10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

Quarterly Report Pursuant To Section 13 or 15(d)
of the Securities Exchange Act of 1934

For the Quarterly Period Ended September 30, 2007

Commission File Number 0-18927

TANDY BRANDS ACCESSORIES, INC.

(Exact name of registrant as specified in its charter)

Delaware	75-2349915
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

690 East Lamar Boulevard, Suite 200, Arlington, TX 76011
(Address of principal executive offices and zip code)

817-548-0090
(Registrant’s telephone number, including area code)

Former name, former address and former fiscal year, if changed since last report:

Not Applicable

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

þ Yes          No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o      Accelerated filer o      Non-accelerated filer þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

o Yes          No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.

Class	Number of shares outstanding at November 16, 2007
Common stock, $1.00 par value	6,965,613

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION
Item 1 Financial Statements	4 - 9
Item 2 Management’s Discussion And Analysis Of Financial Condition And Results Of Operations	10 - 12
Item 3 Quantitative And Qualitative Disclosures About Market Risk	12
Item 4 Controls And Procedures	13
PART II — OTHER INFORMATION
Item 1A Risk Factors	13
Item 2 Unregistered Sales Of Equity Securities And Use Of Proceeds	13
Item 4 Submission Of Matters To A Vote Of Security Holders	13 - 14
Item 5 Other Information	14
Item 6 Exhibits	14
SIGNATURES	15
Limited Waiver and First Amendment to Amended and Restated Credit Agreement
Limited Waiver and First Amendment to Amended and Restated Credit Agreement
Amended and Restated Stock Purchase Program
Certification Pursuant to Rule 13a-14(a)/15d-14(a) - CEO
Certification Pursuant to Rule 13a-14(a)/15d-14(a) - Principal Accounting Officer
Section 1350 Certifications - CEO and Principal Accounting Officer

Exhibit Index
Credit Agreement Waiver and Amendment	Exhibits 4.4 and 10.32
Amended and Restated Stock Purchase Program	Exhibit 10.40
Certification Pursuant to Rule 13a-14(a)/15d-14(a) (Chief Executive Officer)	Exhibit 31.1
Certification Pursuant to Rule 13a-14(a)/15d-14(a) (Principal Accounting Officer)	Exhibit 31.2
Section 1350 Certifications — Chief Executive Officer and Principal Accounting Officer	Exhibit 32.1

2

This Form 10-Q contains forward-looking statements regarding future events and our future results that are subject to the safe harbors created under the Securities Act of 1933 and the Securities Exchange Act of 1934. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “continue,” “may,” variations of such words, and similar expressions are intended to identify forward-looking statements. In addition, any statements that refer to projections of our future financial performance, our anticipated growth and trends in our business, and other characterizations of future events or circumstances are forward-looking statements. We have based these forward-looking statements on our current expectations about future events, estimates and projections about the industry in which we operate. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Our actual results may differ materially from those suggested by these forward-looking statements for various reasons, including those identified under “Risk Factors” included in our 2007 Annual Report on Form 10-K. Given these risks and uncertainties, you are cautioned not to place undue reliance on forward-looking statements. The forward-looking statements included in this report are made only as of the date hereof. Except as required under federal securities laws and the rules and regulations of the United States Securities and Exchange Commission, we do not undertake, and specifically decline, any obligation to update any of these statements or to publicly announce the results of any revisions to any forward-looking statements after the distribution of this report, whether as a result of new information, future events, changes in assumptions, or otherwise.

3

PART I — FINANCIAL INFORMATION

ITEM 1 — FINANCIAL STATEMENTS

Tandy Brands Accessories, Inc. And Subsidiaries
Consolidated Statements Of Operations
(in thousands except per share amounts)
(unaudited)

	Three Months Ended
	September 30
	2007			2006
Net sales	$	39,464		$	57,199
Cost of goods sold		26,634			36,172
Gross margin		12,830			21,027
Selling, general and administrative expenses		14,441			14,795
Depreciation and amortization		976			1,221
Total operating expenses		15,417			16,016
Operating (loss) income		(2,587	)		5,011
Interest expense		(280	)		(436	)
Royalty and other income		45			55
(Loss) income before income taxes		(2,822	)		4,630
Income taxes (benefit)		(1,087	)		1,801
Net (loss) income	$	(1,735	)	$	2,829
(Loss) earnings per common share	$	(0.25	)	$	0.42
(Loss) earnings per common share assuming dilution	$	(0.25	)	$	0.41
Cash dividends declared per common share	$	0.04		$	0.0275
Common shares outstanding		6,826			6,675
Common shares outstanding assuming dilution		6,826			6,864

The accompanying notes are an integral part of these consolidated financial statements.

4

Tandy Brands Accessories, Inc. And Subsidiaries
Consolidated Balance Sheets
(in thousands of dollars)
(unaudited)

	September 30			June 30
	2007			2007
Assets
Current assets:
Cash and cash equivalents	$	3,573		$	4,076
Accounts receivable		33,226			31,357
Inventories:
Raw materials and work in process		3,500			3,527
Finished goods		64,571			60,845
Deferred income taxes		3,662			3,454
Other current assets		3,716			3,879
Total current assets		112,248			107,138
Property and equipment		37,427			38,928
Accumulated depreciation		(27,918	)		(28,380	)
Net property and equipment		9,509			10,548
Other assets:
Goodwill		16,462			16,361
Other intangibles		4,707			4,882
Other assets		1,677			1,734
Total other assets		22,846			22,977
	$	144,603		$	140,663
Liabilities And Stockholders’ Equity
Current liabilities:
Accounts payable	$	15,984		$	16,903
Accrued expenses		4,605			6,439
Notes payable		13,000			6,069
Total current liabilities		33,589			29,411
Other liabilities:
Supplemental executive retirement obligation		1,681			1,587
Deferred income taxes		302			389
Other liabilities		3,237			1,369
Total other liabilities		5,220			3,345
Stockholders’ equity:
Preferred stock, $1 par value, 1,000,000 shares authorized, none issued		—			—
Common stock, $1 par value, 10,000,000 shares authorized, 6,962,217 shares and 6,912,302 shares issued and outstanding		6,962			6,912
Additional paid-in capital		34,194			33,616
Retained earnings		63,729			66,967
Other comprehensive income		1,854			1,326
Shares held by Benefit Restoration Plan Trust		(945	)		(914	)
Total stockholders’ equity		105,794			107,907
	$	144,603		$	140,663

The accompanying notes are an integral part of these consolidated financial statements.

5

Tandy Brands Accessories, Inc. And Subsidiaries
Consolidated Statements Of Cash Flows
(in thousands)
(unaudited)

	Three Months Ended
	September 30
	2007			2006
Cash flows used by operating activities:
Net (loss) income	$	(1,735	)	$	2,829
Adjustments to reconcile net (loss) income to net cash used by operating activities:
Depreciation and amortization		976			1,259
Share-based compensation expense		234			105
Amortization of debt origination costs		35			64
Excess income tax benefit from stock option exercises		(9	)		(10	)
Deferred income taxes		(295	)		—
Other		510			65
Changes in assets and liabilities:
Accounts receivable		(1,869	)		(12,596	)
Inventories		(3,699	)		(7,993	)
Other assets		588			2,611
Accounts payable		(1,126	)		8,744
Accrued expenses		(1,175	)		789
Net cash used by operating activities		(7,565	)		(4,133	)
Cash flows used for investing activities:
Purchases of property and equipment		(184	)		(964	)
Cash flows provided by financing activities:
Stock sold to stock purchase program		318			323
Stock options exercised		66			54
Dividends paid		(276	)		(187	)
Change in cash overdrafts		207			269
Note net borrowings		6,931			4,000
Net cash provided by financing activities		7,246			4,459
Net decrease in cash and cash equivalents		(503	)		(638	)
Cash and cash equivalents beginning of year		4,076			4,182
Cash and cash equivalents end of period	$	3,573		$	3,544
Supplemental cash flow information:
Interest paid	$	217		$	448
Income taxes paid	$	80		$	22

The accompanying notes are an integral part of these consolidated financial statements.

6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 — Accounting Principles

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In our opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

The preparation of our financial statements requires the use of estimates that affect the reported value of assets, liabilities, revenues, and expenses. These estimates are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for our conclusions. We continually evaluate the information used to make these estimates as the business and economic environment changes. Actual results may differ from these estimates under different assumptions or conditions. Such differences could have a material impact on our future financial position, results of operations, and cash flows.

The consolidated balance sheet at June 30, 2007 has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. These interim unaudited consolidated financial statements should be read in conjunction with the financial statements and the notes thereto included in our 2007 Annual Report on Form 10-K filed with the Securities and Exchange Commission.

Historically our first and second quarter sales and net income reflect a seasonal increase compared to the third and fourth quarters of our fiscal year. Consequently, operating results for the three-month period ended September 30, 2007 are not necessarily indicative of the results that may be expected for the year ended June 30, 2008.

Note 2 — Impact Of Recently Issued Accounting Standard

As of July 1, 2007 we adopted the provisions of Financial Accounting Standards Board Interpretation No. 48, “Accounting for Uncertainty in Income Taxes,” (“FIN No. 48”), a clarification of the accounting in accordance with Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes.” Accordingly a $1,225,000 liability was recognized with a corresponding reduction in retained earnings. The effect of FIN No. 48 on the fiscal 2008 first quarter was not material. Interest and penalties on unrecognized tax benefits of uncertain tax positions are included in our income tax provision.

Note 3 — Credit Arrangements

Our $75 million unsecured revolving credit facility requires the maintenance of certain financial covenants which, if not met, could adversely impact our liquidity. At September 30, 2007 we did not meet the leverage ratio and the fixed charge coverage ratio covenants contained in the credit facility due to our pretax loss for the quarter which was attributable primarily to one of our largest customers placing fewer replenishment orders and discontinuing a fashion belt program. The lenders have granted a waiver of compliance with these financial covenants. In connection with the waiver, we entered into an amendment to the Credit Agreement which limits borrowings under the Credit Agreement to a maximum of $30 million at an interest rate of LIBOR plus 2.5% and a commitment fee of 37.5 basis points on the unused commitment balance until we deliver to the lenders the covenant certificates required by the Credit Agreement for the quarter ending December 31, 2007 reflecting no default or event of default at that date. It is possible we may not be in compliance with these financial covenant ratios at December 31, 2007 which could require a further waiver or amendment of the credit facility.

At September 30, 2007 we had outstanding borrowings under the credit facility of $13 million bearing interest at 5.88% and outstanding letters of credit used in conjunction with merchandise procurement totaling $2 million. Principal payments are due on the facility’s expiration date; however, the outstanding borrowings have been classified as a current liability consistent with the fiscal 2007 year-end classification. The effect of a 1% increase or decrease in the interest rate on the amount of our notes payable outstanding at September 30, 2007 could lower or increase our annual pretax operating results by $130,000.

7

The credit facility is guaranteed by all of our subsidiaries, except our Canadian subsidiary. It permits the payment of dividends and does not require us to enter into an interest rate swap agreement against our borrowings under the facility.

We also have a $1 million Canadian line of credit secured by a letter of credit from a U.S. bank. At June 30, 2007 and September 30, 2007 there were no borrowings under this line of credit. At September 30, 2007 we had credit availability under our credit facility and our Canadian line of credit as follows (in thousands):

Total credit facilities	$	76,004
Less:
Borrowing limitation		45,000
Notes payable outstanding		13,000
Letters of credit outstanding		2,038
Canadian standby letter of credit		1,004
Credit available	$	14,962

Note 4 — Income Taxes

Our estimated annual effective income tax rate for fiscal 2008 is 39.4%, an increase over the 38.9% tax expense rate for the first quarter last year primarily due to higher effective state income tax rates. The income tax benefit provision for the quarter was reduced by $38,000, net of income taxes, for interest on unrecognized tax benefits of uncertain tax positions resulting in the net tax benefit being 38.5% of our pretax loss.

The following presents information about our unrecognized tax benefits of uncertain tax positions (in thousands).

	July 1		September 30
	2007		2007
Gross unrecognized tax benefits	$	1,946	$	1,946
Amount, if recognized, affecting tax rate		1,444		1,444
Interest and penalties related to unrecognized tax benefits:
Accrued liability for potential payment net of tax		568		606
Gross expense included in income tax provision				60

While it is reasonably possible a current examination of state income tax returns for the fiscal years 1999 through 2003 involving uncertain tax positions could be resolved within the next twelve months through settlement or administrative proceedings, the potential impact cannot be estimated at this time. Otherwise, the majority of our state and local income tax returns are no longer subject to examination for years before 2003. US federal income tax returns have been examined through fiscal 2003 and Canadian income tax returns are no longer subject to examination for years before 1999.

