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 December 31, 2008

Commission File Number 0-18927

TANDY BRANDS ACCESSORIES, INC.

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization) 75-2349915
(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.

þYes      oNo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o  Accelerated filer o  Non-accelerated filer   o
(Do not check if a smaller reporting company) Smaller Reporting Company þ 

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

oYes      þNo

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

	Number of shares outstanding
Class	at February 3, 2009
Common stock, $1.00 par value	6,990,380

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	10-13
Item 4T Controls And Procedures	13
PART II — OTHER INFORMATION
Item 1A Risk Factors	13-14
Item 2 Unregistered Sales Of Equity Securities And Use Of Proceeds	14
Item 4 Submission Of Matters To A Vote Of Security Holders	14
Item 6 Exhibits	14
SIGNATURES	15
EX-10.1
EX-10.2
EX-10.3
EX-10.6
EX-10.7
EX-31.1
EX-31.2
EX-32.1

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References in this Quarterly Report on Form 10-Q to “we,” “our,” “us,” or the “Company” refer to Tandy Brands Accessories, Inc. and its subsidiaries unless the context requires otherwise.

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,” “continues,” “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 2008 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.

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PART I — FINANCIAL INFORMATION

ITEM 1 — FINANCIAL STATEMENTS

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

	Three Months Ended						Six Months Ended
	December 31						December 31
	2008			2007			2008			2007
Net sales	$	42,944		$	49,617		$	77,561		$	89,081
Cost of goods sold		27,183			32,538			49,790			59,172
Inventory write-down		—			18,725			—			18,725
		27,183			51,263			49,790			77,897
Gross margin (loss)		15,761			(1,646	)		27,771			11,184
Selling, general and administrative expenses		14,047			16,401			26,448			30,842
Depreciation and amortization		474			919			1,043			1,895
Goodwill and other intangibles impairment		—			17,774			—			17,774
Total operating expenses		14,521			35,094			27,491			50,511
Operating income (loss)		1,240			(36,740	)		280			(39,327	)
Interest expense		(220	)		(830	)		(368	)		(1,110	)
Other income		44			4			105			49
Income (loss) before income taxes		1,064			(37,566	)		17			(40,388	)
Income taxes		112			3,124			345			2,038
Net income (loss)	$	952		$	(40,690	)	$	(328	)	$	(42,426	)
Earnings (loss) per common share	$	0.14		$	(5.94	)	$	(0.05	)	$	(6.20	)
Earnings (loss) per common share assuming dilution	$	0.14		$	(5.94	)	$	(0.05	)	$	(6.20	)
Cash dividends declared per common share	$	—		$	0.04		$	0.04		$	0.08
Common shares outstanding		6,934			6,855			6,961			6,841
Common shares outstanding assuming dilution		7,040			6,855			6,961			6,841

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

4

Tandy Brands Accessories, Inc. And Subsidiaries
Unaudited Consolidated Balance Sheets
(in thousands)

	December 31			June 30
	2008			2008
Assets
Current assets:
Cash and cash equivalents	$	3,577		$	2,855
Accounts receivable		24,634			22,147
Inventories		38,625			35,535
Other current assets		6,641			8,783
Total current assets		73,477			69,320
Property and equipment		4,577			5,382
Other assets:
Intangibles		2,904			3,069
Other assets		2,340			1,617
Total other assets		5,244			4,686
	$	83,298		$	79,388
Liabilities And Stockholders’ Equity
Current liabilities:
Accounts payable	$	9,479		$	10,312
Accrued expenses		4,332			5,361
Note payable		8,422			363
Total current liabilities		22,233			16,036
Other liabilities:
Supplemental executive retirement obligation		1,671			1,893
Other liabilities		3,276			3,581
Total other liabilities		4,947			5,474
Stockholders’ equity:
Preferred stock, $1.00 par value, 1,000 shares authorized, none issued		—			—
Common stock, $1.00 par value, 10,000 shares authorized, 7,037 shares and 7,049 shares issued and outstanding		7,037			7,049
Additional paid-in capital		34,782			34,840
Retained earnings		14,728			15,337
Other comprehensive income		663			1,666
Shares held by Benefit Restoration Plan Trust		(1,092	)		(1,014	)
Total stockholders’ equity		56,118			57,878
	$	83,298		$	79,388

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

5

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

	Six Months Ended
	December 31
	2008			2007
Cash flows (used) provided by operating activities:
Net loss	$	(328	)	$	(42,426	)
Adjustments to reconcile net loss to net cash (used) provided by operating activities:
Inventory write-down		—			18,725
Goodwill and other intangibles impairment		—			17,774
Doubtful accounts receivable provision		1,117			—
Depreciation and amortization		1,056			1,898
Stock compensation expense		28			240
Amortization of debt costs		90			237
Deferred income taxes		—			3,065
Other		(959	)		602
Changes in assets and liabilities:
Accounts receivable		(3,604	)		4,689
Inventories		(3,090	)		4,198
Other assets		2,178			(614	)
Accounts payable		(229	)		(4,894	)
Accrued expenses		(1,004	)		(178	)
Net cash (used) provided by operating activities		(4,745	)		3,316
Cash flows used for investing activities:
Purchases of equipment		(219	)		(302	)
Funding supplemental executive retirement plan trust		(1,060	)		—
Net cash used for investing activities		(1,279	)		(302	)
Cash flows provided by financing activities:
Stock purchase program (withdrawals)		(145	)		520
Stock options exercised		—			66
Dividends paid		(564	)		(553	)
Change in cash overdrafts		(604	)		(175	)
Net note borrowings		8,059			2,931
Net cash provided by financing activities		6,746			2,789
Net increase in cash and cash equivalents		722			5,803
Cash and cash equivalents beginning of year		2,855			4,076
Cash and cash equivalents end of period	$	3,577		$	9,879
Supplemental cash flow information:
Interest paid	$	158		$	567
Income taxes paid	$	238		$	178

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

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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 8-03 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 and a fiscal 2009 second quarter $1.1 million provision for doubtful accounts receivable) considered necessary for a fair presentation have been included. During the quarter ended December 31, 2007 we recorded noncash charges ($18.7 million inventory write-down, $16.5 million goodwill impairment, and $1.3 million intangibles impairment) and restructuring charges of $438,000 included in selling, general and administrative expenses.

The preparation of our consolidated 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 we believe 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, 2008 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 2008 Annual Report on Form 10-K filed with the Securities and Exchange Commission.

Historically our first and second quarter sales and operating results reflect a seasonal increase compared to the third and fourth quarters of our fiscal year. However, sales for the first and second quarters of fiscal 2009 and 2008 were not consistent with historical patterns due to the very difficult retail environment in both years, deliveries to customers shifting from the first to the second quarter of fiscal 2009, and curtailed replenishment orders by one of our largest customers in fiscal 2008. Consequently, operating results for the three- and six-month periods ended December 31, 2008 are not necessarily indicative of the results that may be expected for the year ended June 30, 2009.

Note 2 — Recent Accounting Pronouncements

Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards (“SFAS”) No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities,” (“SFAS 159”) permits choosing to measure certain financial assets and liabilities at fair value. We have not elected to measure any assets or liabilities at fair value which were not being so measured prior to our adopting SFAS 159 on July 1, 2008.

Effective July 1, 2008, we adopted the disclosure requirements of SFAS No. 157, “Fair Value Measurements,” (“SFAS 157”) issued by the FASB in September 2006, which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements required under other accounting pronouncements, but does not change existing guidance for carrying instruments at fair value. FASB Staff Position No. 157-2 issued in February 2008 allows us to delay application of SFAS 157 for nonfinancial assets and liabilities until the first quarter of fiscal 2010.

Note 3 — Business Segments And Related Information

We sell our products through all major retail distribution channels throughout North America, 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, automobile and tire stores, and the retail exchange operations of the United States military. 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, suspenders, and sporting goods; and (2) women’s accessories, consisting of belts, small leather goods, 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

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financial statements included in our 2008 Annual Report of Form 10-K filed with the Securities and Exchange Commission. No inter-segment revenue is recorded.

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

	Three Months Ended						Six Months Ended
	December 31						December 31
	2008			2007			2008			2007
Net sales:
Men’s accessories	$	34,440		$	39,908		$	60,845		$	70,120
Women’s accessories		8,504			9,709			16,716			18,961
	$	42,944		$	49,617		$	77,561		$	89,081
Operating income (loss): (1)
Men’s accessories (2)	$	1,334		$	(27,203	)	$	461		$	(29,236	)
Women’s accessories (3)		(94	)		(9,537	)		(181	)		(10,091	)
		1,240			(36,740	)		280			(39,327	)
Interest expense (4)		(220	)		(830	)		(368	)		(1,110	)
Other income		44			4			105			49
Income (loss) before income taxes	$	1,064		$	(37,566	)	$	17		$	(40,388	)
Depreciation and amortization:
Men’s accessories	$	301		$	666		$	677		$	1,373
Women’s accessories		173			253			366			522
	$	474		$	919		$	1,043		$	1,895
Capital expenditures:
Men’s accessories	$	21		$	33		$	69		$	66
Corporate		117			85			150			236
	$	138		$	118		$	219		$	302

(1)	Operating income (loss) consists of net sales less cost of goods sold and specifically identifiable and allocated selling, general and administrative expenses.
(2)	Men’s accessories’ fiscal 2008 operating loss includes charges of $27.4 million: goodwill impairment ($16.5 million); write-down of out-of-program and slow-moving inventory ($9.6 million); and intangibles impairment ($1.3 million).
(3)	Women’s accessories’ fiscal 2008 operating loss includes a $9.1 million write-down of out-of-program and slow-moving inventory.
(4)	Interest expense for fiscal 2008 includes $196,000 of costs related to a debt covenant waiver we received for the first quarter and $176,000 related to costs previously capitalized for the credit facility with our previous lenders.

Note 4 — Income Taxes

The fiscal 2009 income tax provisions relate to earnings of our Canadian subsidiary (second quarter - - $49,000; six months — $189,000) and taxes, interest, and penalties for uncertain tax positions (second quarter — $63,000; six months — $156,000). Income tax expense of approximately $300,000 for the fiscal 2009 second quarter was offset by an operating loss carryforward. The approximately $200,000 deferred tax benefit of our domestic pretax loss for the six-month period was offset by a valuation allowance provision as our operating results over the past three years and projections of future operating results do not currently indicate it is more likely than not the deferred tax benefits will ultimately be realized.

The fiscal 2008 six-month tax provision includes an $8.2 million deferred tax benefit, a $1.4 million estimated net operating loss carryback, and a $1.0 million estimated net operating loss carryforward, reduced by a $12.3 million deferred tax valuation allowance. It also includes $129,000 of taxes, interest, and penalties for uncertain tax positions.

