth, TX 76140.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 10.85pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">CROSS-COLLATERALIZATION. In addition to the Note, this Deed of Trust secures all obligations,&#160;&#160;debts&#160;&#160;and&#160;&#160;liabilities,&#160;&#160;plus&#160;&#160;interest&#160;&#160;thereon,&#160;&#160;of&#160;&#160;Granter to Lender, or any one or more of them, as&#160;&#160;well&#160;&#160;as&#160;&#160;all&#160;&#160;claims&#160;&#160;by&#160;&#160;Lender&#160;&#160;against&#160;&#160;Granter&#160;&#160;or&#160;&#160;any&#160;&#160;one&#160;&#160;or&#160;&#160;more&#160;&#160;of&#160;&#160;them,&#160;&#160;whether&#160;&#160;now&#160;&#160;existing or hereafter arising, whether related or unrelated&#160;&#160;to&#160;&#160;the&#160;&#160;purpose&#160;&#160;of&#160;&#160;the&#160;&#160;Note,&#160;&#160;whether&#160;&#160;voluntary&#160;&#160;or&#160;&#160;otherwise,&#160;&#160;whether&#160;&#160;due&#160;&#160;or&#160;&#160;not&#160;&#160;due, direct or indirect, determined or undetermined,&#160;&#160;absolute&#160;&#160;or&#160;&#160;contingent,&#160;&#160;liquidated&#160;&#160;or&#160;&#160;unliquidated,&#160;&#160;whether&#160;&#160;Granter&#160;&#160;may&#160;&#160;be&#160;&#160;liable&#160;&#160;individually&#160;&#160;or&#160;&#160;jointly&#160;&#160;with&#160;&#160;others,&#160;&#160;whether&#160;&#160;obligated&#160;&#160;as&#160;&#160;guarantor,&#160;&#160;surety,&#160;&#160;accommodation&#160;&#160;party&#160;&#160;or&#160;&#160;otherwise.&#160;&#160;However,&#160;&#160;this&#160;&#160;Deed&#160;&#160;of&#160;&#160;Trust&#160;&#160;shall&#160;&#160;not&#160;&#160;secure,&#160;&#160;and the "Indebtedness" shall not include, any obligations arising under Subchapters E and F&#160;&#160;of&#160;&#160;Chapter&#160;&#160;342&#160;&#160;of&#160;&#160;the&#160;&#160;Texas&#160;&#160;Finance&#160;&#160;Code,&#160;&#160;as&#160;&#160;amended.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 8.2pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Granter hereby absolutely assigns to Lender (also known as Beneficiary in this Deed of Trust) all of Grantor's right, title, and interest in and to all present and future leases of the Property and all Rents from the Property. In addition, Granter grants to Lender a Uniform Commercial Code security interest in the Personal Property and Rents.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 8pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">THIS DEED OF TRUST, INCLUDING THE ASSIGNMENT OF RENTS AND THE SECURITY INTEREST IN THE RENTS AND PERSONAL PROPERTY, IS GIVEN TO SECURE (A) PAYMENT OF THE INDEBTEDNESS AND (B) PERFORMANCE OF ANY AND ALL OBLIGATIONS UNDER THE NOTE, THE RELATED DOCUMENTS, AND THIS DEED OF TRUST.&#160;&#160;THIS DEED OF TRUST IS GIVEN AND ACCEPTED ON THE FOLLOWING TERMS:</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 7.3pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">PAYMENT AND PERFORMANCE. Except as otherwise provided in this Deed of Trust, Granter shall pay to Lender all amounts secured by this&#160;&#160;Deed of Trust as they become due, and shall strictly and in a timely manner&#160;&#160;perform all of&#160;&#160;Grantor's&#160;&#160;obligations&#160;&#160;under the&#160;&#160;Note, this&#160;&#160;Deed of Trust, and the Related Documents.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 8.35pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">PURPOSE OF LOAN. The Note in the amount of $10,000,000.00 represents, in part or in whole, cash or other financial accommodations advanced or committed by Lender to Granter on September 18, 2015 at Grantor's request and which Granter will use under its charter powers to discharge corporate debts. Granter represents to Lender that its board of directors has authorized its legally elected, qualified, and acting officers to execute the Note and this Deed of Trust.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 7.4pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">POSSESSION AND MAINTENANCE OF THE PROPERTY. Granter agrees that Grantor's possession and use of the Property shall be governed by the following provisions:</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 10.85pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Possession and Use. Until the occurrence of an Event of&#160;&#160;Default, Granter&#160;&#160;may&#160;&#160;(1)&#160;&#160;remain in possession and control of the&#160;&#160;Property;&#160;&#160;(2)&#160;&#160;use, operate or manage the Property; and&#160;&#160;(3)&#160;&#160;collect the Rents from the Property.</font></div>