Note 5 — Earnings Per Share

The following presents the computation of basic and diluted earnings per share (in thousands except per share amounts).

	2007			2006
Numerator for basic and diluted earnings per share:
Net (loss) income	$	(1,735	)	$	2,829
Denominator:
Weighted-average shares outstanding		6,822			6,671
Contingently issuable shares		4			4
Denominator for basic earnings per share		6,826			6,675
Effect of dilutive share-based compensation		—			189
Denominator for diluted earnings per share		6,826			6,864
(Loss) earnings per common share	$	(0.25	)	$	0.42
(Loss) earnings per common share assuming dilution	$	(0.25	)	$	0.41

8

Note 6 — Comprehensive Income

The following presents the components of comprehensive income (in thousands).

	2007			2006
Net (loss) income	$	(1,735	)	$	2,829
Currency translation adjustments		528			(23	)
Comprehensive (loss) income	$	(1,207	)	$	2,806

Note 7 — Disclosures About Segments Of Our Business And Related Information

We sell our products under national brand names and private labels through all major retail distribution channels in the United States and Canada, including mass merchants, national chain stores, department stores, men’s and women’s specialty stores, catalog retailers, grocery stores, drug stores, golf pro shops, sporting goods stores, and the United States military retail exchange operations. We and our corresponding customer relationships are organized along men’s and women’s product lines. As a result we have two reportable segments: (1) men’s accessories, consisting of belts, gifts, wallets and other small leather goods, neckwear, suspenders, and sporting goods; and (2) women’s accessories, consisting of belts, small leather goods, handbags, and gifts. General corporate expenses and depreciation and amortization related to assets recorded in our corporate accounting records are allocated to each segment based on the respective segment’s asset base. Management measures each segment based upon income or loss before income taxes utilizing accounting policies consistent in all material respects with those described in Note 2 of the notes to consolidated financial statements included in our 2007 Annual Report on Form 10-K. No inter-segment revenue is recorded.

The following presents operating and asset information by reportable segment (in thousands).

	2007			2006
Net sales to external customers:
Men’s accessories	$	30,212		$	37,361
Women’s accessories		9,252			19,838
	$	39,464		$	57,199
Operating (loss) income: (1)
Men’s accessories	$	(2,033	)	$	3,311
Women’s accessories		(554	)		1,700
		(2,587	)		5,011
Interest expense		(280	)		(436	)
Other income		45			55
(Loss) income before income taxes	$	(2,822	)	$	4,630
Depreciation and amortization:
Men’s accessories	$	707		$	841
Women’s accessories		269			380
	$	976		$	1,221
Capital expenditures:
Men’s accessories	$	33		$	274
Women’s accessories		—			24
Corporate		151			666
	$	184		$	964

⁽¹⁾ Operating (loss) income consists of net sales less cost of goods sold and specifically identifiable and allocated selling, general and administrative expenses.

9

ITEM 2 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Item 2 should be read in the context of the information included in our 2007 Annual Report on Form 10-K filed with the Securities and Exchange Commission and elsewhere in this Quarterly Report, including our consolidated financial statements and accompanying notes in Item 1 of this Quarterly Report.

OVERVIEW

We are a leading designer and marketer of branded men’s, women’s and children’s accessories, including belts, small leather goods, and gift accessories. Our product line also includes handbags, sporting goods, and neckwear. Our merchandise is marketed under a broad portfolio of nationally recognized licensed and proprietary brand names, including DOCKERS^®, LEVI’S^®, LEVI STRAUSS SIGNATURE™, JONES NEW YORK^®, TOTES^®, ROLFS^®, HAGGAR^®, WOOLRICH^®, CANTERBURY^®, PRINCE GARDNER^®, PRINCESS GARDNER^®, AMITY^®, COLETTA^®, STAGG^®, ACCESSORY DESIGN GROUP^®, TIGER^®, ETON^®, SURPLUS^®, EILEEN WEST™, GOODYEAR™, GENO D’LUCCA™, as well as private brands for major retail customers. We sell our products through all major retail distribution channels throughout the United States and Canada, including mass merchants, national chain stores, department stores, men’s and women’s specialty stores, catalog retailers, grocery stores, drug stores, golf pro shops, sporting goods stores and the retail exchange operations of the United States military.

Net sales for the first quarter of fiscal 2008 were $39.5 million compared to $57.2 million in the same period last year with $12.0 million of the decline being related to fewer sales of men’s and women’s belts. Our gross margin as a percent of sales for the quarter was 32.5%, 4.3 percentage points lower than the first quarter last year. Our selling, general and administrative, depreciation and amortization, and interest expenses this year were all slightly lower. Overall, we incurred a $2.6 million operating loss and a $1.7 million net loss ($0.25 per share) in the current period. In the first quarter last year, our operating income was $5.0 million and net income was $2.8 million ($0.41 per diluted share).

The net loss for the quarter resulted in our noncompliance with two of the financial covenant ratios of our credit facility as described in Note 3 of the notes to consolidated financial statements included in Item 1 of this Quarterly Report. Our lenders have granted a waiver with respect to these financial covenants ratios and we have entered into an amendment to the credit agreement. It is possible we may not be in compliance with these financial covenant ratios at December 31, 2007 which could require a further waiver or amendment of the credit facility.

2007 COMPARED TO 2006

Net Sales And Gross Margins

The following presents sales and gross margin data for our reportable segments (in thousands of dollars).

	2007			2006
Net sales:
Men’s accessories	$	30,212		$	37,361
Women’s accessories		9,252			19,838
	$	39,464		$	57,199
Gross margin:
Men’s accessories	$	9,309		$	14,281
Women’s accessories		3,521			6,746
	$	12,830		$	21,027
Gross margin percent of sales:
Men’s accessories		30.8	%		38.2	%
Women’s accessories		38.1			34.0
Total		32.5			36.8

10

Net sales of $30.2 million by our men’s accessories segment in the fiscal 2008 first quarter were $7.2 million below the $37.4 million in fiscal 2007. One of the largest customers of our men’s accessories segment curtailed replenishment orders as part of its inventory management program resulting in $5.5 million fewer belt sales during the first quarter. We believe the effects of the inventory management program, which has continued in our second quarter, are affecting other suppliers as well. Net sales of men’s gift accessories were almost $1 million lower as the shipping of some orders was shifted from the first to the second quarter.

The women’s accessories segment had net sales of $9.3 million in the first quarter of fiscal 2008 compared to $19.8 million in fiscal 2007. The lower sales were primarily attributable to a customer discontinuing a fashion belt program ($5.0 million) and fewer sales of small leather goods ($1.8 million) and handbags ($1.7 million) resulting from competitive market pressures related to the allocation of retail space to accessories and continued weakening of women’s fashion accessory trends. In the first quarter last year our women’s accessories segment sold approximately $1 million of products which we discontinued in fiscal 2006.

Gross margins were 32.5% and 36.8% for the first quarter of fiscal 2008 and 2007, respectively. The men’s accessories segment margins were 30.8% this year and 38.2% last year. The 7.4% percentage point decline was primarily attributable to clearance sales of belts and small leather goods. The women’s accessories segment margins increased to 38.1% this year from 34.0% in the first quarter of fiscal 2007 primarily because lower margins on fashion belts sold to one of our largest customers last year negatively impacted the segment’s overall gross margin percentage. These higher gross margins also reflect the benefit of our exit from non-core women’s product categories in fiscal 2006 in order to focus on more profitable product lines.

Total direct shipment sales and margins were almost half of the fiscal 2007 amounts and the margin percentage was slightly lower; however, they had little impact on year-to-year comparisons. Direct shipments have lower gross margins because these goods are shipped from our suppliers to our customers and are not handled in our distribution centers, thereby reducing the general and administrative costs related to the sales. Any material changes in sales mix, such as higher mass merchant accessory sales or direct shipments, could lower our gross margin percentages during a particular season.

Operating Expenses

The following presents expense data for our reportable segments (in thousands).

	2007		2006
Selling, general and administrative expense:
Men’s accessories	$	10,635	$	10,129
Women’s accessories		3,806		4,666
	$	14,441	$	14,795
Depreciation and amortization:
Men’s accessories	$	707	$	841
Women’s accessories		269		380
	$	976	$	1,221
Interest expense	$	280	$	436

Selling, general and administrative expenses (“SG&A”) of $14.4 million for the first quarter of fiscal 2008 were slightly lower than the $14.8 million in fiscal 2007. Lower costs included the benefit of changes in the market value of retirement benefit investments ($181,000) and reduced product development, travel, and payroll expenses (approximately $100,000 each). Restricted stock awards increased SG&A over the same period list year by $243,000. Interest expense was less due to lower average amounts borrowed during the respective quarters.

Our effective income tax rate for the first quarter of fiscal 2008 and the effect of adopting the provisions of Financial Accounting Standards Board Interpretation No. 48, “Accounting for Uncertainty in Income Taxes,” (“FIN No. 48”) as of July 1, 2007 are discussed in Notes 2 and 4 of the notes to consolidated financial statements included in Item 1 of this Quarterly Report.

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SEASONALITY

Historically our quarterly sales and operating results reflect a seasonal increase during the first and second quarters of our fiscal year.

LIQUIDITY AND CAPITAL RESOURCES

Operating cash flows for the first quarter of both years were negative (2007 — $7.6 million; 2006 - $4.1 million) as inventories for shipment in the second quarter increased (2007 — $3.7 million; 2006 — $8.0 million) and accounts receivable increased (2007 — $1.9 million; 2006 — $12.6 million) from sales in the latter part of the first quarter which are not collected until later in the year. The lower amount of cash used by operating activities last year is attributable to increases in accounts payable, an operating profit, and an income tax refund. Capital expenditures this year were nominal while last year we were completing an inventory management project and improving other computer related functions.

Our primary sources of liquidity are cash flows from operating activities and our credit facility which we believe will provide adequate financial resources for our future working capital needs. Information about the credit facility, including a waiver of compliance with certain financial covenant ratios and an amendment, is incorporated herein by reference to Note 3 of the notes to consolidated financial statements included in Item 1 of this Quarterly Report.

During fiscal 2008 we declared the following cash dividends:

			Dividend
Declaration Date	Record Date	Payable Date	Per Share
August 15, 2007	September 28, 2007	October 19, 2007	$0.04
October 29, 2007	December 31, 2007	January 18, 2008	$0.04

CONTRACTUAL OBLIGATIONS AND CONTINGENT LIABILITIES AND COMMITMENTS

There have been no material changes outside the ordinary course of our business in any of our contractual obligations, contingent liabilities, or commitments since June 30, 2007 other than the adoption of the provisions of Financial Accounting Standards Board Interpretation No. 48, “Accounting for Uncertainty in Income Taxes,” (“FIN No. 48”) as of July 1, 2007. We are unable to reasonably estimate when cash payments, if any, of the $2,050,000 liability recognized for uncertain tax positions at September 30, 2007 will occur, but it is reasonably possible a current examination of state income tax returns for the fiscal years 1999 through 2003 involving uncertain tax positions could be resolved within the next twelve months through settlement or administrative proceedings.

CRITICAL ACCOUNTING POLICIES

There have been no significant changes in our critical accounting policies disclosed in our Annual Report on Form 10-K for the year ended June 30, 2007 other than the adoption of the provisions of FIN No. 48 as discussed in Notes 2 and 4 of the notes to consolidated financial statements included in Item 1 of this Quarterly Report.

ITEM 3 — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are subject to interest rate risk on our notes payable. The effect of a 1% increase or decrease in the interest rate on the amount outstanding at September 30, 2007 could lower or increase our annual pretax operating results by $130,000. We do not expect the impact of market conditions on the fair value of our indebtedness to be material.

We are exposed to market risk in the event our suppliers are not able to manage their risks associated with unanticipated significant increases in the prices of leather and other commodities used in the production of our products. If we are unable to contractually or otherwise mitigate the pass-through of unanticipated cost increases, our operating results could be materially impacted.

We are exposed to the effects of changing currency exchange rates on the cost of products we purchase from foreign manufacturers; however, the risks and benefits of foreign currency exchange rate fluctuations historically have not been material to our operations since we generally have negotiated and settled agreements for the procurement of our products in US dollars.