Note 5 — Credit Arrangements

We have a $35 million credit facility for borrowings and letters of credit based on accounts receivable and inventory levels. At December 31, 2008 we had outstanding borrowings under the facility of $8.4 million bearing interest at 3.5%, outstanding letters of credit totaling $1.2 million, and $23.6 million borrowing availability. Borrowings

8

under the facility, which are due on the facility’s expiration date in February 2010, bear interest at the lender’s prime rate plus 0.25% or LIBOR plus 2.75% as designated by the Company. The effect of a 1% increase or decrease in the interest rate on the amount borrowed at December 31, 2008 could lower or increase our annual pretax operating results by $84,000.

The credit facility is guaranteed by substantially all of our subsidiaries and is secured by substantially all of our assets and those of our subsidiaries. It requires the maintenance of a tangible net worth financial ratio as of the end of each fiscal quarter which, if not met, could adversely impact our liquidity. The facility contains customary representations and warranties and we have agreed to certain affirmative covenants, including reporting requirements. The facility also limits our ability to engage in certain actions without the lender’s consent, including, repurchasing our common stock, entering into certain mergers or consolidations, guaranteeing or incurring certain debt, engaging in certain stock or asset acquisitions, paying dividends, making certain investments in other entities, prepaying debt, and making certain property transfers.

We were in compliance with the credit agreement tangible net worth financial ratio covenant at December 31, 2008, but we currently expect a waiver or modification of the covenant will be necessary at March 31, 2009 as we will not be in compliance with the covenant if we incur more than a minimal net loss in the third quarter of fiscal 2009. We cannot be assured the lender will agree to any waiver or modification, or that the terms will be acceptable. If we cannot obtain a waiver or modification, our borrowing capacity and liquidity could be negatively impacted.

Our Canadian subsidiary has a CAD $1 million credit facility (direct advances limited to US $830,000) secured by its cash, credit balances, and deposit instruments with interest at the lender’s prime or US base rates. There have been no borrowings under this line of credit.

Note 6 — Fair Value Measurements

The only account we measure at fair value is the rabbi trust established to set aside amounts to assist in satisfying our supplemental executive retirement obligation. The trust’s assets (December 31, 2008 — $1.7 million) are measured at their quoted prices in active markets (Level 1 of the SFAS 157 fair value hierarchy).

Note 7 — Comprehensive Income

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

	Three Months Ended						Six Months Ended
	December 31						December 31
	2008			2007			2008			2007
Net income (loss)	$	952		$	(40,690	)	$	(328	)	$	(42,426	)
Currency translation adjustments		(772	)		50			(1,003	)		578
Comprehensive income (loss)	$	180		$	(40,640	)	$	(1,331	)	$	(41,848	)

Note 8 — Earnings Per Share

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

	Three Months Ended					Six Months Ended
	December 31					December 31
	2008		2007			2008			2007
Numerator for basic and diluted earnings per share:
Net income (loss)	$	952	$	(40,690	)	$	(328	)	$	(42,426	)
Denominators:
Weighted-average shares outstanding		6,931		6,851			6,958			6,837
Contingently issuable shares		3		4			3			4
Denominator for basic earnings per share		6,934		6,855			6,961			6,841
Effect of dilutive share-based compensation		106		—			—			—
Denominator for diluted earnings per share		7,040		6,855			6,961			6,841
Earnings (loss) per common share	$	0.14	$	(5.94	)	$	(0.05	)	$	(6.20	)
Earnings (loss) per common share assuming dilution	$	0.14	$	(5.94	)	$	(0.05	)	$	(6.20	)

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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 2008 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.

BUSINESS

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 and sporting goods. Our merchandise is marketed under a broad portfolio of nationally recognized licensed and proprietary brand names, including DOCKERS^®, LEVI’S^®, LEVI STRAUSS SIGNATURE™, TOTES^®, ROLFS^®, WOOLRICH^®, CANTERBURY^®, PRINCE GARDNER^®, PRINCESS GARDNER^®, AMITY^®, COLETTA^®, STAGG^®, ACCESSORY DESIGN GROUP^®, TIGER^®, ETON^®, SURPLUS^®, EILEEN WEST™, GOODYEAR™, GENO D’LUCCA™, DR. MARTENS^®, and DR. MARTENS AIRWAIR^®, as well as private brands for major retail customers. We sell our products through all major retail distribution channels throughout North America, 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, automobile and tire stores, and the retail exchange operations of the United States military.

The overall negative retail environment and general economic conditions which the global economy began to experience over a year ago have continued to worsen, and there seems to be little consensus on when there will be a turnaround. Like most companies in the retail industry, our net sales, and resulting profitability, have been severely impacted beginning in fiscal 2008 and, across the board, our customers have indicated they are taking a very conservative approach toward replenishing inventory in this environment. We are making the necessary adjustments internally to respond to these measures, and we continue to work closely with our retail partners to develop products and programs to help them through these difficult times.

Our operating results for the first half of fiscal 2009 were not only affected by lower net sales, but also the need to recognize that $1.1 million of accounts receivable may not be collectible due to bankruptcy filings by several of our customers. These customers accounted for approximately 1.9% to 2.8% of our net sales in fiscal 2008 and each of the first two quarters of fiscal 2009. Additional future charges may be required if we determine there is no current market for customer-specific and odd-lot inventories.

We have identified more than $3 million in potential annualized savings resulting from an organizational restructuring plan we announced on January 20, 2009. The plan is designed to focus our product development efforts, build critical capabilities, increase flexibility to better serve our retail partners’ needs, and reduce operating expenses as a first step in stabilizing our platform to position us for profitable growth in the future. We estimate the pretax termination charges in the third quarter of fiscal 2009 relating to an approximately 17% salaried employee headcount reduction in connection with the organizational restructuring will be between $550,000 and $650,000.

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FISCAL 2009 COMPARED TO FISCAL 2008

Net Sales And Gross Margin

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

	Three Months Ended						Six Months Ended
	December 31						December 31
	2008			2007			2008			2007
Net sales:
Men’s accessories	$	34,440		$	39,908		$	60,845		$	70,120
Women’s accessories		8,504			9,709			16,716			18,961
	$	42,944		$	49,617		$	77,561		$	89,081
Gross margin (loss):
Men’s accessories	$	12,792		$	3,734		$	21,711		$	13,043
Women’s accessories		2,969			(5,380	)		6,060			(1,859	)
	$	15,761		$	(1,646	)	$	27,771		$	11,184
Gross margin percent of sales:
Men’s accessories		37.1	%		9.4	%		35.7	%		18.6	%
Women’s accessories		34.9			(55.4	)		36.3			(9.8	)
Total		36.7			(3.3	)		35.8			12.6

Net sales were lower this year (quarter — $6.7 million; six months — $11.5 million) as the difficult retail environment, which began to affect our sales over a year ago, accelerated its decline. Approximately $4.5 million and $6.6 million of the men’s accessories sales declines in the second quarter and first half of fiscal 2009, respectively, were partly offset by lower discounts and allowances for returns primarily for our gift products. The first half of fiscal 2008 included more than $2.5 million in men’s belt and small leather goods sales to two customers as part of their closeout programs as they shifted to new private labels, one of which we replaced with a new program.

Our overall gross margin percentages of net sales in the current year (quarter — 36.7%; six months - - 35.8%) included benefits of approximately 1.8 percentage points from sales of out-of-program inventory at prices exceeding the inventory’s previously reduced carrying value. The fiscal 2008 overall margin percentages for the quarter and six months were impacted 37.7 and 21.0 percentage points, respectively, by an inventory write-down. For men’s accessories products, other than gifts, the fiscal 2009 six-month margin percentage improved 5.0 percentage points over the prior year. This improvement included a 1.4 percentage point benefit from sales of inventory having reduced carrying values and lower product costs from overseas suppliers. Increased costs together with lower discounts and allowances compared to last year reduced the men’s gift accessories 2009 six-month margin by 2.6 percentage points. This margin reduction was offset by 2.3 percentage points from out-of-program inventory sales. Similarly, the 4.5 percentage point decrease in women’s accessories 2009 six-month margin resulting from increased costs was mitigated by 2.7 percentage points from sales of out-of-program inventory.

Expenses And Taxes

The following presents expense data by reportable segment (in thousands).

	Three Months Ended				Six Months Ended
	December 31				December 31
	2008		2007		2008		2007
Selling, general and administrative expenses:
Men’s accessories	$	11,157	$	12,497	$	20,573	$	23,132
Women’s accessories		2,890		3,904		5,875		7,710
	$	14,047	$	16,401	$	26,448	$	30,842
Depreciation and amortization:
Men’s accessories	$	301	$	666	$	677	$	1,373
Women’s accessories		173		253		366		522
	$	474	$	919	$	1,043	$	1,895
Interest expense	$	220	$	830	$	368	$	1,110

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Selling, general and administrative (“SG&A”) expenses in the second quarter of fiscal 2009 included a $1.1 million provision for doubtful accounts receivable and in the second quarter last year they included restructuring charges totaling $438,000. Other SG&A expenses, including lower selling and marketing costs, in fiscal 2009 were more than $2.3 million and $4.4 million less than the second quarter and six-month periods of the prior year, respectively. The major fiscal 2009 SG&A reductions compared to fiscal 2008 were derived from lower employment expenses (quarter — $1.1 million; six months — $1.9 million) resulting from workforce reductions and reduced distribution costs (quarter — $304,000; six months — $1.2 million) including closing our men’s accessories distribution facility in West Bend, Wisconsin in the second half of fiscal 2008.

Depreciation and amortization was lower this year primarily as the result of equipment and software reaching the end of their estimated depreciable lives and a $158,000 reduction in each quarter attributable to last year’s closing of the West Bend facility and writing off customer lists.

Interest expense in fiscal 2009 was more than 50% less than the expense in the same periods of fiscal 2008 as both our borrowings and the interest rates were lower in the current year. The fiscal 2008 second quarter includes $196,000 of costs related to a debt covenant waiver we received for the first quarter and $176,000 related to costs previously capitalized for the credit facility with our previous lenders.

Information about our income taxes is incorporated herein by reference to Note 4 of the notes to consolidated financial statements in Item 1 of this Quarterly Report.

SEASONALITY

Historically our first and second quarter sales and operating results reflect a seasonal increase compared to the third and fourth quarters of our fiscal year. However, sales for the first and second quarters of fiscal 2009 and 2008 were not consistent with historical patterns due to the very difficult retail environment in both years, deliveries to customers shifting from the first to the second quarter of fiscal 2009, and curtailed replenishment orders by one of our largest customers in fiscal 2008.

LIQUIDITY AND CAPITAL RESOURCES

Our primary sources of liquidity have been cash flows from operating activities and our credit facilities ($24.4 million borrowing availability at December 31, 2008). Historically our first quarter operating activities result in net cash outflows due to procurement of holiday inventory shipped in the second quarter (fiscal 2009 — $14.3 million; fiscal 2008 — $7.6 million). We believe these liquidity sources will provide adequate financial resources for our foreseeable working capital needs; however, while we were in compliance with the tangible net worth financial ratio covenant of our credit agreement at December 31, 2008, we currently expect a waiver or modification of the covenant will be necessary at March 31, 2009 as we will not be in compliance with the covenant if we incur more than a minimal net loss in the third quarter of fiscal 2009. If we cannot obtain a waiver or modification, our borrowing capacity and liquidity could be negatively impacted. Information about our credit facilities is incorporated herein by reference to Note 5 of the notes to consolidated financial statements included in Item 1 of this Quarterly Report.

