EX-10.2



 





Exhibit 10.2




AMENDED AND RESTATED




LOAN
AND SECURITY AGREEMENT


DATED AS OF MAY 25. 2007



between




ROCKY BRANDS, INC.,

LIFESTYLE FOOTWEAR, INC.,

ROCKY BRANDS WHOLESALE LLC

AND

ROCKY BRANDS RETAIL LLC

as Borrowers,




GMAC COMMERCIAL FINANCE LLC,

as Agent and as Lender, and




The Financial Institution(s) Listed

on the Signature Pages Hereof,

as Lenders




 









 





TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page
	SECTION 1. DEFINITIONS AND ACCOUNTING TERMS
	 	 	3	 
	1.1. Certain Defined Terms
	 	 	3	 
	1.2. UCC Defined Terms
	 	 	29	 
	1.3. Accounting Terms
	 	 	30	 
	1.4. Other Definitional Provisions
	 	 	30	 
	 
	 	 	 	 
	SECTION 2. LOANS AND COLLATERAL
	 	 	31	 
	2.1. Loans
	 	 	31	 
	(A) Revolving Loan
	 	 	31	 
	(B) [Reserved.]
	 	 	31	 
	(C) [Reserved.]
	 	 	31	 
	(D) Borrowing Mechanics
	 	 	31	 
	(E) Notes
	 	 	31	 
	(F) Letters of Credit
	 	 	32	 
	(1) Maximum Amount
	 	 	32	 
	(2) Reimbursement
	 	 	32	 
	(3) Request for Letters of Credit
	 	 	32	 
	(G) Other Letter of Credit Provisions
	 	 	33	 
	(1) Obligations Absolute
	 	 	33	 
	(2) Nature of Lender’s Duties
	 	 	33	 
	(3) Liability
	 	 	34	 
	(H) Availability of a Lender’s Pro Rata Share
	 	 	34	 
	(1) Lender’s Amounts Available on a Funding Date
	 	 	34	 
	(2) Lender’s Failure to Fund
	 	 	34	 
	(3) Payments to a Defaulting Lender
	 	 	35	 
	(4) Defaulting Lender’s Right to Vote
	 	 	35	 
	2.2. Interest
	 	 	35	 
	(A) Rate of Interest
	 	 	35	 
	(B) Computation and Payment of Interest
	 	 	35	 
	(C) Interest Laws
	 	 	36	 
	(D) Conversion or Continuation
	 	 	36	 
	2.3. Fees
	 	 	37	 
	(A) Unused Line Fee
	 	 	37	 
	(B) Letter of Credit Fees
	 	 	37	 
	(C) Audit Fees
	 	 	38	 
	(D) Other Fees and Expenses
	 	 	38	 
	(E) Fee Letter
	 	 	38	 
	2.4. Payments and Prepayments
	 	 	38	 
	(A) Manner and Time of Payment
	 	 	38	 
	(B) Mandatory Prepayments
	 	 	38	 
	(1) Over Formula Advance
	 	 	38	 
	(2) Prepayments from Proceeds of Asset Dispositions
	 	 	39	 
	(3) Prepayments from Issuance of Securities
	 	 	39	 






i









 






	 	 	 	 	 
	 	 	Page
	(4) Prepayments from Tax Refunds
	 	 	39	 
	(5) Change of Control
	 	 	39	 
	(C) Voluntary Prepayments and Repayments
	 	 	39	 
	(D) Payments on Business Days
	 	 	40	 
	(E) Application of Prepayment Proceeds
	 	 	40	 
	2.5. Term of this Agreement
	 	 	40	 
	2.6. Statements
	 	 	40	 
	2.7. Grant of Security Interest
	 	 	40	 
	(A) Grant of Liens in the Collateral
	 	 	41	 
	(B) Loan Parties Remain Liable
	 	 	41	 
	2.8. Yield Protection
	 	 	41	 
	(A) Capital Adequacy and Other Adjustments
	 	 	41	 
	(B) Increased LIBOR Funding Costs
	 	 	42	 
	2.9. Taxes
	 	 	42	 
	(A) No Deductions
	 	 	42	 
	(B) Changes in Tax Laws
	 	 	42	 
	(C) Foreign Lenders
	 	 	43	 
	2.10. Required Termination and Prepayment
	 	 	43	 
	2.11. Optional Prepayment/Replacement of Lenders
	 	 	44	 
	(A) Replacement of an Affected Lender
	 	 	44	 
	(B) Prepayment of an Affected Lender
	 	 	44	 
	2.12. Compensation
	 	 	44	 
	2.13. Booking of LIBOR Loans
	 	 	45	 
	2.14. Assumptions Concerning Funding of LIBOR Loans
	 	 	45	 
	2.15. Endorsement; Insurance Claims
	 	 	45	 
	 
	 	 	 	 
	SECTION 3. CONDITIONS TO LOANS
	 	 	45	 
	(A) Closing Deliveries
	 	 	46	 
	(B) Security Interests
	 	 	46	 
	(C) Closing Date Availability
	 	 	46	 
	(D) Representations and Warranties
	 	 	46	 
	(E) Fees
	 	 	46	 
	(F) No Default
	 	 	46	 
	(G) Performance of Agreements
	 	 	46	 
	(H) No Prohibition
	 	 	46	 
	(I) No Litigation
	 	 	46	 
	(J) Second Priority Senior Secured Note Investment
	 	 	46	 
	(K) Refinancing Transactions
	 	 	47	 
	 
	 	 	 	 
	SECTION 4. REPRESENTATIONS, WARRANTIES OF THE LOAN PARTIES
	 	 	47	 
	4.1. Representations and Warranties of Loan Parties
	 	 	47	 
	(A) Organization and Power
	 	 	47	 
	(B) Principal Business
	 	 	47	 
	(C) Financial Statements and Financial Projections
	 	 	47	 
	(1) Financial Statements; Historical Statements
	 	 	47	 
	(2) Pro Forma Balance Sheet
	 	 	48	 
	(3) Financial Projections
	 	 	48	 
	(4) Accuracy of Financial Statements
	 	 	48	 






ii









 






	 	 	 	 	 
	 	 	Page
	(D) Capitalization and Related Matters
	 	 	48	 
	(E) Subsidiaries
	 	 	49	 
	(F) Authorization; No Breach
	 	 	49	 
	(G) Governmental Approvals
	 	 	49	 
	(H) Enforceability
	 	 	49	 
	(I) No Material Adverse Change
	 	 	49	 
	(J) Litigation
	 	 	50	 
	(K) Compliance with Laws
	 	 	50	 
	(L) Environmental Protection
	 	 	50	 
	(M) Legal Investments; Use of Proceeds
	 	 	51	 
	(N) Taxes
	 	 	51	 
	(O) Labor and Employment
	 	 	51	 
	(P) Investment Company Act; Public Utility Holding Company Act
	 	 	52	 
	(Q) Properties; Security Interests
	 	 	52	 
	(R) Intellectual Property; Licenses
	 	 	52	 
	(S) Solvency
	 	 	53	 
	(T) Complete Disclosure
	 	 	53	 
	(U) Side Agreements
	 	 	53	 
	(V) Broker’s or Finder’s Commissions
	 	 	54	 
	(W) Material Contracts
	 	 	54	 
	(X) Foreign Assets Control Regulations, Etc.
	 	 	54	 
	(Y) Parent SEC Reports
	 	 	54	 
	(Z) Current Business Practices
	 	 	55	 
	4.2. Absolute Reliance on the Representations and Warranties
	 	 	55	 
	 
	 	 	 	 
	SECTION 5. COVENANTS
	 	 	56	 
	5.1. Affirmative Covenants
	 	 	56	 
	(A) Existence
	 	 	56	 
	(B) Businesses and Properties; Compliance with Laws
	 	 	56	 
	(C) Insurance
	 	 	56	 
	(D) Obligations and Taxes
	 	 	57	 
	(E) Financial Statements; Reports. Parent will furnish to Agent:
	 	 	57	 
	(1) Annual Financial Statements
	 	 	57	 
	(2) Quarterly Financial Statements
	 	 	58	 
	(3) Monthly Financial Statements
	 	 	58	 
	(4) Reserved
	 	 	59	 
	(5) Projections
	 	 	59	 
	(6) Variances From Operating Budget
	 	 	59	 
	(7) Borrowing Base Certificate
	 	 	59	 
	(8) Collateral Reports
	 	 	60	 
	(9) Additional Information
	 	 	60	 
	(10) Reconciliation Statements
	 	 	60	 
	(11) Inventory Location Statements
	 	 	60	 
	(F) Litigation and Other Notices
	 	 	61	 
	(1) Orders; Injunctions
	 	 	61	 
	(2) Litigation
	 	 	61	 
	(G) Environmental Matters
	 	 	61	 






iii









 






	 	 	 	 	 
	 	 	Page
	(H) Default; Material Occurrences
	 	 	61	 
	(I) ERISA
	 	 	62	 
	(J) Maintaining Records; Access to Premises and Inspections
	 	 	62	 
	(K) Other Reports
	 	 	62	 
	(L) Patriot Act Compliance
	 	 	62	 
	(M) SEC Filings; Press Release
	 	 	62	 
	5.2. Negative Covenants
	 	 	63	 
	(A) Indebtedness
	 	 	63	 
	(B) Negative Pledge; Liens
	 	 	64	 
	(C) Contingent Liabilities
	 	 	66	 
	(D) Intentionally Omitted
	 	 	66	 
	(E) Mergers, etc.
	 	 	66	 
	(F) Affiliate Transactions
	 	 	66	 
	(G) Dividends
	 	 	67	 
	(H) Advances, Investments and Loans
	 	 	67	 
	(I) Use of Proceeds
	 	 	69	 
	(J) Press Release; Public Offering Materials
	 	 	69	 
	(K) Amendment of Charter Documents
	 	 	69	 
	(L) Subsidiaries
	 	 	69	 
	(M) Business
	 	 	69	 
	(N) Fiscal Year; Accounting
	 	 	69	 
	(O) Establishment of New or Changed Business Locations
	 	 	70	 
	(P) Business Practices
	 	 	70	 
	(Q) Sale or Discount of Accounts
	 	 	70	 
	(R) Changes Relating to Note Purchase Documents; Prepayments
	 	 	70	 
	5.3. Financial Covenants
	 	 	70	 
	(A) Fixed Charge Coverage
	 	 	70	 
	(B) Capital Expenditures
	 	 	71	 
	(C) Undrawn Availability
	 	 	71	 
	 
	 	 	 	 
	SECTION 6. ADDITIONAL REPRESENTATIONS AND COVENANTS
	 	 	71	 
	6.1. Representations
	 	 	71	 
	(A) Accounts Warranties and Covenants
	 	 	71	 
	(B) Inventory Warranties and Covenants
	 	 	72	 
	(C) Equipment Warranties and Covenants
	 	 	73	 
	(D) Chattel Paper Warranties and Covenants
	 	 	73	 
	(E) Instruments Warranties and Covenants
	 	 	73	 
	(F) Investment Property Warranties and Covenants
	 	 	73	 
	(G) Letters of Credit Warranties and Covenants
	 	 	74	 
	(H) General Intangibles Warranties and Covenants
	 	 	74	 
	(I) Intellectual Property Covenants
	 	 	74	 
	(J) Commercial Tort Claims Warranties and Covenants
	 	 	75	 
	(K) Deposit Accounts; Bank Accounts Warranties and Covenants
	 	 	75	 
	(L) Bailees
	 	 	75	 
	(M) Collateral Description; Use of Collateral
	 	 	75	 
	(N) Collateral Filing Requirements; Collateral Records
	 	 	75	 
	(O) Federal Claims
	 	 	76	 






iv









 






	 	 	 	 	 
	 	 	Page
	(P) Agent Authorized
	 	 	76	 
	(Q) Names and Locations
	 	 	76	 
	(R) Additional Mortgaged Property
	 	 	76	 
	(S) Disclosure of Material Matters
	 	 	77	 
	6.2. Access to Accountants and Management
	 	 	77	 
	6.3. Amendment of Schedules
	 	 	77	 
	6.4. Collection of Accounts and Payments
	 	 	77	 
	6.5. Further Assurances
	 	 	78	 
	 
	 	 	 	 
	SECTION 7. DEFAULT, RIGHTS AND REMEDIES
	 	 	78	 
	7.1. Event of Default
	 	 	78	 
	(A) Payment
	 	 	78	 
	(B) Default in Other Agreements
	 	 	78	 
	(C) Breach of Certain Provisions
	 	 	78	 
	(D) Breach of Warranty
	 	 	79	 
	(E) Other Defaults Under Loan Documents
	 	 	79	 
	(F) Change in Control
	 	 	79	 
	(G) Involuntary Bankruptcy; Appointment of Receiver, etc.
	 	 	79	 
	(H) Voluntary Bankruptcy; Appointment of Receiver, etc.
	 	 	79	 
	(I) Liens
	 	 	79	 
	(J) Judgment and Attachments
	 	 	79	 
	(K) Dissolution
	 	 	80	 
	(L) Solvency
	 	 	80	 
	(M) Injunction
	 	 	80	 
	(N) Invalidity of Loan Documents
	 	 	80	 
	(O) Failure of Security
	 	 	80	 
	(P) Damage, Strike, Casualty
	 	 	80	 
	(Q) Licenses and Permits
	 	 	80	 
	(R) Forfeiture
	 	 	80	 
	7.2. Suspension of Commitments
	 	 	80	 
	7.3. Acceleration
	 	 	81	 
	7.4. Remedies
	 	 	81	 
	7.5. Appointment of Attorney-in-Fact
	 	 	82	 
	7.6. Limitation on Duty of Agent and Lenders with Respect to Collateral
	 	 	82	 
	7.7. Application of Proceeds
	 	 	82	 
	7.8. License of Intellectual Property
	 	 	83	 
	7.9. Waivers; Non-Exclusive Remedies
	 	 	83	 
	 