12

ITEM 4 — CONTROLS AND PROCEDURES

Under the supervision and with the participation of our management, including our Chief Executive Officer and Principal Accounting Officer, we have evaluated the effectiveness of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Principal Accounting Officer have concluded that these disclosure controls and procedures are effective. There has been no change in our internal control over financial reporting during the first quarter of fiscal 2008 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Our Chief Financial Officer accepted a position with another company and resigned effective October 23, 2007. Our Corporate Controller has been appointed Principal Accounting Officer.

PART II — OTHER INFORMATION

ITEM 1A — RISK FACTORS

No material changes have occurred to the risk factors disclosed in our Annual Report on Form 10-K for the year ended June 30, 2007. Adoption of the provisions of Financial Accounting Standards Board Interpretation No. 48, “Accounting for Uncertainty in Income Taxes,” (“FIN No. 48”) as of July 1, 2007 increased the risks associated with the estimation of our income tax provisions. We are subject to US federal income tax and taxes in state, local, and Canadian jurisdictions. Provisions for income tax expense or benefits are recorded based on our estimates of future payments, including taxes, interest, and penalties for uncertain tax positions not meeting the more-likely-than-not criterion of FIN No. 48. At any one time, many income tax returns are subject to audit, the results of which may affect our estimates. Additionally, our effective tax rate may be materially impacted from time-to-time by changes in the level and mix of earnings, or by tax law or accounting rule changes.

ITEM 2 — UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following provides information about repurchases of shares of common stock made by us during the quarter ended September 30, 2007. Of the total shares purchased, 4,551 were withheld from employees’ restricted stock awards for employment taxes due when the stock vested. The remaining shares were purchased in the open market and are held in a rabbi trust established under our Benefit Restoration Plan.

					Total Number Of		Maximum Number
	Total				Shares Purchased		Of Shares That May
	Number		Average		As Part Of Publicly		Yet Be Purchased As
	Of Shares		Price Paid		Announced Plans		Part Of The Plans
Period	Purchased		Per Share		Or Programs		Or Programs
July 1, 2007 to July 31, 2007		1,759	$	12.74		N/A		N/A
August 1, 2007 to August 31, 2007		4,900		10.77		N/A		N/A
September 1, 2007 to September 30, 2007		379		11.08		N/A		N/A
Total		7,038		11.28		N/A		N/A

ITEM 4 — SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

At our 2007 Annual Meeting of Stockholders on October 29, 2007, the stockholders voted on proposals to (1) re-elect two directors to our board of directors, (2) amend our certificate of incorporation to declassify our board of directors, and (3) ratify the appointment of Ernst & Young LLP as our independent auditor for fiscal 2008.

Ms. Colombe M. Nicholas and Mr. W. Grady Rosier were re-elected to our board of directors to serve as Class II directors for a three-year term expiring at the 2010 annual meeting of stockholders, or until their successors are elected and qualified. The number of votes cast for their re-election and withheld was as follows:

Nominee	For	Withheld
Colombe M. Nicholas	3,287,553	75,443
W. Grady Rosier	3,287,947	75,049

Votes on the proposal to amend our certificate of incorporation to declassify our board of directors were as follows:

For 5,938,526 Against 21,450 Abstain 21,916

13

Votes on the proposal to ratify the appointment of Ernst & Young LLP as our independent auditor for fiscal 2008 were as follows:

For 5,962,557 Against 18,656 Abstain 679

Following the annual meeting, our directors increased the size of our board of directors from seven to eight members and appointed Mr. William D. Summitt as a Class II director with a term expiring at the 2010 annual meeting, or until his successor is elected and qualified..

Item 5 — OTHER INFORMATION

At September 30, 2007 the Company did not meet the leverage ratio and the fixed charge coverage ratio covenants contained in the Amended and Restated Credit Agreement among the Company, as the Borrower, Wells Fargo HSBC Trade Bank, N.A. as Administrative Agent and as a Lender, and Certain Financial Institutions, as Lenders and Wells Fargo Bank, N.A. as Arranger as of September 7, 2006 (the “Credit Agreement”) due to the Company’s pretax loss for the quarter ended September 30, 2007. The lenders have granted a waiver of compliance with these financial covenants. In connection with the waiver, the Company entered into an amendment to the Credit Agreement which limits borrowings under the Credit Agreement to a maximum of $30 million at an interest rate of LIBOR plus 2.5% and a commitment fee of 37.5 basis points on the unused commitment balance until the Company delivers to the lenders the covenant certificates required by the Credit Agreement for the quarter ending December 31, 2007 reflecting no default or event of default at that date.

The Limited Waiver and First Amendment to Amended and Restated Credit Agreement is filed as Exhibits 4.4 and 10.33 to this Quarterly Report.

ITEM 6 — EXHIBITS

The Exhibit Index immediately preceding the exhibits required to be filed is incorporated herein by reference.

14

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	TANDY BRANDS ACCESSORIES, INC. (Registrant)
November 19, 2007	/s/ J.S.B. Jenkins
	J.S.B. Jenkins
	President and Chief Executive Officer (Principal Executive Officer)
	/s/ Janna Keck
	Janna Keck
	Principal Accounting Officer and Controller

15

TANDY BRANDS ACCESSORIES, INC. AND SUBSIDIARIES

EXHIBIT INDEX

				Incorporated by Reference
				(if applicable)
	Exhibit Number and Description			Form	Date	File No.	Exhibit
(3)	Articles of Incorporation and Bylaws
		3.1	Certificate of Incorporation of Tandy Brands Accessories, Inc.	S-1	11/02/90	33-37588		3.1
		3.2	Certificate of Amendment of the Certificate of Incorporation of Tandy Brands Accessories, Inc.	8-K	10/29/07	0-18927		3.1
		3.3	Amended and Restated Bylaws of Tandy Brands Accessories, Inc., effective July 2007	8-K	7/13/07	0-18927		3.1
		3.4	Amendment No. 1 to Amended and Restated Bylaws of Tandy Brands Accessories, Inc.	8-K	7/13/07	0-18927		3.2
(4)	Instruments defining the rights of security holders, including indentures
		4.1	Form of Common Stock Certificate of Tandy Brands Accessories, Inc.	S-1	12/17/90	33-37588		4.2
		4.2	Certificate of Elimination of Series A Junior Participating Cumulative Preferred Stock of Tandy Brands Accessories, Inc.	8-K	10/19/07	0-18927		3.1
		4.3	Amended and Restated Credit Agreement among Tandy Brands Accessories, Inc. as the Borrower, Wells Fargo HSBC Trade Bank, N.A. as Administrative Agent and as a Lender, and Certain Financial Institutions, as Lenders and Wells Fargo Bank, N.A. as Arranger as of September 7, 2006	10-K	9/22/06	0-18927		4.7
		4.4	Limited Waiver and First Amendment to Amended and Restated Credit Agreement**	N/A	N/A	N/A		N/A
(10)	Material Contracts
		10.1	Tandy Brands Accessories, Inc. Benefit Restoration Plan and related Trust Agreement and Amendments Nos. 1 and 2 thereto*	10-K	9/25/97	0-18927		10.14
		10.2	Amendment No. 3 to the Tandy Brands Accessories, Inc. Benefit Restoration Plan, effective as of July 1, 2003*	10-K	9/23/03	0-18927		10.32

1

TANDY BRANDS ACCESSORIES, INC. AND SUBSIDIARIES
EXHIBIT INDEX

			Incorporated by Reference
			(if applicable)
Exhibit Number and Description			Form	Date	File No.	Exhibit
	10.3	Succession Agreement, dated July 1, 2001, between Tandy Brands Accessories, Inc. and Chase Texas, N.A. (the Former Trustee) and Comerica Bank – Texas (the Trustee), relating to the Tandy Brands Accessories, Inc. Benefit Restoration Plan*	10-K	9/23/03	0-18927		10.34
	10.4	Form of Indemnification Agreement between Tandy Brands Accessories, Inc. and each of its Directors	S-1	12/17/90	33-37588		10.16
	10.5	Form of Indemnification Agreement between Tandy Brands Accessories, Inc. and each of its Officers	S-1	12/17/90	33-37588		10.17
	10.6	Tandy Brands Accessories, Inc. Non-Qualified Formula Stock Option Plan for Non-Employee Directors*	S-8	2/10/94	33-75114		28.1
	10.7	Amendment No. 4 to the Tandy Brands Accessories, Inc. Nonqualified Formula Stock Option Plan For Non-Employee Directors*	10-Q	5/10/02	0-18927		10.39
	10.8	Tandy Brands Accessories, Inc. Non-Qualified Stock Option Plan for Non-Employee Directors*	S-8	2/10/94	33-75114		28.3
	10.9	Tandy Brands Accessories, Inc. 1995 Stock Deferral Plan for Non-Employee Directors*	S-8	6/03/96	33-08579		99.1
	10.10	Tandy Brands Accessories, Inc. 1997 Employee Stock Option Plan*	S-8	12/12/97	333-42211		99.1
	10.11	Amendment No. 2 to the Tandy Brands Accessories, Inc. 1997 Employee Stock Option Plan*	10-Q	5/10/02	0-18927		10.38
	10.12	Tandy Brands Accessories, Inc. Employees Investment Plan, as Amended and Restated effective July 1, 2000*	10-K	9/26/00	0-18927		10.39
	10.13	Mid-Market Trust Agreement, dated August 19, 2001, between Tandy Brands Accessories, Inc. and State Street Bank and Trust Company, relating to the Tandy Brands Accessories, Inc. Employees Investment Plan*	10-K	9/23/03	0-18927		10.28

2

TANDY BRANDS ACCESSORIES, INC. AND SUBSIDIARIES
EXHIBIT INDEX

			Incorporated by Reference
			(if applicable)
Exhibit Number and Description			Form	Date	File No.	Exhibit
	10.14	Amendments Nos. 1-3 to the Tandy Brands Accessories, Inc. Employees Investment Plan, as Amended and Restated effective July 1, 2000*	10-K	9/23/03	0-18927		10.31
	10.15	Succession Agreement, dated June 20, 2002, between Tandy Brands Accessories, Inc. and Comerica Bank – Texas, (the Trustee), relating to the Tandy Brands Accessories, Inc. Employees Investment Plan*	10-K	9/23/03	0-18927		10.35
	10.16	Amendment No. 4 to the Tandy Brands Accessories, Inc. Employees Investment Plan, dated December 22, 2003*	10-Q	2/12/04	0-18927		10.38
	10.17	Nonqualified Stock Option Agreement for Non-Employee Directors, dated October 16, 2001, by and between Tandy Brands Accessories, Inc. and Dr. James F. Gaertner*	S-8	5/15/02	33-88276		10.2
	10.18	Nonqualified Stock Option Agreement for Non-Employee Directors, dated October 16, 2001, by and between Tandy Brands Accessories, Inc. and Gene Stallings*	S-8	5/15/02	33-88276		10.4
	10.19	Nonqualified Stock Option Agreement for Non-Employee Directors, dated October 16, 2001, by and between Tandy Brands Accessories, Inc. and Roger R. Hemminghaus*	S-8	5/15/02	33-88276		10.5
	10.20	Nonqualified Stock Option Agreement for Non-Employee Directors, dated October 16, 2001, by and between Tandy Brands Accessories, Inc. and Colombe M. Nicholas*	S-8	5/15/02	33-88276		10.6
	10.21	Tandy Brands Accessories, Inc. 2002 Omnibus Plan*	10-Q	11/12/02	0-18927		10.24
	10.22	Form of Non-Employee Director Nonqualified Stock Option Agreement pursuant to the Tandy Brands Accessories, Inc. 2002 Omnibus Plan*	10-K	9/23/04	0-18927		10.39
	10.23	Form of Employee Nonqualified Stock Option Agreement pursuant to the Tandy Brands Accessories, Inc. 2002 Omnibus Plan*	10-K	9/23/04	0-18927		10.40
	10.24	Form of Non-Employee Director Restricted Stock Award Agreement pursuant to the Tandy Brands Accessories, Inc. 2002 Omnibus Plan*	10-K	9/23/04	0-18927		10.41