Operating cash flows for the first half of fiscal 2009 were a negative $4.7 million as accounts receivable, exclusive of the provision for doubtful accounts, increased $3.6 million and inventories increased $3.1 million from their levels at June 30, 2008. The increase in receivables was primarily due to deliveries to customers shifting from the first to the second quarter while, in the first half of fiscal 2008, more products were shipped and the receivables collected. Inventories did not decline in fiscal 2009 due to lower than anticipated sales. In fiscal 2008, more inventory was shipped, but later returns exceeded estimates. Part of the fiscal 2009 increases was offset by a $1.2 million tax refund included in other current assets at June 30, 2008.

Investing activities included nominal amounts of capital expenditures in the first half of both years and $1.1 million funding in fiscal 2009 of the rabbi trust established to set aside amounts to assist in satisfying our supplemental executive retirement obligation. Financing activities included the payment of dividends (2009 — $564,000; 2008 — $553,000) and stock purchase program transactions (2009 — $145,000 net cash distributions in lieu of issuing shares as the result of the program being suspended; 2008 — $520,000 net contributions). Seasonal borrowings funded the fiscal 2009 cash outflows while fiscal 2008 net borrowings were lower due to the $6.1 million in outstanding loans at June 30, 2007.

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In light of the ongoing decline in economic conditions, we suspended the payment of quarterly dividends in December 2008 in an effort to preserve capital and enhance our financial flexibility for investing in key growth initiatives as we implement our organizational restructuring plan. The dividend suspension will be reassessed on an ongoing basis. During fiscal 2009 we declared the following cash dividend:

Declaration Date	Record Date	Payable Date	Per Share
August 19, 2008	September 30, 2008	October 17, 2008	$0.04

CRITICAL ACCOUNTING POLICIES

There have been no significant changes in the critical accounting policies disclosed in our Annual Report on Form 10-K for the year ended June 30, 2008.

ITEM 4T — CONTROLS AND PROCEDURES

Disclosure Controls And Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of December 31, 2008 in alerting them in a timely manner to material information required to be disclosed by us in the reports we file with or submit to the Securities and Exchange Commission under the Securities Exchange Act of 1934.

Changes In Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting during the second quarter of fiscal 2009 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

ITEM 1A — RISK FACTORS

In addition to the information in this Quarterly Report on Form 10-Q, consideration should be given to the risk factors in Part I, “Item 1A — Risk Factors” in our Annual Report on Form 10-K for the year ended June 30, 2008 which could materially and adversely affect our business, results of operations, and financial condition. There have been no significant changes in the risk factors disclosed in our 2008 Annual Report on Form 10-K, other than the updates set forth below.

Our industry is highly subject to economic cycles and retail industry conditions.
Our business is highly subject to general economic cycles and retail industry conditions. When general economic conditions are lower, consumers are often hesitant to use discretionary income to purchase fashion accessories. Any significant declines in general economic conditions or uncertainties regarding future economic prospects that may affect consumer spending habits could adversely affect our business.

The current volatility and disruption in the capital and credit markets have reached unprecedented levels and are having a significantly adverse impact on global economic conditions resulting in significant recessionary pressures and declines in consumer confidence and economic growth. The economic crisis has had and may continue to have a negative impact on our business which could result in:

• reduced consumer spending and demand for our products;

• increased consolidation in the retail industry;

• increased price competition for our products;

• increased risk of unsaleable inventories; and

• increased risk in the collectibility of accounts receivable from our customers.

These potential effects are difficult to forecast and mitigate. As a consequence, our operating results for a particular period are difficult to predict and, therefore, prior results are not necessarily indicative of results to be expected in future periods. Any of the foregoing effects could have a material adverse effect on our business, results of operations, and financial condition and could adversely affect the market price of our common stock.

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We extend unsecured credit to our customers and are subject to potential financial difficulties they may face.

We extend credit to our department and retail store customers based on an evaluation of their financial condition and generally do not require collateral from our customers. If a customer experiences financial difficulties, we may need to curtail our sales to that customer or be subject to increased risk of nonpayment. This risk increases if distressed customers are forced to file for bankruptcy. If we are unable to collect our accounts receivable from a financially distressed or bankrupt customer, our operating results would be negatively impacted.

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

Issuer Purchases Of Equity Securities

The following provides information about repurchases of shares of common stock made by us during the quarter ended December 31, 2008. Of the total shares purchased, 441 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
October 1, 2008 to October 31, 2008		6,913	$	3.89		N/A		N/A
November 1, 2008 to November 30, 2008		4,476		2.45		N/A		N/A
December 1, 2008 to December 31, 2008		2,619		1.93		N/A		N/A
Total		14,008		3.07		N/A		N/A

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

At our 2008 Annual Meeting of Stockholders on October 30, 2008, our stockholders voted on proposals to (1) elect two directors to our board of directors, and (2) ratify the appointment of Ernst & Young LLP as our independent auditor for fiscal 2009. NSL Capital Management, LLC (“NSL”) initiated a proxy contest and solicited proxies from our stockholders to elect Nicholas S. Levis and Evan Kagan to our board of directors instead of our Company’s nominees. No representatives of NSL attended the Annual Meeting and, as a result, NSL did not present its nominees for election and no proxies for NSL’s nominees were voted.

Mr. J.S.B. Jenkins and Mr. George C. Lake were re-elected to our board of directors to serve until the 2009 annual meeting of stockholders, or until their successors are elected and qualified. The number of votes cast for and withheld for each nominee was as follows:

Nominee	For	Withheld
J.S.B. Jenkins	3,740,711	1,417,257
George C. Lake	5,052,948	105,020

Votes on the proposal to ratify the appointment of Ernst & Young LLP as our independent auditor for fiscal 2009 were as follows:

For 5,136,485 Against 15,014 Abstain 6,469

Following the Annual Meeting, Dr. James F. Gaertner, Roger R. Hemminghaus, Gene Stallings, and newly-appointed N. Roderick McGeachy, III, having terms expiring in 2009, and Colombe M. Nicholas, W. Grady Rosier, and William D. Summitt, having terms expiring in 2010, continued as members of our board.

ITEM 6 — EXHIBITS

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

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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)
February 4, 2009	/s/ N. Roderick McGeachy, III N. Roderick McGeachy, III
	President and Chief Executive Officer (principal executive officer)
	/s/ M.C. Mackey M.C. Mackey
	Chief Financial Officer
	(principal financial officer and
	principal accounting officer)

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	11/02/07	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	3.01
3.4      Amendment No. 1 to Amended and Restated Bylaws of Tandy Brands Accessories, Inc.	8-K	11/02/07	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	10/24/07	01-18927	3.1
4.3      Credit Agreement by and between Tandy Brands Accessories, Inc. and Comerica Bank dated as of February 12, 2008	10-Q	2/14/08	0-18927	4.3
(10)      Material Contracts
10.1      Amendment No. 5 to the Tandy Brands Accessories, Inc. Benefit Restoration Plan dated December 31, 2008* **	N/A	N/A	N/A	N/A
10.2      Amendment No. 2 to the Tandy Brands Accessories, Inc. 1995 Stock Deferral Plan for Non-Employee Directors dated December 31, 2008* **	N/A	N/A	N/A	N/A
10.3      Amendment No. 8 to the Tandy Brands Accessories, Inc. Employees Investment Plan effective as of January 1, 2009* **	N/A	N/A	N/A	N/A
10.4      Summary of Fiscal 2009 Management Incentive Plan for Tandy Brands Accessories, Inc.*	8-K	12/24/08	0-18927	10.1
10.5      Summary of 2009 Long-Term Incentive Program for Tandy Brands Accessories, Inc.*	8-K	12/24/08	0-18927	10.2

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	Incorporated by Reference
	(if applicable)
Exhibit Number and Description	Form	Date	File No.	Exhibit
10.6      Form of Tandy Brands Accessories, Inc. 2009 Performance Unit Award Agreement* **	N/A	N/A	N/A	N/A
10.7      First Amendment to Lease dated January 22, 2009 by and between Enterprise Centre Operating Associates, LP and Tandy Brands Accessories, Inc. relating to the corporate office**	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) (Chief Financial Officer)**	N/A	N/A	N/A	N/A
(32)     Section 1350 Certifications
32.1 Section 1350 Certifications (Chief Executive Officer and Chief Financial Officer)**	N/A	N/A	N/A	N/A

*	Management contract or compensatory plan
**	Filed herewith

2 EX-10.1 2 d66135exv10w1.htm EX-10.1

EXHIBIT 10.1
TANDY BRANDS ACCESSORIES, INC.
BENEFIT RESTORATION PLAN

Amendment No. 5

     THIS AMENDMENT NO. 5 to the Tandy Brands Accessories, Inc. Benefit Restoration Plan (the “Plan”) is dated December 31, 2008, to amend the Plan in the following respects:

     WHEREAS, the Plan was established by Tandy Brands Accessories, Inc., a Delaware corporation (the “Company”), effective as of July 1, 1993, and was subsequently amended from time to time;

     WHEREAS, in accordance with Sections 8.4 and 8.6 of the Plan, the Plan shall be administered by the Committee (as designated by the Company’s Board of Directors), and the Company’s Board of Directors (the “Board”) shall have the discretion to amend the Plan; and

     WHEREAS, the Board has determined to amend the Plan by making such changes as necessary to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

     NOW THEREFORE, effective December 31, 2008, the Plan is hereby amended in the following respects:

     1. Definition of Disability. Section 1.7 of the Plan shall be deleted in its entirety and replaced with the following:

          “1.7 “Disability” means that a Participant (i) is unable to engage in any substantial gainful activity by reason of any medically-determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve months; (ii) is, by reason of any medically-determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Company; or (iii) is deemed by the Social Security Administration to be totally disabled. The determination of the existence of a Disability shall be made by the Committee in accordance with Section 409A of the Code.