	 	 	 	 
	SECTION 8. GUARANTY
	 	 	83	 
	 
	 	 	 	 
	SECTION 8A. BORROWING AGENCY
	 	 	89	 
	8A.1. Borrowing Agency Provisions
	 	 	89	 
	8A.2. Waiver of Subrogation
	 	 	90	 
	 
	 	 	 	 
	SECTION 9. AGENT
	 	 	90	 
	9.1. Agent
	 	 	90	 
	(A) Appointment
	 	 	90	 
	(B) Nature of Duties
	 	 	90	 
	(C) Rights, Exculpation, Etc.
	 	 	91	 






v









 






	 	 	 	 	 
	 	 	Page
	(D) Reliance
	 	 	91	 
	(E) Indemnification
	 	 	92	 
	(F) GMAC CF Individually
	 	 	92	 
	(G) Successor Agent
	 	 	92	 
	(1) Resignation
	 	 	92	 
	(2) Appointment of Successor
	 	 	93	 
	(3) Successor Agent
	 	 	93	 
	(H) Collateral Matters
	 	 	93	 
	(1) Release of Collateral
	 	 	93	 
	(2) Confirmation of Authority; Execution of Releases
	 	 	93	 
	(3) Absence of Duty
	 	 	94	 
	(I) Agency for Perfection
	 	 	94	 
	(J) Exercise of Remedies
	 	 	94	 
	9.2. Notice of Default
	 	 	95	 
	9.3. Action by Agent
	 	 	95	 
	9.4. Amendments, Waivers and Consents
	 	 	95	 
	(A) Percentage of Lenders Required
	 	 	95	 
	(B) Specific Purpose or Intent
	 	 	95	 
	(C) Failure to Give Consent; Replacement of Non-Consenting Lender
	 	 	96	 
	9.5. Assignments and Participations in Loans
	 	 	96	 
	(A) Assignments
	 	 	96	 
	(B) Participations
	 	 	97	 
	(C) No Relief of Obligations; Cooperation; Ability to Make LIBOR Loans
	 	 	97	 
	(D) Security Interests; Assignment to Affiliates
	 	 	97	 
	(E) Recording of Assignments
	 	 	98	 
	9.6. Set Off and Sharing of Payments
	 	 	98	 
	9.7. Disbursement of Funds
	 	 	99	 
	9.8. Settlements, Payments and Information
	 	 	99	 
	(A) Revolving Advances and Payments; Fee Payments
	 	 	99	 
	(1) Fluctuation of Revolving Loan Balance
	 	 	99	 
	(2) Settlement Dates
	 	 	99	 
	(3) Settlement Definitions
	 	 	99	 
	(4) Settlement Payments
	 	 	100	 
	(B) Return of Payments
	 	 	100	 
	(1) Recovery after Non-Receipt of Expected Payment
	 	 	100	 
	(2) Recovery of Returned Payment
	 	 	101	 
	9.9. Discretionary Advances
	 	 	101	 
	9.10. Other Agents
	 	 	101	 
	 
	 	 	 	 
	SECTION 10. MISCELLANEOUS
	 	 	101	 
	10.1. Expenses and Attorneys’ Fees
	 	 	101	 
	10.2. Indemnity
	 	 	102	 
	10.3. Notices
	 	 	102	 
	10.4. Survival of Representations and Warranties and Certain Agreements
	 	 	103	 
	10.5. Indulgence Not Waiver
	 	 	103	 
	10.6. Marshaling; Payments Set Aside
	 	 	104	 






vi









 






	 	 	 	 	 
	 	 	Page
	10.7. Entire Agreement
	 	 	104	 
	10.8. Severability
	 	 	104	 
	10.9. Lenders’ Obligations Several; Independent Nature of Lenders’ Rights
	 	 	104	 
	10.10. Headings
	 	 	104	 
	10.11. APPLICABLE LAW
	 	 	104	 
	10.12. Successors and Assigns
	 	 	105	 
	10.13. No Fiduciary Relationship; No Duty; Limitation of Liabilities
	 	 	105	 
	(A) No Fiduciary Relationship
	 	 	105	 
	(B) No Duty
	 	 	105	 
	(C) Limitation of Liabilities
	 	 	105	 
	10.14. CONSENT TO JURISDICTION
	 	 	105	 
	10.15. WAIVER OF JURY TRIAL
	 	 	106	 
	10.16. Construction
	 	 	106	 
	10.17. Counterparts; Effectiveness
	 	 	106	 
	10.18. Confidentiality
	 	 	106	 
	10.19. Publication
	 	 	107	 






vii









 





EXHIBITS




	 	 	 
	A.

	 	Assignment and Acceptance Agreement
	B.

	 	Borrowing Base Certificate
	C.

	 	Compliance and Pricing Certificate
	D.

	 	Calculation of initial Advance Rates for Eligible Inventory
	E.

	 	Form of Notes
	F.

	 	Notice of Borrowing






SCHEDULES




	 	 	 
	Schedule 1.1

	 	Excluded Property
	Schedule 2.7(A)

	 	Commercial Tort Claims
	Schedule 3

	 	List of Closing Documents
	Schedule 4.1(A)

	 	Organizational Schedule
	Schedule 4.1(D)

	 	Capitalization Schedule
	Schedule 4.1(F)

	 	Authorization; No Breach
	Schedule 4.1(G)

	 	Governmental Approvals
	Schedule 4.1(J)

	 	Litigation Schedule
	Schedule 4.1(L)

	 	Environmental Schedule
	Schedule 4.1(R)

	 	Intellectual Property Schedule
	Schedule 4.1(W)

	 	Material Contracts
	Schedule 4.1(Q)

	 	Properties Schedule
	Schedule 4.1(U)

	 	Side Agreements
	Schedule 4.1(Z)

	 	Current Business Practices
	Schedule 5.2(A)

	 	Permitted Indebtedness Schedule
	Schedule 5.2(B)

	 	Permitted Liens Schedule
	Schedule 6.1(K)

	 	Deposit Accounts
	Schedule 6.1(L)

	 	Bailees
	Schedule 6.1(Q)

	 	Names and Locations






viii









 





AMENDED AND RESTATED



LOAN AND SECURITY AGREEMENT




     This AGREEMENT is dated as of May 25, 2007 and entered into among ROCKY BRANDS, INC., a
corporation organized and existing under the laws of the State of Ohio (“Parent”), LIFESTYLE
FOOTWEAR, INC., a corporation organized and existing under the laws of the State of Delaware, ROCKY
BRANDS WHOLESALE LLC, a limited liability company organized and existing under the laws of the
State of Delaware, and ROCKY BRANDS RETAIL LLC, a limited liability company organized and existing
under the laws of the State of Delaware (the foregoing entities, jointly and severally, as the
context requires, “Borrower” or “Borrowers”), the financial institution(s) listed on the signature
pages hereof and their respective successors and Eligible Assignees (each individually a “Lender”
and collectively, “Lenders”), GMAC COMMERCIAL FINANCE LLC, a Delaware limited liability company (in
its individual capacity, “GMAC CF”), as administrative agent and sole lead arranger for the Lenders
(in such capacities, the “Agent”) and BANK OF AMERICA, N.A., as syndication agent (in such
capacity, the “Syndication Agent”) and CHARTER ONE BANK, N.A., as documentation agent (in such
capacity, the “Documentation Agent”).



     WHEREAS, Parent, certain Borrowers and GMAC CF were parties to that certain Loan and Security
Agreement (as amended, supplemented or otherwise modified prior to the date hereof, the “Original
Financing Agreement”) dated as of January 6, 2005 (the “Initial Closing Date”) and related
agreements and documents pursuant to which GMAC CF established a revolving loan and term loan
credit facility in an amount of up to One Hundred and Eighteen Million Dollars ($118,000,000) in
the aggregate, consisting of Revolving Loans of up to $100,000,000 and a Term Loan A in the
original principal sum of $18,000,000 (“Term Loan A”); and



     WHEREAS, to secure Borrower’s obligations under the Loan Documents, Borrower granted to Agent,
for the benefit of Agent and Lenders, a security interest in and lien upon substantially all of
Borrower’s personal property and certain real property; and



     WHEREAS, Borrower may from time to time have Subsidiaries that benefit from the credit
facility described above (jointly and severally, as the context requires, “Guarantor”), and in
consideration of such benefits will guaranty all of the obligations of Borrower to Agent and
Lenders under the Loan Documents and grant to Agent, for the benefit of Agent and Lenders, a
security interest in substantially all personal property and certain real property of Guarantor to
secure such guaranty;



     WHEREAS, contemporaneous with the entering into of the Original Financing Agreement, Parent
and certain Borrowers entered into a Note Purchase Agreement with American Capital Financial
Services, Inc. (“ACFS”), as agent for the purchasers thereunder and American Capital Strategies,
Ltd. (“ACSL”) pursuant to which ACSL extended a Term Loan B in the original principal sum of
$30,000,000 (“Term Loan B”) to certain Borrowers, and ACFS, as agent, entered into an Intercreditor
Agreement with GMAC CF setting forth the relative priorities and other rights of the secured
parties in the Collateral (the “Original Intercreditor Agreement”); and



 









 





     WHEREAS, pursuant to certain Assignment and Acceptance Agreements by and among GMAC CF and
other Lenders from time to time, a portion of the Commitment of GMAC CF was assigned to other
Lenders and, as of the date hereof, the respective Commitment of each of the Lenders is as set
forth on the signature page hereof; and



     WHEREAS, pursuant to Amendment No. 3 to the Original Financing Agreement, dated as of June 28,
2006, Agent and Lenders increased the amount available under the credit facility by extending a
Term Loan C in the original principal sum of $15,000,000 (“Term Loan C”); and



     WHEREAS, Borrower has entered into a Note Purchase Agreement with Purchasers and Second
Priority Agent pursuant to which Borrower will issue, and Purchasers will purchase, second priority
secured notes in the aggregate original principal sum of $40,000,000 (“Second Priority Senior
Secured Notes”), the proceeds of which will be utilized to satisfy in full all of the outstanding
indebtedness under Term Loan A, Term Loan B and Term Loan C (the “Refinancing Transactions”), as
well as pay certain fees and expenses incurred in connection with the Refinancing Transactions, and
reduce the outstanding Revolving Loans with the balance of such proceeds; and



     WHEREAS, in connection with the issuance of the New Notes, Borrower has requested Agent and
Lenders to (a) enter into a new Intercreditor Agreement with Second Priority Agent, which agreement
shall replace the Original Intercreditor Agreement and (b) amend and modify the Original Financing
Agreement to reflect the prepayment Term Loan A, Term Loan B and Term Loan C, delete certain
financial covenants, and more generally amend and restate the Original Financing Agreement; and



     WHEREAS, under the terms and conditions hereof, Borrowers, Agent and Lenders have agreed to
amend and restate the Original Financing Agreement, as provided herein.



     NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants
herein contained, Borrower, Agent and Lenders agree as follows:



AMENDMENT AND RESTATEMENT




     As of the date of this Amended and Restated Loan and Security Agreement among Parent,
Borrower, Agent, Lenders, Syndication Agent and Documentation Agent, the terms, conditions,
covenants, agreements, representations and warranties contained in the Original Financing Agreement
shall be deemed amended and restated in their entirety as follows, and the Original Financing
Agreement shall be consolidated with and into and superseded by this Amended and Restated Loan and
Security Agreement without breaking continuity; provided, however, that nothing contained in this
Amended and Restated Loan and Security Agreement shall impair, limit or affect the security
interests heretofore granted, pledged and or assigned to Agent as security for the Obligations
under the Original Financing Agreement, and this Amended and Restated Loan and Security Agreement
does not constitute a novation of the Original Financing Agreement or the security interests
granted in connection therewith.



2









 





SECTION 1. DEFINITIONS AND ACCOUNTING TERMS




     1.1. Certain Defined Terms. The capitalized terms not otherwise defined in this Agreement
shall have the meanings set forth below:



          “ACFS” has the meaning assigned to that term in the fourth WHEREAS clause of this Agreement.




          “ACSL” has the meaning assigned to that term in the fourth WHEREAS clause of this Agreement.




          “Additional Mortgaged Property” means all real property owned by any Loan Party which is
unencumbered by a mortgage or deed of trust in favor of a Person which provides financing (not in
excess of the purchase price therefor) for the acquisition thereof by such Loan Party, and in which
after the Closing Date, Agent requires a mortgage to secure the Obligations.




          “Adjusted Indebtedness of Rocky on a Consolidated Basis” shall mean total Indebtedness of
Rocky on a Consolidated Basis, provided that for purposes of determining Adjusted Indebtedness of
Rocky on a Consolidated Basis as of the end of any fiscal period, the outstanding balance of
Revolving Loans and Letter of Credit Liabilities as of the end of such period shall be deemed to be
the average outstanding balance of Revolving Loans and Letter of Credit Liabilities as of the end
of the four most recently ended fiscal quarter periods, including the period then just ended.




          “Adjustment Date” has the meaning assigned to that term in the definition of Applicable
Margin.




          “Advance” shall mean an advance under the Revolving Loan.




          “Affected Lender” has the meaning assigned to that term in Section 2.11.




          “Affiliate” means any Person (other than Agent or any Lender): (a) directly or indirectly
controlling, controlled by, or under common control with, any Loan Party; (b) directly or
indirectly owning or holding ten percent (10%) or more of any equity interest in any Loan Party;
(c) ten percent (10%) or more of whose stock or other equity interest having ordinary voting power
for the election of directors or the power to direct or cause the direction of management, is
directly or indirectly owned or held by any Loan Party; or (d) which has a senior officer who is
also a senior officer of any Loan Party. For purposes of this definition, “control” (including
with correlative meanings, the terms “controlling”, “controlled by” and “under common control
with”) means the possession directly or indirectly of the power to direct or cause the direction of
the management and policies of a Person, whether through the ownership of voting securities or
other equity interest, or by contract or otherwise.