3

TANDY BRANDS ACCESSORIES, INC. AND SUBSIDIARIES
EXHIBIT INDEX

			Incorporated by Reference
			(if applicable)
Exhibit Number and Description			Form	Date	File No.	Exhibit
	10.25	Form of Employee Restricted Stock Award Agreement pursuant to the Tandy Brands Accessories, Inc. 2002 Omnibus Plan*	10-K	9/23/04	0-18927		10.42
	10.26	Form of Severance Agreement between Tandy Brands Accessories, Inc. for Executive and Senior Officers*	10-K	9/23/03	0-18927		10.33
	10.27	Office Lease Agreement, dated January 31, 2004, between Koll Bren Fund VI, LP and Tandy Brands Accessories, Inc. relating to the corporate office	10-Q	2/12/04	0-18927		10.36
	10.28	Acknowledgement and Release Agreement between Tandy Brands Accessories, Inc. and J.S.B. Jenkins relating to the termination of the Supplemental Executive Retirement Plan*	8-K	8/22/05	0-18927		10.45
	10.29	Amendments Nos. 5-6 to the Tandy Brands Accessories, Inc. Employees Investment Plan, as Amended and Restated effective July 1, 2000*	10-Q	5/11/06	0-18927		10.44
	10.30	Amendment No. 2 to the Tandy Brands Accessories, Inc. 1995 Stock Deferral Plan for Non-Employee Directors*	10-K	9/22/06	0-18927		10.35
	10.31	Amended and Restated Credit Agreement among Tandy Brands Accessories, Inc. as the Borrower, Wells Fargo HSBC Trade Bank, N.A. as Administrative Agent and as a Lender, and Certain Financial Institutions, as Lenders and Wells Fargo Bank, N.A. as Arranger as of September 7, 2006	10-K	9/22/06	0-18927		10.36
	10.32	Limited Waiver and First Amendment to Amended and Restated Credit Agreement**	N/A	N/A	N/A		N/A
	10.33	Amendment No. 4 to the Tandy Brands Accessories, Inc. Benefit Restoration Plan, dated July 1, 2001*	10-Q	11/14/06	0-18927		10.37
	10.34	Form of 2006 Performance Unit Award Agreement pursuant to the Tandy Brands Accessories, Inc. 2002 Omnibus Plan*	10-Q	2/14/07	0-18927		10.37
	10.35	Amendment No. 7 to the Tandy Brands Accessories, Inc. Employees Investment Plan, effective as of January 1, 2006*	10-Q	2/14/07	0-18927		10.38

4

TANDY BRANDS ACCESSORIES, INC. AND SUBSIDIARIES
EXHIBIT INDEX

				Incorporated by Reference
				(if applicable)
	Exhibit Number and Description			Form	Date	File No.	Exhibit
		10.36	Tandy Brands Accessories, Inc. Summary of Incentive Bonus Plan for Executive Officers*	8-K	6/12/07	0-18927		5.1
		10.37	Amendment No. 1 to the Tandy Brands Accessories, Inc. 2002 Omnibus Plan*	10-K	9/21/07	0-18927		10.38
		10.38	Fiscal 2008 Compensation Summaries*	10-K	9/21/07	0-18927		10.38
		10.39	Settlement Agreement by and among Tandy Brands Accessories, Inc. Golconda Capital Management, LLC, Golconda Capital Portfolio, LP and each of William D. Summitt and Jedd M. Flowers	8-K	10/29/07	0-18927		10.1
		10.40	Tandy Brands Accessories, Inc. Stock Purchase Program (As Amended And Restated Effective December 1, 2005)* **	N/A	N/A	N/A		N/A
(31)	Rule 13a-14(a)/15d-14(a) Certifications
		31.1	Certification pursuant to Rule 13a-14(a)/15d-14(a) (Chief Executive Officer)**	N/A	N/A	N/A		N/A
		31.2	Certification pursuant to Rule 13a-14(a)/15d-14(a) (Principal Accounting Officer)**	N/A	N/A	N/A		N/A
(32)	Section 1350 Certifications
		32.1	Section 1350 Certifications (Chief Executive Officer and Principal Accounting Officer)**	N/A	N/A	N/A		N/A

*	Management contract or compensatory plan
**	Filed herewith

5

EX-4.4

EXHIBITS 4.4 AND 10.32
LIMITED WAIVER
AND
FIRST AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT

     THIS LIMITED WAIVER AND FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this “Amendment”) made as of the 13th day of November, 2007, by and among TANDY BRANDS ACCESSORIES, INC. (the “Borrower”), WELLS FARGO HSBC TRADE BANK, N. A., as Administrative Agent (“Agent”), WELLS FARGO BANK, N.A., as Arranger (“Arranger”) and such of the lenders specified in the Credit Agreement described below as are signatories hereof (“Lenders”).

     WHEREAS, Borrower, Agent, Arranger and the Lenders entered into an Amended and Restated Credit Agreement dated as of September 6, 2006, (the “Credit Agreement”); and

     WHEREAS, certain Events of Default have occurred and continue to exist as a result of Borrower’s failure to comply with Sections 10.13 and 10.14 of the Credit Agreement as of September 30, 2007 (the “Subject Defaults”); and

     WHEREAS, the Borrower has requested that Agent and the Lenders provide a limited waiver of the Subject Defaults and make certain amendments to the Credit Agreement, and the Agent and the Lenders are willing to do so subject to the terms and conditions set forth herein;

     NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

     1. Defined Terms. All capitalized terms used but not otherwise defined in this Amendment shall have the meaning ascribed to them in the Credit Agreement. Unless otherwise specified, all section references herein refer to sections of the Credit Agreement.

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

     2.1 Definitions

          (a) The definition of “Applicable Commitment Fee Percentage” set forth in Section 1 of the Credit Agreement is hereby amended by adding the following sentence at the end of such definition:

“Notwithstanding the foregoing, at all times during the Adjustment Period, the Applicable Commitment Fee Percentage shall be 0.375% per annum.”

1

          (b) The definition of “Applicable Margin” set forth in Section 1 of the Credit Agreement is hereby amended by adding the following sentence at the end of such definition:

“Notwithstanding the foregoing, at all times during the Adjustment Period, the Applicable Margin for Eurodollar Borrowings shall be 2.50% per annum.”

          (c) Section 1 of the Credit Agreement is hereby further amended by adding the following definition thereto, in appropriate alphabetical order:

     “Adjustment Period’ shall mean the period commencing September 30, 2007 and ending on the date on which Borrower delivers financial statements and related certificates required hereunder for the fiscal quarter ending December 31, 2007, reflecting that no Default or Event of Default exists as of such date.

     2.2 The Revolving Credit Loan. The first sentence of Section 2.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

“Subject to the terms and conditions of this Agreement, each Lender agrees to extend to the Borrower from the date hereof through the Termination Date, a revolving line of credit which shall not exceed (i) at all times during the Adjustment Period, $30,000,000, and (ii) at all other times, the Total Revolving Credit Commitment, in either case less (a) outstanding Advances (including Swingline Advances), (b) Letter of Credit Obligations, and (c) the Acceptance Exposure.

     3. Limited Waiver. Effective as of September 30, 2007, and subject to the other terms and conditions of this Amendment, Agent and Lenders hereby waive the Subject Defaults and their rights and remedies under the Credit Agreement and otherwise existing as a result of the Subject Defaults.

          The Borrower is hereby notified that irrespective of (i) any waivers previously granted by Agent and Lenders regarding the Credit Agreement and the Loan Documents, (ii) any previous failures or delays of Agent and Lenders in exercising any right, power or privilege under the Credit Agreement or the Loan Documents, or (iii) any previous failures or delays of Agent and Lenders in the monitoring or in the requiring of compliance by the Borrower with the duties, obligations, and agreements of the Borrower in the Credit Agreement and the Loan Documents, hereafter the Borrower will be expected to comply strictly with its duties, obligations and agreements under the Credit Agreement and the Loan Documents.

     4. Effectiveness of Amendment. This Amendment shall be effective upon receipt by the Agent of:

          (a) A copy or copies of this Amendment signed by each of the parties hereto;

2

          (b) A Confirmation of Guaranty executed by each Guarantor; and

          (c) A Compliance Certificate executed by Borrower.

          (d) Receipt by Agent, for the benefit of each Lender signatory hereto, an accommodation fee equal to 0.15% of each such Lender’s Revolving Credit Commitment, in immediately available funds, which fee shall be fully earned and non-refundable upon execution hereof.

          (e) Receipt by Wells Fargo HSBC Trade Bank, N.A. of all amounts payable to it pursuant to the Fee Letter dated October 30, 2007, between it and the Borrower.

     5. Ratifications, Representations and Warranties.

(a) The terms and provisions set forth in this Amendment shall modify and supersede all inconsistent terms and provisions set forth in the Credit Agreement and, except as expressly modified and superseded by this Amendment, the terms and provisions of the Credit Agreement are ratified and confirmed and shall continue in full force and effect. The Borrower, Agent and the Lenders agree that the Credit Agreement and the Loan Documents, as amended hereby, shall continue to be legal, valid, binding and enforceable in accordance with their respective terms.

(b) To induce the Agent and the Lenders to enter into this Amendment, the Borrower ratifies and confirms each representation and warranty set forth in the Credit Agreement as if such representations and warranties were made on the even date herewith, (except to the extent that such representations and warranties related solely to an earlier date and except to the extent that the facts upon which such representations are based have been changed by the transactions contemplated in the Credit Agreement) and further represents and warrants (i) that there has occurred since the date of the last financial statements delivered to the Agent and the Lenders no event or circumstance that has resulted or could reasonably be expected to result in a Material Adverse Change, (ii) that no Event of Default (other than the Subject Defaults) exists on the date hereof, and (iii) that the Borrower is fully authorized to enter into this Amendment.

     6. Benefits. This Amendment shall be binding upon and inure to the benefit of Borrower, Agent and the Lenders and their respective successors and assigns; provided, however, that Borrower may not, without the prior written consent of Agent and the Lenders, assign any rights, powers, duties or obligations under this Amendment, the Credit Agreement or any of the other Loan Documents.

     7. Construction. This Amendment shall be governed by and construed in accordance with the laws of the State of Texas.

3

     8. Invalid Provisions. If any provision of this Amendment is held to be illegal, invalid or unenforceable under present or future laws, such provision shall be fully severed and the remaining provisions of this Amendment shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance.

     9. Entire Agreement. The Credit Agreement, as amended by this Amendment, contains the entire agreement among the parties regarding the subject matter hereof and supersedes all prior written and oral agreements and understandings among the parties hereto regarding same.

     10. Reference to Credit Agreement. The Credit Agreement and any and all other agreements, documents or instruments now or hereafter executed and delivered pursuant to the terms hereof or pursuant to the terms of the Credit Agreement, as amended hereby, are hereby amended so that any reference in the Credit Agreement to the Credit Agreement shall mean a reference to the Credit Agreement as amended hereby.

     11. Counterparts. This Amendment may be separately executed in any number of counterparts, each of which shall be an original, but all of which, taken together, shall be deemed to constitute one and the same agreement.

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written.

BORROWER: TANDY BRANDS ACCESSORIES, INC.
By:	/s/ J.S.B. Jenkins
	J.S.B. Jenkins
	President and Chief Executive Officer
AGENT: WELLS FARGO HSBC TRADE BANK, N.A.
By:	/s/ John R. Peloubet
Name:	John R. Peloubet
Title:	Vice President

4

ARRANGER:
WELLS FARGO BANK, N. A.
By:	/s/ John R. Peloubet
Name:	John R. Peloubet
Title:	Vice President
LENDERS: WELLS FARGO HSBC TRADE BANK, N. A.
By:	/s/ John R. Peloubet
Name:	John R. Peloubet
Title:	Vice President
COMERICA BANK
By:	/s/ Donald P. Hellman
Name:	Donald P. Hellman
Title:	SVP
BANK OF AMERICA, N. A.
By:	/s/ Allison W. Connally
Name:	Allison W. Connally
Title:	Vice President
JPMORGAN CHASE BANK, N. A.
By:	/s/ Jerry Petrey
Name:	Jerry Petrey
Title:	SVP

5

CONFIRMATION OF GUARANTY

     Reference is made to the Amended and Restated Credit Agreement dated as of September 7, 2006 (the “Credit Agreement”) among Tandy Brands Accessories, Inc. (“Borrower”), Wells Fargo HSBC Trade Bank, N. A., as Administrative Agent (“Agent”), Wells Fargo Bank, N.A., and the lenders specified therein (“Lenders”). The undersigned Guarantors hereby confirm that their guaranty under the Amended and Restated Subsidiary Guaranty dated as of September 7, 2006 for the benefit of the Agent, the Lenders, and Wells Fargo Bank, N. A., continues in full force and effect notwithstanding the Limited Waiver and First Amendment to Amended and Restated Credit Agreement dated as of November 13th, 2007 (the “First Amendment”), which First Amendment is hereby accepted and consented to by each Guarantor. In accordance herewith, the aforesaid guaranty shall be deemed to cover and secure the Obligations at any time due from Borrower pursuant to the Credit Agreement as the latter has been modified by the First Amendment. This Confirmation of Guaranty shall be governed by and construed in accordance with the laws of the State of Texas.