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<div align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Duty to Maintain. Granter shall maintain the Property in tenantable condition and promptly perform all repairs, replacements, and maintenance necessary to preserve its value<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font></font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 4.9pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Compliance With Environmental Laws.&#160;&#160;Granter represents and warrants&#160;&#160;to&#160;&#160;Lender that:&#160;&#160;(1)&#160;&#160;During the&#160;&#160;period of&#160;&#160;Grantor's&#160;&#160;ownership&#160;&#160;of the Property, there has been no use, generation, manufacture, storage, treatment, disposal, release or threatened release of any Hazardous Substance by any person on, under, about or from the&#160;&#160;Property;&#160;&#160;(2)&#160;&#160;Granter&#160;&#160;has no knowledge of, or reason to&#160;&#160;believe that&#160;&#160;there has been, except as previously&#160;&#160;disclosed to&#160;&#160;and acknowledged by Lender in writing, (a) any breach or violation of any Environmental Laws, (b) any use, generation, manufacture, storage, treatment, disposal, release or threatened release of any Hazardous Substance on, under, about or from the Property by any prior owners or occupants&#160;&#160;of the&#160;&#160;Property, or (c) any&#160;&#160;actual or threatened&#160;&#160;litigation or claims of any kind by any person relating to such matters; and (3) Except as previously disclosed to and acknowledged by Lender in writing, (a) neither Granter&#160;&#160;nor any tenant, contractor, agent or other authorized user of the Property shall use, generate, manufacture, store, treat, dispose of or release any Hazardous Substance&#160;&#160;on, under, about&#160;&#160;or from the&#160;&#160;Property; and&#160;&#160;(b)&#160;&#160;any&#160;&#160;such activity&#160;&#160;shall&#160;&#160;be conducted&#160;&#160;in compliance with all applicable federal, state, and local laws, regulations and ordinances, including without limitation all Environmental Laws. Granter authorizes Lender and its agents to enter upon the Property to make such inspections and tests, at Grantor's expense, as Lender may deem appropriate to determine compliance of the Property with this section of the Deed of Trust.&#160;&#160;Any inspections or tests made by Lender shall be for Lender's purposes only and shall not be construed to create any responsibility or liability on the part of Lender to Granter or to any other person. The representations and warranties contained herein are based on Grantor's due diligence in investigating the Property for Hazardous Substances. Granter hereby (1) releases and waives any future claims&#160;&#160;against Lender for indemnity or&#160;&#160;contribution&#160;&#160;in the&#160;&#160;event Granter becomes liable for cleanup or other costs under any such&#160;&#160;laws; and (2) agrees to&#160;&#160;indemnify, defend, and hold harmless&#160;&#160;Lender against any and all claims, losses, liabilities, damages, penalties, and expenses which Lender&#160;&#160;may directly or indirectly sustain or suffer resulting from a breach of this section of the Deed of Trust or as a consequence of any use, generation, manufacture, storage,&#160;&#160;disposal, release or threatened release occurring prior to Grantor's ownership or interest in the Property, whether or not the same was&#160;&#160;or should have been known to Granter. The provisions of this section of the&#160;&#160;Deed of Trust, including the obligation to indemnify&#160;&#160;and defend,&#160;&#160;shall survive the payment of the Indebtedness and the satisfaction and reconveyance of the lien of this Deed of Trust&#160;&#160;and shall not be&#160;&#160;affected by Lender's acquisition of any interest in the Property, whether&#160;&#160;by foreclosure or otherwise<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 6.35pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Nuisance, Waste.&#160;&#160;Granter shall not cause, conduct or permit any nuisance nor commit, permit, or suffer any stripping of or waste on or to the Property or any portion of the Property.&#160;&#160;Without limiting the generality of the foregoing, Granter will not remove, or grant to any other party the right to remove, any timber, minerals (including oil and gas), coal, clay, scoria, soil, gravel or rock products without Lender's prior written consent. This restriction will not apply to rights and easements (such as gas and oil) not owned by Granter and of which Granter has informed Lender in writing prior to Grantor's signing of this Deed of Trust.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 6pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Removal&#160;of Improvements<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font>&#160;Granter&#160;shall&#160;not&#160;demolish&#160;or&#160;remove&#160;any&#160;Improvements&#160;from&#160;the&#160;Real&#160;Property&#160;without&#160;Lender's&#160;prior&#160;written consent.&#160;As a condition&#160;to the&#160;removal of any&#160;Improvements, Lender&#160;may require&#160;Granter&#160;to make arrangements satisfactory&#160;to Lender to&#160;replace&#160;such&#160;Improvements&#160;with&#160;Improvements&#160;of&#160;at&#160;least equal&#160;value<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 6pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Lender's&#160;Right&#160;to Enter. Lender&#160;and Lender's&#160;agents&#160;and representatives&#160;may enter&#160;upon&#160;the&#160;Real Property&#160;at&#160;all reasonable&#160;times&#160;to attend&#160;to Lender's&#160;interests&#160;and&#160;to inspect&#160;the Real&#160;Property for purposes&#160;of Grantor's compliance with the&#160;terms&#160;and&#160;conditions of this&#160;Deed&#160;of Trust.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 6pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Compliance&#160;with&#160;Governmental&#160;Requirements.&#160;Granter&#160;shall&#160;promptly&#160;comply with&#160;all&#160;laws,&#160;ordinances<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">,</font>&#160;and&#160;regulations,&#160;now&#160;or&#160;hereafter in effect, of all governmental&#160;authorities&#160;applicable&#160;to the&#160;use&#160;or occupancy&#160;of&#160;the&#160;Property<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">,</font>&#160;including&#160;without&#160;limitation, the Americans With Disabilities&#160;Act.&#160;Granter may contest in&#160;good faith&#160;any&#160;such&#160;law<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">,</font>&#160;ordinance<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">,</font>&#160;or regulation and&#160;withhold compliance during any&#160;proceeding,&#160;including&#160;appropriate appeals<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">,</font>&#160;so&#160;long&#160;as&#160;Granter&#160;has notified&#160;Lender&#160;in&#160;writing&#160;prior to doing so and so long&#160;as<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">,</font>&#160;in&#160;Lender's sole&#160;opinion,&#160;Lender's&#160;interests&#160;in&#160;the&#160;Property&#160;are&#160;not&#160;jeopardized<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font>&#160;Lender&#160;may&#160;require&#160;Granter&#160;to&#160;post&#160;adequate&#160;security&#160;or&#160;a&#160;surety&#160;bond, reasonably satisfactory to Lender, to protect Lender's&#160;interest.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 6pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Duty to Protect. Granter&#160;agrees&#160;neither to abandon&#160;or leave&#160;unattended&#160;the&#160;Property.&#160;Granter shall do all&#160;other&#160;acts<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">,</font>&#160;in&#160;addition to&#160;those&#160;acts set forth above in this section, which from the character and use of the Property are reasonably necessary to protect and preserve the Property.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 13.05pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">DUE ON SALE - CONSENT BY LENDER. Lender may, at Lender's option, declare immediately due and payable all sums secured by this Deed of Trust upon the sale or transfer, without Lender's prior written consent, of all or any part&#160;&#160;of&#160;&#160;the&#160;&#160;Real&#160;&#160;Property,&#160;&#160;or&#160;&#160;any&#160;&#160;interest&#160;&#160;in the&#160;&#160;Real Property.&#160;&#160;A&#160;&#160;"sale or transfer"&#160;&#160;means the conveyance of Real Property or any right, title or interest in the Real Property; whether&#160;&#160;legal, beneficial&#160;&#160;&#160;or equitable; whether voluntary or involuntary; whether by outright sale, deed, installment sale&#160;&#160;contract,&#160;&#160;land&#160;&#160;contract,&#160;&#160;contract&#160;&#160;for&#160;&#160;deed,&#160;&#160;leasehold interest with a term greater than three&#160;&#160;(3) years,&#160;&#160;lease<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">-</font>option contract, or by sale, assignment,&#160;&#160;or transfer&#160;&#160;of any&#160;&#160;beneficial interest in&#160;&#160;or to any land trust holding title to the Real Property, or by any other method of conveyance of an interest in the Real Property.&#160;&#160;If any Granter is&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;a corporation, partnership or limited liability company, transfer also includes any change in ownership of more than twenty-five percent (25 %) of the voting stock, partnership interests or limited liability company interests, as the case may be, of such Grantor.&#160;&#160;&#160;However, this option shall not be exercised by Lender it such exercise is prohibited by federal law or by Texas law<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 10.9pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">TAXES AND LIENS.&#160;&#160;The following provisions relating to the taxes and liens on the Property are part of this&#160;Deed of Trust:</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 12.8pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Payment. Granter shall pay when due (and in all events prior to delinquency)&#160;&#160;all taxes , special taxes, assessments, charges (including water and sewer) , fines and impositions levied against or on account of the Property, and shall pay when due all claims for work done on or for services rendered or material furnished to the Property.&#160;&#160;Grantor shall maintain the Property free of all liens having priority over or equal to the interest of Lender under this Deed of Trust, except for the lien of taxes and assessments not due and except as otherwise provided in this Deed of&#160;Trust.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 20.5pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Right to Contest. Granter may withhold payment of any tax, assessment, or claim in connection with a good faith dispute over the obligation to pay, so long as Lender's interest in the Property is not jeopardized.&#160;&#160;If a lien arises or is filed as a result of&#160;&#160;nonpayment, Granter shall within fifteen (15) days after the lien arises or, if a lien is filed, within fifteen&#160;&#160;(15) days&#160;&#160;after&#160;&#160;Granter&#160;&#160;has notice of the filing, secure the discharge of the lien, or if requested by Lender, deposit with Lender cash or a sufficient corporate surety bond or other security satisfactory to Lender in an amount sufficient to discharge the lien plus any costs and Lender's reasonable attorneys'&#160;&#160;fees, or other charges that could accrue as a result of a foreclosure&#160;&#160;or sale under the lien.&#160;&#160;In any contest, Granter shall defend itself and Lender and shall satisfy any adverse judgment before enforcement against the Property. Grantor shall name Lender as an additional obligee under any surety bond furnished in the contest proceedings<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 12.8pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Evidence of Payment. Grantor shall upon demand furnish to Lender satisfactory evidence of payment of the taxes or assessments and shall authorize the appropriate governmental official to deliver to Lender at any time a written statement of the taxes and assessments against the Property.