          “Agent” means GMAC CF in its capacity as agent for the Lenders under the Loan Documents and
any successor in such capacity appointed pursuant to Section 9.1(G).




          “Agent’s Account” means JPMorgan Chase Bank, N.A., New York, New York.




3









 








	 	 	 	 	 	 	 
	 

	 	ABA No.
	021000021	 	 
	 

	 	Account No.
	3613249-84	 	 
	 

	 	Account Name:
	GMAC Commercial Finance

	 

	 	Reference:
	Rocky Shoes & Boots







          “Agreement” means this Loan and Security Agreement as it may be amended, restated,
supplemented or otherwise modified from time to time.




          “Applicable Margin” for each type of Loan shall mean, commencing as of the Closing Date and
continuing, until the First Adjustment Date (as hereafter defined), the applicable percentage
specified below:




	 	 	 	 	 	 	 	 	 
	 	 	APPLICABLE MARGIN FOR	 	APPLICABLE MARGIN
	TYPE OF LOAN	 	DOMESTIC RATE LOANS	 	FOR LIBOR RATE LOANS
	Revolving Advances
	 	 	1.25	%	 	 	2.75	%






          Thereafter on a quarterly basis, effective as of the first day following receipt by Agent of
the internal financial statements of Rocky on a Consolidated Basis required under Section 5.1(E)(b)
for the previous fiscal quarter (each day of such delivery, an “Adjustment Date”), commencing with
the first Business Day following receipt by Agent of the internal financial statements of Rocky on
a Consolidated Basis for the fiscal quarter ending June 30, 2007 required under Section 5.1(E)(b)
(the “First Adjustment Date”), the Applicable Margin for each type of Loan shall be adjusted, if
necessary, to the applicable percent per annum set forth in the pricing table set forth below
corresponding to the Total Leverage Ratio for the trailing twelve month period ending on the last
day of the most recently completed fiscal quarter prior to the applicable Adjustment Date (each
such period, a “Calculation Period”):




	 	 	 	 	 	 	 	 	 
	TOTAL LEVERAGE	 	APPLICATION MARGIN FOR	 	APPLICATION MARGIN FOR
	RATIO	 	DOMESTIC RATE LOANS	 	LIBOR RATE LOANS
	Greater than or equal
to 4.0 to 1.0
	 	 	1.25	%	 	 	2.75	%
	Greater than or equal
to 3.0 to 1.0 but
less than 4.0 to 1.0
	 	 	1.00	%	 	 	2.50	%
	Greater than or equal
to 2.0 to 1.0 but
less than 3.0 to 1.0
	 	 	0.75	%	 	 	2.25	%
	Less than 2.0 to 1.0
	 	 	0.50	%	 	 	2.00	%






          If Borrower shall fail to timely deliver the financial statements, certificates and/or other
information required under Section 5.1(E)(b), each Applicable Margin shall be conclusively presumed
to equal the highest Applicable Margin specified in the pricing table set forth above for the
period commencing on the required delivery date of such financial statements, certificates and/or
other information until the delivery thereof.




4









 








          “Asset Disposition” means the disposition, whether by sale, lease, transfer, loss, damage,
destruction, condemnation or otherwise, of any or all of the assets of any Loan Party other than
the sale or other disposition of Inventory, sale or transfer of property of any Loan Party to any
other Loan Party (to the extent not otherwise prohibited by this Agreement) and assignments and
licenses of Intellectual Property, all of the foregoing in the ordinary course of business, and
subleases of leases or leases of property not then being utilized in the Business.




          “Assignment and Acceptance Agreement” shall mean an Assignment and Acceptance Agreement
substantially in the form of Exhibit A.




          “Bank Letter of Credit” means each Letter of Credit issued by a bank acceptable to and
approved by Agent for the account of a Borrower and supported by guaranty or risk participation
agreement issued by GMAC CF or Agent.




          “Base Rate” means a variable rate of interest per annum equal to the higher of (a) the rate of
interest from time to time published by the Board of Governors of the Federal Reserve System as the
“Bank Prime Loan” rate in Federal Reserve Statistical Release H.15(519) entitled “Selected Interest
Rates” or any successor publication of the Federal Reserve System reporting the Bank Prime Loan
rate or its equivalent, or (b) the Federal Funds Effective Rate plus fifty (50) basis points. The
statistical release generally sets forth a Bank Prime Loan rate for each Business Day. The
applicable Bank Prime Loan rate for any date not set forth shall be the rate set forth for the last
preceding date. In the event the Board of Governors of the Federal Reserve System ceases to
publish a Bank Prime Loan rate or its equivalent, the term “Base Rate” shall mean a variable rate
of interest per annum equal to the highest of the “prime rate”, “reference rate”, “base rate”, or
other similar rate announced from time to time by any of the three largest banks (based on combined
capital and surplus) headquartered in New York, New York (with the understanding that any such rate
may merely be a reference rate and may not necessarily represent the lowest or best rate actually
charged to any customer by any such bank).




          “Base Rate Loans” means Loans bearing interest at rates determined by reference to the Base
Rate.




          “Blocked Account Agreement” has the meaning assigned to that term in Section 6.4.




          “Blocked Accounts” has the meaning assigned to that term in Section 6.4.




          “Borrower” has the meaning assigned to that term in the introductory paragraph of this
Agreement.




          “Borrower’s Accountants” means the independent certified public accountants selected by
Borrower and its Subsidiaries and reasonably acceptable to Agent.




          “Borrowing Base” means, as of any date of determination, an amount equal to the sum of (a) up
to 85% of Eligible Accounts less the Dilution Reserve, plus (b) the lesser of (i) $50,000,000, or
(ii) the sum of (A) the lesser of (1) up to 40% of Eligible Inventory consisting of raw materials
or (2) 85% times the Net Orderly Liquidation Percentage of such Eligible Inventory, plus (B) the
lesser of (1) up to 75% of Eligible Inventory consisting of finished goods




5









 




or (2) 85% times the Net Orderly Liquidation Percentage of such Eligible Inventory, plus (C)
the lesser of (1) up to 75% of Eligible Inventory consisting of eligible retail Inventory or (2)
85% times the Net Orderly Liquidation Percentage of such Eligible Inventory and less, in each case,
such reserves as Agent in its reasonable credit judgment may elect to establish; provided,
however, that Advances with respect to Eligible Inventory shall also not exceed, at any
time, (x) $8,000,000 with respect to Eligible In-Transit Inventory and (y) $2,000,000 with respect
to finished goods located in Puerto Rico. The calculation of the actual advance rates, utilizing
the formulae provided in this definition of Borrowing Base, with respect to different categories of
Eligible Inventory, shall be set forth on Exhibit D, which shall be subject to modification
from time to time by Agent following each appraisal conducted by Agent.




          “Borrowing Agent” means Parent.




          “Borrowing Base Certificate” means a certificate and schedule duly executed by an officer of
Borrowing Agent appropriately completed and in substantially the form of Exhibit B.




          “Business” shall mean the principal business of the Loan Parties as set forth in Section
4.1(B) herein and as such shall continue to be conducted following the consummation of the
Transactions.




          “Business Day” means any day excluding Saturday, Sunday and any day which is a legal holiday
under the laws of the States of New York or Michigan or is a day on which banking institutions
located in any such state are closed, or for the purposes of LIBOR Loans only, a London Banking
Day.




          “Capital Expenditures” means, with respect to any Person, all expenditures for, or contracts
for expenditures with respect to any fixed assets or improvements, or for replacements,
substitutions or additions thereto, that, in accordance with GAAP, either would be required to be
capitalized on the balance sheet of such Person, or would be classified and accounted for as
capital expenditures on a statement of cash flows of such Person.




          “Capital Lease” means any lease of any property (whether real, personal or mixed) that, in
conformity with GAAP, should be accounted for as a capital lease.




          “Cash Interest Expense” means, without duplication, for any period, for Rocky on a
Consolidated Basis: interest expenses deducted in the determination of net income (excluding (a)
the amortization of fees and costs with respect to the Initial Transactions which have been
capitalized as transaction costs in accordance with the provisions of Section 1.3; (b) any non-cash
charges and/or amortization of other capitalized fees and costs subsequent to the Initial
Transactions and (c) interest paid in kind).




          “CERCLA” shall mean the Comprehensive Environmental Response, Compensation and Liability Act
(42 U.S.C. § 9604, et seq.), as amended, and rules, regulations and standards, promulgated
thereunder.




          “Certificate of Exemption” has the meaning assigned to that term in Section 2.9(C).




6









 








          “Change of Control” shall mean the occurrence of any of the following:




               (a) any transaction or series of related transactions resulting in the sale or issuance of
securities or any rights to securities of Parent by Parent representing in the aggregate more than
fifty percent (50%) of its issued and outstanding securities entitled to vote for the election of
directors of Parent, or any transaction or series of related transactions resulting in the sale,
transfer, assignment or other conveyance or disposition of any securities or any rights to
securities of Parent by any holder or holders thereof representing in the aggregate more than fifty
percent (50%) of the issued and outstanding securities entitled to vote for the election of
directors of Parent;



               (b) a merger, consolidation, reorganization, recapitalization or share exchange (whether or
not Parent is the surviving and continuing corporation) in which the stockholders of Parent
immediately prior to such transaction own, as a result of such transaction, less than fifty percent
(50%) of the securities entitled to vote for the election of directors of the resulting corporation
or less than fifty percent (50%) of the capital stock of the resulting corporation;



               (c) a sale, transfer or other disposition of all or substantially all of the assets of Parent
and its Subsidiaries, on a consolidated basis; and



               (d) any sale or issuance or series of sales or issuances of the Common Stock or any other
voting security (or security convertible into, exchangeable for, or exercisable for any other
voting security) of Parent within a twelve (12) month period that results in a transfer of more
than fifty percent (50%) of the issued and outstanding shares of voting stock of Parent or a
transfer of more than fifty percent (50%) of the voting power of Parent.



          “Charges” shall mean all taxes, charges, fees, imposts, levies or other assessments,
including, without limitation, all net income, gross income, gross receipts, sales, use, ad
valorem, value added, transfer, franchise, profits, inventory, capital stock, license, withholding,
payroll, employment, social security, unemployment, excise, severance, stamp, occupation and
property taxes, custom duties, fees, assessments, liens, claims and charges of any kind whatsoever,
together with any interest and any penalties, additions to tax or additional amounts, imposed by
any taxing or other Governmental Authority, domestic or foreign (including, without limitation, the
PBGC or any environmental agency or superfund), upon the Collateral, the Loan Parties or any of
their Affiliates.




          “Charter Documents” shall mean, with respect to any Person, the Articles of Incorporation,
Certificate of Incorporation, certificate of limited partnership, certificate of limited liability
company, charter or analogous organic instrument filed with the appropriate Governmental
Authorities of such Person, as applicable, including all amendments and supplements thereto.




          “Closing Date” means May 25, 2007.




          “Collateral” has the meaning assigned to that term in Section 2.7(A).




          “Collecting Banks” has the meaning assigned to that term in Section 6.4.




7









 








          “Commitment” or “Commitments” means the commitment or commitments of Lenders to make Loans as
set forth in Sections 2.1(A) and to provide Lender Letters of Credit as set forth in Section
2.1(E).




          “Common Stock” shall mean the common stock, without par value, of Parent.




          “Compliance and Pricing Certificate” means a certificate duly executed by the chief executive
officer or chief financial officer of Borrower appropriately completed and in substantially the
form of Exhibit C.




          “Condition” shall mean any condition that results in or otherwise relates to any Environmental
Liabilities.




          “Conformed Bills of Lading” means original clean on-board negotiable bills of lading with
respect to any shipment of Inventory which (a) are issued by the carrier of the Inventory described
in such bills of lading or by a freight forwarder acting on behalf of such carrier; (b) consign
such Inventory to Agent (either directly or by means of endorsement); (c) are accompanied by all
commercial invoices describing such Inventory and all necessary certificates of inspection, origin
and insurance; (d) adequately describe such Inventory; (e) contain language expressly incorporating
The International Convention for the Unification of Certain Rules Relating to Bills of Lading for
the Carriage of Goods by Sea or The Carriage of Goods by Sea Act; (f) contain standard industry or
trade association delivery terms (along with a reference to the particular publication in which
said terms are defined); and (g) do not contain any reservation of title clause.




          “Control” means “control” as defined in the UCC with respect to a particular item of
Collateral.




          “Controlled Group” shall mean the “controlled group of corporations” as that term is defined
in Section 1563 of the Internal Revenue Code of 1986, as amended, of which the Loan Parties are a
part from time to time.




          “Copyright Security Agreement” means any Copyright Security Agreement executed and delivered
by a Loan Party to Agent, as the same may be amended and in effect from time to time.




          “Copyrights” means, collectively, all of the following (a) all copyrights, rights and
interests in copyrights, works protectable by copyright, copyright registrations and copyright
applications, including those listed in the schedules to any Copyright Security Agreement; (b) all
renewals of any of the foregoing; (c) all income, royalties, damages and payments now or hereafter
due and/or payable under any of the foregoing or with respect to any of the foregoing, including
damages or payments for past, present or future infringements of any of the foregoing; (d) the
right to sue for past, present and future infringements of any of the foregoing; and (e) all rights
corresponding to any of the foregoing throughout the world.




          “Daily Interest Amount” has the meaning assigned to that term in Section 9.8(A)(3).




8









 








          “Daily Interest Rate” has the meaning assigned to that term in Section 9.8(A)(3).