Dated this 13 day of November, 2007.

TBAC-PRINCE GARDNER, INC., a Delaware corporation
By:	/s/ J.S.B. Jenkins
	J.S.B. Jenkins
	President
AMITY/ROLFS, INC., a Delaware corporation
By:	/s/ J.S.B. Jenkins
	J.S.B. Jenkins
	President
TBAC INVESTMENTS, INC., a Nevada corporation
By:	/s/ J.S.B. Jenkins
	J.S.B. Jenkins
	President

6

TBAC GENERAL MANAGEMENT COMPANY, a Nevada corporation
By:	/s/ J.S.B. Jenkins
	J.S.B. Jenkins
	President
ACCESSORY DESIGN GROUP, INC., a Delaware corporation
By:	/s/ J.S.B. Jenkins
	J.S.B. Jenkins
	President
TBAC-TOREL, INC., a Delaware corporation
By:	/s/ J.S.B. Jenkins
	J.S.B. Jenkins
	President
TANDY BRANDS ACCESSORIES HANDBAGS, INC., a Delaware corporation
By:	/s/ J.S.B. Jenkins
	J.S.B. Jenkins
	President
STAGG INDUSTRIES, INC., an Alabama corporation
By:	/s/ J.S.B. Jenkins
	J.S.B. Jenkins
	President
TBAC INVESTMENT TRUST, a Pennsylvania trust
By:	/s/ J.S.B. Jenkins
	J.S.B. Jenkins
	President

7

TBAC MANAGEMENT COMPANY, L.P., a Delaware limited partnership
By:	/s/ J.S.B. Jenkins
	J.S.B. Jenkins
	President
TBAC-MASS MERCHANT QUALITY CONTROL, INC., a Delaware corporation
By:	/s/ J.S.B. Jenkins
	J.S.B. Jenkins
	President
TBAC-ACQUISITION, INC., a Delaware corporation
By:	/s/ J.S.B. Jenkins
	J.S.B. Jenkins
	President
SUPERIOR MERCHANDISE COMPANY, a Louisiana corporation
By:	/s/ J.S.B. Jenkins
	J.S.B. Jenkins
	President

ACCEPTED as of the date first written above.

BORROWER

TANDY BRANDS ACCESSORIES, INC.

By:	/s/ J.S.B. Jenkins J.S.B. Jenkins
	President and Chief Executive Officer

8

COMPLIANCE CERTIFICATE

November 13, 2007

     Reference is made to that certain Amended and Restated Credit Agreement dated as of September 7, 2006, as amended by that certain Limited Waiver and First Amendment to Amended and Restated Credit Agreement of even date herewith (the “First Amendment”)among Tandy Brands Accessories, Inc. (“Borrower”), Wells Fargo HSBC trade Bank, N. A. (“Agent”), Wells Fargo Bank, N.A., and the lenders specified therein (“Lenders”)(the “Credit Agreement”). Terms which are defined in the Credit Agreement and which are used but not defined herein shall have the meanings given them in the Credit Agreement. The undersigned, J.S.B. Jenkins, Borrower’s President and Chief Executive Officer, hereby certifies in the name, and on behalf, of Borrower that Borrower has made a thorough inquiry into all matters certified herein and based upon such inquiry, experience, and the advice of counsel, does hereby further certify that:

     1. All representations and warranties made by the Borrower in any Loan Document delivered on or before the date hereof (including, without limitation, the representations and warranties contained in Section 5 of the Amendment) are true in all material respects on and as of the date hereof (except to the extent that such representations and warranties related solely to an earlier date and except to the extent that the facts upon which such representations are based have been changed by the transactions contemplated in the Credit Agreement) as if such representations and warranties had been made as of the date hereof.

     2. No Event of Default (other than the Subject Defaults, as defined in the First Amendment) exists on the date hereof.

     3. Borrower has performed and complied with all agreements and conditions required in the Loan Documents to be performed or complied with by it on or prior to the date hereof.

     IN WITNESS WHEREOF, this instrument is executed by the undersigned as of the date first above written.

TANDY BRANDS ACCESSORIES, INC.
By:	/s/ J.S.B. Jenkins
	J.S.B. Jenkins
	President and Chief Executive Officer

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EX-10.32

EXHIBITS 4.4 AND 10.32
LIMITED WAIVER
AND
FIRST AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT

     THIS LIMITED WAIVER AND FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this “Amendment”) made as of the 13th day of November, 2007, by and among TANDY BRANDS ACCESSORIES, INC. (the “Borrower”), WELLS FARGO HSBC TRADE BANK, N. A., as Administrative Agent (“Agent”), WELLS FARGO BANK, N.A., as Arranger (“Arranger”) and such of the lenders specified in the Credit Agreement described below as are signatories hereof (“Lenders”).

     WHEREAS, Borrower, Agent, Arranger and the Lenders entered into an Amended and Restated Credit Agreement dated as of September 6, 2006, (the “Credit Agreement”); and

     WHEREAS, certain Events of Default have occurred and continue to exist as a result of Borrower’s failure to comply with Sections 10.13 and 10.14 of the Credit Agreement as of September 30, 2007 (the “Subject Defaults”); and

     WHEREAS, the Borrower has requested that Agent and the Lenders provide a limited waiver of the Subject Defaults and make certain amendments to the Credit Agreement, and the Agent and the Lenders are willing to do so subject to the terms and conditions set forth herein;

     NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

     1. Defined Terms. All capitalized terms used but not otherwise defined in this Amendment shall have the meaning ascribed to them in the Credit Agreement. Unless otherwise specified, all section references herein refer to sections of the Credit Agreement.

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

     2.1 Definitions

          (a) The definition of “Applicable Commitment Fee Percentage” set forth in Section 1 of the Credit Agreement is hereby amended by adding the following sentence at the end of such definition:

“Notwithstanding the foregoing, at all times during the Adjustment Period, the Applicable Commitment Fee Percentage shall be 0.375% per annum.”

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          (b) The definition of “Applicable Margin” set forth in Section 1 of the Credit Agreement is hereby amended by adding the following sentence at the end of such definition:

“Notwithstanding the foregoing, at all times during the Adjustment Period, the Applicable Margin for Eurodollar Borrowings shall be 2.50% per annum.”

          (c) Section 1 of the Credit Agreement is hereby further amended by adding the following definition thereto, in appropriate alphabetical order:

     “Adjustment Period’ shall mean the period commencing September 30, 2007 and ending on the date on which Borrower delivers financial statements and related certificates required hereunder for the fiscal quarter ending December 31, 2007, reflecting that no Default or Event of Default exists as of such date.

     2.2 The Revolving Credit Loan. The first sentence of Section 2.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

“Subject to the terms and conditions of this Agreement, each Lender agrees to extend to the Borrower from the date hereof through the Termination Date, a revolving line of credit which shall not exceed (i) at all times during the Adjustment Period, $30,000,000, and (ii) at all other times, the Total Revolving Credit Commitment, in either case less (a) outstanding Advances (including Swingline Advances), (b) Letter of Credit Obligations, and (c) the Acceptance Exposure.

     3. Limited Waiver. Effective as of September 30, 2007, and subject to the other terms and conditions of this Amendment, Agent and Lenders hereby waive the Subject Defaults and their rights and remedies under the Credit Agreement and otherwise existing as a result of the Subject Defaults.

          The Borrower is hereby notified that irrespective of (i) any waivers previously granted by Agent and Lenders regarding the Credit Agreement and the Loan Documents, (ii) any previous failures or delays of Agent and Lenders in exercising any right, power or privilege under the Credit Agreement or the Loan Documents, or (iii) any previous failures or delays of Agent and Lenders in the monitoring or in the requiring of compliance by the Borrower with the duties, obligations, and agreements of the Borrower in the Credit Agreement and the Loan Documents, hereafter the Borrower will be expected to comply strictly with its duties, obligations and agreements under the Credit Agreement and the Loan Documents.

     4. Effectiveness of Amendment. This Amendment shall be effective upon receipt by the Agent of:

          (a) A copy or copies of this Amendment signed by each of the parties hereto;

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          (b) A Confirmation of Guaranty executed by each Guarantor; and

          (c) A Compliance Certificate executed by Borrower.

          (d) Receipt by Agent, for the benefit of each Lender signatory hereto, an accommodation fee equal to 0.15% of each such Lender’s Revolving Credit Commitment, in immediately available funds, which fee shall be fully earned and non-refundable upon execution hereof.

          (e) Receipt by Wells Fargo HSBC Trade Bank, N.A. of all amounts payable to it pursuant to the Fee Letter dated October 30, 2007, between it and the Borrower.

     5. Ratifications, Representations and Warranties.

(a) The terms and provisions set forth in this Amendment shall modify and supersede all inconsistent terms and provisions set forth in the Credit Agreement and, except as expressly modified and superseded by this Amendment, the terms and provisions of the Credit Agreement are ratified and confirmed and shall continue in full force and effect. The Borrower, Agent and the Lenders agree that the Credit Agreement and the Loan Documents, as amended hereby, shall continue to be legal, valid, binding and enforceable in accordance with their respective terms.

(b) To induce the Agent and the Lenders to enter into this Amendment, the Borrower ratifies and confirms each representation and warranty set forth in the Credit Agreement as if such representations and warranties were made on the even date herewith, (except to the extent that such representations and warranties related solely to an earlier date and except to the extent that the facts upon which such representations are based have been changed by the transactions contemplated in the Credit Agreement) and further represents and warrants (i) that there has occurred since the date of the last financial statements delivered to the Agent and the Lenders no event or circumstance that has resulted or could reasonably be expected to result in a Material Adverse Change, (ii) that no Event of Default (other than the Subject Defaults) exists on the date hereof, and (iii) that the Borrower is fully authorized to enter into this Amendment.

     6. Benefits. This Amendment shall be binding upon and inure to the benefit of Borrower, Agent and the Lenders and their respective successors and assigns; provided, however, that Borrower may not, without the prior written consent of Agent and the Lenders, assign any rights, powers, duties or obligations under this Amendment, the Credit Agreement or any of the other Loan Documents.

     7. Construction. This Amendment shall be governed by and construed in accordance with the laws of the State of Texas.

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     8. Invalid Provisions. If any provision of this Amendment is held to be illegal, invalid or unenforceable under present or future laws, such provision shall be fully severed and the remaining provisions of this Amendment shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance.

     9. Entire Agreement. The Credit Agreement, as amended by this Amendment, contains the entire agreement among the parties regarding the subject matter hereof and supersedes all prior written and oral agreements and understandings among the parties hereto regarding same.

     10. Reference to Credit Agreement. The Credit Agreement and any and all other agreements, documents or instruments now or hereafter executed and delivered pursuant to the terms hereof or pursuant to the terms of the Credit Agreement, as amended hereby, are hereby amended so that any reference in the Credit Agreement to the Credit Agreement shall mean a reference to the Credit Agreement as amended hereby.

     11. Counterparts. This Amendment may be separately executed in any number of counterparts, each of which shall be an original, but all of which, taken together, shall be deemed to constitute one and the same agreement.

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written.

BORROWER: TANDY BRANDS ACCESSORIES, INC.
By:	/s/ J.S.B. Jenkins
	J.S.B. Jenkins
	President and Chief Executive Officer
AGENT: WELLS FARGO HSBC TRADE BANK, N.A.
By:	/s/ John R. Peloubet
Name:	John R. Peloubet
Title:	Vice President

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ARRANGER:
WELLS FARGO BANK, N. A.
By:	/s/ John R. Peloubet
Name:	John R. Peloubet
Title:	Vice President
LENDERS: WELLS FARGO HSBC TRADE BANK, N. A.
By:	/s/ John R. Peloubet
Name:	John R. Peloubet
Title:	Vice President
COMERICA BANK
By:	/s/ Donald P. Hellman
Name:	Donald P. Hellman
Title:	SVP
BANK OF AMERICA, N. A.
By:	/s/ Allison W. Connally
Name:	Allison W. Connally
Title:	Vice President
JPMORGAN CHASE BANK, N. A.
By:	/s/ Jerry Petrey
Name:	Jerry Petrey
Title:	SVP

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CONFIRMATION OF GUARANTY

     Reference is made to the Amended and Restated Credit Agreement dated as of September 7, 2006 (the “Credit Agreement”) among Tandy Brands Accessories, Inc. (“Borrower”), Wells Fargo HSBC Trade Bank, N. A., as Administrative Agent (“Agent”), Wells Fargo Bank, N.A., and the lenders specified therein (“Lenders”). The undersigned Guarantors hereby confirm that their guaranty under the Amended and Restated Subsidiary Guaranty dated as of September 7, 2006 for the benefit of the Agent, the Lenders, and Wells Fargo Bank, N. A., continues in full force and effect notwithstanding the Limited Waiver and First Amendment to Amended and Restated Credit Agreement dated as of November 13th, 2007 (the “First Amendment”), which First Amendment is hereby accepted and consented to by each Guarantor. In accordance herewith, the aforesaid guaranty shall be deemed to cover and secure the Obligations at any time due from Borrower pursuant to the Credit Agreement as the latter has been modified by the First Amendment. This Confirmation of Guaranty shall be governed by and construed in accordance with the laws of the State of Texas.

