On January 29, 2014, Salus Capital Partners, LLC formally notified Tandy Brands Accessories, Inc. in writing of one or more events of default under the credit agreement and provided Tandy Brands Accessories, Inc. with a notification of disposition of collateral pursuant to which Salus intends to exercise certain rights available to it under the security agreements and article 9 of the uniform commercial code as in effect in the State of New York, including disposition of collateral following default.  Per the notice received from Salus, Salus will undertake, in one or more public and/or private sales, dispositions of certain of the collateral under the security agreements.  This collateral may include accounts, goods, equipment, inventory, fixtures, documents, instruments, chattel paper, letters of credit and letter of credit rights, investment property, securities, collateral, intellectual property, good will, commercial tort claims, general intangibles (including payment intangibles, deposit accounts and supporting obligations) and books and records related to the foregoing collateral.  Proceeds from such transactions will be applied against the outstanding obligations under the credit agreement.  If the proceeds from such transactions are insufficient to satisfy the outstanding amounts under the credit agreement, Tandy Brands Accessories, Inc. could remain liable for any deficiency.  In addition, Tandy Brands Accessories, Inc. anticipates selling its remaining inventory of Walmart mens' and boys' belts to Walmart over the course of the next several months.  While Tandy Brands Accessories, Inc. anticipates certain residual assets may remain following consummation of the transactions, there are no assurances that total proceeds from the transactions and sales of inventory to Walmart will be sufficient to fully satisfy the outstanding obligations under the credit agreement.