          “Daily Loan Balance” has the meaning assigned to that term in Section 9.8(A)(3).




          “Default” means a condition, act or event that, after notice or lapse of time or both, would
constitute an Event of Default if that condition, act or event were not cured or removed within any
applicable grace or cure period.




          “Default Rate” has the meaning assigned to that term in Section 2.2(A).




          “Defaulted Amount” means, with respect to any Lender at any time, any amount required to be
paid hereunder or under any other Loan Document by such Lender to the Agent or any other Lender
which has not been so paid.




          “Defaulting Lender” means, at any time, any Lender that owes a Defaulted Amount.




          “Dilution Reserve” means, as of any date of determination, a reserve for the amount by which
the total dilution of Accounts exceeds five percent (5%); with dilution referring to all actual and
reasonably anticipated offsets to Accounts, including, without limitation, customer payment and/or
volume discounts, write-offs, credit memoranda, returns and allowances, and billing errors. The
Dilution Reserve shall be adjusted after each field examination audit of the Collateral conducted
by Agent or any authorized representative designated by Agent.




          “Documentation Agent” has the meaning assigned to that term in the Recitals section of this
Agreement.




          “EBITDA” means, for any period, without duplication, the total of the following for Rocky on a
Consolidated Basis, each calculated for such period: (a) net income determined in accordance with
GAAP; plus, to the extent included in the calculation of net income, (b) the sum of (i) income and
franchise taxes paid or accrued; (ii) interest expenses, net of interest income, paid or accrued;
(iii) amortization and depreciation, (iv) Non-Recurring Charges and (v) any non-cash intellectual
property impairment charges, non-cash stock compensation expense charges and other non-cash charges
(excluding accruals for cash expenses made in the ordinary course of business); less, to the extent
included in the calculation of net income, and (c) the sum of (i) the income of any Person (other
than wholly-owned Subsidiaries of Parent) in which Parent or a wholly-owned Subsidiary of Parent
has an ownership interest except to the extent such income is received by Parent or such
wholly-owned Subsidiary in a cash distribution during such period; (ii) gains or losses from sales
or other dispositions of assets (other than Inventory in the normal course of business); and (iii)
extraordinary gains.




          “Eligible Accounts” means, as at any date of determination, the aggregate of all Accounts that
Agent, in its reasonable credit judgment, deems to be eligible for borrowing purposes. Without
limiting the generality of the foregoing, the Agent may determine that the following of Borrower’s
Accounts are not Eligible Accounts:




9









 








               (1) Accounts which do not consist of accounts receivable or contract receivables, each owed to
and owned by any Borrower arising or resulting from the sale of goods or the rendering of services
by such Borrower;



               (2) With respect to Accounts having payment terms of net forty-five (45) days or less, any
such Account which remains unpaid more than ninety (90) days from the date on which the original
invoice rendered in connection with such Account was issued; provided, however, that with respect
to Accounts due Rocky Brands Retail LLC, such Accounts shall not be considered ineligible due to
the provisions of this clause unless the applicable Accounts remain unpaid for more than sixty (60)
days after the due date specified in the original invoice or for more than ninety (90) days after
the invoice date if no due date was specified;



               (3) With respect to Accounts having payment terms in excess of forty-five (45) days,
(a) any
such Account which remains unpaid more than thirty (30) days past due or (b) any such Account which
remains unpaid more than one hundred and eighty (180) days from the date on which the original
invoice rendered in connection with such Account was issued; provided, however, that with respect
to Accounts due Rocky Brands Retail LLC, such Accounts shall not be considered ineligible due to
the provisions of this clause unless the applicable Accounts remain unpaid for more than sixty (60)
days after the due date specified in the original invoice or for more than ninety (90) days after
the invoice date if no due date was specified;



               (4) Accounts which are otherwise eligible with respect to which the Person obligated on such
Account is owed a credit by Borrower, but only to the extent of such credit;



               (5) Accounts due from a Person whose principal place of business is located outside the US
unless such Account is backed by a Letter of Credit, in form and substance acceptable to Agent and
issued or confirmed by a bank that is organized under the laws of the US or a State thereof, that
is acceptable to Agent; provided that such Letter of Credit has been delivered to Agent as
additional Collateral;



               (6) Accounts due from a Person which Agent has notified Borrower does not have a satisfactory
credit standing;



               (7) Accounts with respect to which the Account Debtor or the Person obligated with respect
thereto is the US, any state or any municipality, or any department, agency or instrumentality
thereof, unless Borrower has, with respect to such Account, complied with the Federal Assignment of
Claims Act of 1940 as amended (31 U.S.C. Section 3727 et seq.) or any applicable statute or
municipal ordinance of similar purpose and effect;



               (8) Accounts with respect to which the Person obligated is an Affiliate of Borrower or a
director, officer, agent, stockholder, member or employee of Borrower or any of its Affiliates;



               (9) Accounts due from a Person if more than fifty percent (50%) of the aggregate amount of
Accounts of such Person are not eligible under the criteria specified in clauses (2) or (3) above;



10









 





               (10) Accounts with respect to which there is any unresolved dispute with the respective
Account Debtor or the Person obligated on such Account (but only to the extent of such dispute);



               (11) Accounts evidenced by an Instrument or Chattel Paper not in the possession of Agent, for
the benefit of itself and Lenders;



               (12) Accounts with respect to which Agent, on behalf of itself and Lenders, does not have a
valid, first priority and fully perfected security interest;



               (13) Accounts subject to any Lien except those in favor of Agent, for the benefit of itself
and Lenders, and Second Priority Agent;



               (14) Accounts with respect to which the Account Debtor or the Person obligated on the Account
is the debtor under any bankruptcy or other insolvency proceeding;



               (15) Accounts due from a Person to the extent that such Accounts exceed in the aggregate an
amount equal to twenty percent (20%) of the aggregate of all Accounts at said date;



               (16) Accounts with respect to which the obligation to pay is conditional or subject to a
repurchase obligation or right to return or with respect to which the goods or services giving rise
to such Accounts have not been delivered (or performed, as applicable) and accepted by the Account
Debtor or the Person obligated on such Account, including progress billings, bill and hold sales,
guarantied sales, sale or return transactions, sales on approval or consignments;



               (17) Accounts with respect to which the Account Debtor or the Person obligated on the Account
is located in New Jersey, or any other state denying out of state creditors access to its courts in
the absence of a Notice of Business Activities Report or other similar filing, unless the
respective Borrower has either qualified as a foreign entity authorized to transact business in
such state or has filed a Notice of Business Activities Report or similar filing with the
applicable state agency for the then current year;



               (18) Accounts with respect to which the Account Debtor or the Person obligated on Account is a
creditor of any Borrower; provided, however, that any such Account shall only be ineligible as to
that portion of such Account which is less than or equal to the amount owed by such Borrower to
such Person.



          “Eligible Assignee” shall mean (a) a commercial bank organized under the laws of the US, or
any state thereof, and having a combined capital and surplus of at least $250,000,000; (b) a
commercial bank organized under the laws of any other country which is a member of the Organization
for Economic Cooperation and Development (the “OECD”), or a political subdivision of any such
country, and having a combined capital and surplus of at least $250,000,000, provided that such
bank is acting through a branch or agency located in the US; (c) any other entity which is an
“accredited investor” (as defined in Regulation D under the Securities Act) which extends credit or
buys loans as one of its businesses, including but not limited to, insurance companies, mutual
funds and lease financing companies, (d) a Related




11









 




Fund, and (e) a Person that is primarily engaged in the business of lending that is (i) a
Subsidiary of a Lender, (ii) a Subsidiary of a Person of which a Lender is a Subsidiary, or (iii) a
Person of which a Lender is a Subsidiary; provided, however, that no Affiliate of any Loan Party
shall be an Eligible Assignee.




          “Eligible In-Transit Inventory” means, at any date of determination, the value (determined at
the lower of cost or market on a first-in, first-out basis) of all Inventory owned by any Borrower
that does not qualify as Eligible Inventory solely because it is in transit to Borrower or an agent
or contractor of or for Borrower and that Agent, in its reasonable credit judgment, deems to be
eligible for borrowing purposes. Without limiting the generality of the foregoing, Agent may
determine that any of the following is not Eligible In-Transit Inventory: (1) Inventory that is not
in transit to a location identified pursuant to Section 6.1(Q) or Section 5.2(O) or such location
is not a vendor or consignee location, or the location of a warehouseman, bailee, processor or
similar third party that has not executed a satisfactory waiver of interest satisfactory to Agent);
(2) title to such Inventory has not passed to Borrower; (3) Inventory which is not insured against
types of loss, damage, hazards and risks, and in amounts, satisfactory to Agent; (4) such Inventory
is not subject to a Conformed Bill of Lading; (5) each original of the applicable Conformed Bill of
Lading is not in the possession of Agent or a Person acting as Agent’s agent for purposes of
perfecting Agent’s security interest, on behalf of itself and Lenders, in such Conformed Bill of
Lading; and (6) Inventory which is not finished goods Inventory.




          “Eligible Inventory” means, as at any date of determination, the value (determined at the
lower of cost or market on a first-in, first-out basis) of all Inventory owned by Borrower and
located in the US (including Puerto Rico) that Agent, in its reasonable credit judgment, deems to
be eligible for borrowing purposes. Without limiting the generality of the foregoing, the Agent
may determine that any of the following is not Eligible Inventory: (1) work-in-process that is not
readily marketable in its current form; (2) Inventory which Agent determines, is unacceptable for
borrowing purposes due to age, quality, type, category and/or quantity; (3) packaging, shipping
materials or supplies consumed in Borrower’s business; (4) Inventory with respect to which Agent,
on behalf of itself and Lenders, does not have a valid, first priority and fully perfected security
interest; (5) Inventory with respect to which there exists any Lien in favor of any Person other
than Agent, on behalf of itself and Lenders and Second Priority Agent; (6) Inventory produced in
violation of the Fair Labor Standards Act and subject to the so-called “hot goods” provisions
contained in Title 29 U.S.C. Section 215 (a)(i) or any replacement statute; (7) Inventory located
at any location other than those identified pursuant to Section 6.1(Q) or Section 5.2(O); (8)
Inventory located at a vendor’s location or with a consignee which is not subject to a bailee’s
waiver or other agreement satisfactory to Agent; (9) Inventory located with a warehouseman, bailee,
processor or similar third party, unless such Person has executed a waiver of interest satisfactory
to Agent; and (10) unless otherwise agreed to by Agent, Inventory in any location leased by
Borrower for which Agent has not received a Landlord Waiver.




          “Environmental Laws” shall mean any Laws that address, are related to or are otherwise
concerned with environmental, health or safety issues, including any Laws relating to any
emissions, releases or discharges of Pollutants into ambient air, surface water, ground water or
land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage,




12









 




disposal, transport, handling, clean-up or control of Pollutants or any exposure or impact on
worker health and safety.




          “Environmental Liabilities” shall mean any obligations or Liabilities (including any claims,
suits or other assertions of obligations or Liabilities) that are:




               (a) related to environmental, health or safety issues (including on-site or off-site
contamination by Pollutants of surface or subsurface soil or water, and occupational safety and
health); and



               (b) based upon or related to (i) any provision of past, present or future US or foreign
Environmental Law (including CERCLA and RCRA), common law or treaty of which the US is a signatory,
or (ii) any judgment, order, writ, decree, permit or injunction imposed by any court,
administrative agency, tribunal or otherwise.



          The term “Environmental Liabilities” includes: (i) fines, penalties, judgments, awards,
settlements, losses, damages (including foreseeable and unforeseeable consequential damages),
costs, fees (including reasonable attorneys’ and consultants’ fees), expenses and disbursements;
(ii) defense and other responses to any administrative or judicial action (including claims, notice
letters, complaints, and other assertions of liability); and (iii) financial responsibility for (1)
cleanup costs and injunctive relief, including any Removal, Remedial or other Response actions, and
natural resource damages, and (2) any other compliance or remedial measures.




          “EPA” shall mean the United States Environmental Protection Agency and any governmental body
or agency succeeding to the functions thereof.




          “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as the same may from
time to time be amended, and the rules and regulations of any Governmental Agency or authority, as
from time to time in effect, promulgated thereunder.




          “ERISA Affiliate” means any Loan Party and any Person who is a member of a group which is
under common control with any Loan Party, who together with any Loan Party is treated as a single
employer within the meaning of Section 414 of the IRC.




          “Event of Default” has the meaning assigned to that term in Section 7.1.




          “Excess Interest” has the meaning assigned to that term in Section 2.2(C).