Dated this 13 day of November, 2007.

TBAC-PRINCE GARDNER, INC., a Delaware corporation
By:	/s/ J.S.B. Jenkins
	J.S.B. Jenkins
	President
AMITY/ROLFS, INC., a Delaware corporation
By:	/s/ J.S.B. Jenkins
	J.S.B. Jenkins
	President
TBAC INVESTMENTS, INC., a Nevada corporation
By:	/s/ J.S.B. Jenkins
	J.S.B. Jenkins
	President

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TBAC GENERAL MANAGEMENT COMPANY, a Nevada corporation
By:	/s/ J.S.B. Jenkins
	J.S.B. Jenkins
	President
ACCESSORY DESIGN GROUP, INC., a Delaware corporation
By:	/s/ J.S.B. Jenkins
	J.S.B. Jenkins
	President
TBAC-TOREL, INC., a Delaware corporation
By:	/s/ J.S.B. Jenkins
	J.S.B. Jenkins
	President
TANDY BRANDS ACCESSORIES HANDBAGS, INC., a Delaware corporation
By:	/s/ J.S.B. Jenkins
	J.S.B. Jenkins
	President
STAGG INDUSTRIES, INC., an Alabama corporation
By:	/s/ J.S.B. Jenkins
	J.S.B. Jenkins
	President
TBAC INVESTMENT TRUST, a Pennsylvania trust
By:	/s/ J.S.B. Jenkins
	J.S.B. Jenkins
	President

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TBAC MANAGEMENT COMPANY, L.P., a Delaware limited partnership
By:	/s/ J.S.B. Jenkins
	J.S.B. Jenkins
	President
TBAC-MASS MERCHANT QUALITY CONTROL, INC., a Delaware corporation
By:	/s/ J.S.B. Jenkins
	J.S.B. Jenkins
	President
TBAC-ACQUISITION, INC., a Delaware corporation
By:	/s/ J.S.B. Jenkins
	J.S.B. Jenkins
	President
SUPERIOR MERCHANDISE COMPANY, a Louisiana corporation
By:	/s/ J.S.B. Jenkins
	J.S.B. Jenkins
	President

ACCEPTED as of the date first written above.

BORROWER

TANDY BRANDS ACCESSORIES, INC.

By:	/s/ J.S.B. Jenkins J.S.B. Jenkins
	President and Chief Executive Officer

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COMPLIANCE CERTIFICATE

November 13, 2007

     Reference is made to that certain Amended and Restated Credit Agreement dated as of September 7, 2006, as amended by that certain Limited Waiver and First Amendment to Amended and Restated Credit Agreement of even date herewith (the “First Amendment”)among Tandy Brands Accessories, Inc. (“Borrower”), Wells Fargo HSBC trade Bank, N. A. (“Agent”), Wells Fargo Bank, N.A., and the lenders specified therein (“Lenders”)(the “Credit Agreement”). Terms which are defined in the Credit Agreement and which are used but not defined herein shall have the meanings given them in the Credit Agreement. The undersigned, J.S.B. Jenkins, Borrower’s President and Chief Executive Officer, hereby certifies in the name, and on behalf, of Borrower that Borrower has made a thorough inquiry into all matters certified herein and based upon such inquiry, experience, and the advice of counsel, does hereby further certify that:

     1. All representations and warranties made by the Borrower in any Loan Document delivered on or before the date hereof (including, without limitation, the representations and warranties contained in Section 5 of the Amendment) are true in all material respects on and as of the date hereof (except to the extent that such representations and warranties related solely to an earlier date and except to the extent that the facts upon which such representations are based have been changed by the transactions contemplated in the Credit Agreement) as if such representations and warranties had been made as of the date hereof.

     2. No Event of Default (other than the Subject Defaults, as defined in the First Amendment) exists on the date hereof.

     3. Borrower has performed and complied with all agreements and conditions required in the Loan Documents to be performed or complied with by it on or prior to the date hereof.

     IN WITNESS WHEREOF, this instrument is executed by the undersigned as of the date first above written.

TANDY BRANDS ACCESSORIES, INC.
By:	/s/ J.S.B. Jenkins
	J.S.B. Jenkins
	President and Chief Executive Officer

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EX-10.40

EXHIBIT 10.40

TANDY BRANDS ACCESSORIES, INC.
STOCK PURCHASE PROGRAM

(AS AMENDED AND RESTATED
EFFECTIVE DECEMBER 1, 2005)

ARTICLE I

PURPOSE AND SCOPE

     The Tandy Brands Accessories, Inc. Stock Purchase Program (the “Program”) provides employees of Tandy Brands Accessories, Inc. and its participating affiliates and associates (both collectively called “Tandy Brands Accessories” or “Company”) an opportunity for convenient and regular personal investments in the common stock, $1.00 par value per share (“Stock”), of Tandy Brands Accessories.

     The Program provides for matching contributions by the Company (“Company Contributions”) of twenty-five percent (25%) or fifty percent (50%) of employee payroll deductions which are invested in Stock.

W I T N E S S E T H:

WHEREAS, the Company originally established the Program, effective January 1, 1991, for the benefit of its employees and employees of its affiliates that participate in the Program;

WHEREAS, the Program has been amended from time to time to (i) modify the Company Contribution eligibility requirements, and (ii) make necessary changes to the terms of the Program so that the employees of H.A. Sheldon, Ltd. (“H.A. Sheldon”), a Canadian subsidiary of the Company, could participate in the Program; and

WHEREAS, the Company now wishes to amend and restate the Program to incorporate the prior amendments and to make certain other conforming changes so that the terms of the Program reflect how the Program is currently administered;

NOW, THEREFORE, effective December 1, 2005, in consideration of the premises and the covenants herein contained, the Company hereby adopts the Program, as amended and restated, as follows:

ARTICLE II

PARTICIPATION IN THE PROGRAM

     A. Adoption of Program. Tandy Brands Accessories adopts the Program for all or part of its employees as its Board of Directors may in its discretion approve.

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     B. Eligibility. The Program has two levels of Company Contributions (25% and 50%) with each level having different eligibility requirements, as follows:

     1. Level One Participants: Eligibility for 25% Company Contribution. Any employee of Tandy Brands Accessories and its divisions (and subsidiaries which have adopted the Program) may participate in the Program with a 25% Company Contribution if:

          (a) The employee is of legal age; and

          (b) The employee has been (i) continuously employed by this Company for at least six (6) months, but less than one (1) year, or (ii) continuously employed by the Company for one (1) year or more, and contributing to the Tandy Brands Accessories, Inc. Employees Investment Plan (the “Plan”); and

          (c) The employee’s employment contemplates that the employee will regularly work a minimum of twenty (20) hours per week; and

          (d) The employee’s conditions of employment are not governed by a collective bargaining agreement between employee representatives and the Company.

     2. Level Two Participants: Eligibility for 50% Company Contribution. Any employee of Tandy Brands Accessories and its divisions (and subsidiaries which have adopted the Program) may participate in the Program with a 50% Company Contribution if:

          (a) The employee satisfies the eligibility requirements for the 25% Company Contribution set forth in ARTICLE II-B-1 above; and

          (b) The employee has been continuously employed by the Company for two (2) years or more.

     With respect to ARTICLE II-B-1-b and 2-b, an employee’s employment with H.A. Sheldon shall count as employment with the Company for purposes of the continuous employment requirement.

     C. Application for Participation. In order to become a Participant hereunder, each eligible employee shall execute a written application, on a form to be furnished by the Company, wherein the employee shall evidence:

     1. His/her intent to participate in the Program;

     2. His/her consent for payroll deductions in accordance with ARTICLE III below; and

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     3. His/her acknowledgment and consent to pay the taxes resulting from the Company Contributions during the taxable year in which the Company Contributions are made, in accordance with any applicable statutes or regulations concerning taxation.

     Once an employee has completed the necessary service for participation in the Program, and if necessary to meet the eligibility requirements, has become a participant or has executed and delivered an appropriate application for participation in the Plan, the employee may file an application for participation at any time thereafter. Participation in the Program shall not become effective, however, until the start of the next pay period after the application is received by the Company.

ARTICLE III

EMPLOYEE CONTRIBUTIONS

     A. Rate of Payroll Deduction.

     1. Participants may elect to have payroll deductions withheld at the rate of five percent (5%) or ten percent (10%) of Earnings (as defined in ARTICLE XVIII).

     2. Participants shall designate their rate of payroll deduction by means of a signed payroll deduction authorization form. The initial rate of deduction authorized by the Participant shall become effective with the first day of the pay period following the date on which the authorization is received by the appropriate payroll department. The initial authorization shall continue in effect, notwithstanding any change in the Participant’s Earnings, until the Participant authorizes a change in his rate of deduction, as provided in ARTICLE III-B-1 below, or until the Participant becomes ineligible for the Program. Deductions made pursuant to such authorization are called “Employee Payroll Deductions.”

     B. Changes in Employee Contributions. Without withdrawing from the Program, a Participant may at any time by written notice to the payroll department suspend, increase, or decrease Employee Payroll Deductions. Any such notice of suspension, increase, or decrease of Employee Payroll Deductions shall be effective as soon as is administratively practicable following its receipt by the payroll department, but in no event later than the first payroll period in the month following receipt of notice.

     If a Participant is also a participant in the Plan, the Participant’s Employee Payroll Deductions will automatically be suspended if the Participant’s contributions to the Plan are suspended for any reason. A Participant’s Employee Payroll Deductions will automatically resume at the level elected by the Participant prior to the suspension of the Participant’s Employee Payroll Deductions when the Participant’s contributions resume under the Plan.

     1. Procedure. Changes in the percentage rates of Employee Payroll Deduction shall be made by signing a new payroll deduction authorization on a form authorized by Tandy Brands Accessories.

     C. Special Catch-up Contribution for Certain Employees of H.A. Sheldon. Notwithstanding any other provision of the Program, employees of H.A. Sheldon who begin

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participating in the Program during September 1995 shall be given a special election to make a catch-up contribution to the Program for July and August 1995 to the extent such employees were employed by H.A. Sheldon during such months. H.A. Sheldon employees who are eligible for this catch-up contribution may elect to make such contribution by completing the special catch-up contribution section of the payroll deduction authorization form provided by the Company. The payroll deductions necessary for an employee’s special catch-up contribution shall be made during the pay period following the date on which the payroll authorization is received by the appropriate payroll department. Thereafter, an H.A. Sheldon’s employee’s payroll deductions shall be as designated by such employee in accordance with ARTICLE III-A and as may be changed in accordance with ARTICLE III-B.

ARTICLE IV

CREDITS TO PARTICIPANT’S ACCOUNTS

     A. Monthly Credits. As of the end of each calendar month the following credits shall be made to each Participant’s account:

     1. Employee Payroll Deductions. The amount of Employee Payroll Deductions withheld during such month shall be credited to each Participant’s account.

     2. Company Contributions. The amount of the Company Contribution credited on a monthly basis to each Participant’s account shall be either twenty-five percent (25%) or fifty percent (50%) of the Employee Payroll Deduction, which shall be determined on the basis of each Participant’s eligibility status as set forth in ARTICLE II-B, above.

     3. Application of Monthly Credits. The Employee Payroll Deductions and Company Contributions shall be used for the acquisition of Stock monthly and shall be credited to the Participant’s account as Stock and as fractional shares, if necessary, on the basis of a price (the “Stock Price”) equal to the average of the closing prices of the Stock on the NASDAQ National Market System for each trading day in the month for which credits are made. Provided, however, with respect to employees of H.A. Sheldon, the Stock Price shall be the purchase price of the Stock on the Purchase Date described in the second paragraph of ARTICLE VI-A.