     2. Eligibility. Article II of the Plan shall be deleted in its entirety and replaced with the following:

          “Participation in the Plan shall be made available to a select group of individuals providing services to the Company in key positions of management and responsibility who are eligible to make contributions to the Employees Investment Plan, the amount of which is reduced by reason of the application of the limitations set forth in Sections 401(a)(17) or 402(g)(1) of the Code. Such individuals may elect to participate hereunder by executing a participation agreement in such form and at such time as the Committee shall require, provided that each

1

participation agreement shall be executed no later than the last day of December immediately preceding the Plan Year for which an individual elects to make contributions to the Plan in accordance with the provisions of Section 3.1 hereof. Notwithstanding the foregoing, in the first year in which an individual becomes eligible to participate in the Plan, he may elect to participate in the Plan by executing a participation agreement, in such form as the Committee shall require, within thirty (30) days of the date on which he is notified by the Chief Executive Officer of his eligibility to participate in the Plan. In such event, his election to participate in the Plan shall become effective as of the first full payroll period beginning in the calendar quarter immediately following the Committee’s receipt of his participation agreement. The determination as to the eligibility of any individual to participate in the Plan shall be in the sole and absolute discretion of the Chief Executive Officer of the Company, whose decision in that regard shall be conclusive and binding for all purposes hereunder.”

     3. Contributions. The second flush paragraph of Section 3.1 of the Plan shall be deleted in its entirety and replaced with the following:

          “At the time a Participant makes a deferral election pursuant to this Section 3.1, the Participant shall elect the manner and date upon which his benefit under the Plan (an “Initial Election”) shall be distributed (the “Original Distribution Date”). A Participant shall have the option to change his or her Initial Election to postpone or modify the manner of payment of his benefit from that initially elected to be effective as of the Original Distribution Date; provided that such election (the “Subsequent Election”) is received by the Committee at least twelve months before the Original Distribution Date in effect prior to the Subsequent Election, and the modified Original Distribution Date shall occur no earlier than five years from the Original Distribution Date prior to such Subsequent Election. Under no circumstances shall a modification of the Original Distribution Date result in an acceleration of payments in violation of Section 409A of the Code. The distribution elections described in this paragraph must be made on a form supplied by the Committee for that purpose.”

     4. Payment of Benefits. Sections 7.1, 7.2, 7.3 and 7.4 of the Plan shall be deleted in their entirety and replace with the following:

          “7.1 The payment of a Participant’s benefit shall be made in a lump sum in cash and shall be paid, except as otherwise provided in Sections 7.1 and 7.2, upon the earlier of the time specified by the Participant in his participation agreement or his death, but in no event later than sixty days following the calendar year in which the Participant attains age sixty-five. Notwithstanding the foregoing:

               (a) If any portion of a Participant’s Account is required to be included in income by the Participant prior to receipt of Account proceeds due to a failure of this Plan or any aggregated plan to comply with the requirements of Section 409A of the Code, the Committee may determine that such Participant shall receive a distribution from the Plan in an amount equal to the lesser of: (i) the portion of his Account required to be included in income as a result of the failure of the Plan or any aggregated plan to comply with the requirements of Section 409A of the Code, or (ii) the balance of the Participant’s Account.

2

               (b) If the Company is required to withhold amounts to pay the Participant’s portion of the Federal Insurance Contributions Act (FICA) tax imposed under Sections 3101, 3121(a) or 3121(v)(2) of the Code with respect to amounts that are or will be paid to the Participant under the Plan before they otherwise would be paid, the Committee may determine that such Participant shall receive a distribution from the Plan in an amount equal to the lesser of: (i) the amount in the Participant’s Account or (ii) the aggregate of the FICA taxes imposed and the income tax withholding related to such amount.

               (c) In the case of administrative necessity, the payment of benefits may be delayed up to the later of the last day of the calendar year in which payment would otherwise be made or the 15^th day of the third calendar month following the date on which payment would otherwise be made.

          7.2 Notwithstanding anything in the Plan to the contrary, with respect to a Participant who is a “specified employee” (within the meaning of Section 409A of the Code), no payments under the Plan may begin prior to the date that is six months following such Participant’s separation from service (as defined under Section 409A of the Code), or if earlier, such Participant’s date of death. Any payments that would have been made to a Participant but for the six-month delay under this Section 7.2 of the Plan shall be accumulated by the Company and paid (without interest) on the first day of the seventh month following the separation from service.”

     5. Effect on Plan. Except as otherwise set forth in this Amendment No. 5, the Plan shall remain in full force and effect.

     IN WITNESS WHEREOF, the Company, by its duly authorized officer, has executed this Amendment No. 5 to the Plan effective as of the date first indicated above.

TANDY BRANDS ACCESSORIES, INC. a Delaware corporation
By:	/s/ Craig Mackey
	Name:	Craig Mackey
	Title:	Chief Financial Officer

3

EX-10.1

exv10w1

EX-10.2

EXHIBIT 10.2
TANDY BRANDS ACCESSORIES, INC.
1995 STOCK DEFERRAL PLAN FOR NON-EMPLOYEE DIRECTORS

Amendment No. 2

     THIS AMENDMENT NO. 2 to the Tandy Brands Accessories, Inc. 1995 Stock Deferral Plan for Non-Employee Directors (the “Plan”) is dated December 31, 2008, to amend the Plan in the following respects:

     WHEREAS, the Plan was established by Tandy Brands Accessories, Inc., a Delaware corporation (the “Company”), and was subsequently amended;

     WHEREAS, in accordance with Section 8.1 of the Plan, the Plan shall be administered by the Company’s Board of Directors (the “Board”) and the Board shall have the discretion to amend the Plan; and

     WHEREAS, the Board has determined to amend the Plan by making such changes as necessary to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

     NOW THEREFORE, effective December 31, 2008, the Plan is hereby amended in the following respects:

     1. Deferral Elections. Section 3.1(a) of the Plan shall be deleted in its entirety and replaced with the following:

          “(a) Deferral Elections. Commencing on the effective date of the Plan, payment of the Retainer Fees and/or Meeting Fees may be deferred by election of the Non-Employee Director. Each such Deferral Election of the Retainer Fees and/or Meeting Fees shall be made pursuant to a form and at such time as the Company shall require, provided that each such form shall be executed no later than the last day of December immediately preceding the calendar year for which the Non-Employee Director elects to defer receipt of the Retainer Fees and/or Meeting Fees. Notwithstanding the foregoing, on the date a Non-Employee Director first becomes a member of the Board, he may make such Deferral Election of Retainer Fees and/or Meeting Fees, in such form as the Company shall require, within thirty (30) days of such date. In such event, his election to participate in the Plan shall become effective immediately. At the time a Non-Employee Director makes a Deferral Election pursuant to this Section 3.1(a), the Non-Employee Director shall elect the manner and date upon which his benefit under the Plan (an “Initial Election”) shall be distributed. A Non-Employee Director shall have the option to change his or her Initial Election to postpone or modify the manner of payment of his benefit from that initially elected to be effective; provided that such election (the “Subsequent Election”) is received by the Company at least twelve months before the original distribution date in effect prior to the Subsequent Election, and the modified distribution date shall occur no earlier than five years from the original distribution date. Under no circumstances shall a modification of the original distribution date result in an acceleration of payments in violation of Section 409A of

1

the Code. The distribution elections described in this paragraph must be made on a form supplied by the Company for that purpose.”

     2. Change of Control. Section 10.3(b) of the Plan shall be deleted in its entirety and replaced with the following:

          “(b) “Change of Control” shall mean the occurrence of any of the following events:

               (i) any one person, or more than one person acting as a group, acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of the Company;

               (ii) any one person, or more than one person acting as a group, acquires (or has acquired during any twelve month period) ownership of stock of the Company possessing 30% or more of the total voting power of the stock of the Company;

               (iii) a majority of the members of the Board is replaced during any twelve month period by directors whose appointment is not endorsed by a majority of the members of the Board before the date of the appointment or election; or

               (iv) any one person, or more than one person acting as a group, acquires (or has acquired during any twelve month period) assets from the Company that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of the Company immediately before such acquisition or acquisitions.

          The determination of whether a Change of Control has occurred shall be made by the Board in accordance with the provisions of Section 409A of the Code and the Treasury Regulations promulgated thereunder.”

     3. Effect on Plan. Except as otherwise set forth in this Amendment No. 2, the Plan shall remain in full force and effect.

     IN WITNESS WHEREOF, the Company, by its duly authorized officer, has executed this Amendment No. 2 to the Plan effective as of the date first indicated above.

TANDY BRANDS ACCESSORIES, INC. a Delaware corporation
By:	/s/ Craig Mackey
	Name:	Craig Mackey
	Title:	Chief Financial Officer

2

EX-10.3

EXHIBIT 10.3
AMENDMENT NO. 8 TO THE
TANDY BRANDS ACCESSORIES, INC.
EMPLOYEES INVESTMENT PLAN

     Pursuant to the authority of the undersigned, and the provisions of Section 15.1 thereof, the Tandy Brands Accessories, Inc. Employees Investment Plan, as amended and restated July 1, 2000 (the “Plan”) is hereby amended in the following respects only, effective as of January 1, 2009.

     (1) Article II, Section 2.1 (s) is hereby amended to read as follows:

     (s) Entry Date. The first day of the first payroll period of each calendar month.

     (2) Article II, Section 2.1, subsection (oo) is hereby amended to read as follows:

     (oo) Salary Reduction Contributions. Contributions made to the Plan by the Company, at the election or deemed election of a Participant, in lieu of cash compensation, pursuant to a payroll withholding agreement, as provided in Section 4.1 hereof.

     (3) Article II, Section 2.1, subsection (pp) is hereby amended to read as follows:

     (pp) Salary Reduction Contribution Account. A separate subaccount to which is credited a Participant’s Salary Reduction Contributions, if any, Catch-Up Contributions, if any, and any earnings attributable thereto, adjusted to reflect any withdrawals, distributions or investment losses attributable thereto.

     (4) Article II, Section 2.1, subsection (vv) is hereby added to read as follows:

     (vv) Catch-Up Contributions. Contributions made to the Plan by an Employer, at the election of an eligible Participant, in lieu of cash compensation, pursuant to a salary reduction agreement, as provided in Section 4.10, or as otherwise permitted in accordance with Section 5.3 hereof.

     (5) Article II, Section 2.1, subsection (ww) is hereby added to read as follows:

     (ww) Deemed Election Date. Except as otherwise provided herein, the Entry Date immediately following the thirty (30)-day period beginning on the later of: (a) the Employee’s employment commencement date or, (b) the applicable Notification Date. Notwithstanding the foregoing, in the event that a Participant is on a Leave of Absence on such Entry Date, such Participant’s Deemed Election Date shall be delayed to the Entry Date immediately following

1

the thirty (30)-day period beginning on the later of: (a) the date on which such Participant is again actively at work or (b) the applicable Notification Date following such return to active work. Furthermore, in the event that a Participant’s employment with the Employer and all Affiliates terminates, any prior deemed election shall automatically terminate (or, in the event such termination occurs prior to the Deemed Election Date, whether or not such employment is later reinstated), such Participant shall have a new Deemed Election Date, which shall be the Entry Date immediately following the thirty (30)-day period beginning on the later of: (a) the date on which such Participant is eligible for re-entry into the Plan, as provided in Section 3.2 hereof or, if employment shall be reinstated, the date of such reinstatement; or (b) the applicable Notification Date thereafter.