          “Excluded Property” means any of the following:




               (a) any lease (including any fixtures or improvements on the property subject to the lease),
license, contract, property right or agreement to which any Loan Party is a party or any of its
rights or interests thereunder if and only for so long as the grant of a security interest under
this Agreement therein shall constitute or result in a breach, termination or default under any
such lease, license, contract, property right or agreement (other than to the extent that any such
term would be rendered ineffective pursuant to the UCC of any relevant jurisdiction (including,
without limitation, under Sections 9-406, 9-407, 9-408 or 9-409 thereof) or any other



13









 







applicable law or principles of equity); provided that notwithstanding the foregoing (i) no
personal property lease, license, contract, property right or agreement or any right or interest
thereunder, in each instance, existing on the Closing Date shall constitute Excluded Property
unless described on Schedule 1.1, (ii) no Account or money or other amounts due or to become due to
any Loan Party under or with respect to any such lease, license, contract, property right or
agreement or right or interest thereunder (other than (A) any such property subject to an
assignment of rents containing a restriction of the type described above or (B) property described
in clauses (d) or (e) of this definition) shall constitute Excluded Property, (iii) no item of
tangible property owned by any Loan Party shall constitute Excluded Property unless such item is
described in clauses (b), (c) or (f) of this definition, (iv) such lease, license, contract,
property right or agreement or right or interest thereunder shall be Excluded Property only to the
extent and for so long as the consequences specified above shall result and shall cease to be
Excluded Property and shall become subject to the security interest granted under this Agreement,
immediately and automatically, at such time as such consequences shall no longer result (including,
without limitation and in any event, in the case of any item of tangible property which is the
subject of purchase money Indebtedness or other financing permitted hereunder when such financing
has been paid in full) and (v) Lenders will be deemed to have, and at all times from and after the
date hereof to have had, a security interest in the proceeds of any such Excluded Property to the
extent that proceeds of such Excluded Property have come into the possession of any Lender or
otherwise constitute a portion of the Collateral;



               (b) any Equipment that is subject to a purchase money security interest or Capital Lease, as
described on Schedule 1.1, if and only for so long as the grant of a security interest under this
Agreement therein shall constitute or result in a breach, termination or default under any
applicable purchase money security agreement or Capital Lease agreement (other than to the extent
that any such term would be rendered ineffective pursuant to the UCC of any relevant jurisdiction
(including, without limitation, under Sections 9-406, 9-407, 9-408 or 9-409 thereof) or any other
applicable law or principles of equity);



               (c) any real estate owned or leased by the Borrower or its Subsidiaries other than any and all
Additional Mortgaged Property;



               (d) any life insurance or life insurance policy in which the Borrower or a Subsidiary has an
interest;



               (e) loans or advances to any officer, director, employee or agent permitted by this Agreement;
and



               (f) Inventory not located in the US, Canada or Puerto Rico, and Intellectual Property issued
under the Laws of a country other than the US or any state thereof.



          “Federal Funds Effective Rate” means, for any day, the weighted average of the rates on
overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published on the immediately following Business Day by the Board of Governors of
the Federal Reserve System as the Federal Funds Rate or Federal Reserve Statistical Release
H.15(519) entitled “Selected Interest Rates” or any successor publication of the Federal Reserve
System reporting the Federal Funds Effective Rate or its




14









 




equivalent or, if such rate is not published for any Business Day, the average of the
quotations for the day of the requested Loan received by Agent from three Federal funds brokers of
recognized standing selected by Agent.




          “Financial Projections” shall have the meaning assigned to such term in Section 4.1(C)(3).




          “Financial Statements” shall have the meaning assigned to such term in Section 4.1(C)(1).




          “Fiscal Year” means each twelve (12) month period ending on the last day of December in each
year, as modified in accordance with Section 5.2(N).




          “Fixed Charge Coverage Ratio” shall mean, for any period, the ratio of EBITDA less Capital
Expenditures of Rocky on a Consolidated Basis during such period to Fixed Charges during such
period.




          “Fixed Charges” shall mean, for any period, and each calculated for such period (without
duplication) with respect to Rocky on a Consolidated Basis, the sum of (a) Cash Interest Expense;
(b) scheduled payments of principal with respect to all Indebtedness (other than (i) the Revolving
Loan and the Letters of Credit and (ii) payments made with respect to Term Loan A and Term Loan C);
(c) any provision for income or franchise taxes included in the determination of net income,
excluding any provision for deferred taxes; and (d) payment of deferred taxes relating to income
and franchise taxes accrued in any prior period.




          “Foreign Lender” has the meaning assigned to that term in Section 2.9(C).




          “Foreign Subsidiary” means, with respect to any Person, a Subsidiary of such Person, which
Subsidiary is not incorporated or otherwise organized under the laws of a State of the US.




          “Funding Date” means the date of each funding of a Loan or issuance of a Lender Letter of
Credit.




          “GAAP” means generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting Standards Board that are
applicable to the circumstances as of the date of determination.




          “GMAC CF” has the meaning assigned to that term in the introductory paragraph of this
Agreement.




          “GMAC Transactions” shall mean the incurrence of the Obligations by the Loan Parties and the
advancing of the Loans and issuance of Lender Letters of Credit, all as contemplated by this
Agreement and the Loan Documents.




15









 








          “Governmental Authorities” shall mean any federal, state or municipal court or other
governmental department, commission, board, bureau, agency or instrumentality, governmental or
quasi-governmental, domestic or foreign.




          “Guarantor” has the meaning assigned to that term in the third WHEREAS clause of this
Agreement.




          “Guaranty” shall mean any guaranty of the payment or performance of any Indebtedness or other
obligation and any other arrangement whereby credit is extended to one obligor on the basis of any
promise of another Person, whether that promise is expressed in terms of an obligation to pay the
Indebtedness of such obligor, or to purchase an obligation owed by such obligor, or to purchase
goods and services from such obligor pursuant to a take-or-pay contract, or to maintain the
capital, working capital, solvency or general financial condition of such obligor, whether or not
any such arrangement is reflected on the balance sheet of such other Person, firm or corporation,
or referred to in a footnote thereto, but shall not include (i) endorsements of items for
collection in the ordinary course of business and (ii) obligations, warranties and indemnities
incurred in the ordinary course of Business in connection with the sale of Inventory and not in
respect of Indebtedness of any Person. For the purpose of all computations made under this
Agreement, the amount of a Guaranty in respect of any obligation shall be deemed to be equal to the
maximum aggregate amount of such obligation or, if the Guaranty is limited to less than the full
amount of such obligation, the maximum aggregate potential liability under the terms of the
Guaranty.




          “Indebtedness” shall mean, for any Person at the time of any determination, without
duplication, all obligations, contingent or otherwise, of such Person that, in accordance with
GAAP, should be classified upon the balance sheet of such Person as indebtedness, but in any event
including: (i) all obligations for borrowed money, (ii) all obligations arising from installment
purchases of property or representing the deferred purchase price of property or services in
respect of which such Person is liable, contingently or otherwise, as obligor or otherwise (other
than trade payables and other current Liabilities incurred in the ordinary course of business on
terms customary in the trade), (iii) all obligations evidenced by notes, bonds, debentures,
acceptances or instruments, or arising out of letters of credit or bankers’ acceptances issued for
such Person’s account, (iv) all obligations, whether or not assumed, secured by any Lien or payable
out of the proceeds or production from any property or assets now or hereafter owned or acquired by
such Person, (v) all obligations for which such Person is obligated pursuant to a Guaranty which
are classified under GAAP as indebtedness, (vi) the capitalized portion of lease obligations under
Capitalized Leases, (vii) all obligations for which such Person is obligated pursuant to any
Interest Rate Protection Agreements or derivative agreements or arrangements, (viii) all factoring
arrangements and (ix) all obligations of such Person upon which interest charges are customarily
paid or accrued.




          “Indemnified Liabilities” has the meaning assigned to that term in Section 10.2.




          “Indemnities” has the meaning assigned to that term in Section 10.2.




          “Initial Closing Date” has the meaning ascribed to that term in the first WHEREAS clause of
this Agreement.




16









 








          “Initial Transactions” means the incurrence of the Obligations by the Loan Parties under the
Original Financing Agreement, the incurrence by the Loan Parties of Term Loan B and the
consummation of the acquisition by Parent of the equity interests of Borrower and the related
transactions occurring on or about the Initial Closing Date.




          “Intangible Assets” means all intangible assets (determined in conformity with GAAP)
including, without limitation, goodwill, Intellectual Property, Software, licenses, organizational
costs, deferred amounts, covenants not to compete, unearned income and restricted funds.




          “Intellectual Property” means, collectively, all: Copyrights, Patents and Trademarks.




          “Intercreditor Agreement” means that certain Intercreditor Agreement dated as of the Closing
Date to be executed by Second Priority Agent, in a form acceptable to Agent.




          “Interest Period” means, in connection with each LIBOR Loan, an interest period which
Borrowing Agent shall elect to be applicable to such Loan, which Interest Period shall be either
(a) a one (1), two (2), three (3), or six (6) month period or (b) a one (1), two (2) or three (3)
week period; provided in each case that:




               (1) the initial Interest Period for any LIBOR Loan shall commence on the Funding Date of such
Loan;



               (2) in the case of successive Interest Periods, each successive Interest Period shall commence
on the day on which the immediately preceding Interest Period expires;



               (3) if an Interest Period expiration date is not a Business Day, such Interest Period shall
expire on the next succeeding Business Day; provided that if any Interest Period expiration date is
not a Business Day but is a day of the month after which no further Business Day occurs in such
month, such Interest Period shall expire on the immediately preceding Business Day;



               (4) any Interest Period that begins on the last Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to part (5) below, end on the last Business Day of a calendar
month;



               (5) no Interest Period shall extend beyond the Termination Date;



               (6) no Interest Period may extend beyond a scheduled principal payment date of any Loan,
unless the aggregate principal amount of such Loan that is a Base Rate Loan or that has Interest
Periods expiring on or before such scheduled principal payment date equals or exceeds the principal
amount required to be paid on such Loan on such scheduled principal payment date; and



               (7) there shall be no more than five (5) Interest Periods relating to LIBOR Loans
outstanding
at any time.



17









 





          “Interest Rate” has the meaning assigned to that term in Section 2.2(A).




          “Interest Rate Protection Agreement” means any interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement or similar agreement or arrangement designed to protect
Loan Parties against fluctuations in interest rates.




          “Interest Ratio” has the meaning assigned to that term in Section 9.8(A)(3)(d).




          “Interest Settlement Date” has the meaning assigned to that term in Section 9.8(A)(4).




          “Investment” as applied to any Person shall mean the amount paid or agreed to be paid or
loaned, advanced or contributed to other Persons, and in any event shall include, without
limitation, (i) any direct or indirect purchase or other acquisition of any notes, obligations,
instruments, stock, securities or ownership interest (including partnership interests and joint
venture interests) and (ii) any capital contribution to any other Person




          “IRC” means the Internal Revenue Code of 1986, as amended from time to time, and any successor
statute and all rules and regulations promulgated thereunder.




          “Issuing Lender” has the meaning assigned to that term in Section 2.1(F)(2).




          “Landlord Waiver” shall mean a letter in form and substance acceptable to the Agent and
executed by a landlord in respect of Personal Property of the Loan Parties located at any leased
premises of the Loan Parties pursuant to which such landlord, among other things, waives or
subordinates to Agent any Lien such landlord may have in respect of such Personal Property,
acknowledges the Liens of the Agent, and permits the Agent access to and use of such premises.




          “Laws” shall mean all US and foreign federal, state or local statutes, laws, rules,
regulations, ordinances, codes, policies, rules of common law, and the like, now or hereafter in
effect, including any judicial or administrative interpretations thereof, and any judicial or
administrative orders, consents, decrees or judgments




          “Lender” or “Lenders” has the meaning assigned to that term in the Recitals section of this
agreement.




          “Lender Letter of Credit” has the meaning assigned to that term in Section 2.1(E).




          “Letter of Credit Liability” means, all reimbursement and other liabilities of Loan Parties or
any of their respective Subsidiaries with respect to each Lender Letter of Credit, whether
contingent or otherwise, including: (a) the amount available to be drawn or which may become
available to be drawn; (b) all amounts which have been paid or made available by any Lender issuing
a Lender Letter of Credit or any bank issuing a Bank Letter of Credit to the extent not reimbursed;
and (c) all unpaid interest, fees and expenses related thereto.




          “Letter of Credit Reserve” means, at any time, an amount equal to (a) the aggregate amount of
Letter of Credit Liability with respect to all Lender Letters of Credit




18









 




outstanding at such time plus, without duplication, (b) the aggregate amount theretofore paid
by Agent or any Lender under Lender Letters of Credit and not debited to the Revolving Loan
pursuant to Section 2.1(E)(2) or otherwise reimbursed by Borrowers.




          “Letter of Non-Exemption” has the meaning assigned to that term in Section 2.9(C).




          “Liabilities” shall have the meaning given that term in accordance with GAAP and shall
include, without limitation, Indebtedness.




          “LIBOR” means, for each Interest Period (provided that in the case of any Interest Period
having a duration of one (1), two (2) or three (3) weeks, the Interest Period with respect thereto
for purposes of this definition of LIBOR shall mean one (1) month), a rate per annum equal to:




               (1) the offered rate for deposits in U.S. dollars in an amount comparable to the amount of the
applicable Loan in the London interbank market for the relevant Interest Period which is published
by the British Bankers’ Association and currently appears on the Dow Jones Telerate Page 3750 as of
11:00 a.m. (London time) on the day which is two (2) Business Days prior to the first day of such
Interest Period for a term comparable to such Interest Period; provided, however, that if such a
rate ceases to be available to Agent on that or any other source from the British Bankers’
Association, LIBOR shall be equal to a rate per annum equal to the average rate (rounded upwards,
if necessary, to the nearest 1/100 of 1%) at which Agent determines that U.S. dollars in an amount
comparable to the amount of the applicable Loans are being offered to prime banks at approximately
11:00 a.m. (London time) on the day which is two (2) Business Days prior to the first day of such
Interest Period for a term comparable to such Interest Period for settlement in immediately
available funds by leading banks in the London interbank market selected by Agent; divided by



               (2) a number equal to one (1.0) minus the maximum reserve percentages (expressed as a decimal
fraction) (including, without limitation, basic, supplemental, marginal and emergency reserves
under any regulations of the Board of Governors of the Federal Reserve System or other governmental
authority having jurisdiction with respect thereto, as now and from time to time in effect) for
Eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of such
Board) which are required to be maintained by any Lender by the Board of Governors of the Federal
Reserve System; such rate to be rounded upwards, if necessary, to the nearest 1/100 of 1%. LIBOR
shall be adjusted automatically on and as of the effective date of any change in any such reserve
percentage.



          “LIBOR Loans” means at any time that portion of the Loans bearing interest at rates determined
by reference to LIBOR.




          “Lien” means any lien, mortgage, pledge, security interest, charge or encumbrance of any kind,
whether voluntary or involuntary (including any conditional sale or other title retention
agreement, any lease in the nature thereof, and any agreement to give any security interest.