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 12.8pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Notice of Construction. Granter shall notify Lender at least fifteen (15) days before any work is commenced, any services are furnished, or any materials are supplied to the Property, if any mechanic's lien, materialmen's lien, or other lien could be asserted on account of the work, services, or materials.&#160;&#160;Granter will upon request of Lender furnish to Lender advance assurances satisfactory to Lender that Granter can and will pay the cost of such improvements.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 10.9pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">PROPERTY DAMAGE INSURANCE.&#160;&#160;The following provisions relating to insuring the Property are a part of this Deed of Trust.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 10.9pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Maintenance of Insurance.&#160;&#160;Granter shall procure and maintain policies of fire insurance with standard extended coverage endorsements on a replacement basis for the full insurable value covering all Improvements on the Real Property in an amount sufficient to avoid application of any coinsurance clause, and with a standard mortgagee clause in favor of Lender.&#160;&#160;Granter shall also procure and maintain&#160;comprehensive general liability insurance in such coverage amounts&#160;&#160;as&#160;&#160;Lender&#160;&#160;may&#160;&#160;request&#160;&#160;with&#160;&#160;Trustee&#160;&#160;and&#160;&#160;Lender&#160;&#160;being&#160;&#160;named&#160;&#160;as&#160;&#160;additional insureds in such liability insurance policies. Additionally, Granter shall maintain such other insurance, including but not limited to hazard, business interruption, and boiler insurance, as Lender may reasonably require.&#160;&#160;Policies shall be written in form, amounts, coverages and basis reasonably acceptable to Lender, with losses made payable to Lender. GRANTOR MAY FURNISH THE REQUIRED INSURANCE WHETHER THROUGH EXISTING POLICIES OWNED OR CONTROLLED BY GRANTOR OR THROUGH EQUIVALENT INSURANCE FROM ANY INSURANCE COMPANY AUTHORIZED TO TRANSACT BUSINESS IN THE STATE OF TEXAS. If Granter fails to provide any required insurance or fails to continue such insurance in force, Lender may, but shall not be required to, do so at Grantor's expense,&#160;&#160;and the cost of the insurance will be added to the Indebtedness.&#160;&#160;&#160;If any such insurance is procured by Lender, Granter will be so notified, and Granter will have the option of furnishing equivalent insurance through any insurer authorized to transact business in Texas. Granter, upon request of Lender, will deliver to Lender from time to time the policies or certificates of insurance in form satisfactory to Lender, including stipulations that coverages will not be cancelled or diminished without at least ten (10) days prior written notice to Lender.&#160;&#160;Each insurance policy also shall include an endorsement providing that coverage in favor of Lender will not be impaired in any way by any act, omission or default of Granter or any other person. Should the Real Property be located in an area designated by the Administrator of the Federal Emergency Management Agency as a special flood hazard area, Granter agrees to obtain and maintain Federal Flood Insurance, it available, tor the full unpaid principal balance of the loan and any prior liens on the property securing the loan, up to the maximum policy limits set under the National Flood Insurance Program, or as otherwise required by Lender, and to maintain such insurance for the term of the loan.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 20.5pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Application of Proceeds. Granter shall promptly notify Lender of any loss or damage to the Property.&#160;&#160;Lender may make proof of loss if Granter fails to do so within fifteen (15) days of the casualty. Whether or not Lender's security is impaired, Lender may, at Lender's election, receive and retain the proceeds of any insurance and apply the proceeds to the reduction of the Indebtedness, payment of any lien affecting the Property, or the restoration and repair of the Property. If Lender elects to apply the proceeds to restoration and repair, Granter shall repair or replace the damaged or destroyed Improvements in a manner satisfactory to Lender. Lender shall, upon satisfactory proof of such expenditure, pay or reimburse Granter from the proceeds for the reasonable cost of repair or restoration if Granter is not in default under this Deed of Trust. Any proceeds which have not been disbursed within 180 days after their receipt and which Lender has not committed to the repair or restoration of the Property shall be used first to pay any amount owing to Lender under this Deed of Trust, then to pay accrued interest, and the remainder, if any, shall be applied to the principal balance of the Indebtedness.&#160;&#160;If Lender holds any proceeds after payment in full of the Indebtedness, such proceeds shall be paid to Granter as Grantor's interests may appear<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 11.2pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Grantor's Report on Insurance. Upon request of Lender, however not more than once a year, Granter shall furnish to Lender a report on each existing policy of insurance showing:&#160;&#160;(1) the name of the insurer; (2) the risks insured; (3) the amount of the policy; (4) the property insured, the then current replacement value of such property, and the manner of determining that value; and (5) the expiration date of the policy. Granter shall, upon request of Lender, have an independent appraiser satisfactory to Lender determine the cash value replacement cost of the Property<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 9.15pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">LENDER'S EXPENDITURES. If any action or proceeding is commenced that would materially affect Lender's interest in the Property or if Granter fails to comply with any provision of this Deed of Trust or any Related Documents, including but not limited to Grantor's failure to discharge or pay when due any amounts Granter is required to discharge or pay under this Deed of Trust or any Related Documents,&#160;&#160;Lender on Grantor's behalf may (but shall not be obligated to) take any action that Lender deems appropriate, including but not limited to discharging or paying all taxes, liens, security interests, encumbrances and other claims, at any time levied or placed on the Property and paying all costs for insuring, maintaining and preserving the&#160;&#160;Property.&#160;&#160;All such expenditures paid by Lender for such purposes will then bear interest at the Note rate from the date paid by Lender to the date of repayment by Grantor.&#160;&#160;To the extent permitted by applicable law, all such expenses will become a part of the Indebtedness and, at Lender's option, will (A) be payable on demand; (B) be added to the balance of the Note and be apportioned among and be payable with any installment payments to become due during either (1) the term of any applicable insurance policy; or (2) the remaining term of the Note; or (C) be treated as a balloon payment which will be due and payable at the Note's maturity. The Deed of Trust also will secure payment of these amounts.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Such right shall be in addition to all other rights and remedies to which Lender may be entitled upon Default<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">WARRANTY; DEFENSE OF TITLE.&#160;&#160;The following provisions relating to ownership of the Property are a part of this Deed of Trust:</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 15.35pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Title.&#160;&#160;Grantor warrants that: (a) Grantor holds good and marketable title of record to the Property in fee simple, free and clear of all liens and encumbrances other than those set forth in the Real Property description or in any title insurance policy, title report, or final title opinion issued in favor of, and accepted by, Lender in connection with this Deed of Trust, and (b) Grantor has the full right, power, and authority to execute and deliver this Deed of Trust to Lender.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 20.5pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Defense of Title.&#160;&#160;Subject to the exception in the paragraph above, Grantor warrants and will forever defend the title to the Property against the lawful claims of all persons. In the event any action or proceeding is commenced that questions Grantor's title or the interest of Trustee or Lender under this Deed of Trust, Grantor shall defend the action at Grantor's expense.&#160;&#160;Grantor may be the nominal party in such proceeding, but Lender shall be entitled to participate in the proceeding and to be represented in the proceeding by counsel of Lender's own choice, and Grantor will deliver, or cause to be delivered, to Lender such instruments as Lender may request from time to time to permit such participation<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 14.15pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Compliance With Laws. Grantor warrants that the Property and Grantor's use of the Property complies with all existing applicable laws, ordinances, and regulations of governmental authorities.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 13.45pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Survival of Representations and Warranties. All representations, warranties, and agreements made by Grantor in this Deed of Trust shall survive the execution and delivery of this Deed of Trust, shall be continuing&#160;&#160;in nature,&#160;&#160;and shall&#160;&#160;remain&#160;&#160;in full force&#160;&#160;and&#160;&#160;effect&#160;&#160;until such&#160;&#160;time as Grantor's Indebtedness shall be paid in&#160;&#160;full.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 14.9pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">CONDEMNATION, JUDGMENTS AND AWARDS.&#160;&#160;The following provisions relating to condemnation proceedings, judgments, decrees and awards for injury to the Property are a part of this Deed of Trust:</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 13.9pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Proceedings. If any proceeding in condemnation is filed, Grantor shall promptly notify Lender in writing, and Grantor shall promptly take such steps as may be necessary to defend the action and obtain the award. Grantor may be the nominal party in such proceeding, but ender shall be entitled to participate in the proceeding and to be represented in the proceeding by counsel of its own choice, and Grantor will deliver or cause to be delivered to Lender such instruments and documentation as may be requested by Lender from time to time to permit such participation.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 13pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Application of Net Proceeds. To the extent permitted by applicable law, all judgments, decrees and awards tor injury or damage&#160;&#160;to the Property, or any part of the Property, and awards pursuant to proceedings for condemnation of the Property, are hereby absolutely assigned&#160;&#160;to Lender, and if all or any part of the Property is condemned by eminent domain proceedings or by any proceeding or purchase in lieu of condemnation, Lender may at its election require that all or any&#160;&#160;portion of the net proceeds of the award be applied to the Indebtedness or&#160;&#160;&#160;&#160;the repair or restoration of the Property. The net proceeds of the award, judgment or decree shall mean the award after payment of all reasonable&#160;costs,&#160;expenses,&#160;and&#160;attorneys'&#160;fees&#160;incurred&#160;by&#160;Trustee&#160;or&#160;Lender&#160;in&#160;connection&#160;with&#160;the&#160;condemnation.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 13.95pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">SECURITY AGREEMENT; INANCING STATEMENTS.&#160;&#160;The&#160;&#160;following&#160;&#160;provisions&#160;&#160;relating to this&#160;&#160;Deed of&#160;&#160;Trust&#160;&#160;as&#160;&#160;a security&#160;&#160;agreement&#160;&#160;are&#160;&#160;a&#160;&#160;part of&#160;&#160;this&#160;&#160;Deed&#160;&#160;of Trust:</font></div>