     (6) Article II, Section 2.1, subsection (xx) is hereby added to read as follows:

     (xx) Notification Date. The date on which the Plan Administrator or, if later, its authorized delegate, notifies the Participant that, absent a salary reduction election (including an election to contribute 0% of his Annual Compensation) filed with the Plan Administrator, he will be deemed to have made an election under Section 4.1 hereof to have one percent (1%) of his Annual Compensation contributed to the Trust Fund on his behalf. In the event that a Participant shall be entitled to an additional notification following a termination of employment, or return from a Leave of Absence, the date of the notification by the Plan Administrator or its authorized delegate, following such return to employment or return to active work shall apply.

     (7) Article III, Section 3.1 is hereby amended to read as follows:

     3.1 Eligibility Requirements. Every Employee on the Effective Date, who was a Participant in the Prior Plan on the day before the Effective Date, shall continue to be a Participant in the Plan. Every other Employee shall become a Participant in the Plan as of the first Entry Date concurrent with or next following his completion of thirty (30) days of service. Notwithstanding the foregoing, (a) Employees included in a unit of Employees covered by a collective bargaining agreement between employee representatives and an Employer, if retirement benefits were the subject of good faith bargaining between such employee representatives and the Employer, shall not be eligible to participate in the Plan unless such collective bargaining agreement expressly provides for the inclusion of such Employees under the Plan; (b) Non-resident aliens who receive no earned income from an Employer which constitutes income from sources within the United States shall not be eligible to participate in the Plan; (c) Individuals classified as independent contractors or Leased Employees under the Employer’s customary worker classification procedures shall not be eligible to participate in the Plan, regardless of whether or not such individual is actually an employee. An Employee’s allocation of contributions under the Plan shall take into account his Annual Compensation for only that portion of the Plan Year during which he is eligible to participate in the Plan.

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     (8) Article IV, Section 4.1 is hereby amended to read as follows:

     4.1 Salary Reduction Contributions. Each Participant may elect to have contributed on his behalf to the Trust Fund, on a pre-tax basis, any whole percentage of his Annual Compensation which is not less than one percent (1%) and which does not exceed twenty-five percent (25%); provided, however, that such amount may not exceed the dollar limitation contained in Section 402(g) of the Code in effect for such taxable year of the Participant, except to the extent permitted under Section 414(v) of the Code, if applicable. Salary Reduction Contributions shall be elected pursuant to a payroll withholding agreement, in accordance with Section 5.3 hereof. In the event that a payroll withholding agreement is not received for a Participant, a payroll withholding agreement is deemed to have been made and such Participant will be treated as if he elected one percent (1%) of his Annual Compensation to be contributed on his behalf to the Trust Fund as of the Deemed Election Date. Salary Reduction Contributions are at all times one hundred percent (100%) vested and nonforfeitable. Salary Reduction Contributions made on behalf of a Participant shall be added to the Trust Fund as soon as practicable after deduction from a Participant’s paycheck, and shall be credited to the Salary Reduction Contribution Account of the Participant in accordance with Section 6.1.

     (9) Article IV, Section 4.4 is hereby amended to read as follows:

     4.4 Dollar Limitation of Section 402(g) of the Code. If a Participant’s Salary Reduction Contributions hereunder should exceed the applicable dollar amount as set forth in Section 402(g) of the Code ($16,500 for the Participant’s taxable year beginning 2009), adjusted for increases in the cost of living, as set forth in Section 402(g)(4) of the Code, the excess (with earnings thereon) shall be reduced as follows:

     (a) To the extent that such excess Salary Reduction Contributions do not exceed the applicable dollar amount under Section 414(v) of the Code, reduced by elective deferrals previously treated as Catch-Up Contributions, for the taxable year in which the Plan Year ends, whether under this Plan or another applicable employer plan (as defined in Section 414(v)(6)(A) of the Code), the amount of such excess Salary Reduction Contributions shall be recharacterized as Catch-Up Contributions, if such Participant is otherwise eligible to make Catch-Up Contributions pursuant to Section 4.10 during the taxable year in which the excess deferral arises;

     (b) If the Participant is not eligible to make Catch-Up Contributions, as provided in Section 4.10, or to the extent that recharacterization of such excess Salary Reduction Contributions, together with elective deferrals previously treated as Catch-Up Contributions, whether under this Plan or another applicable employer plan (as defined in Section 414(v)(6)(A) of the Code), exceeds the applicable dollar amount under Section 414(v) of the Code, the amount of such excess Salary Reduction Contributions shall be distributed to the Participant. Any distribution under this paragraph (b) shall be made to the Participant no later than the April 15th immediately following the close of the Participant’s taxable year with respect to which such excess deferrals were made.

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     If the Participant also participates in another elective deferral program (within the meaning of Section 402(g)(3) of the Code) and if, when aggregating his elective deferrals under all such programs, an excess deferral arises under the applicable dollar amount set forth in Section 402(g) of the Code with respect to such Participant, the Participant shall, no later than March 1st following the close of the Participant’s taxable year, notify the Plan Administrator as to the portion of such excess deferrals to be allocated to this Plan and such excess so allocated to this Plan (with earnings thereon) shall be deemed a Catch-Up Contribution in accordance with paragraph (a) herein, as the case may be, or distributed to the Participant in accordance with paragraph (b) herein. In the event there is a loss allocable to an excess deferral, any distribution to a Participant as required by paragraph (b) of this Section shall be no greater than the lesser of: (i) the value of the Participant’s Salary Reduction Contribution Account (without regard to Catch-Up Contributions) or (ii) the Participant’s excess deferrals for the taxable year.

     In determining the amount of income allocable to excess deferrals, any reasonable alternative method of calculating income allocable to excess deferrals may be utilized, including the safe harbor method. Income from the end of the Plan Year through a date that is no more than seven (7) days before the actual date of distribution (“gap period” income) will also be calculated and distributed with such excess deferrals.

     (10) Article IV, Section 4.10 is hereby added to read as follows:

     4.10 Catch-Up Contributions. Each Participant who has or would have attained age fifty (50) prior to the close of the Participant’s taxable year, may, as of January 1 of such year, elect to have Catch-Up Contributions contributed on his behalf to the Trust Fund on a pre-tax basis, in accordance with, and subject to the limitations of, Section 414(v) of the Code. Except as otherwise provided under Section 5.3 hereof, Catch-Up Contributions shall be made pursuant to a salary reduction election. Catch-Up Contributions are at all times one hundred percent (100%) vested and nonforfeitable. Catch-Up Contributions made on behalf of a Participant shall be added to the Trust Fund as soon as practicable after deduction from a Participant’s paycheck and shall be credited to the Salary Reduction Contribution Account of the Participant.

     (11) Article V, Section 5.1 is hereby amended to read as follows:

     5.1 Individual Accounts. The Committee shall establish an Individual Account for each Participant showing the monetary value of the individual interest in the Trust Fund of each Employee, former Employee and Beneficiary. The Individual Account of each Participant shall be composed of a Company Matching Contribution Account, to which Company Matching Contributions, if any, and Catch-Up Contributions, if any, shall be credited and a Salary Reduction Contribution Account, to which Salary Reduction Contributions, if any, shall be credited, together with Company Matching Contributions, if any, utilized to satisfy the deferral percentage test or the contribution percentage test, as set forth in Sections 4.5 and 4.6 hereof. Qualified Nonelective Contributions, if any, contributed to satisfy the deferral percentage test or the contribution percentage test as set forth in Section 4.5 and 4.6 hereof, shall be credited to a Participant’s Qualified Nonelective Contribution Account. If an individual has made

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either Prior Plan Employee Contributions or Rollover Contributions, or received Prior Plan Employer Contributions, then his Individual Account shall include a Prior Plan Employee Contribution Account, a Rollover Contribution Account and a Prior Plan Employer Contribution Account, as applicable.

     (12) Article V, Section 5.3 is hereby amended to read as follows:

     5.3 Salary Reduction Elections. Each Participant who desires to make Salary Reduction Contributions (including an election to contribute 0% of his Annual Compensation) shall indicate such intent by making a salary reduction election to be effective as of the first day of the first payroll period for which he elects Salary Reduction Contributions; provided, that each Participant with respect to whom a deemed election has been made pursuant to Section 4.1 hereof shall be deemed to have filed a salary reduction election to be effective as of the Deemed Election Date. Each Participant who is eligible to make Catch-Up Contributions under Section 4.10 hereof and who desires to make such contributions for the taxable year shall indicate such intent by making a salary reduction election to be effective as of the first day of the first payroll period for which he elects Catch-Up Contributions. Such elections must be made prior to the first day of the applicable payroll period and shall be effective for each payroll period thereafter until modified or amended, as provided below.

     Salary reduction elections (including deemed elections) shall constitute a payroll withholding agreement between the Participant and the Employer, and shall constitute authorization for the reduction in Annual Compensation described above. The terms of such elections shall evidence the Participant’s intent to have his Employer withhold from his compensation each payroll period any whole percentage of his Annual Compensation, subject to the applicable limitations of Article IV. The Employer will make a contribution to the Trust Fund on behalf of the Participant for each payroll period in an amount equal to the total amount by which the Participant’s Annual Compensation from the Employer was reduced during such payroll period pursuant to the salary reduction election

     Notwithstanding any provision of this Section 5.3 to the contrary, salary reduction elections shall be governed by the following general guidelines:

     (a) A salary reduction election shall be made in the manner determined by the Plan Administrator. All salary reduction elections (including deemed elections) shall apply to each payroll period during which such election is in effect. Upon termination of employment, such election will become void.

     (b) A Participant may revoke his salary reduction election (or a deemed election) at any time upon advance notice to the Plan Administrator, within the time period established by the Plan Administrator, and thus discontinue all future withholding thereafter. Following such a revocation, a Participant may elect to resume withholding effective as of the first day of the first full payroll period next following the payroll period in which the revocation occurs, or as of the first day of any payroll period thereafter next following timely receipt by the

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Plan Administrator of such notice. A resumption of withholding following the revocation of a salary reduction election may be made only upon advance notice to the Plan Administrator, within the time period established by the Plan Administrator, and in the manner prescribed by the Plan Administrator. A Participant may increase the percentage to be withheld from his Annual Compensation or decrease the percentage to be withheld from his Annual Compensation upon advance notice to the Plan Administrator, within the time period established by the Plan Administrator, and in the manner prescribed by the Plan Administrator, such increase or decrease to be effective as of the first day of the first full payroll period next following timely receipt by the Plan Administrator of such notice. Any revocation of or change in the terms of a salary reduction election shall be made in the manner prescribed by the Plan Administrator.

     (c) An Employer may unilaterally amend or revoke a salary reduction election (including a deemed election) at any time, including an amendment to recharacterize an election of Salary Reduction Contributions as an election of Catch-Up Contributions, if the Employer determines that such revocation or amendment is necessary to insure that a Participant’s Annual Additions, as defined in subsection 6.6(b) hereof, for any Plan Year will not exceed the limitations of Article VI or to ensure that the requirements of Section 401(k) of the Code and Sections 4.1 and 4.10 hereof have been satisfied with respect to the amount that may be withheld and contributed on behalf of a Participant.