19









 








          “Loan” or “Loans” means an advance or advances under the Revolving Loan Commitment.




          “Loan Documents” means this Agreement and all other documents, instruments and agreements
executed by or on behalf of any Loan Party and delivered concurrently herewith or at any time
hereafter to or for Agent or any Lender in connection with the Loans, any Lender Letter of Credit,
and any other transaction contemplated by this Agreement, all as amended, restated, supplemented or
modified from time to time.




          “Loan Party” means each of Borrower and Guarantor and each Subsidiary of Borrower which is or
becomes a Borrower or Guarantor pursuant to the terms of this Agreement or pursuant to any Loan
Document.




          “Loan Year” means each period of twelve (12) consecutive months commencing on the Closing Date
and on each anniversary thereof.




          “London Banking Day” means any day on which dealings in deposits in U.S. dollars are
transacted in the London Interbank market.




          “Manage” and “Management” shall mean generation, production, handling, distribution,
processing, use, storage, treatment, operation, transportation, recycling, reuse and/or disposal,
as those terms are defined in CERCLA, RCRA and other Environmental Laws (including as those terms
are further defined, construed, or otherwise used in rules, regulations, standards, guidelines and
publications issued pursuant to, or otherwise in implementation of, such Environmental Laws).




          “Material Adverse Change” shall mean any change that has a Material Adverse Effect.




          “Material Adverse Effect” means a material adverse effect upon (a) the business, operations,
prospects, properties, assets, liabilities or condition (financial or otherwise) of the Loan
Parties taken as a whole or (b) the ability of Parent, or the Loan Parties taken as a whole, to
perform its (or their) obligations under any Loan Document to which it is (or they are) a party or
(c) the ability of Agent or any Lender to enforce or collect any of the Obligations.




          “Material Contracts” shall have the meaning assigned to such term in Section 4.1(W).




          “Material License Agreements” shall mean and include each of the following: (a) Trademark
License Agreement between Georgia Boot LLC, as Licensee and W.L Gore & Associates (“Gore”), W.L.
Gore & Associates Gmbh, and Japan Gore-Tex, Inc., collectively as Licensor, dated May 20, 2002, (b)
Trademark License Agreement between Rocky, as Licensee and Gore, as Licensor, dated July 11, 2001
and (c) Certified Manufacturer Agreement between Rocky and Gore dated July 11, 2001.




          “Maximum Rate” has the meaning assigned to that term in Section 2.2(C).




20









 








          “Maximum Revolving Loan Amount” means, as of any date of determination, the lesser of (a) the
aggregate of the Revolving Loan Commitments of all Lenders less the sum of the Letter of Credit
Reserve and (b) the Borrowing Base less the sum of the Letter of Credit Reserve.




          “Mortgage” means each of the mortgages, deeds of trust, leasehold mortgages, leasehold deeds
of trust, collateral assignments of leases or other real estate security documents delivered by any
Loan Party to Agent, on behalf of Agent and Lenders, with respect to Additional Mortgaged Property,
all in form and substance satisfactory to Agent.




          “Multiemployer Plan” shall mean a multiemployer plan (within the meaning of Section 3(37) of
ERISA) that is maintained for the benefit of the employees of the Loan Parties or any member of the
Controlled Group or an ERISA Affiliate.




          “Net Cash Proceeds” shall mean the proceeds, received in cash or cash equivalents, of any
applicable Asset Disposition, minus (i) commissions and other reasonable and customary transaction
costs, fees and expenses properly attributable to such transaction and payable by such obligated
party in connection therewith (in each such case, paid to non-Affiliates), (ii) transfer taxes,
(iii) amounts payable to holders of Liens (to the extent such Liens constitute Permitted Liens
hereunder and such Liens are senior to the Liens of Agent and the Lenders), if any, on the property
subject to the Asset Disposition to the extent the documentation governing such senior Liens
required such payment to such holders upon such Asset Disposition and (iv) an appropriate reserve
for income taxes in accordance with GAAP in connection therewith.




          “Net Orderly Liquidation Percentage” means, with respect to any class of Inventory of a
Borrower at any time, the ratio (expressed as a percentage) computed by dividing (i) (x) if such
percentage is being determined on the Closing Date or on any date prior to the delivery of an
appraisal of such Borrower’s Inventory (containing such class of Inventory) conducted pursuant to
Section 2.3(C), the net recovery value of such class of Inventory of such Borrower (which in any
event shall give effect to all costs and expenses of liquidation), as set forth in such appraisal
of such Borrower’s Inventory (containing such class of Inventory) delivered to Agent prior to the
Closing Date and (y) if such percentage is being determined on or after the date of the first
delivery of an appraisal of such Borrower’s Inventory (containing such class of Inventory)
conducted pursuant to Section 2.3(C), the net recovery value of such class of Inventory of such
Borrower (which in any event shall give effect to all costs and expenses of liquidation), as set
forth in the appraisal of such Borrower’s Inventory (containing such class of Inventory) most
recently delivered to Agent pursuant to Section 2.3(C) by (ii) the value of such class of Inventory
of such Borrower, valued at net book value, as set forth in the corresponding appraisal.




          “Non-Recurring Charges” shall mean the sum of the aggregate amount of fees, expenses,
financing costs and other expenses incurred in connection (a) with the Initial Transactions, to the
extent paid substantially contemporaneously with, on or about the Initial Closing Date, and (b)
with the Transactions, to the extent paid substantially contemporaneously with, on or about the
Closing Date.




21









 








          “Note” or “Notes” means the Revolving Notes.




          “Note Purchase Agreement” means the Note Purchase Agreement dated as of May 25, 2007 by and
among Borrowers, Second Priority Agent and certain Purchasers named therein pursuant to which each
Second Priority Senior Secured Note shall have been issued, as amended, restated, supplemented or
otherwise modified from time to time in accordance with the provisions of this Agreement and the
Intercreditor Agreement.




          “Note Purchase Documents” means the Note Purchase Agreement, the Security Documents (as
defined therein) and each Second Priority Senior Secured Note.




          “Notice of Borrowing” means a notice duly executed by an authorized representative of Borrower
appropriately completed and in the form of Exhibit F.




          “Obligations” means all Liabilities and other obligations of every nature of each Loan Party
from time to time owed to Agent or to any Lender under the Loan Documents (whether incurred before
or after the Termination Date) including, without limitation, the principal amount of all debts,
claims and indebtedness, accrued and unpaid interest and all fees, costs and expenses, whether
primary, secondary, direct, contingent, fixed or otherwise, heretofore, now and/or from time to
time hereafter owing pursuant to any Loan Document, due or payable including, without limitation,
all interest, fees, cost and expenses accrued or incurred after the filing of any petition under
any bankruptcy or insolvency law, together with all Liabilities of any Loan Party to any Lender
under any Interest Rate Protection Agreements, and under any banking and cash management
arrangements and agreements with any Lender.




          “Organizational Schedule” has the meaning assigned to that term in Section 4.1(A).




          “Original Financing Agreement” has the meaning assigned to that term in the first WHEREAS
clause of this Agreement.




          “Original Intercreditor Agreement” has the meaning assigned to this term in the WHEREAS clause
of this Agreement.




          “Parent” has the meaning assigned to that term in the introductory paragraph of this
Agreement.




          “Parent SEC Reports” has the meaning assigned to that term in Section 4.1(Y).




          “Patent Security Agreement” means any Patent Security Agreement executed and delivered by each
Loan Party to Agent, as the same may be amended and in effect from time to time.




          “Patents” means collectively all of the following: (a) all patents and patent applications
including, without limitation, those listed on any schedule to any Patent Security Agreement and
the inventions and improvements described and claimed therein, and patentable inventions; (b) the
reissues, divisions, continuations, renewals, extensions and continuations-in-part of any of the
foregoing; (c) all income, royalties, damages and payments now or hereafter




22









 




due and/or payable under any of the foregoing or with respect to any of the foregoing,
including, without limitation, damages and payments for past, present and future infringements of
any of the foregoing; (d) the right to sue for past, present and future infringements of any of the
foregoing; and (e) all rights corresponding to any of the foregoing throughout the world.




          “PBGC” shall mean the Pension Benefit Guaranty Corporation established pursuant to Title IV of
ERISA, or any other Governmental Authority succeeding to the functions thereof.




          “Permitted Acquisition” means any transaction, or any series of related transactions,
consummated on or after the date of this Agreement by which the Parent or any Subsidiary thereof
(a) acquires any ongoing business or all or a substantially all of the operations or assets of any
Person, any division thereof or operating unit thereof, whether through purchase of assets, merger
or otherwise or (b) directly or indirectly acquires (in one transaction or in a series of
transactions) at least a majority (in number of votes) of the equity interests of a Person which
have ordinary voting power for the election of directors or constitute a majority (by percentage of
voting power) of the outstanding equity interests of another Person (any of the foregoing an
“Acquisition”); provided that:





     (i) such Acquisition is made at a time when, after giving effect to such
Acquisition and the related financing thereof, no Default or Event of Default
exists;




     (ii) after giving effect to such Acquisition, (A) no Default or Event of
Default exists or would occur based on a 12 month pro forma good faith prospective
calculation of the covenants set forth in Sections 5.3(A) and 5.3(B) (excluding any
Acquisition as a Capital Expenditure), giving effect to the EBITDA of the acquired
operations or Person and any higher levels of Indebtedness associated with the
acquired operations or Person and (B) Undrawn Availability is not less than
$15,000,000;




     (iii) the acquired Person or post-merger Person (other than any Foreign
Subsidiary), if such Acquisition is of equity interests, guarantees all Obligations
under this Agreement and grants to Agent, for the benefit of Agent and Lenders, a
first Lien upon all of the tangible and intangible personal property of such
acquired Person, whether then owned or thereafter acquired or arising, subject only
to Liens permitted by this Agreement;




     (iv) if the Acquisition is of equity interests, such Borrower or Guarantor
acquiring such equity interests grants to Agent, for the benefit of Agent and
Lenders, a Lien upon all such equity interests (or not less than 65% of such equity
interests if a Foreign Subsidiary) pursuant to a pledge agreement or joinder in form
and substance satisfactory to Agent;




     (v) any acquired assets become subject to Liens in favor of Agent, for the
benefit of Agent and Lenders, pursuant to such agreements, instruments and



23









 







documents as shall be satisfactory in form and substance to Agent, and are free
and clear of all other Liens except as permitted under this Agreement;




     (vi) Parent delivers written notice to Agent of its or such Subsidiary’s
intention to make such Acquisition no less than 15 Business Days prior to the
proposed closing date for such Acquisition, together with a certificate that sets
forth (A) information regarding liabilities and obligations with respect to tax,
ERISA and environmental matters, if any, to be incurred by such Person (including,
without limitation, the acquired Person in the event of an Acquisition of equity
interests) as a result of such Acquisition, any indemnities afforded under the terms
of such Acquisition and the scope and results of any tax, ERISA or environmental
review undertaken by the Parent or such Subsidiary in connection therewith and (B)
any available financial statements of (1) such acquired Person if such Acquisition
of equity interests, and (2) operating unit or division if such Acquisition is of
assets;




     (vii) on the date of the closing of the Permitted Acquisition and after giving
effect thereto and to any Loans made to finance such Permitted Acquisition, all
representations and warranties under the Loan Documents shall be true and correct in
all material respects as though made on and as of such date, except to the extent
that any such representation or warranty expressly relates to an earlier date;




     (viii) such Acquisition is of or with a Person assembling and selling specialty
footwear, apparel and accessories or an industry related thereto;




     (ix) such Acquisition shall have been approved by the board of directors of
such Person (or similar governing body if such Person is not a corporation) that is
the subject of such Acquisition, and such Person shall not have announced that it
will oppose such Acquisition or shall not have commenced any action which alleges
that such Acquisition will violate any applicable law;




     (x) the consideration for the Permitted Acquisition shall have been paid only
(A) in cash, (B) in deferred installment payments, provided that any
indebtedness incurred in connection therewith is permitted pursuant to Section
5.2(A) or equity interests of the Parent or such Subsidiary making such Acquisition,
and the purchase price for any such Acquisition, including (1) the original stated
purchase price therefor, plus (2) the reasonably estimated transaction costs
associated with such Acquisition, plus (3) the amount of Indebtedness for
borrowed money assumed (directly or indirectly) as a result thereof, plus
(4) all amounts payable of any nature whatsoever, including cost of goods sold, to
the seller or any Affiliate of such seller following such Acquisition, shall not
exceed the amount set forth in Section 5.2(E) (excluding any portion of any of the
foregoing payable in common equity of the Parent or any Subsidiary thereof); and



24









 






     (xi) on the funding date for any borrowing of any Loans for the purpose of
consummating a Permitted Acquisition, Agent shall have received a certificate from
an officer of Parent (A) certifying that (1) such Acquisition meets the requirements
of the definition of Permitted Acquisition and (2) the liabilities assumed with
respect to such Permitted Acquisition do not or are not reasonably likely to have a
Material Adverse Effect, and (B) attaching calculations of financial covenants set
forth in Section 5.3, copies of the definitive purchase agreement or most
recent draft of the same, and copies of all material, business and financial
information relating to the business purchased in the Permitted Acquisition, all as
Agent may reasonably request.



          “Permitted Investment” shall have the meaning assigned to such term in Section 5.2(H).




          “Permitted Liens” shall have the meaning assigned to such term in Section 5.2(B).