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<div align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Security Agreement.&#160;&#160;This&#160;&#160;instrument&#160;&#160;shall&#160;&#160;constitute&#160;&#160;a&#160;&#160;Security&#160;&#160;Agreement&#160;&#160;to&#160;&#160;the&#160;&#160;extent&#160;&#160;any&#160;&#160;of&#160;&#160;the&#160;&#160;Property&#160;&#160;constitutes&#160;&#160;fixtures,&#160;&#160;&#160;and Lender&#160;&#160;shall&#160;&#160;have all of the&#160;&#160;rights&#160;&#160;of&#160;&#160;a&#160;&#160;secured&#160;&#160;party&#160;&#160;under the&#160;&#160;Uniform Commercial&#160;&#160;Code&#160;&#160;as&#160;&#160;amended from time&#160;&#160;to time.</font></div>
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<div align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Security Interest. Upon request by Lender, Grantor shall take whatever action is requested by Lender to perfect and continue Lender's security interest in the Rents and Personal Property. In addition to recording this Deed of Trust in the real property records, Lender may, at any time and without further authorization from Grantor, file executed counterparts, copies or reproductions of this Deed of Trust as a financing statement. Grantor shall reimburse Lender for all expenses incurred in perfecting or continuing this security interest.&#160;&#160;Upon default, Grantor shall not remove, sever or detach the Personal Property from the Property. Upon default, Grantor&#160;&#160;shall&#160;&#160;assemble&#160;&#160;any Personal Property not affixed to the Property in a manner and at a place reasonably convenient to Grantor and Lender and make it available to&#160;Lender&#160;within&#160;three&#160;(3)&#160;days&#160;after&#160;receipt&#160;of&#160;written&#160;demand&#160;from&#160;Lender&#160;to&#160;the&#160;extent&#160;permitted&#160;by&#160;applicable&#160;law.</font></div>
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<div align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Addresses. The mailing addresses of Grantor (debtor) and Lender (secured party) from which information concerning the security interest granted by this Deed of Trust may be obtained (each as required by the Uniform Commercial Code) are as stated on the first page of this Deed of Trust.</font></div>
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<div align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">FURTHER ASSURANCES; ATTORNEY-I N-FACT. The following provisions relating to&#160;&#160;further&#160;&#160;assurances&#160;&#160;and&#160;&#160;attorney-in-fact&#160;&#160;are&#160;&#160;a&#160;&#160;part&#160;&#160;of&#160;&#160;this&#160;&#160;Deed&#160;&#160;of Trust:</font></div>
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<div align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Further Assurances.&#160;&#160;&#160;At any time,&#160;&#160;and from time to time, upon request of&#160;&#160;Lender, Grantor will make, execute and deliver, or&#160;&#160;will cause to&#160;&#160;&#160;&#160;&#160;be made, executed or delivered, to Lender or to Lender's designee, and when requested by Lender, cause to be filed, recorded, refiled, or rerecorded, as the case may be, at such times and in such offices and places as Lender may deem appropriate, any and all such mortgages, deeds of trust, security deeds, security agreements, financing statements, continuation statements, instruments of further assurance, certificates, and other documents as may, in the sole opinion of Lender, be necessary or desirable in order to effectuate, complete, perfect, continue, or preserve ( 1) Grantor's obligations under the Note, this&#160;&#160;Deed of Trust, and the&#160;&#160;Related Documents, and&#160;&#160;(2)&#160;&#160;the liens and&#160;&#160;security interests created by this Deed of Trust as first and prior liens on the&#160;&#160;Property,&#160;&#160;whether&#160;&#160;now&#160;&#160;owned&#160;&#160;or&#160;&#160;hereafter&#160;&#160;acquired&#160;&#160;by Grantor. Unless prohibited by law or Lender agrees to the contrary in writing, Grantor shall reimburse Lender for all costs and expenses incurred in connection with the matters referred to in this paragraph.</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 12.3pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Attorney-in-Fact. If Grantor fails to do any of the things referred to in the preceding paragraph, Lender may do so for and in the name of Grantor and at Grantor's expense. For such purposes, Grantor hereby irrevocably appoints Lender as Grantor's attorney-in-fact for the purpose of making, executing, delivering, filing, recording, and doing all other things as may be necessary or desirable, in Lender's sole opinion, to accomplish the matters referred to in the preceding paragraph.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 11.85pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">FULL PERFORMANCE. If Grantor pays all the Indebtedness when due, and otherwise performs all the obligations imposed upon Grantor&#160;&#160;under&#160;&#160;this Deed of Trust, Lender shall execute and deliver to Grantor a release of this Deed of Trust lien and suitable statements of termination of any financing&#160;&#160;statement on file evidencing&#160;&#160;Lender's security&#160;&#160;interest in the Rents and the Personal Property.&#160;&#160;However, it is agreed that the payment&#160;&#160;&#160;of all the Indebtedness and performance of such obligations shall not terminate this Deed of Trust unless the liens and interests created hereby are released by Lender by a proper recordable instrument.&#160;&#160;Any filing tees required by law shall be paid by Grantor, it permitted by applicable&#160;&#160;&#160;law<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>