     4. Dividend Income on Stock. Any cash dividends paid with respect to the Stock shall be paid to each Participant on the basis of all the Stock and fractional shares credited to the Participant’s account as of the record date designated for such dividend. Dividend payments shall be made to Participants at the same time such payments are made to all other stockholders of the Company.

     All rights and warrants for a whole share of Stock shall also be distributed to each Participant. All rights and warrants for less than a full share of Stock shall be sold and the net proceeds promptly paid to the Participant.

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     5. Stock Splits. Any Stock issuable by the Company as a stock dividend or stock split shall be credited to each Participant’s account (in an amount per share equivalent to any dividend actually paid during such month on its Stock then outstanding) on the basis of all Stock and fractional shares credited to the Participant’s account as of the record date designated by the Company for such dividend or split.

ARTICLE V

TRANSFERS TO THE PROGRAM

     A. Employee Payroll Deductions. The Company shall transfer to the Program the Employee Payroll Deductions of each Participant as soon as practicable after the payroll period nearest the end of the calendar month in which such Employee Payroll Deductions are withheld.

     B. Company Contributions. The Company shall transfer to the Program the Company Contribution for each Participant as soon as practicable after the payroll period nearest the end of the calendar month in which the Employee Payroll Deductions with respect to which such Company Contribution is made are withheld.

ARTICLE VI

ARTICLE VI INVESTMENT_.

     A. Stock. Any Stock required for the purposes of the Program may be treasury shares or original issue shares. Stock shall be purchased as of the end of each calendar month in the amount required by the Program at the Stock Price determined for such month.

     Notwithstanding the preceding paragraph, with respect to employees of H.A. Sheldon, any Stock required for the purposes of the Program shall be purchased on the open market. The Employee Payroll Deductions and the Company Contributions transferred to the Program for each H.A. Sheldon’s Participant account shall be used to purchase the maximum possible number of whole shares of Stock for the account of such Participant. Such Stock shall be purchased in the name of the H.A. Sheldon Participant and shall be held by the Company as custodian until distribution to the H.A. Sheldon Participant. The purchase of Stock in the name of an H.A. Sheldon Participant shall be made on the first trading day of each calendar month (or as soon after such day as practicable) following the month in which the Employee Payroll Deductions and Company Contributions are made (“Purchase Date”). The Stock Price for such purchases shall be the price at which the Stock is purchased on such Purchase Date. To the extent funds remain in an H.A. Sheldon’s Participant account after the purchase of Stock, such funds shall be carried forward in the Participant’s account until the next Purchase Date, at which time such funds shall be used along with additions to the Participant’s account to purchase additional Stock.

     B. Other Interest and Income. Except as herein expressly provided, no interest or other income will be paid or credited on account of Employee Payroll Deductions, Company Contributions, or any other amounts payable or credited to Participant’s accounts.

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ARTICLE VII

HOLDING PERIOD AND DISTRIBUTION

     A. Holding Period. The Stock purchased by or on behalf of the Program and credited to Participant’s accounts shall be held by the Company as custodian, at its discretion either in its name or in the name of one or more nominees, during the holding period (the “Holding Period”) specified in ARTICLE-VII-B below and until such Stock is distributed to Participants.

     B. Duration. The Holding Period with respect to Stock credited to a Participant’s account shall commence on the date such Stock is credited to the Participant’s account and shall end on December 31 of the year in which such Stock is credited.

     C. Distribution.

     1. As promptly as practicable after December 31 of each year, but not later than February 15, the Company shall distribute to the Participant the Stock then held by the Company which was credited to the Participant under the Program during the preceding calendar year, except that any fractional shares of Stock shall be retained by the Company and carried forward to the credit of the Participant.

     2. In lieu of retaining a prior year’s fractional share, the Company may, at its election, distribute cash in lieu of any fractional share held for the account of any Participant who has no payroll deduction authorization form or in effect. For such fractional share of Stock, the Company shall pay the Participant the pro rata Stock Price for the month preceding the date of the distribution. With respect to any funds that remain in an H.A. Sheldon Participant’s account after the end of each Holding Period, the Company may either (i) carry such funds forward in the Participant’s account, with such funds to be used at the next Purchase Date, or (ii) distribute such funds to the H.A. Sheldon Participant as soon as practicable after the end of the Holding Period.

ARTICLE VIII

WITHDRAWALS AND PAYMENTS

     A. Conditions of Withdrawal. Notwithstanding the provisions of ARTICLE VII relating to the Holding Period, a Participant may make a withdrawal under the conditions specified in this ARTICLE VIII-A. The method of payment upon any such withdrawal is specified in ARTICLE VIII-C below.

     1. Notwithstanding the Holding Period, all Stock and cash for any fractional share previously credited to the account of a Participant will be delivered to the Participant, his/her beneficiary or estate as the case may be, upon the occurrence of the following events:

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     (a) Death of the Participant;

     (b) Termination of employment;

     (c) Retirement at age 65 or older;

     (d) Withdrawal in full from participation in the Program.

     2. In any such event, delivery of the Stock and cash for any fractional share shall be made as soon as practicable following the end of the month in which such event occurred.

     B. Cessation of Company Contributions; Eligibility for Future Participation. All Company Contributions shall terminate on cessation of withholding of Employee Payroll Deductions. A Participant withdrawing from the Program during his employment is not eligible for renewed participation in the Program until after the expiration of twelve (12) months from his date of withdrawal.

     C. Method of Payment.

     1. In the event of any withdrawal under this ARTICLE VIII, payment shall be made to Participant in cash equal to the value of the Participant’s account or in Stock, in accordance with ARTICLE VIII-C-2 and ARTICLE VIII-C-3 below.

     2. For the purpose of making cash payments upon withdrawal, cash will be paid for Stock credited to the Participant’s account at the Stock Price for the calendar month preceding the Company’s receipt of the withdrawal request.

     3. A Participant may be delivered Stock in lieu of cash under ARTICLE VIII-C-1 above, provided such Participant notifies the Administrative Committee in writing of the desire to be issued Stock. Stock will be issued only at the regularly scheduled annual distribution as set forth in Article VII.

     4. Notwithstanding any other provision of this ARTICLE VII-C to the contrary, with respect to H.A. Sheldon Participants, the withdrawals and payments under this ARTICLE VIII shall be made by distributing the Stock and funds, if any, in the Participant’s account to the H.A. Sheldon Participant. Such distribution shall be made as soon as administratively practicable following the Participant’s entitlement to a withdrawal or payment under this ARTICLE VIII.

     D. Refund of Uncredited Accounts. Upon a Participant electing to withdraw, the Company will refund any Employee Payroll Deductions and Company Contributions not already credited to the Participant’s account for the month the withdrawal election is made.

ARTICLE IX

DESIGNATION OF BENEFICIARY

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     A. Participants shall file with the Company a written designation of beneficiary designating who is to receive any Stock, fractional shares, and cash being held for the Participant’s benefit under the Program in the event of the Participant’s death.

     B. A Participant may change beneficiary designations at any time by written notice to the Company. Such change shall take effect as of the date the Participant signed such written notice, whether or not Participant is living at the time of receipt of such notice by the Company, but without prejudice to the Company on account of payments made before such receipt.

     C. Upon the death of a Participant and upon receipt of proof deemed adequate by the Company of the identity and existence at the Participant’s death of a beneficiary or beneficiaries validly designated under the Program, the Stock, fractional shares and cash being held for the Participant’s benefit under the Program shall be delivered to the beneficiary designated under ARTICLE IX-A.

     D. In the absence of a beneficiary designated under the Program who is living at the time of a Participant’s death, payment shall be made to the executor or administrator of the estate of the Participant. If no executor or administrator has been appointed to the Company’s knowledge (or in the event such executor or administrator has been disqualified) payment may be made to such person or persons as the Company shall be satisfied is legally entitled thereto.

     E. No designated beneficiary shall, prior to the death of the Participant, acquire any interest in the Stock, fractional shares or cash credited to the Participant under the Program.

ARTICLE X

VOTING RIGHTS AND TENDER RIGHTS

     A. Voting Rights — In General. While Stock is held by the Company as custodian under the Program, the Company will deliver to each Participant all notices of meetings, proxy statements and other materials distributed by the Company to its stockholders. The full shares of Stock in each Participant’s account will be voted in accordance with the Participant’s signed proxy instructions timely delivered to the Company. Fractional shares shall be voted on a combined basis in order to comply, to the extent possible, with all timely written instructions received from Participants. If timely written instructions are not received from a Participant, the custodian shall vote such Participant’s shares in the same proportion as those shares of stock with respect to which timely written instructions were received.

     B. Voting Rights and Tender Rights — After Commencement of a Tender Offer. Notwithstanding anything to the contrary in the Program, the following provisions shall govern after the Commencement Date of a Tender Offer (each as hereinafter defined):

     1. For purposes of this ARTICLE X-B, the terms set forth below shall have the following meanings:

8

“Affiliate” shall mean, with respect to Tandy Brands Accessories any person or entity that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with Tandy Brands Accessories.

“Commencement Date” shall mean the date of public announcement of the commencement of any Tender Offer.

“Credited Shares” shall mean, with respect to a Participant, any and all shares of Stock credited to such Participant’s account that have been transferred to the Special Custodian in accordance with ARTICLE X-B-2. hereof.

“Special Custodian” shall mean the bank, trust company or other entity appointed as such by the Company in accordance with ARTICLE X-B-2 hereof.

“Tender Offer” shall mean any tender offer for, or request or invitation for tenders of, shares of Stock, whether the consideration proposed to be exchanged for such shares is cash, the securities of any person or any other form of property.

“Tender Rights” shall mean any and all rights to tender or exchange shares of Stock pursuant to a Tender Offer.

“Voting Rights” shall mean any and all rights to vote or consent with respect to shares of Stock.

     2. As promptly as practicable following any Commencement Date, the Company shall (a) appoint a bank, trust company or other entity that is not an Affiliate of Tandy Brands Accessories to act as Special Custodian for Stock held by the Company as custodian under the Program and (b) irrevocably transfer all shares of Stock then held by the Company as custodian to the Special Custodian. Thereafter, the Company shall, until the date on which the Tender Offer is consummated or abandoned, irrevocably transfer any and all additional shares of Stock acquired by it as custodian to the Special Custodian. Cash held by the Company as custodian shall not be transferred to the Special Custodian.

     3. Except as otherwise expressly provided in ARTICLE X-B-4 hereof, the Special Custodian shall hold shares of Stock transferred to it by the Company on such terms and conditions of the Program, as shall be agreed upon by the Company and the Special Custodian; provided, however, that, with respect to the rights of a Participant to shares of Stock, the terms and conditions under which the Special Custodian shall hold shares of Stock transferred to it shall be at least as favorable as those available to a Participant under the Program.

     4. The following provisions shall govern the exercise by the Special Custodian of Voting Rights and Tender Rights with respect to shares of Stock transferred to it by the Company:

9

     (a) The Special Custodian shall exercise Tender Rights with respect to a Participant’s Credited Shares in accordance with timely written instructions delivered by such Participant to the Special Custodian.

     Tender Rights with respect to fractional Credited Shares shall be exercised on a combined basis in order to comply, to the extent possible, with all timely written instructions received from Participants. If timely written instructions are not received from a Participant, the Special Custodian shall not exercise Tender Rights with respect to such Participant’s Credited Shares.

     (b) The Special Custodian shall exercise Voting Rights with respect to a Participant’s Credited Shares in accordance with timely written instructions delivered by such Participant to the Special Custodian. Voting Rights with respect to fractional Credited Shares shall be exercised on a combined basis in order to comply, to the extent possible, with all timely written instructions received from Participants. If timely written instructions are not received from a Participant, the Special Custodian shall exercise Voting Rights with respect to such Participant’s Credited Shares in the same proportion as those shares of Stock with respect to which timely written instructions were received.

     (c) The Special Custodian shall use its best efforts to ensure that Participants are able to direct the exercise of Voting Rights and Tender Rights on the basis of the same information, and in accordance with substantially the same procedures, as are available to the holders of shares of Stock. Without limiting the generality of the foregoing, the Special Custodian shall take the following actions:

     (1) Give prior written notice to each Participant of any occasion upon which Voting Rights or Tender Rights may be exercised;

     (2) Transmit to each Participant any written information relating to the exercise of Voting Rights or Tender Rights that is distributed by the management of the Company or any other person;

     (3) Request written instructions from each Participant as to the manner in which Voting Rights or Tender Rights should be exercised; and

     (4) Exercise Voting Rights or Tender Rights in accordance with the written instructions delivered by the Participant to the Special Custodian.