          “Permitted Sale/Leaseback” means any transaction, or any series of related transactions,
consummated on or after the date of this Agreement, on terms and conditions reasonably satisfactory
to Agent, by which the Parent or any Subsidiary thereof (a) sells any of its real property and
Equipment which is subject to, as of the Closing Date, a Lien in favor of General Electric Capital
Business Asset Funding Corporation and, substantially simultaneously therewith, (b) leases such
real property (or a portion thereof) from the purchaser thereof, or an Affiliate of such purchaser,
or otherwise enters into a contractual relationship pursuant to which such purchaser (or an
Affiliate thereof) provides logistics services for one of more Borrowers at such property;
provided that:





     (i) such sale/leaseback is made at a time when, after giving effect thereto, no
Default or Event of Default exists;




     (ii) the entire balance of the mortgage secured by such real property is paid
in full from the sale proceeds thereof;




     (iii) any Net Cash Proceeds thereof are remitted to Agent in accordance with
Section 2.4(B)(2); and




     (iv) any non-cash proceeds thereof consisting of any notes or other evidence of
Indebtedness are delivered to Agent as additional Collateral, together with such
endorsements and/or instruments of assignment as Agent may reasonable request in
connection therewith.



          “Person” means and includes natural persons, corporations, limited partnerships, general
partnerships, limited liability companies, limited liability partnerships, joint stock companies,
joint ventures, associations, companies, trusts, banks, trust companies, land trusts, business
trusts or other organizations, whether or not legal entities, and governments and agencies and
political subdivisions thereof.




          “Personal Property” shall mean, with respect to any Loan Party, now owned or hereafter
acquired goods, merchandise, machinery, Equipment, furniture, fixtures, Inventory and




25









 




other personal property, wherever located, of any kind, nature or description, and all
documents of title or other documents representing them.




          “Plan” shall mean any employee benefit plan (within the meaning of Section 3(3) of ERISA)
established or maintained by any of the Loan Parties or any member of the Controlled Group or any
ERISA Affiliate or any such Plan to which any Loan Party or any ERISA Affiliate or member of the
Controlled Group is required to contribute on behalf of any of its employees.




          “Pollutant” shall include any “hazardous substance” and any “pollutant or contaminant” as
those terms are defined in CERCLA; any “hazardous waste” as that term is defined in RCRA; and any
“hazardous material” as that term is defined in the Hazardous Materials Transportation Act (49
U.S.C. § 1801 et seq.), as amended (including as those terms are further defined, construed, or
otherwise adopted in rules, regulations or standards, promulgated pursuant to, or otherwise in
implementation of, said Environmental Laws); and including without limitation any petroleum product
or byproduct, solvent, flammable or explosive material, radioactive material, asbestos,
polychlorinated biphenyls (“PCBs”), dioxins, dibenzofurans, heavy metals, and radon gas; and
including any other substance or material that is reasonably determined to present a threat, hazard
or risk to human health or the environment.




          “Pro Forma Balance Sheet” shall have the meaning assigned to such term in Section 4.1(C)(iii).




          “Pro Rata Share” means the percentage obtained by dividing (i) the particular Commitment of a
Lender by (ii) all such Commitments of all Lenders, as such percentage may be adjusted by
assignments permitted pursuant to Section 9.5; provided, however, if any Commitment is terminated
pursuant to the terms hereof, then “Pro Rata Share” means the percentage obtained by dividing (x)
the aggregate amount of such Lender’s outstanding Loans related to such Commitment by (y) the
aggregate amount of all outstanding Loans related to such Commitment.




          “Properties and Facilities” shall have the meaning assigned to such term in Section 4.1(Q).




          “Proprietary Rights” shall mean all right, title, and interest in the following intellectual
property, including both statutory and common law rights: (i) copyrights in published and
unpublished works, and all applications, registrations and renewals relating thereto; (ii)
registered or unregistered trademarks, service marks, domain names, logos, trade dress and other
source or business identifiers, and the goodwill associated therewith; (iii) patents, patent
applications, and other patent or industrial property rights in any country; and (iv) trade
secrets, confidential or proprietary information, inventions, ideas, designs, concepts,
compilations of information, methods, techniques, procedures, processes, and know-how, whether or
not patentable patents, trademarks, trade names, service marks, copyrights, inventions, production
methods, licenses, formulas, know-how and trade secrets, regardless of whether such are registered
with any Governmental Authorities, including applications therefor.




26









 








          “RCRA” shall mean the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.), as
amended, and all rules, regulations, standards, guidelines, and publications issued thereunder.




          “Register” has the meaning assigned to that term in Section 9.5(E).




          “Related Fund” shall mean, with respect to any Lender, a fund or other investment vehicle that
invests in commercial loans and is managed by such Lender or by the same investment advisor that
manages such Lender or by an Affiliate of such investment advisor.




          “Release” shall mean any releasing, spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping, depositing, or disposing into the indoor or
outdoor environment, or into or out of any property, including the abandonment or discarding of
barrels, containers, and other closed receptacles containing any Pollutant.




          “Removal,” “Remedial” and “Response” actions shall include the types of activities
“covered”
by CERCLA, RCRA, and other comparable Environmental Laws, and whether the activities are those that
might be taken by a government entity or those that a government entity or any other person might
seek to require of waste generators, handlers, distributors, processors, users, storers, treaters,
owners, operators, transporters, recyclers, reusers, disposers, or other persons under “removal,”
“remedial,” or other “response” actions.




          “Reportable Event” shall mean any of the events that are reportable under Section 4043 of
ERISA and the regulations promulgated thereunder, other than an occurrence for which the thirty
(30) day notice contained in 29 C.F.R. § 2615.3(a) is waived.




          “Replacement Lender” has the meaning assigned to that term in Section 2.11(A).




          “Requisite Lenders” means Lenders, (other than a Defaulting Lender), holding or being
responsible for more than 50% of the sum of the (a) outstanding Loans, (b) Letter of Credit Reserve
and (c) unutilized Commitments of all Lenders which are not Defaulting Lenders.




          “Revolving Advance” means each advance made by Lender(s) under the Revolving Loan Commitment
pursuant to Section 2.1 (A).




          “Revolving Loan” means the outstanding balance of all Revolving Advances and any amounts added
to the principal balance of the Revolving Loan pursuant to this Agreement.




          “Revolving Loan Commitment” means (a) as to any Lender, the commitment of such Lender to make
Revolving Advances pursuant to Section 2.1 (A), and to purchase participations in Lender Letters of
Credit pursuant to Section 2.1(E) in the aggregate amount set forth on the signature page of this
Agreement opposite such Lender’s signature or in the most recent Assignment and Acceptance
Agreement, if any, executed by such Lender and (b) as to all Lenders, the aggregate commitment of
all Lenders to make Revolving Advances and to purchase participations in Lender Letters of Credit.
Any reduction of the aggregate Revolving Loan Commitment pursuant to Section 2.4(C) shall reduce
each Lender’s respective Revolving Loan Commitment on a Pro Rata Basis.




27









 








          “Revolving Note” means each promissory note of Borrower in form and substance reasonably
acceptable to Agent, issued to evidence the Revolving Loan Commitments.




          “Rocky on a Consolidated Basis” means the consolidation, in accordance with GAAP, of the
financial accounts of Parent and its Subsidiaries.




          “S&P” shall have the meaning assigned to such term in Section 5.2(H)(ii).




          “SEC” shall mean the Securities and Exchange Commission and any governmental body or agency
succeeding to the functions thereof.




          “Second Priority Agent” means Laminar Direct Capital L.P. in its capacity as agent for the
holders of the Second Priority Senior Secured Notes.




          “Second Priority Senior Secured Loans” means the advances made to Borrower by the purchasers
of the Senior Priority Senior Secured Notes pursuant to the Note Purchase Agreement.




          “Second Priority Senior Secured Notes” has the meaning assigned to that term in the fourth
WHEREAS clause of this Agreement.




          “Securities Act” shall mean the Securities Act of 1933, as amended.




          “Settlement Date” has the meaning assigned to that term in Section 9.8(A)(2).




          “Subsidiary” means, with respect to any Person, any corporation, association or other business
entity of which more than fifty percent (50%) of the total voting power of shares of stock (or
equivalent ownership or controlling interest) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by that Person or one or more of the other
subsidiaries of that Person or a combination thereof.




          “Syndication Agent” has the meaning assigned to that term in the Recitals section of this
Agreement.




          “Tax Liabilities” has the meaning assigned to that term in Section 2.9(A).




          “Term Loan A” has the meaning assigned to that term in the first WHEREAS clause of this
Agreement.




          “Term Loan B” has the meaning assigned to that term in the fourth WHEREAS clause of this
Agreement.




          “Term Loan C” has the meaning assigned to that term in the sixth WHEREAS clause of this
Agreement.




          “Termination Date” has the meaning assigned to that term in Section 2.5.




28









 








          “Total Leverage Ratio” shall mean, for any period, the ratio of (x) Adjusted Indebtedness of
Rocky on a Consolidated Basis as of the end of such period to (y) EBITDA for such period.




          “Trademark Security Agreement” means each Trademark Security Agreement executed and delivered
by a Loan Party to Agent, as the same may be amended and in effect from time to time.




          “Trademarks” means collectively all of the following: (a) all trademarks, trade names,
corporate names, company names, business names, fictitious business names, trade styles, service
marks, logos, other business identifiers, prints and labels on which any of the foregoing have
appeared or appear, all registrations and recordings thereof, and all applications in connection
therewith including, without limitation, those listed on any schedule to any Trademark Security
Agreement; (b) all renewals thereof; (c) all income, royalties, damages and payments now or
hereafter due and/or payable under any of the foregoing or with respect to any of the foregoing
including damages and payments for past, present and future infringements of any of the foregoing;
(d) the right to sue for past, present and future infringements of any of the foregoing; (e) all
rights corresponding to any of the foregoing throughout the world; and (f) all goodwill associated
with and symbolized by any of the foregoing.




          “Transactions” shall mean, in the aggregate, the GMAC Transactions, the incurrence of the
obligations by the Loan Parties of the Second Priority Senior Secured Loans, all as contemplated by
this Agreement, the Note Purchase Documents and related documents.




          “UCC” means the Uniform Commercial Code as in effect from time to time in the State of New
York; provided, however, to the extent the law of any other state or other jurisdiction applies to
the attachment, perfection, priority or enforcement of any Lien granted to Agent in any of the
Collateral, “UCC” means the Uniform Commercial Code as in effect in such other state or
jurisdiction for purposes of the provisions hereof relating to such attachment, perfection,
priority or enforcement of a Lien in such Collateral. To the extent this Agreement defines the
term “Collateral” by reference to terms used in the UCC, each of such terms shall have the broadest
meaning given to such terms under the UCC as in effect in any state or other jurisdiction.




          “Undrawn Availability” means an amount at any particular date equal to (a) the Maximum
Revolving Loan Amount less (b) the sum of (i) the Revolving Loan, plus (ii) all amounts due
Borrower’s trade creditors with respect to accounts payable outstanding beyond customary trade
terms, in accordance with the historical practices of Borrower.




          “US” shall mean the United States of America.




     1.2. UCC Defined Terms. The following terms used in this Agreement shall have the
respective meanings provided for in the UCC: “Accounts”, “Account Debtor”, “Buyer in Ordinary
Course of Business”, “Chattel Paper”, “Commercial Tort Claim”, “Deposit Account”, “Documents”,
“Electronic Chattel Paper”, “Equipment”, “Farm Products”, “Fixtures”, “General Intangibles”,
“Goods”, “Instruments”, “Inventory”, “Investment Property”, “Letter of Credit”,



29









 







“Letter-of-Credit
Rights”,
“Licensee in Ordinary Course of Business”, “Payment Intangibles”, “Proceeds”, “Record”, “Software”,
“Supporting Obligations” and “Tangible Chattel Paper”.



     1.3. Accounting Terms. For purposes of this Agreement, all accounting terms not otherwise
defined herein shall have the meanings assigned to such terms in conformity with GAAP. Financial
statements and other information furnished to Agent or any Lender pursuant to Section 5.1(E) shall
be prepared in accordance with GAAP (as in effect at the time of such preparation) on a consistent
basis. In the event any “Accounting Changes” (as defined below) shall occur and such changes
affect financial covenants, standards or terms in this Agreement, then Loan Parties and Agent agree
to enter into negotiations in order to amend such provisions of this Agreement so as to equitably
reflect such Accounting Changes with the desired result that the criteria for evaluating the
financial condition of the Loan Parties shall be the same after such Accounting Changes as if such
Accounting Changes had not been made, and until such time as such an amendment shall have been
executed and delivered by Loan Parties and Requisite Lenders, (A) all financial covenants,
standards and terms in this Agreement shall be calculated and/or construed as if such Accounting
Changes had not been made, and (B) the Loan Parties shall prepare footnotes to each Compliance
Certificate and the financial statements required to be delivered hereunder that show the
differences between the financial statements delivered (which reflect such Accounting Changes) and
the basis for calculating financial covenant compliance (without reflecting such Accounting
Changes). “Accounting Changes” means: (a) changes in accounting principles required by GAAP and
implemented by Loan Parties; (b) changes in accounting principles recommended by Loan Parties’
Accountants; and (c) changes in carrying value of any Loan Party’s assets, Liabilities or equity
accounts resulting from (i) the application of purchase accounting principles (FASB 141) to the
Transactions or (ii) any other adjustments that, in each case, were applicable to, but not included
in, the Pro Forma Balance Sheet. All such adjustments resulting from expenditures made subsequent
to the Closing Date (including, but not limited to, capitalization of costs and expenses or payment
of pre-Closing Date Liabilities) shall be treated as expenses in the period the expenditures are
made and deducted as part of the calculation of EBITDA in such period.