     (13) Article VI, Section 6.1 is hereby amended to read as follows:

     6.1 Salary Reduction, Catch-Up Contributions and Rollover Contributions. Salary Reduction Contributions shall be credited to the Salary Reduction Contribution Accounts of Participants and former Participants, as of the Valuation Date coinciding with the date on which Salary Reduction Contributions and Catch-Up Contributions are received by the Trust Fund, or as soon thereafter as administratively feasible, in accordance with each Participant’s or former Participant’s payroll withholding agreement. Rollover Contributions shall be credited to the Individual Accounts of Participants and Employees as provided in Section 4.7 hereof.

     (14) Article VII, Section 7.2 is hereby amended to read as follows:

     7.2 Benefit Upon Retirement. Upon Retirement (whether normal or late Retirement in accordance with Section 7.1), a Participant shall be entitled to the entire amount to the credit of his Individual Account as of the Valuation Date concurrent with or next preceding his date of Retirement, together with his portion, if any, of Salary Reduction Contributions, Catch-Up Contributions and Company Matching Contributions allocated after his date of Retirement, adjusted for earnings and losses, if any, which accrue to the Valuation Date immediately preceding the date of distribution, if later. Upon his Retirement under this Article VII, a Participant shall receive the benefits to which he is entitled at the time and in the manner provided in Article XIII hereof.

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     (15) Article VIII, Section 8.2 is hereby amended to read as follows:

     8.2 Benefit. Upon the death of a Participant or former Participant, his designated Beneficiary or Beneficiaries shall be entitled to the entire vested amount to the credit of his Individual Account as of the Valuation Date concurrent with or next preceding his date of death, together with his portion, if any, of Salary Reduction Contributions, Catch-Up Contributions and Company Matching Contributions allocated after his date of death, adjusted for earnings and losses, if any, which accrue to the Valuation Date immediately preceding the date of distribution, if later. Payment shall be made at the time and in the manner provided in Article XIII hereof.

     (16) Article IX, Section 9.1 is hereby amended to read as follows:

     9.1 Benefit. In the event of the Disability of a Participant, he shall be entitled to the entire vested amount to the credit of his Individual Account as of the Valuation Date concurrent with or next preceding the date on which his employment terminates as a result of his Disability, together with his portion, if any, of Salary Reduction Contributions, Catch-Up Contributions and Company Matching Contributions allocated after the date of his termination of employment, adjusted for earnings and losses, if any, which accrue to the Valuation Date immediately preceding the date of distribution, if later. Payments shall be made at the time and in the manner provided in Article XIII hereof. A Participant who suffers a Disability who has not terminated employment may request an in-service withdrawal in accordance with Section 13.10 hereof.

     (17) Article XIII, Section 13.7 is hereby amended to read as follows:

     13.7 Financial Hardship Withdrawals. A Participant may, upon the approval of the Committee, withdraw any portion of his Individual Account, other than amounts attributable to income on such Participant’s Salary Reduction Contributions, on account of financial hardship. A Participant who wishes to request a hardship withdrawal shall file with the Committee a written request for withdrawal, on a form provided by the Committee. The Committee shall adopt uniform and nondiscriminatory rules regarding the granting of such requests and shall evaluate hardship requests made under this Section 13.7. Financial hardship means an immediate and heavy financial need of the Participant for which funds are not reasonably available from other resources of the Participant. If approved by the Committee, any withdrawal for financial hardship may not exceed the amount required to meet the immediate financial need created by the hardship. Furthermore, the Committee shall not approve the request of any Participant for a hardship withdrawal, unless the Participant has theretofore made all withdrawals, other than hardship withdrawals, and has theretofore obtained all loans permitted under all plans maintained by the Employer. The determination of whether a Participant suffers sufficient hardship to justify the granting of his written request and of the amount permitted to be withdrawn under this Section 13.7 shall be made in the sole and absolute discretion of the Committee after a full review of the Participant’s written request and evidence presented by the Participant showing financial hardship.

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     A distribution will be treated as necessary to satisfy a financial hardship if the Committee relies upon the Participant’s written representation, unless the Committee has actual knowledge to the contrary, that the hardship cannot reasonably be relieved:

     (a) through reimbursement or compensation by insurance or otherwise:

     (b) by liquidation of the Participant’s assets;

     (c) by cessation of Salary Reduction Contributions and Catch-Up Contributions under the Plan; or

     (d) by other distributions or nontaxable (determined at the time of the loan) loans from plans maintained by the Employer, or any other employer of such Participant, or by borrowing from commercial sources on reasonable commercial terms in an amount sufficient to satisfy the financial hardship.

     Upon a Participant’s receipt of a withdrawal for financial hardship, such Participant shall be prohibited from making Salary Reduction Contributions and Catch-Up Contributions for a period of six (6) months, beginning on the date on which the hardship withdrawal is made. A Participant may elect to resume Salary Reduction Contributions and Catch-Up Contributions as of the first payroll period commencing on or after the Entry Date next following the last day of such six (6) month period by executing a new payroll withholding agreement within the time period prior to such date established by the Committee.

     Expenses which may warrant approval of a Participant’s request for a hardship withdrawal include:

     (i) Expenses for (or necessary to obtain) medical care that would be deductible under Code Section 213(a) (determined without regard to whether the expenses exceed 7.5% of adjusted gross income) for the Participant, the Participant’s spouse or dependents (as defined in Code Section 152);

     (ii) Costs directly related to the purchase of a principal residence for the Participant (excluding mortgage payments);

     (iii) Payment of tuition, related educational fees, and room and board expenses, for up to the next twelve (12) months of post secondary education for the Participant or the Participant’s spouse, children or dependents (as defined in Code Section 152 without regard to Sections 152(b)(1), (b)(2) and (d)(1)(B));

     (iv) Payments necessary to prevent the eviction of the Participant from his principal residence or foreclosure on the mortgage of that residence;

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     (v) Payments for burial or funeral expenses for the Participant’s deceased parent, spouse, children or dependents (as defined in Code Section 152 without regard to Section 152(d)(1)(B));

     (vi) Expenses for the repair of damage to the Participant’s principal residence that would qualify for the casualty deduction Code Section 165 (determined without regard to whether the loss exceeds 10% of adjusted gross income); or

     (vii) Such other purposes as permitted by the Commissioner of Internal Revenue.

     (18) Article XIV, Section 14.5, subsection (a) is hereby amended to read as follows:

     (a) Investment of Contributions: Any Participant, on or before entry into the Plan, within the time period established by the Plan Administrator, may designate the manner and the applicable percentage in which the Participant desires the Trustee to invest his current contributions, pursuant to the provisions set forth above, which designation shall continue in effect until revoked or modified by the Participant. If such Participant fails to designate the investment of his current contributions on or before his entry into the Plan, or if the Participant wishes to change such designation, the Participant may make such designation, within the time period established by the Plan Administrator, to become effective as soon as practicable following such time period as is established by the Plan Administrator, and such designation shall continue in effect until revoked by the Participant.

     In the event the nature of any investment shall, in the opinion of the Company, or its authorized delegate, change, then the Plan Administrator shall notify those Participants who the Plan Administrator, in its sole and absolute discretion, determines are affected by the change, who shall then have a reasonable period of time, as determined by the Plan Administrator, to designate the manner and the applicable percentages in which amounts so invested and affected by the change shall be invested.

     Any amounts with respect to which the Trustee fails to receive a proper investment direction from any Participant shall be invested, as directed by the Plan Administrator to the Trustee in writing, in a qualified default investment alternative, as defined in Department of Labor Proposed Regulations §2550.404c-5 and such other guidance as may be promulgated by the Department of Labor, and with respect to which the other conditions set forth in Department of Labor Proposed Regulations §2550.404c-5 are met, including, but not limited to, the delivery to the Participant of any material provided to the Plan that relates to the Participant’s investment therein. All investment designations under this subparagraph (a) shall be made in the manner prescribed by the Plan Administrator.

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     The Plan Administrator shall maintain separate subaccounts in the name of each Participant within his Individual Account to reflect such Participant’s accrued benefit attributable to his directed investment in each investment fund.

     IN WITNESS WHEREOF, and as conclusive evidence of the adoption of the foregoing instrument comprising Amendment No. 8 to the Tandy Brands Accessories, Inc. Employees Investment Plan, Tandy Brands Accessories, Inc. has caused these presents to be duly executed in its name and behalf by a proper officer thereunto duly authorized this 31^st day of December, 2008.

TANDY BRANDS ACCESSORIES, INC.
By: Name: Title:	/s/ Craig Mackey Craig Mackey CFO

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EX-10.6

EXHIBIT 10.6

Tandy Brands Accessories, Inc.
2009 Performance Unit Award Agreement

This award agreement (“Award Agreement”) sets forth the terms and conditions of the 2009 Performance Unit Program (the “Program”) which is governed by the Tandy Brands Accessories, Inc. 2002 Omnibus Plan (the “Plan”). This Award Agreement, together with the Plan, govern the rights under the Program with respect to the performance-based units (each, a “Performance Unit”) Awards granted under this Award Agreement, and set forth all of the conditions and limitations affecting such rights. Terms used in this Award Agreement that are not otherwise defined herein shall have the meanings ascribed to them in the Plan. If there is any inconsistency between the terms of this Award Agreement and the terms of the Plan, the Plan’s terms shall supersede and replace the conflicting terms of this Award Agreement. For purposes of this Award Agreement, “Company” means Tandy Brands Accessories, Inc., its affiliates, and/or its subsidiaries.

Award and Program Provisions

1.	Performance Units Granted:                      Performance Units granted to                      (the “Participant”).
2.	Date of Grant: January 19, 2009.
3.	Performance Cycle. The performance cycle commences on January 1, 2009, and ends on June 30, 2011 (the “Performance Cycle”).
4.	Performance Unit. Each Performance Unit shall be payable 50% in cash and 50% in shares of Common Stock of the Company, with the number of shares of Common Stock payable based on the Fair Market Value of the Common Stock of the Company on the date of grant, which was $1.9201. The value of a single Performance Unit shall equal $1.00.
5.	Performance Measure — Earnings Per Share. Earnings Per Share (“EPS”) shall be determined by dividing the Company’s consolidated net income or loss by the number of basic common shares of the Company for each twelve-month period, which shall begin each July 1 and end on the following June 30, in the Performance Cycle (each, a “Performance Year”). For purposes of determining EPS for the Performance Year ending June 30, 2009, such Performance Year shall include the period beginning July 1, 2008 and ending December 31, 2008, despite the fact that the Performance Cycle does not commence until January 1, 2009. All amounts necessary to calculate EPS for each Performance Year shall be determined in accordance with generally accepted accounting principles in the United States and, to the extent possible, based on disclosures in the Company’s consolidated financial statements; provided, however, with respect to the determination of:

(a) consolidated net income or loss, the Company’s consolidated financial statements shall be adjusted to exclude, as applicable, the following possible actions or effects:

(i)	the cumulative effect(s) of changes in accounting principles;
(ii)	extraordinary items;

(iii)	recognized capital gains or losses; and
(iv)	such one-time, non-operating items as determined by the Board; and

(b) the number of basic common shares, the calculation shall:

(i)	be made in accordance with the provisions of Financial Accounting Standards Board Statement No. 128, “Earnings per Share,” as amended and interpreted as of the date of this Award Agreement and without regard to subsequent revisions, amendments, interpretations, or replacements; and
(ii)	exclude the effects, if any, during the Performance Cycle of:

(A)	the issuance of securities in connection with the acquisition of assets or a business;
(B)	the declaration or payment of a stock dividend;
(C)	any recapitalization resulting in a stock split-up, combination, or exchange of shares of Common Stock; or
(D)	other increase or decrease in such shares of Common Stock effected without receipt of consideration by the Company.