<div align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;EVENTS OF DEFAULT. Each of the following, at Lender's option, shall constitute an Event of Default under this Deed of Trust: Payment Default. Grantor fails to make any payment when due under the Indebtedness.</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 11.75pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Other Defaults.&#160;&#160;Grantor fails to comply with or to perform any other term, obligation, covenant or condition contained in this Deed of Trust or in any of the Related Documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Grantor.</font></div>

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<div align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Compliance Default. Failure to comply with any other term, obligation, covenant or condition contained in this Deed of Trust, the Note or in any of the Related Documents.</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 12.55pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Default on Other Payments.&#160;&#160;Failure of Grantor within the time required by this Deed of Trust to make any payment for taxes or insurance, or any other payment necessary to prevent filing of or to effect discharge of any lien.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 11.8pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Default in Favor of Third Parties. Should Grantor default under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Grantor's property or Grantor's ability to repay the Indebtedness or Grantor's ability to perform Grantor's obligations under this Deed of Trust or any of the Related Documents.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 11.15pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">False Statements. Any warranty, representation or statement made or furnished to Lender by Grantor or on Grantor's behalf under this Deed of Trust or the Related Documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time hereafter.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 11.3pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Defective Collateralization. This Deed of Trust or any of the Related Documents ceases to be in full force and effect (including failure of any&#160;collateral&#160;document&#160;to&#160;create&#160;a&#160;valid&#160;and&#160;perfected&#160;security&#160;interest&#160;or&#160;lien)&#160;at&#160;any&#160;time&#160;and&#160;for&#160;any&#160;reason<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 10.95pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Insolvency. The dissolution or termination of Grantor's existence as a going business, the insolvency of Grantor, the appointment of a receiver for&#160;&#160;any part of Grantor's property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against&#160;Grantor.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 15.1pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Creditor or Forfeiture&#160;Proceedings. Commencement&#160;of foreclosure or forfeiture proceedings,&#160;whether&#160;by judicial proceeding<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font>&#160;self&#160;help<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font>&#160;repossession&#160;or&#160;any&#160;other&#160;method<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">,</font>&#160;by any&#160;creditor&#160;of&#160;Granter&#160;or&#160;by&#160;any governmental agency&#160;against&#160;any property securing&#160;&#160;the&#160;Indebtedness. This includes a garnishment of any of Grantor's accounts, including deposit accounts, with Lender. However, this Event of Default shall&#160;not&#160;apply&#160;if there is&#160;a good faith&#160;dispute by Grantor&#160;as&#160;to the validity&#160;or&#160;reasonableness&#160;of the claim which&#160;is&#160;the&#160;basis&#160;of&#160;the&#160;creditor&#160;or&#160;forfeiture&#160;<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">-</font>proceeding&#160;and if&#160;Grantor gives Lender&#160;written&#160;notice&#160;of the&#160;creditor&#160;or forfeiture proceeding&#160;and&#160;deposits with Lender&#160;monies or a surety bond for the creditor or forfeiture proceeding, in an amount&#160;determined by Lender, in its sole discretion, as being an adequate reserve or bond for the&#160;dispute<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 15.8pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Breach of Other Agreement. Any breach by Grantor under the terms of any other agreement between Grantor and Lender&#160;&#160;that is not&#160;&#160;remedied within any grace period provided therein, including without limitation any agreement concerning any indebtedness or other obligation of Grantor to Lender, whether existing now or later.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 15.1pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the Indebtedness or any Guarantor&#160;dies&#160;or&#160;becomes&#160;incompetent<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">,</font>&#160;or&#160;revokes&#160;or&#160;disputes&#160;the&#160;validity&#160;of,&#160;or&#160;liability under,&#160;any&#160;Guaranty&#160;of&#160;the&#160;Indebtedness.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Insecurity.&#160;&#160;Lender in good faith believes itself insecure.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 20.5pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Right to Cure. If any default, other than a default in payment, is curable and if Grantor has not been given a notice of a breach of the same provision of this Deed of Trust within the preceding twelve (12) months, it may be cured if Grantor, after&#160;&#160;Lender sends&#160;&#160;written&#160;&#160;notice to&#160;&#160;Grantor demanding cure of such default: (1)&#160;&#160;cures the default&#160;&#160;within twenty&#160;&#160;(20)&#160;&#160;days; or&#160;&#160;(2)&#160;&#160;if the cure requires more than twenty&#160;&#160;(20)&#160;&#160;days, immediately initiates steps which Lender deems in Lender's sole discretion to be&#160;&#160;sufficient&#160;&#160;to&#160;&#160;cure&#160;&#160;the&#160;&#160;default&#160;&#160;and&#160;&#160;thereafter&#160;&#160;continues and completes all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 20.5pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this Deed of Trust, at any time thereafter, Trustee or Lender may exercise any one or more of the following rights and remedies:</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 15pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Election of Remedies. Election by Lender to pursue any remedy shall not exclude pursuit of any other remedy, and an election to make expenditures or to take action to perform an obligation of Grantor under this&#160;&#160;Deed of Trust, after Grantor's failure to perform, shall not affect Lender's right to declare a default and exercise its remedies<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font></font></div>

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<div align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160; </font>Accelerate Indebtedness. Lender may declare the unpaid principal balance of the Indebtedness due and payable. In no event will Grantor be required to pay any unearned interest<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font></font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 14.7pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Foreclosure. If Lender invokes the power of sale, Trustee, at the request of Lender, may sell all or any portion of the&#160;&#160;Property at public auction to the highest bidder for cash at the location within the courthouse designated by the County Commissioners Court, or if no such&#160;&#160;area&#160;&#160;has been designated,&#160;&#160;at the&#160;&#160;area&#160;&#160;designated in the notice of sale within the courthouse, between the hours of 10:00 A.M.&#160;and 4:<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">00</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font>M. on the first Tuesday&#160;&#160;of any month, after the Trustee or its agent has given notice of the time&#160;&#160;and place of sale and of the property to&#160;&#160;be sold as required by the Texas Property Code, as then&#160;amended <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 15.7pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">UCC Remedies. With respect to all or any part of the Personal Property, Lender shall have all the rights and remedies of a secured party under the Uniform Commercial&#160;Code<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font></font></div>

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<div align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Collect Rents. As additional security for the payment of the Indebtedness, Grantor hereby assigns to Lender all Rents as defined in the Definitions section of this Deed of Trust. Lender shall have the right at any time, and even though no Event of Default shall have occurred under this Deed of Trust, to collect and receive the Rents. Lender shall provide any notice required by applicable law with regard to such enforcement of its right to collect and receive the Rents. In addition, if the Property is vacant, Lender may rent or lease the Property. Lender shall not be liable for its failure to rent the Property, to collect any Rents, or to exercise diligence in any matter relating to the Rents; Lender shall be accountable only for Rents actually received. Lender neither has nor assumes any obligation as lessor or landlord with respect to any occupant of the Property. Rents so received shall be applied by Lender first to the remaining unpaid balance of the Indebtedness, in such order or manner as Lender shall elect, and the residue, if any, shall be paid to the person or persons legally entitled to the residue.</font></div>

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<div align="left">Trustee's Powers. Grantor hereby jointly and severally authorizes and empowers Trustee to sell all or any portion of the Property together or in lots or parcels, as Trustee may deem expedient, and to execute and deliver to the purchaser or purchasers of such Property good and sufficient deeds of conveyance of fee simple title, or of lesser estates, and bills of sale and assignments, with covenants of general warranty made on Grantor 's behalf . In no event shall Trustee be required to exhibit, present or display at any such sale any of the Property to be sold at such sale. The Trustee making such sale shall receive the proceeds of the sale and shall apply the same as provided below. Payment of the purchase price to Trustee shall satisfy the liability of the purchaser at any such sale of the Property, and such person shall not be bound to look after the application of the proceeds<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font></div>

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<div align="left">Appoint Receiver. Lender shall have the right to have a receiver appointed to take possession of all or any part of the Property, with the power to protect and preserve the Property, to operate the Property preceding foreclosure or sale, and to collect the Rents from the Property and apply the proceeds, over and above the cost of the receivership, against the Indebtedness. The receiver may serve without bond if permitted by law. Lender's right to the appointment of a receiver shall exist whether or not the apparent value of the Property exceeds the Indebtedness by a substantial amount. Employment by Lender shall not disqualify person from serving as a receiver.</div>