     (d) The Special Custodian shall not disclose to the Company, and shall maintain strict confidentiality with respect to, any information regarding the exercise of Voting Rights or Tender Rights, including without limitation information regarding the identity of any Participant who exercises or fails to exercise such rights.

     (e) Any cash or other property received by the Special Custodian upon consummation of a Tender Offer shall be distributed to Participants as promptly as practicable following receipt thereof.

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     C. Applicability of Terms of Program. Except as expressly provided in this ARTICLE X, the terms and provisions of the Program shall remain in full force and effect.

ARTICLE XI

ADMINISTRATION

     A. Authority of Tandy Brands Accessories.

     1. The Program shall be administered by Tandy Brands Accessories through such persons as it shall name to the Administrative Committee.

     2. The powers of the Company with respect to the administration of this Program shall include those conferred elsewhere in the Program plus those set forth below.

     (a) Authorizing delivery and payment of Stock and cash under the Program.

     (b) Making, amending and enforcing all appropriate rules and regulations for the administration of the Program.

     (c) Deciding or resolving any and all questions as may arise in connection with the Program.

     3. Any determination, decision or action of the Company or the Administrative Committee concerning or with respect to any question arising out of or in connection with the construction, interpretation, administration and application of the Program and of its rules and regulations, shall lie within the absolute discretion of the Company and shall be final, conclusive and binding upon all Participants and any and all persons claiming under or through any Participant.

     B. Cost of Administration. All costs of administration of the Program shall be paid by the Company.

ARTICLE XII

PARTICIPATION BY AFFILIATED COMPANIES

     This Program shall apply to any corporation a portion of whose voting stock is owned directly or indirectly by Tandy Brands Accessories and any of its affiliates, if such corporation shall elect to participate and if., and so long as, such participation shall be approved by Tandy Brands Accessories. Such participating corporations are called “Participating Companies”. The Participating Companies shall be bound by the terms of this document unless otherwise determined by the Administrative Committee and approved by the Tandy Brands Accessories Board of Directors.

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ARTICLE XIII

NO WARRANTY OF SECURITY VALUES

     Neither Tandy Brands Accessories nor any Participating Companies, their officers, directors, agents or servants, warrants or represents in any way that the value of Stock in which the Participant may have an interest will increase or will not decrease. Each Participant assumes all risk in connection with any changes in the value of Stock to the extent he/she may have an interest therein.

ARTICLE XIV

GENERAL PROVISIONS

     A. Extent of Certain Rights of Participants.

     1. Participation in the Program shall not entitle any employee to be retained in the service of Tandy Brands Accessories or of any Participating Company. The right and power of Tandy Brands Accessories and of each Participating Company to dismiss or discharge any employee is specifically reserved.

     2. No Participant nor any person claiming under or through them shall have any right or interest under the Program that is not herein expressly granted.

     3. No interest in any Stock or cash held under the Program prior to delivery to the Participant as hereinabove provided, shall be assigned, alienated, pledged, or other-wise encumbered in whole or in part, either directly, by operation of law, or otherwise. If any attempt is made by a Participant to assign, alienate, pledge or otherwise encumber his interest in such Stock or cash prior to such delivery, for his debts, liabilities or in tort or contract, or otherwise, then the Company (in its absolute discretion) may treat such attempt as an election by the Participant to withdraw from the Program and submit to any loss of rights as provided in the Program in the case of a withdrawal at the time of such attempt.

     B. Quarterly Statement of Account. As soon as practicable after the end of each calendar quarter, all Participants shall be furnished with a statement of their account under the Program.

     C. Registration of Stock. Each Participant shall, at such time as the Company may reasonably request, furnish written instructions for the registration of Stock to be delivered under the Program upon completion of the Holding Period. Such Stock will be registered in the Participant’s name alone or in such name and that of one such other adult person as may be designated as joint .tenants with right of survivorship, and not as tenants in common. Such instructions shall remain in effect until receipt by the Company of written instructions to change the registration previously authorized. In the absence of such written instructions, Stock to be delivered to a. Participant will be registered in the Participant’s name alone or, in the event of

12

death prior to such delivery, will be registered in the name of the person or persons entitled thereto.

     D. Miscellaneous.

     1. The Administrative Committee may rely upon the authenticity of any information supplied to them by the Company in connection with the operation of the Program, and shall be fully protected in relying upon such information.

     2. No individual administering or aiding in the administration of the Program shall have any liability, except as provided in ARTICLE XIV-D-3 below. As a condition precedent to participation in the Program or the receipt of benefits thereunder, such liability, if any, is expressly waived and released by each Participant and by the act of participation or the acceptance of benefits thereunder.

     3. No individual administering or aiding in the administration of the Program shall be liable except for his own act or omissions and then only for willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office. As used herein, “individual administering or aiding in the administration of the Program” shall include any director, officer, employee or agent of the Company.

     4. The Company may require compliance with any legal requirements which it deems necessary as a condition for delivery of, or payment for, any Stock or cash credited to a Participant’s account under the Program.

     5. By a Participant’s act of participating in the Program or by the acceptance of any of the benefits thereunder, such Participant and any and all persons claiming under or through any such Participant, shall thereby be conclusively deemed to have indicated his acceptance and ratification of, and consent to, the application of the provisions of the Program.

     6. For the purposes of the Program, unless the contrary is clearly indicated by the context, the use of the masculine gender shall also include within its meaning the feminine, and the use of the singular shall also include within its meaning the plural, and vice versa.

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ARTICLE XV

NOTICES AND COMMUNICATIONS

     A. To Participants. All notices, reports and other communications to a Participant under or in connection with the Program shall be deemed to have been duly given, made or delivered when received by the Participant, or (if mailed) when mailed with postage prepaid and addressed to the Participant at his address last appearing on the records of the Company.

     B. By Participant. All notices, instructions or other communications by a Participant to the Company under or in connection with the Program shall be deemed to have been duly given, made or delivered when received by the Vice President and Chief Financial Officer of the Company at 690 East Lamar Blvd., Suite 200, Arlington, Texas 76011 or when received in the form specified by the Company and at the location, or by the person, designated for receipt of such notice, instruction or other communication by the Company.

ARTICLE XVI

AUTHORITY TO AMEND, SUSPEND OR TERMINATE

     A. The Board of Directors of the Company may amend, suspend or terminate the Program at any time, or from time to time. Without limitation, such amendment may change: (a) the rates of allowable Employee Payroll Deductions which may be designated by all Participants; (b) the rates of Company Contributions; or (c) any other provision of the Program, except that a Participant’s percentage rate of Employee Payroll Deductions may not be increased without his consent.

     B. The Board of Directors of the Company may delegate to the Administrative Committee the authority to amend any provisions of this Program, provided such amendment is (a) of an administrative nature or (b) does not result in any material increase in the Company’s cost.

     C. The Board of Directors of the Company shall have the discretionary authority to waive the requirement that a Participant in the Program be employed by the Company for at least two (2) years and be contributing to the Plan as described in ARTICLE II-B and confer immediate eligibility for the Participant in the Program at the fifty percent (50%) Company Contribution level as described in ARTICLE II-B-2; provided, however, that such Participant will lose eligibility for the fifty percent (50%) Company Contribution and will no longer be eligible to participate in the Program unless the Participant begins contributions to the Plan as soon as possible after the Participant satisfies the Plan’s eligibility requirements.

     D. No amendment, suspension or termination shall adversely affect any rights of a Participant to Stock, fractional shares or cash credited to his account under the Program as of the date of amendment, suspension or termination. Upon termination of the Program, all Stock,

14

fractional shares and cash credited to the account of each Participant under the Program shall be promptly paid to such Participant.

ARTICLE XVII

APPLICABLE LAW

     Except as otherwise provided herein, any question concerning or with respect to the validity; construction, interpretation, administration and effect of the Program, and of its rules and regulations, and the rights of any or all persons having or claiming to have an interest therein or thereunder, shall be governed exclusively and solely in accordance with the laws of the State of Texas.

ARTICLE XVIII

DEFINITIONS

     For the purpose of the Program, unless some other meaning is clearly indicated by the context, the following definitions shall be applicable:

     “Company” is defined in ARTICLE I as Tandy Brands Accessories and its participating affiliates and associates.

     “Company Contributions” is defined in ARTICLE I.

     “Earnings” means the amount which an employee is receiving as salary or wages from the Company, including (a) payments for overtime, vacation pay, night shift bonus, and any cost of living adjustment, including incentive compensation, other variable compensation, and the value of the personal use of company vehicles and company automobile allowances, but excluding (b) living allowance, retainers, and any special payments made for services performed outside his regular duties and any other special payments, (c) except to the extent that the inclusion of any item in (b) above is specifically approved by the Chief Executive Officer of the Company or by such employee or employees of the Company as he may authorize in writing. Commissions shall be included as Earnings only to the extent determined by the Chief Executive Officer of the Company or by such employee or employees of the Company as he may authorize in writing.

     “Employee” means a regular employee of the Company receiving wages or salary, but shall not include any_. person compensated pursuant to a contract other than an employment contract with the Company under the terms of which compensation is paid on a regular fixed salary or wage basis. As used above, “Employee” shall also include, without limitation, any salesman who is a bona fide employee of the Company and recognized as such for Social Security purposes.

     “Employee Payroll Deductions” is defined in ARTICLE III-A.

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     “Holding Period” is defined in ARTICLE VII-A.

     “Participant” means an employee who is eligible to be and becomes a participant in accordance with the provisions of the Program.

     “Participating Companies” is defined in ARTICLE XII.

     “Program” is defined in ARTICLE I.

     “Stock” is defined in ARTICLE I.

     “Stock Price” is defined in ARTICLE IV. Provided, however, with respect to employees of H.A. Sheldon, “Stock Price” is defined in ARTICLE VI-A.

     “Tandy Brands Accessories” means Tandy Brands Accessories, Inc., a Delaware corporation.

ARTICLE XIX

EFFECTIVE DATE

     A. The original effective date of the Program was January 1, 1991. The effective date of this amendment and restatement of the Program shall be December 1, 2005 provided all approvals, rulings and orders (satisfactory to Tandy Brands Accessories and, to the extent deemed by Tandy Brands Accessories to be necessary or desirable) by the appropriate State and Federal or other Governmental authorities with respect to the Program and any action contemplated under the Program have been obtained or satisfied.

     B. Notwithstanding the provisions of ARTICLE II and ARTICLE XIX-A, employees who are represented by a union (pursuant to a certification by the National Labor Relations Board otherwise in accordance with the provisions of Section 9 of the National Labor Relations Act) shall become eligible to participate in the Program (a) only after the Company and such union shall have entered into a written agreement to the effect that the Program shall be offered to the employees so represented, and (b) only in accordance with any conditions or requirements contained in such agreement.

     IN WITNESS WHEREOF, this document has been executed this 30 day of November, 2005.

TANDY BRANDS ACCESSORIES, INC.
By:	s/s J.S.B. Jenkins
Name:	J.S.B. Jenkins
Title:	President and CEO

16

EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO
RULE 13a-14(a)/15d-14(a)
(CHIEF EXECUTIVE OFFICER)

CERTIFICATION BY CHIEF EXECUTIVE OFFICER

I, J.S.B. Jenkins, certify that:

     1. I have reviewed this quarterly report on Form 10-Q of Tandy Brands Accessories, Inc.;

     2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

     3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

     4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a – 15(e) and 15d – 15(e)) for the registrant and have:

     a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

     b. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

     c. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

     5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

     a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

     b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

November 19, 2007	/s/ J.S.B. Jenkins
	J.S.B. Jenkins
	President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO
RULE 13a-14(a)/15d-14(a)
(CHIEF FINANCIAL OFFICER)

CERTIFICATION BY PRINCIPAL ACCOUNTING OFFICER

I, Janna Keck, certify that:

     1. I have reviewed this quarterly report on Form 10-Q of Tandy Brands Accessories, Inc.;

     2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

     3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

     4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a – 15(e) and 15d-15(e)) for the registrant and have:

     a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

     b. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

     c. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

     5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

     a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

     b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

November 19, 2007	/s/ Janna Keck
	Janna Keck
	Principal Accounting Officer and Controller

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2007 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, J.S.B. Jenkins and Janna Keck, President and Chief Executive Officer and Principal Accounting Officer and Controller, respectively, of Tandy Brands Accessories, Inc. (the “Company”), certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

     1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

     2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

November 19, 2007	/s/ J.S.B. Jenkins
	J.S.B. Jenkins
	President and Chief Executive Officer
	/s/ Janna Keck
	Janna Keck
	Principal Accounting Officer and Controller