6. Amount of Performance Unit Award Earned: If not previously forfeited, on June 30, 2011, the Participant shall vest in and have a nonforfeitable right to the percentage of Performance Units that equals the average of the Achievement Percentages attained for each Performance Year in the Performance Cycle that corresponds with the EPS Performance Level Achieved for each such year as set forth in the table below.

	Performance		EPS Performance Level Achieved
	Year Ending		(Income (Loss))
	June 30,		Threshold			Target			Maximum
		2009	$			$			$
Achievement Percentage				50	%		100	%		200	%
		2010	$			$			$
Achievement Percentage				50	%		100	%		200	%
		2011	$			$			$
Achievement Percentage				50	%		100	%		200	%

The Achievement Percentage for each Performance Year shall be interpolated to the actual EPS achieved for that Performance Year; provided, however, that if the actual EPS achieved for any Performance Year is (i) less than the corresponding threshold level set forth above, the Achievement Percentage for such Performance Year shall be 0% or (ii) greater than the corresponding maximum level set forth above, the Achievement Percentage for such Performance Year shall be 200%.

As described above, the percentage of Performance Units that shall vest at the end of the Performance Cycle shall be calculated by averaging the Achievement Percentages attained for each Performance Year in the Performance Cycle. By way of example, but not limitation:

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• If the actual EPS Performance Level Achieved for each of 2009, 2010 and 2011 was $ ___, $ ___and $ ___, respectively, the corresponding Achievement Percentages for each of 2009, 2010 and 2011 would be ___%, ___% and ___%, respectively.

• Based on the foregoing, the percentage of Performance Units that would vest at the end of the Performance Cycle would be the average of the Achievement Percentages, or ___%.

• As a result, the Performance Units earned would equal                      multiplied by ___%, or                      Performance Units.

• Of the                      Performance Units earned, the Participant would be entitled to receive (a) 50% in cash, or $                     (calculated by multiplying                      Performance Units by $1.00 and multiplying the product by 50%), and (b) 50% in shares of Common Stock, or                      shares (calculated by multiplying                      Performance Units by $1.00 and multiplying the product by 50%, then, dividing by $1.9201, the Fair Market Value of the Company’s Common Stock on the date of grant) with a cash settlement to be made for any fractional shares.

7.	Settlement of Award: The cash and shares of Common Stock underlying the Performance Units which vest pursuant to Section 6 of this Award Agreement shall be paid by the Company to the Participant as provided in Section 9 of this Award Agreement, subject to adjustment in accordance with Section 14 of this Award Agreement, with the number of shares of Common Stock distributed, if any, rounded down to the next whole share and a cash settlement made for any fractional shares. Evidence of the issuance of the shares of Common Stock pursuant to this Award Agreement may be accomplished in such manner as the Company or its authorized representatives shall deem appropriate including, without limitation, electronic registration, book-entry registration or issuance of a certificate or certificates in the name of the Participant or in the name of such other party or parties as the Company and its authorized representatives shall deem appropriate.
	In the event the shares of Common Stock issued pursuant to this Award Agreement remain subject to any additional restrictions, the Company and its authorized representatives shall ensure that the Participant is prohibited from entering into any transaction, which would violate any such restrictions, until such restrictions lapse.
8.	Eligibility for Earned Performance Units: A Participant will be eligible to receive Performance Units in which the Participant has a vested interest pursuant to Section 6 of this Award Agreement only if:

(a)	The Participant was approved as a participant for the Performance Cycle; and
(b)	(i) The Participant:

(A)	continues to be employed by the Company through the end of the Performance Cycle; or
(B)	experiences a Termination of Service during the Performance Cycle due to death, Total and Permanent Disability or Retirement (for the purposes of this Agreement, “Retirement” shall mean any Termination of Service solely due to retirement upon attainment of age 65, or permitted Early Retirement as determined by the Committee. Early Retirement shall mean a person’s Termination of Service with

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the Company: (i) after attainment of age 55, but before attainment of age 65; and (ii) after completion of 15 years of service); or

(ii) There is a Change of Control of the Company during the Performance Cycle.

If the Participant experiences a Termination of Service due to death, Total and Permanent Disability, Retirement or Early Retirement during the Performance Cycle, the Participant shall be eligible to vest in a fraction of the number of Performance Units in which the Participant may have otherwise vested under Section 6 of this Award Agreement for the Performance Cycle had the Participant remained employed until the end of the Performance Cycle. The fraction of the number of Performance Units in which the Participant will vest in connection with the Participant’s Termination of Service due to death, Total and Permanent Disability, Retirement or Early Retirement will be determined using a numerator which equals the number of complete Performance Years that have elapsed since the beginning of the Performance Cycle as of the date of the Participant’s Termination of Service and a denominator which is equal to the number of Performance Years in the Performance Cycle. In the event such pro-ration results in the Participant vesting in a fractional number of Performance Units, the number of Performance Units in which the Participant will vest will be rounded up to the nearest whole number.

Except as otherwise provided in this Award Agreement, all Performance Units that are not vested in connection with a Participant’s experiencing a Termination of Service as a result of the Participant’s death, Total and Permanent Disability, Retirement or Early Retirement shall be forfeited to the Company. In the event of a Participant’s death, the Participant’s beneficiary or estate shall be entitled to the Performance Units to which the Participant otherwise would have been entitled under the same conditions as would have been applicable to the Participant.

If there is a Change of Control of the Company during the Performance Cycle, the Participant shall vest in and have a nonforfeitable right to 200% of the Performance Units granted under Section 1 of this Award Agreement without regard to the actual Achievement Percentage attained for any Performance Year.

All Performance Units earned under this Section 8 shall be settled pursuant to the terms of Section 7 at the time provided in Section 9.

9. Time of Payment: Distribution of the cash and shares of Common Stock corresponding to the Performance Units which vested pursuant to Section 6 of this Award Agreement, will be made:

(a)	To a Participant who (i) experiences a Termination of Service as a result of the Participant’s death, Total and Permanent Disability, Retirement or Early Retirement during the Performance Cycle, or (ii) remains employed with the Company for the entire Performance Cycle, as soon as administratively practicable following the end of the Performance Cycle, but not later than the last day of the calendar year in which the Performance Cycle ends.
(b)	In connection with a Change of Control during the Performance Cycle, within two and one half (21/2) months following the earlier of the date of a Section 409A Change of Control or the end of the Performance Cycle.
	For purposes of this Award Agreement, a “Section 409A Change of Control” shall mean:

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(i)	any one person, or more than one person acting as a group, acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of the Company;
(ii)	any one person, or more than one person acting as a group, acquires (or has acquired during any twelve (12) month period) ownership of stock of the Company possessing 30% or more of the total voting power of the stock of the Company;
(iii)	a majority of the members of the Board is replaced during any twelve (12) month period by directors whose appointment is not endorsed by a majority of the members of the Board before the date of the appointment or election; or
(iv)	any one person, or more than one person acting as a group, acquires (or has acquired during any twelve (12) month period) assets from the Company that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of the Company immediately before such acquisition or acquisitions.

The determination of whether a Section 409A Change of Control has occurred shall be made in accordance with the provisions of Code Section 409A and the regulations promulgated thereunder.

10.	Termination of Service for Other Reasons: In the event a Participant experiences a Termination of Service during the Performance Cycle by the Company for any reason other than those reasons set forth in Section 8, this entire Award shall forfeit and no payment shall be made to the Participant under this Award Agreement.
11.	Nontransferability: During the Performance Cycle, Performance Units awarded pursuant to this Award Agreement may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated (“Transfer”), other than by will or by the laws of descent and distribution, except as provided in the Plan. If any Transfer, whether voluntary or involuntary, of Performance Units is made, or if any attachment, execution, garnishment, or lien shall be issued against or placed upon the Performance Units, the individual’s right to such Performance Units shall be immediately forfeited to the Company, and this Award Agreement shall lapse.
12.	Community Interest of Spouse: The community interest, if any, of any spouse of a Participant in any of the Performance Units shall be subject to all of the terms, conditions and restrictions of this Award Agreement and the Plan, and shall be forfeited and surrendered to the Company upon the occurrence of any of the events requiring the Participant’s interest in such Performance Units to be so forfeited and surrendered pursuant to this Award Agreement.
13.	Rights: A Performance Unit represents an unsecured promise of the Company to pay cash and issue shares of Common Stock of the Company as otherwise provided in this Award Agreement. Other than the rights provided in this Award Agreement, the Participant shall have no rights of a stockholder of the Company (e.g., no right to vote the shares of Common Stock underlying the Performance Units or to receive any dividend or dividend equivalent thereon) until such Performance Units have vested and the related shares of Common Stock of the Company have been issued pursuant to the terms of this Award Agreement.
14.	Adjustments: In the event that the outstanding shares of Common Stock are changed into or exchanged for a different number or kind of capital stock or other securities of the Company or its successor by reason of merger, consolidation, recapitalization, reclassification, stock split-up, stock