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<div align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Tenancy at Sufferance. If Grantor remains in possession of the Property after the Property is sold as provided above or Lender otherwise becomes entitled to possession of the Property upon default of Grantor, Grantor shall become a tenant at sufferance of Lender or the purchaser of the Property and shall, at Lender's option, either (1) pay a reasonable rental for the use of the Property, (2) vacate the Property immediately upon the demand of Lender, or (3) if such tenants refuse to surrender possession of the Property upon demand, the purchaser shall be entitled to institute and maintain the statutory action of forcible entry and detainer and procure a writ of possession thereunder, and Grantor expressly waives all damages sustained by reason hereof <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font></font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 11.05pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Other Remedies. Trustee or Lender shall have any other right or remedy provided in this Deed of Trust or the Note or available at law or in equity<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 11.35pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Sale of the Property.&#160;&#160;To the extent permitted by applicable law, Granter hereby waives any and all rights to have the Property marshalled.&#160;&#160;&#160;In exercising its rights and remedies, the Trustee or Lender shall be free to sell all or any part of the Property together or separately, in one sale or by separate sales.&#160;&#160;Lender shall be entitled to bid at any public sale on all or any portion of the Property.&#160;&#160;Trustee may convey all or any part of the Property to the highest bidder for cash with a general warranty binding Grantor, subject to prior liens and to other exceptions to conveyance and warranty. Grantor waives all requirements of appraisement, if any&#160;The affidavit of any person having knowledge of the facts to the effect that&#160;&#160;proper notice as&#160;&#160;required by the Texas&#160;&#160;Property&#160;&#160;Code was&#160;&#160;given shall be prima facie evidence of&#160;&#160;the fact that such notice was in fact given. Recitals and statements of fact in any notice&#160;&#160;or&#160;&#160;in any&#160;&#160;conveyance&#160;&#160;to&#160;&#160;the&#160;&#160;purchaser&#160;&#160;or&#160;&#160;purchasers of the Property in any foreclosure sale under this Deed of Trust shall be prima facie evidence of the truth of such facts , and all prerequisites and requirements necessary to the validity of any such sale shall be presumed to have been performed. Any sale under the powers granted by this Deed of Trust shall be a perpetual bar against Grantor, Grantor's heirs, successors, assigns and legal representatives<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 11.6pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Proceeds. Trustee shall pay the proceeds of any sale of the Property (a) first, to the expenses of foreclosure, including reasonable fees or charges paid to the Trustee, including but not limited to fees for enforcing the lien, posting for sale, selling, or releasing the Property, (b) then to Lender the full amount of the Indebtedness, (c) then to any amount required by law to be paid before payment to Grantor, and (d) the balance, if any, to Grantor.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 10.4pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Attorneys' Fees; Expenses.&#160;&#160;&#160;If Lender institutes any suit or action to enforce any of the terms of this Deed of Trust, Lender shall be entitled to recover such sum as the court may adjudge reasonable as Lender's attorneys'&#160;&#160;fees at trial and upon any appeal.&#160;&#160;Whether or not any court action is involved, and to the extent not prohibited by law, all reasonable expenses Lender incurs that in Lender's opinion are necessary at any time for the protection of its interest or the enforcement of its rights shall become a part of the Indebtedness payable on demand and shall bear interest at the Note rate from the date of the expenditure until repaid. Expenses covered by this paragraph include, without limitation, however subject to any limits under applicable law, Lender's reasonable attorneys' fees and Lender's legal expenses<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">,</font>&#160;whether or not there is a lawsuit, including Lender 's reasonable attorneys'&#160;&#160;fees&#160;&#160;and expenses for&#160;&#160;bankruptcy&#160;&#160;proceedings&#160;&#160;(including efforts to modify or vacate any automatic stay or injunction). appeals, and any anticipated post-judgment collection services, the cost of searching records, obtaining title reports (including foreclosure reports), surveyors' reports, and appraisal&#160;&#160;fees , title&#160;&#160;insurance,&#160;&#160;and&#160;&#160;fees&#160;&#160;for&#160;&#160;the&#160;&#160;Trustee, to the extent&#160;&#160;permitted by applicable&#160;&#160;law.&#160;&#160;Grantor also will pay any court costs, in addition to all other sums provided by law.&#160;&#160;In the&#160;event&#160;of&#160;foreclosure&#160;of&#160;this&#160;Deed&#160;of&#160;Trust,&#160;Lender&#160;shall&#160;be&#160;entitled&#160;to&#160;recover&#160;from&#160;Grantor&#160;Lender&#160;'s&#160;reasonable&#160;attorneys'&#160;fees&#160;and actual disbursements that Lender necessarily incurs in pursuing such foreclosure.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 16.8pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">POWERS AND OBLIGATIONS OF TRUSTEE. The following provisions relating to the powers and obligations of Trustee are part of this Deed of Trust:</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 17.1pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Powers of Trustee. In addition to all powers of Trustee arising as&#160;&#160;a&#160;&#160;matter&#160;&#160;of&#160;&#160;law, Trustee&#160;&#160;shall&#160;&#160;have the&#160;&#160;power to take the following&#160;&#160;actions with respect to the&#160;&#160;Property upon the written&#160;&#160;request of&#160;&#160;Lender and Grantor:&#160;&#160;(a) join&#160;&#160;in preparing and filing a map or&#160;&#160;plat of the&#160;&#160;Real Property, including the dedication of streets or other rights to the public;&#160;&#160;(b) join in granting any easement or creating any restriction on the Real Property; and (c) join in any subordination or other agreement affecting this Deed of Trust or the interest of Lender under this Deed of Trust.</font></div>

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<div align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Obligations to Notify. Trustee shall not be obligated to notify any other lienholder of the Property of the commencement of a foreclosure proceeding or of the commencement of any other action to which Lender may avail itself as a remedy, except to the extent required by applicable law or by written agreement.</font></div>

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<div align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Trustee. In addition to the rights and remedies set forth above, with respect to all or any part of the Property, the Trustee shall have the right to foreclose by notice and sale, and Lender shall have the right to foreclose by judicial foreclosure, in either case in accordance with and to the full extent provided by applicable law.</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 16.05pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Substitute Trustee. Lender, at Lender's option, from time to time, and more than once, may appoint in writing a successor or substitute trustee, with or without cause, including the resignation, absence, death, inability, refusal or failure to act of the Trustee. The successor or substitute trustee may be appointed without ever requiring the resignation of the former trustee and without any formality except for the execution and acknowledgment of the appointment by the beneficiary of this Deed of Trust. The successor or substitute trustee shall then succeed to all rights, obligations, and duties of the Trustee. This appointment may be made on Lender's behalf by the President, any Vice President, Secretary, or Cashier of Lender<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 20.25pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">NOTICES. Any&#160;&#160;notice required to be given&#160;&#160;under this&#160;&#160;Deed of Trust,&#160;&#160;including without&#160;&#160;limitation any&#160;&#160;notice of default&#160;&#160;and any&#160;&#160;notice of sale&#160;&#160;shall be given in writing, and shall be effective when actually delivered,&#160;&#160;when actually&#160;&#160;received by telefacsimile&#160;&#160;(unless otherwise&#160;&#160;required by&#160;&#160;law), when deposited with a nationally recognized overnight courier, or, if&#160;&#160;mailed, when&#160;&#160;deposited&#160;&#160;in the&#160;&#160;United States&#160;&#160;mail, as first&#160;&#160;class,&#160;&#160;certified or&#160;&#160;registered mail postage prepaid, directed to the&#160;&#160;addresses&#160;&#160;shown near the&#160;&#160;beginning of this&#160;&#160;Deed of Trust.&#160;&#160;Any&#160;&#160;party may change&#160;&#160;its address for notices&#160;&#160;under this&#160;&#160;Deed of Trust&#160;&#160;by giving formal&#160;&#160;written&#160;&#160;notice to the other&#160;&#160;parties, specifying&#160;&#160;that the&#160;&#160;purpose&#160;&#160;of the&#160;&#160;notice is to change the party's address. For notice purposes, Grantor agrees to keep Lender informed at all times of Grantor's current address. Unless otherwise provided or required by law, if there is more than one Grantor, any notice given by Lender to any Grantor is deemed to be notice given&#160;&#160;&#160;&#160;&#160;to all Grantors.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 16.8pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">OTHER INDEBTEDNESS SECURED BY THE PROPERTY. To the extent permitted by applicable law, the Property hereby given by the Trustor, or pledged by the Mortgagor pursuant to&#160;&#160;this&#160;&#160;Deed&#160;&#160;of&#160;&#160;Trust&#160;&#160;or&#160;&#160;Mortgage,&#160;&#160;respectively,&#160;&#160;shall&#160;&#160;not&#160;&#160;only&#160;&#160;secure&#160;&#160;the&#160;&#160;obligations&#160;&#160;thereof&#160;&#160;described&#160;&#160;in&#160;&#160;Note set forth above described herein and other obligations described herein, but is also given, granted, or&#160;&#160;pledged&#160;&#160;as&#160;&#160;security&#160;&#160;hereby&#160;&#160;for&#160;&#160;the repayment of any other obligations or indebtedness owed by the&#160;&#160;Trustor&#160;&#160;to&#160;&#160;the&#160;&#160;Beneficiary&#160;&#160;or&#160;&#160;Mortgagor&#160;&#160;to&#160;&#160;the&#160;&#160;Mortgagee, or any of&#160;&#160;them,&#160;&#160;pursuant to any covenant, agreement herein contained, other agreement or other obligation, including but not limited to all other indebtedness of whatsoever kind or nature now owing or hereafter arising whether such indebtedness is owed directly by such parties, or was&#160;&#160;acquired&#160;&#160;through assignment, is contingent, primary, or secondary, and whether&#160;&#160;such&#160;&#160;indebtedness&#160;&#160;is&#160;&#160;evidenced&#160;&#160;by&#160;&#160;a&#160;&#160;note&#160;&#160;or&#160;&#160;otherwise,&#160;&#160;is&#160;&#160;due, or not&#160;&#160;due, secured, or not secured, or whether such indebtedness exists at&#160;&#160;the&#160;&#160;time&#160;&#160;of&#160;&#160;execution&#160;&#160;or&#160;&#160;this&#160;&#160;instrument or not such indebtedness hereafter referred to as "Other&#160;&#160;Indebtedness&#160;&#160;Secured".&#160;&#160;Any Other Indebtedness Secured shall be payable to the Beneficiary (or Trustee) or Mortgagee at the same place where the note above described is payable, and shall bear interest at the same rate per annum as set forth therein from the date such indebtedness arises until paid.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 16.8pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">MISCELLANEOUS PROVISIONS.&#160;&#160;&#160;The following miscellaneous provisions are a part of this Deed of Trust:</font></div>