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	dividend or combination of shares of Common Stock, the Committee or the Board, subject to the provisions of the Plan and this Award Agreement, shall make an appropriate and equitable adjustment in accordance with the provisions of the Plan in the number and kind of Performance Units under this Award Agreement so that after such event each Participant’s proportionate interest shall be maintained as before the occurrence of such event. Any such adjustment made by the Committee or the Board shall be final and binding upon the Participant, the Company and all other interested persons.
15.	Requirements of Law: The granting of Performance Units under the Program and Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.
16.	Inability to Obtain Authorization: The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any shares of Common Stock hereunder, shall relieve the Company of any liability with respect to the failure to issue or sell such shares as to which such requisite authority shall not have been obtained.
17.	Tax Withholding: The Company shall have the power and the right to deduct or withhold, or require the Participant or their beneficiary to remit to the Company, an amount sufficient to satisfy federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of this Award Agreement.
18.	Share Withholding: With respect to withholding required upon any taxable event arising under this Award Agreement, by execution of this Award Agreement or any related acknowledgement, the Participant shall be deemed to have authorized the Company to withhold from the cash to be paid and/or shares of Common Stock issued as a result of the Participant’s vesting in the Performance Units, the cash and/or shares of Common Stock necessary to satisfy the Participant’s minimum required withholding, if any. The amount of the minimum required withholding and the cash and/or number of shares of Common Stock required to satisfy Participant’s minimum required withholding, if any, as well as the amount reflected on tax reports filed by the Company, shall be based on the cash to be paid and/or the Fair Market Value of the Common Stock on the day the liability is determined by the Company. Notwithstanding the foregoing, the Company may require that the Participant satisfy any required withholding by any other means the Company, in its sole discretion, considers reasonable. The obligations of the Company under this Award Agreement shall be conditioned on the Participant’s satisfaction of any required withholding.
19.	Administration: This Award Agreement and the rights hereunder are subject to all the terms and conditions of the Plan, as the same may be amended from time to time, as well as to such rules and regulations as the Committee may adopt for administration of the Plan. It is expressly understood that the Committee is authorized to administer, construe, and make all determinations necessary or appropriate to the administration of the Plan and the Award Agreement, all of which shall be binding upon the Participant.
20.	No Right to Future Grants; No Right of Employment or Continued Employment: In accepting the Award granted hereunder, the Participant acknowledges that: (a) the Plan and this Program are established voluntarily by the Company, they are discretionary in nature and they may be modified, suspended or terminated by the Company at any time, as provided in the Plan and this Award Agreement; (b) the Award is voluntary and occasional and does not create any contractual or other right to receive future Awards; (c) all decisions with respect to future Awards, if any, will be at the sole discretion of the Company; (d) the Participant’s participation in the Program and Plan is

6

	voluntary; (e) the Award is not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculating any severance, resignation, termination, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments; (f) in the event that a Participant is an employee of the Company, the Award will not be interpreted to form an employment contract or relationship with the Company; (g) this Award shall not confer upon an individual any right to continuation of employment by the Company, nor shall this Award interfere in any way with the Participant’s or the Company’s right to terminate employment at any time; (h) the future value of the underlying shares of Common Stock is unknown and cannot be predicted with certainty; (i) notwithstanding any terms or conditions of the Plan to the contrary, in the event of the termination of a Participant’s employment by the Company for any reason, the right to receive cash and shares of Common Stock under this Award Agreement, if any, will terminate effective as of the date that the Participant is no longer actively employed and will not be extended by any notice period mandated under any federal, state, provincial, or local law (including but not limited to the Worker Adjustment and Retraining Notification Act).
21.	Amendment to the Plan: The Committee may terminate, amend, or modify the Plan and this Program; provided, however, that no such termination, amendment, or modification of the Plan or this Program may in any way adversely affect a Participant’s rights under this Award Agreement, without the consent of the Participant or the Participant’s designated beneficiary.
22.	Successor: All obligations of the Company under the Plan and this Award Agreement, with respect to the Performance Units, shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.
23.	Applicable Laws and Consent to Jurisdiction: The validity, construction, interpretation, and enforceability of this Award Agreement shall be determined and governed by the laws of the State of Texas without giving effect to the principles of conflicts of law. For the purpose of litigating any dispute that arises under this Award Agreement, the parties hereby consent to exclusive jurisdiction and agree that such litigation shall be conducted in the federal or state courts of the State of Texas.
24.	Severability: The provisions of this Award Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.

TANDY BRANDS ACCESSORIES, INC.
By:
	Name:
	Title:

7

Tandy Brands Accessories, Inc.
2009 Performance Unit Award Acknowledgement

**If this Acknowledgement is not dated, signed and returned as requested below, the award of Performance Units pursuant to the Award Agreement attached will be null and void and there will be no substitute award of Performance Units.**

Please acknowledge your agreement to participate in the Tandy Brands Accessories, Inc. 2002 Omnibus Plan (the “Plan”), receive performance-based units (“Performance Units”) under the 2009 Performance Unit Award Agreement (“Award Agreement”), attached, and to abide by all of the governing terms and provisions, by signing the following acknowledgement and agreement (“Acknowledgement”) and returning it to the Chief Financial Officer of Tandy Brands Accessories, Inc. at 690 East Lamar Boulevard, Suite 200, Arlington, Texas 76011 within thirty days of receipt. For purposes of this Acknowledgement, “Company” means Tandy Brands Accessories, Inc., its affiliates, and/or its subsidiaries.

Agreement to Participate

By signing this Acknowledgement and returning it to the Chief Financial Officer of Tandy Brands Accessories, Inc., I acknowledge that I have read the Plan and the Award Agreement dated January 19, 2009, and that I fully understand all of my rights under the Plan and the Award Agreement, as well as all of the terms and conditions which may limit my eligibility to retain or receive the Performance Units or cash and shares of Common Stock payable to me pursuant to the Plan and the Award Agreement.

I further acknowledge and agree that the Performance Units subject to the Award Agreement shall vest and the restrictions resulting in the forfeiture of the Performance Units shall lapse, if at all, only during the period of my service to the Company or as otherwise provided in the Award Agreement (not through the act of being granted the Performance Units).

I further acknowledge and agree that nothing in the Award Agreement or the Plan shall confer on me any right with respect to future awards or continuation of my service to the Company.

I acknowledge receipt of a copy of the Plan, represent that I am familiar with the terms and provisions thereof, and hereby accept the Award subject to all of the terms and provisions hereof and thereof. I have reviewed the Award Agreement and the Plan in their entirety, have had an opportunity to obtain the advice of counsel prior to executing this Acknowledgement, and fully understand all provisions of this Acknowledgement, the Award Agreement and the Plan.

I further acknowledge that the tax consequences associated with the Performance Units under the Award Agreement are complex and that the Company has urged me to review the federal, state, and local tax consequences of the award of Performance Units under the Award Agreement with my own tax advisors. I am relying solely on such advisors and not on any statements or representations of the Company or any of its agents. I understand that I, and not the Company, shall be responsible for my own tax liability that may arise as a result of the Award Agreement.

Date:
	[name of participant]

EX-10.7

EXHIBIT 10.7

This FIRST AMENDMENT TO LEASE (“First Amendment”) is made this 22nd day of January, 2009 by and between Enterprise Centre Operating Associates, LP, a New Mexico limited partnership as successor in interest to Koll Bren Fund VI, L.P., a Delaware limited partnership (“Landlord”) and Tandy Brands Accessories, Inc., a Delaware corporation (“Tenant”)

RECITALS:

     WHEREAS, Landlord and Tenant entered into that certain Lease Agreement (“Lease”) dated January 31, 2004 covering certain premises (“Premises”) containing approximately 42,726 square feet of Net Rentable Area in the building commonly known as Enterprise Centre (“Building”) located at 690 East Lamar, Arlington, Tarrant County, Texas;

     WHEREAS, Landlord and Tenant desire to extend the Term of the Lease; and

     WHEREAS, Landlord and Tenant desire to amend the Lease to reflect their agreements as to the terms and conditions governing the Extended Term:

AGREEMENTS:

NOW, THEREFORE, for and in consideration of the sum of ten and no/100 dollars ($10.00) and other valuable consideration paid by each party to the other, the receipt and sufficiency of which is hereby acknowledged, Landlord and Tenant do hereby amend the Lease as follows:

1.	Term. The Term of the Lease for the Leased Premises shall be extended for a period of four (4) months (“Extended Term”) commencing September 1, 2009 and expiring December 31, 2009.
2.	Base Rental. Effective September 1, 2009, The Base Rental shall be amended to read as follows:

	Monthly		Period
Period	Amount		Amount
09/01/09 — 12/31/09	$	62,308.75	$	249,235.00

3.	Tenant Improvements. Tenant hereby accepts the Premises in its “As-Is” condition.
4.	No Brokers. Tenant warrants that it has had no dealings with any real estate broker or agent, excepting Jackson & Cooksey, in connection with the negotiation of this Amendment, and that it knows of no real estate brokers or agents are or might be entitled to a commission in connection with this Amendment or otherwise in connection with the Lease.
5.	Authority. Tenant and each person signing this Amendment on behalf of Tenant represents to Landlord as follows: (i) Tenant is a duly incorporated and validly existing under the laws of the State of Delaware, (ii) Tenant has and is qualified to do business in Texas, (iii) Tenant has the full right and authority to enter into this Amendment, and (iv) each person signing on behalf of Tenant was and continues to be authorized to do so.
6.	Defined Terms. All terms not otherwise defined herein shall have the same meaning as assigned to them in the Lease. Except as amended hereby, the Lease shall remain in full force and effect in accordance with its terms and is hereby ratified. In the event of a conflict between the Lease and this Amendment, this Amendment shall control.

7.	No Representations. Landlord and Landlord’s agents have made no representations or promises, expressed or implied, in connection with this Amendment except as expressly set forth herein.
8.	Entire Agreement. This Amendment, together with the Lease, contains all of the agreements of the parties hereto with respect to any matter covered or mentioned in this Amendment or the Lease, and no prior agreement, understanding or representation pertaining to any such matter shall be effective for any purpose.

Except as modified and amended herein, all other terms and conditions of the Lease are hereby ratified and affirmed in all respects.

IN WITNESS HEREOF, the undersigned have caused this First Amendment to be duly executed effective as of the date first written above.

LANDLORD: Enterprise Centre Operating Associates, LP, a New Mexico limited partnership as successor in interest to Koll Bren Fund VI, L.P., a Delaware limited partnership

By: BGK Texas Property Management, LLC, as Agent for Owner

By:
Name:	J. Peter Mehlert
Title:	President
Date:

TENANT: Tandy Brands Accessories, Inc., a Delaware corporation

By:	/s/ Craig Mackey
Name:	CRAIG MACKEY
Title:	CFO
Date:	1/22/09

2

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, N. Roderick McGeachy, III, 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	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
d.	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.

February 4, 2009	/s/ N. Roderick McGeachy, III
	N. Roderick McGeachy, III
	President and Chief Executive Officer

EX-31.2 8 d66135exv31w2.htm EX-31.2

EXHIBIT 31.2
CERTIFICATION PURSUANT TO
RULE 13a-14(a)/15d-14(a)
(CHIEF FINANCIAL OFFICER)

CERTIFICATION BY CHIEF FINANCIAL OFFICER

I, M.C. Mackey, 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	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
d.	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.

February 4, 2009	/s/ M.C. Mackey
	M.C. Mackey
	Chief Financial Officer

EX-31.2

exv31w2

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 December 31, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, N. Roderick McGeachy, III and M.C. Mackey, President and Chief Executive Officer and Chief Financial Officer, 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.

February 4, 2009	/s/ N. Roderick McGeachy, III N. Roderick McGeachy, III
	President and Chief Executive Officer
	/s/ M.C. Mackey M.C. Mackey
	Chief Financial Officer