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<div align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Amendments. This Deed of Trust, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Deed of Trust. No alteration of or amendment to this Deed of Trust shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment.</font></div>

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<div align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Annual Reports. If the Property is used for purposes other than Grantor's residence, Grantor shall furnish to Lender, upon request, a certified statement of net operating income received from the Property during Grantor's previous fiscal year in such form and detail as Lender shall require. "Net operating income" shall mean all cash receipts from the Property less all cash expenditures made in connection with the operation of the Property.</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 14.5pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Caption Headings. Caption headings in this Deed of Trust are for convenience purposes only and are not to be used to interpret or provisions of this Deed of Trust.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 14.15pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Merger.&#160;&#160;There shall be no merger of the interest or estate created by this Deed of Trust with any other interest or estate in the Property at&#160;&#160;&#160;&#160;any time held by or for the benefit of Lender in any capacity, without the written consent of Lender.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 16.8pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Governing Law. This Deed of Trust will be governed&#160;&#160;by federal&#160;&#160;law applicable to&#160;&#160;Lender&#160;&#160;and, to the extent&#160;&#160;not preempted&#160;&#160;by federal&#160;&#160;law, the laws of the State of Texas without regard to its&#160;&#160;conflicts&#160;&#160;of&#160;&#160;law provisions.&#160;&#160;This Deed of Trust has been accepted by Lender in the State of Texas.</font></div>

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<div align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Choice of Venue. If there is a lawsuit, and if the transaction evidenced by this Deed of Trust occurred in Dallas County, Grantor agrees upon Lender's request to submit to the jurisdiction of the courts of Dallas County, State of Texas.</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 13.1pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Deed of Trust unless such waiver is given in writing and signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right. A waiver by Lender of a provision of this Deed of Trust shall not prejudice or constitute a waiver of Lender's right otherwise to demand strict compliance with that provision or any other provision of this Deed of Trust. No prior waiver by Lender, nor any course of dealing between Lender and Grantor, shall constitute a waiver of any of Lender's rights or of any of Grantor's obligations as to any future transactions. Whenever the consent of Lender is required under this Deed of Trust, the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in the sole discretion of&#160;Lender.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 12.95pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Severability. If a court of competent jurisdiction finds any provision of this Deed of Trust to be illegal, invalid, or unenforceable as to any circumstance, that finding shall not make the offending provision illegal, invalid, or unenforceable as to any other circumstance.&#160;&#160;If feasible,&#160;&#160;&#160;the offending provision shall be considered modified so that it becomes legal, valid and enforceable. If the offending provision cannot be so modified, it shall be considered deleted from this Deed of Trust. Unless otherwise required by law, the illegality, invalidity, or unenforceability of any provision of this Deed of Trust shall not affect the legality, validity or enforceability of any other provision of this Deed of Trust.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 12.15pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Successors and Assigns. Subject to any limitations stated in this Deed of Trust on transfer of Grantor's interest, this Deed of Trust shall be binding upon and inure to the benefit of the parties, their successors and assigns.&#160;&#160;If ownership of the Property becomes vested in a person other than Grantor, Lender, without notice to Grantor, may deal with Grantor's successors with reference to this Deed of Trust and the Indebtedness by way of forbearance or extension without releasing Grantor from the obligations of this Deed of Trust or liability under the Indebtedness.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Time&#160;is&#160;of&#160;the&#160;Essence.&#160;Time&#160;is&#160;of&#160;the&#160;essence&#160;in&#160;the&#160;performance&#160;of&#160;this&#160;Deed&#160;of&#160;Trust<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 54pt; MARGIN-RIGHT: 10.75pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Waive Jury.&#160;&#160;All parties to this Deed of Trust hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by any party against any other party.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 12.5pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Deed of Trust.&#160;&#160;Unless specifically stated to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America.&#160;&#160;Words and terms used in the singular shall include the plural, and the plural shall include the singular, as the context may require. Words and terms not otherwise defined in this Deed of Trust shall have the meanings attributed to such terms in the Uniform Commercial Code:</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Beneficiary.&#160;&#160;The word "Beneficiary" means BOKF, NA dba Bank of Texas, and its successors and assigns.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 14.15pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Borrower. The word "Borrower" means Tandy Leather Factory, Inc. and includes all co-signers and co-makers signing the Note and all their successors and assigns.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 14.6pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Deed of Trust. The words "Deed of Trust" mean this Deed of Trust among Grantor, Lender, and Trustee, and includes without limitation all assignment and security interest provisions relating to the Personal Property and Rents.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Default.&#160;&#160;The word "Default" means the Default set forth in this Deed of Trust in the section titled&#160;"Default".</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 18.2pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Environmental Laws. The words "Environmental Laws" mean any and all state, federal&#160;&#160;and&#160;&#160;local statutes,&#160;&#160;regulations&#160;&#160;and&#160;&#160;ordinances relating to the protection of human health or the environment, including without limitation the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986, Pub. <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">L. </font>No. 99-499 ("SARA"), the&#160;&#160;Hazardous&#160;&#160;Materials Transportation&#160;&#160;Act,&#160;&#160;49&#160;&#160;U.S.C. Section&#160;&#160;1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., or other applicable state or federal laws, rules, or regulations adopted pursuant&#160;thereto.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 18.15pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Event of Default. The words "Event of Default" mean any of the events of default set forth in this Deed of Trust in the events of default section of this Deed of Trust.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Grantor.&#160;&#160;The word "Granter" means Tandy Leather Factory,&#160;Inc<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Guarantor.&#160;&#160;The word "Guarantor" means any guarantor, surety, or accommodation party of any or all of the Indebtedness.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 0pt" align="left">Guaranty.&#160; The word "Guaranty" means the guaranty from Guarantor to Lender, including without limiation a guaranty of all or part of the Note.</div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 16.35pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Indebtedness. The word "Indebtedness" means all principal, interest, and other amounts, costs and expenses payable under the Note or Related Documents, together with all renewals of, extensions of, modifications of,&#160;&#160;consolidations&#160;&#160;of&#160;&#160;and&#160;&#160;substitutions for&#160;&#160;the&#160;&#160;Note&#160;&#160;or Related Documents and any amounts expended or advanced by Lender to discharge Grantor's obligations or expenses incurred by Trustee&#160;&#160;&#160;&#160;&#160;or Lender to enforce Grantor's obligations under this&#160;&#160;Deed of Trust, together&#160;&#160;with interest on such amounts&#160;&#160;as&#160;&#160;provided in this&#160;&#160;Deed of&#160;&#160;Trust. Specifically, without limitation, Indebtedness includes all amounts that may be indirectly&#160;&#160;secured&#160;&#160;by&#160;&#160;the&#160;&#160;Cross-Collateralization provision of this&#160;&#160;Deed of&#160;Trust.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Lender.&#160;&#160;The word "Lender" means BOKF, NA dba Bank of Texas, its successors and&#160;&#160;&#160;assigns.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Property.&#160;&#160;The word&#160;&#160;"Property"&#160;&#160;means collectively the Real Property and the Personal&#160;&#160;Property.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Real Property.&#160;&#160;The words "Real Property" mean the real property, interests and rights, as further described in this Deed of Trust.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 16.25pt" align="left">Trustee:&#160; The word "Trustee" means Jeffrey L. Seasor, whose address is 5956 Sherry Lane, Suite 1100, DAllas, TX&#160; 75225 and any substitute or successor trustees.</div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 16.25pt" align="left">GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS DEED OF TRUST, AND GRANTOR AGREES TO TIS TERMS.</div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 16.25pt" align="left">TANDY LEATHER FACTORY, INC.</div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 16.25pt" align="left">By: <font style="TEXT-DECORATION: underline">/s/ Shannon L. Greene</font></div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 45pt; MARGIN-RIGHT: 16.25pt" align="left">Shannon Greene, Chief Financial Officer of Tandy Leather Factory, Inc.</div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: -1pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">This&#160;&#160;instrument&#160;&#160;was&#160;&#160;acknowledged&#160;&#160;before&#160;&#160;me&#160;&#160;on<font id="TAB1" style="MARGIN-LEFT: 12pt"></font>September 18, 2015 by Shannon Greene, Chief Financial </font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Officer of&#160;Tandy&#160;Leather&#160;Factory,&#160;Inc.&#160;a&#160;Delaware&#160;corporation,&#160;on&#160;behalf&#160;of&#160;said&#160;corporation<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font><font style="TEXT-DECORATION: underline">&#160;/s/ Linda C Hardy</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">EXHIBIT A</div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 11.45pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Block 1, CAMPUS INDUSTRIAL PARK, an Addition to the City of Fort Worth, Tarrant County, Texas, according to plat recorded in Volume 388-49, Page 61, Deed Records of Tarrant County, Texas.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 11.45pt" align="left">A tract of land out of the S. WOODY SURVEY, Abstract No. 1638, Tarrant County, Texas, and being more particularly described as follows:</div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 11.45pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Being a tract of land situated in the Samuel Woody Survey, Abstract No. 1638, in the City of Fort Worth, Tarrant County, Texas, being that same tract of land conveyed to Standard Motor Products, Inc. by deed recorded in Volume 13156, Page 311 of the Deed Records of Tarrant County, Texas, and being more particularly described by metes and bounds as follows:</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 7.8pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Beginning at a 5/8 inch iron rod found for corner in the Northeast line of a tract of land conveyed to Texas Electric Service Company by deed recorded in Volume 2574, Page 545 of the Deed Records of Tarrant County, Texas, said point being the South corner of Block 1 of Campus Industrial Park, an addition to the City of Fort Worth, Tarrant County, Texas, according to the plat thereof recorded in Volume 388-49, Page 61 of the Deed Records of Tarrant County, Texas, same being the West corner of herein described tract;</font></div>

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<div align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Thence North 27 Degrees 57 Minutes 23 Seconds East, along the Southeast line of said addition, a distance of 697.28 feet to a <font style="FONT-STYLE: italic; DISPLAY: inline; FONT-SIZE: 10pt">518 </font>inch iron rod found for corner, said point being the West corner of Campus Business Park, an addition to the City of Fort Worth, Tarrant County, Texas, according to the plat thereof&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">recorded in Volume 388-92, Page 6 of the Deed Records of Tarrant County, Texas, same being the North corner of herein described tract;</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 11.45pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Thence South 62 Degrees 00 Minutes 56 Seconds East, along the Southwest line of said Campus Business Park addition, passing the South corner of said Campus Business Park addition, same being the most northerly West corner of a tract of land conveyed to Campus and 1-20 Joint Venture by deed recorded in Volume 8342, Page 68 of the Deed Records of Tarrant County, Texas, and continuing along the most northerly Southwest line of said Campus and 1-20 Joint Venture tract, for a total distance of</font></div>

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<div align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Thence South 27 Degrees 57 Minutes 23 Seconds West, along the most southerly Northwest line of said Campus and 1-20 Joint Venture tract, a distance of 780<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font>11 feet to a 5/8 inch iron rod found for corner, said point being the beginning of a non-tangent curve to the left having a delta of 158 Degrees 06 Minutes 28 Seconds, a radius of 60<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font>00 feet and a chord bearing and distance of South 51 Degrees 00 Minutes 26 Seconds West, 117.82 feet;</font></div>

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<div align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Thence, in a southwesterly direction, along said curve to the left, an arc length of 165.57 feet to a % inch iron rod found for corner in the Northeast line of said Texas Electric Service Company tract, said point being the South corner of herein described tract;</font></div>

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<div align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Thence North 28 Degrees 02 Minutes 34 Seconds West, along the Northeast line of said Texas Electric Service Company Tract, a distance of 342.27 feet to the Point of Beginning and containing 259, 182.73 square feet or 5.9500 acres of land.</font></div>
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Exhibit 99.1<br>
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<div style="TEXT-ALIGN: center; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 32.4pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">FOR IMMEDIATE RELEASE&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;September 24, 2015</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Tandy Leather Factory Announces Credit Facilities With Bank of Texas</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 32.4pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">FORT WORTH, TEXAS &#8211; Tandy Leather Factory, Inc. (NASDAQ: TLF) today announced an agreement with BOKF, N.A. dba Bank of Texas (&#8220;BOKF&#8221;) for a $6,000,000 revolving credit facility.&#160;&#160;This credit facility replaced the Company&#8217;s prior line of credit with JPMorgan Chase Bank, N.A.&#160;&#160;The new agreement expires in September 2017.&#160;&#160;Further, BOKF is providing a line of credit facility of up to $10 million for the purpose of repurchasing the Company&#8217;s common stock.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 32.4pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt">The $6 million revolving credit facility is secured by the Company&#8217;s inventory.&#160;&#160;The $10 million facility is secured by a Deed of Trust on the Company&#8217;s corporate headquarters. </font>Amounts drawn under either facility accrue interest at LIBOR plus 1.85%.&#160;&#160;No proceeds were drawn on either line of credit upon closing.&#160;&#160;There are no unused line fees associated with either facility.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 32.4pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Jon Thompson, CEO and President of Tandy Leather Factory, Inc. explained, &#8220;Bank of Texas has been a solid partner of ours for several years and we appreciate the opportunity to expand that relationship as they have a great local team.&#160;&#160;We are not eliminating our relationship with JPMorgan Chase Bank as we rely on their expertise and capabilities internationally.&#160;&#160;They will continue to be valuable partner.&#8221;</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 32.4pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Shannon L. Greene, CFO and Treasurer, added, &#8220;Bank of Texas offered us a lower interest rate than what we had with JPMorgan Chase and doesn&#8217;t require unused line fees, which was an important factor as we considered our options.&#8221;</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 32.4pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Tandy Leather Factory, Inc., <font style="DISPLAY: inline; TEXT-DECORATION: underline">(http://www.tandyleather.com</font>), headquartered in Fort Worth, Texas, is a specialty retailer and wholesale distributor of a broad product line including leather, leatherworking tools, buckles and adornments for belts, leather dyes and finishes, saddle and tack hardware, and do-it-yourself kits. The Company distributes its products through its 28 Leather Factory stores, located in 19 states and 3 Canadian provinces, 82 Tandy Leather retail stores, located in 36 states and 6 Canadian provinces, and three combination wholesale/retail stores located in the United Kingdom, Australia, and Spain.&#160;&#160;Its common stock trades on the Nasdaq with the symbol "TLF".&#160;&#160;To be included on Tandy Leather Factory&#8217;s email distribution list, go to <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; TEXT-DECORATION: underline">http://www.b2i.us/irpass.asp?BzID=1625&amp;to=ea&amp;s=0</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">.</font></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Shannon L. Greene, Tandy Leather Factory, Inc.</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 32.4pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(817) 872-3200 or <font style="DISPLAY: inline">shannon.greene@tandyleather.com</font></font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 32.4pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Mark Gilbert, Magellan Fin, LLC</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 32.4pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(317) 867-2839 or <font style="DISPLAY: inline">MGilbert@MagellanFin.com</font></font></div>
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<font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">This news release may contain statements regarding future events, occurrences, circumstances, activities, performance, outcomes and results that are considered &#8220;forward-looking statements&#8221; as defined in the Private Securities Litigation Reform Act of 1995. Actual results and events may differ from those projected as a result of certain risks and uncertainties. These risks and uncertainties include but are not limited to: changes in general economic conditions, negative trends in general consumer-spending levels, failure to realize the anticipated benefits of opening retail stores; availability of hides and leathers and resultant price fluctuations; change in customer preferences for our product, and other factors disclosed in our filings with the Securities and Exchange Commission.&#160;&#160;These forward-looking statements are made only as of the date hereof, and except as required by law, we do not intend to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.</font></div>

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