     1.4. Other Definitional Provisions. References to “Sections”, “subsections”, “Riders”,
“Exhibits”, “Schedules” and “Addenda” shall be to Sections, subsections, Riders, Exhibits,
Schedules and Addenda, respectively, of this Agreement unless otherwise specifically provided. Any
of the terms defined in subsection 1.1 or otherwise in this Agreement may, unless the context
otherwise requires, be used in the singular or the plural depending on the reference. In this
Agreement, words importing any gender include the other genders; the words “including,” “includes”
and “include” shall be deemed to be followed by the words “without limitation”; references to
agreements and other contractual instruments shall be deemed to include subsequent amendments,
assignments, and other modifications thereto, but only to the extent such amendments, assignments
and other modifications are not prohibited by the terms of this Agreement or any other Loan
Document; references to Persons include their respective permitted successors and assigns or, in
the case of governmental Persons, Persons succeeding to the relevant functions of such Persons; and
all
references to statutes and related regulations shall include any amendments of same and any
successor statutes and regulations.



30









 





SECTION 2. LOANS AND COLLATERAL




     2.1. Loans.



          (A) Revolving Loan. Each Lender, severally, agrees to lend to Borrower from time to time its Pro
Rata Share of each advance under the Revolving Loan Commitment. The aggregate amount of the
Revolving Loan Commitment shall not exceed at any time $100,000,000, as reduced by Section 2.4(C).
Amounts borrowed under this Section 2.1(A) may be repaid and reborrowed at any time prior to the
earlier of (1) the termination of the Revolving Loan Commitment pursuant to Section 7.3 or (2) the
Termination Date. Except as otherwise provided herein, no Lender shall have any obligation to make
a Revolving Advance to the extent such Revolving Advance would cause the Revolving Loan (after
giving effect to any immediate application of the proceeds thereof) to exceed the Maximum Revolving
Loan Amount.




          (B) [Reserved.]




          (C) [Reserved.]




          (D) Borrowing Mechanics. (1) LIBOR Loans made on any Funding Date shall be in an aggregate minimum
amount of $500,000 and integral multiples of $100,000 in excess of such amount. (2) On any day
when a Borrower desires a Revolving Advance under this Section 2.1, Borrowing Agent shall give
Agent written or telephonic notice of the proposed borrowing by 11:00 a.m. New York time on the
Funding Date of a Base Rate Loan and three (3) Business Days in advance of the Funding Date of a
LIBOR Loan, which notice shall specify the proposed Funding Date (which shall be a Business Day),
whether such Loans shall consist of Base Rate Loans or LIBOR Loans, and, for LIBOR Loans, the
Interest Period applicable thereto. Any such telephonic notice shall be confirmed with a Notice of
Borrowing on the same day as such request. Neither Agent nor Lender shall incur any liability to
any Borrower for acting upon any telephonic notice or a Notice of Borrowing which Agent believes in
good faith to have been given by a duly authorized officer or other person authorized to borrow on
behalf of any Borrower or for otherwise acting in good faith under this Section 2.1(C). Neither
Agent nor Lender will be required to make any advance pursuant to any telephonic or written notice
or a Notice of Borrowing, unless all of the terms and conditions set forth in Section 3 have been
satisfied and Agent has also received the most recent Borrowing Base Certificate and all other
documents, to the extent required under Section 5.1(E), by 11:00 a.m. New York time on the date of
such funding request. Each Advance shall be deposited by wire transfer in immediately available
funds in such account as Borrowing Agent may from time to time designate to Agent in writing. The
becoming due of any amount required to be paid under this Agreement or any of the other Loan
Documents as principal, Lender Letter of Credit reimbursement obligation, accrued interest, fees,
compensation or any other amounts shall be deemed irrevocably to be an automatic request by
Borrowing Agent on behalf of the Borrowers for a Revolving Advance, which shall be a Base Rate Loan
on the due date of, and in
the amount required to pay (as set forth on Agent’s books and records), such principal, Lender
Letter of Credit reimbursement obligation, accrued interest, fees, compensation or any other
amounts.




          (E) Notes. The Borrowers shall execute and deliver to each Lender with appropriate insertions a
Note to evidence such Lender’s Commitments. In the event of an




31









 




assignment under Section 9.5, the
Borrowers shall, upon surrender of the assigning Lender’s Note, issue new Notes to reflect the
interest held by the assigning Lender and its Eligible Assignee.




          (F) Letters of Credit. The Revolving Loan Commitments may, in addition to Revolving Advances, be
utilized, upon the request of Borrowing Agent, for (1) the issuance of letters of credit by Agent;
or with Agent’s consent any Lender, or (2) the issuance by GMAC CF or Agent of guaranties or risk
participations to banks to induce such banks to issue Bank Letters of Credit for the account of
Borrowers (each of (1) and (2) above a “Lender Letter of Credit”). Each Lender shall be deemed to
have purchased a participation in each Lender Letter of Credit issued on behalf of Borrowers in an
amount equal to its Pro Rata Share thereof. In no event shall any Lender Letter of Credit be
issued to the extent that the issuance of such Lender Letter of Credit would cause the sum of the
Letter of Credit Reserve (after giving effect to such issuance), plus the Revolving Loan to exceed
the lesser of (1) the Borrowing Base and (2) the Revolving Loan Commitments.




               (1) Maximum Amount. The aggregate amount of Letter of Credit Liability with respect to
all
Lender Letters of Credit outstanding at any time shall not exceed $7,500,000.



               (2) Reimbursement. The Borrowers shall be irrevocably and unconditionally obligated
forthwith without presentment, demand, protest or other formalities of any kind, to reimburse Agent
or the issuer for any amounts paid with respect to a Lender Letter of Credit including all fees,
costs and expenses paid to any bank that issues a Bank Letter of Credit. Each Borrower hereby
authorizes and directs Agent, at Agent’s option, to debit Borrowers’ account (by increasing the
Revolving Loan) in the amount of any payment made with respect to any Lender Letter of Credit. In
the event that Agent elects not to debit Borrowers’ account and the Borrowers fail to reimburse
Agent in full on the date of any payment under a Lender Letter of Credit, Agent shall promptly
notify each Lender of the unreimbursed amount of such payment together with accrued interest
thereon and each Lender, on the next Business Day, shall deliver to Agent an amount equal to its
respective participation in same day funds. The obligation of each Lender to deliver to Agent an
amount equal to its respective participation pursuant to the foregoing sentence shall be absolute
and unconditional and such remittance shall be made notwithstanding the occurrence or continuation
of an Event of Default or Default or the failure to satisfy any condition set forth in Section 3.
In the event any Lender fails to make available to Agent the amount of such Lender’s participation
in such Lender Letter of Credit, Agent shall be entitled to recover such amount on
demand from such Lender together with interest on such amount calculated at the Federal Funds
Effective Rate.



               (3) Request for Letters of Credit. Borrowing Agent shall give Agent at least three (3)
Business Days prior notice specifying the date a Lender Letter of Credit is to be issued,
identifying the beneficiary and describing the nature of the transactions proposed to be supported
thereby. The notice shall be accompanied by the form of the Letter of Credit being requested. Any
Letter of Credit which Borrowing Agent requests must be in such form, be for such amount, contain
such terms and support such transactions as are reasonably satisfactory to Agent. The expiration
date of each Lender Letter of Credit shall be on a date which is at least thirty (30) days prior to
the Termination Date, unless otherwise agreed to by Agent.



32









 





          (G) Other Letter of Credit Provisions.




               (1) Obligations Absolute. The obligation of the Borrowers to reimburse Agent or any
Lender
for payments made under, and other amounts payable in connection with, any Lender Letter of Credit
shall be unconditional and irrevocable and shall be paid under all circumstances strictly in
accordance with the terms of this Agreement including, without limitation, the following
circumstances:



                    (a) any lack of validity or enforceability of any Lender Letter
of Credit, or any other
agreement;



                    (b) the existence of any claim, set-off, defense or other right
which any Borrower, any of its
Subsidiaries or Affiliates or any other Person may at any time have against any beneficiary or
transferee of any Lender Letter of Credit (or any Persons for whom any such transferee may be
acting), Agent, any Lender, any bank issuing a Bank Letter of Credit, or any other Person, whether
in connection with this Agreement, any other Loan Document, or any other related or unrelated
agreements or transactions;



                    (c) any draft, demand, certificate or any other document
presented under any Lender Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect;



                    (d) any adverse change in the business, operations, properties,
assets, condition (financial
or otherwise) or prospects of Loan Parties or any of their Subsidiaries;



                    (e) any breach of this Agreement or any other Loan Document by
any party thereto;



                    (f) any other circumstance or happening whatsoever, whether or
not similar to any of the
foregoing;



                    (g) the fact that a Default or an Event of Default shall have
occurred and be continuing; or



                    (h) payment under any Lender Letter of Credit against
presentation of a demand, draft or
certificate or other document which does not comply with the terms of such Lender Letter of Credit;
provided that, in the case of any payment by Agent or a Lender under any Lender Letter of Credit,
Agent or such Lender has not acted with gross negligence or willful misconduct (as determined by a
final non-appealable order by a court of competent jurisdiction) in determining that the demand for
payment under such Lender Letter of Credit complies on its face with any applicable requirements
for a demand for payment under such Lender Letter of Credit.



               (2) Nature of Lender’s Duties. As between any Lender that issues a Lender Letter of
Credit
(an “Issuing Lender”), on the one hand, and all Lenders on the other hand, all Lenders assume all
risks of the acts and omissions of, or misuse of any Lender Letter of Credit by the beneficiary
thereof. In furtherance and not in limitation of the foregoing, neither



33









 







Agent nor any Issuing
Lender shall be responsible: (a) for the form, validity, sufficiency, accuracy, genuineness or
legal effect of any document by any party in connection with the application for and issuance of
any Lender Letter of Credit, even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (b) for the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign any Lender Letter of
Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may
prove to be invalid or ineffective for any reason; (c) for failure of the beneficiary of any Lender
Letter of Credit to comply fully with conditions required in order to demand payment thereunder;
provided that, in the case of any payment under any such Lender Letter of Credit, any Issuing
Lender has not acted with gross negligence or willful misconduct (as determined by a final
non-appealable order by a court of competent jurisdiction) in determining that the demand for
payment under any such Lender Letter of Credit complies on its face with any applicable
requirements for a demand for payment thereunder; (d) for errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise,
whether or not they be in cipher; (e) for errors in interpretation of technical terms; (f) for any
loss or delay in the transmission or otherwise of any document required in order to make a payment
under any such Lender Letter of Credit; (g) for the credit of the proceeds of any drawing under any
such Lender Letter of Credit; and (h) for any consequences arising from causes beyond the control
of Agent or any Lender as the case may be.



               (3) Liability. In furtherance and extension of and not in limitation of, the specific
provisions herein above set forth, any action taken or omitted by Agent or any Lender under or in
connection with any Lender Letter of Credit, if taken or omitted in good faith, shall not put Agent
or any Lender under any resulting liability to any Borrower or any other Lender.



          (H) Availability of a Lender’s Pro Rata Share.




               (1) Lender’s Amounts Available on a Funding Date.
Unless Agent receives written notice from a Lender on or prior to any Funding Date that such
Lender will not make available to Agent as and when required such Lender’s Pro Rata Share of any
requested Loan or Advance, Agent may assume that each Lender will make such amount available to
Agent in immediately available funds on the Funding Date and Agent may (but shall not be so
required), in reliance upon such assumption, make available to Borrowers on such date a
corresponding amount.



               (2) Lender’s Failure to Fund. A Defaulting Lender shall pay interest to Agent at
the
Federal Funds Effective Rate on the Defaulted Amount from the Business Day following the applicable
Funding Date of such Defaulted Amount until the date such Defaulted Amount is paid to Agent. A
notice of Agent submitted to any Lender with respect to amounts owing under this subsection shall
be conclusive, absent manifest error. If such amount is not paid when due to Agent, Agent, at its
option, may notify Borrowing Agent of such failure to fund and, upon demand by Agent, the Borrowers
shall pay the unpaid amount to Agent for Agent’s account, together with interest thereon (without
duplication and to the extent not paid in connection with such applicable Loan) for each day
elapsed since the date of such borrowing, at a rate per annum equal to the interest rate applicable
at the time to the Loan made by the other Lenders on such Funding Date. The failure of any Lender
to make available any portion of its



34









 







Commitment on any Funding Date or to fund its participation in
a Lender Letter of Credit shall not relieve any other Lender of any obligation hereunder to fund
such Lender’s Commitment on such Funding Date or to fund any such participation, but no Lender
shall be responsible for the failure of any other Lender to honor its Commitment on any Funding
Date or to fund any participation to be funded by any other Lender.



               (3) Payments to a Defaulting Lender. Notwithstanding any provision to the contrary
contained in this Agreement or the other Loan Documents, Agent shall not be obligated to transfer
to a Defaulting Lender any payment made by the Borrowers to Agent or any amount otherwise received
by Agent for application to the Obligations nor shall a Defaulting Lender be entitled to the
sharing of any interest, fees or payments hereunder.



               (4) Defaulting Lender’s Right to Vote. Notwithstanding any provision to the
contrary
contained in this Agreement or the other Loan Documents for purposes of voting or consenting to
matters with respect to (a) the Loan Documents or (b) any other matter concerning the Loans, a
Defaulting Lender shall be deemed not to be a “Lender” and such Lender’s Commitments and
outstanding Loans and Advances shall be deemed to be zero.



     2.2. Interest.



          (A) Rate of Interest. The Loans and all other Obligations shall bear interest from the date such
Loans are made or such other Obligations become due to the date paid at a rate per annum equal to
(1) in the case of
Base Rate Loans and Obligations for which no interest rate basis is specified, the Base Rate plus
the Applicable Margin and (2) in the case of LIBOR Loans, LIBOR plus the Applicable Margin
(collectively the “Interest Rate”). All Loans made on the Closing Date shall be either (x) Base
Rate Loans or (y) LIBOR Loans having an Interest Period of one month, and, in each case, shall
remain so until ninety (90) days after the Closing Date or such earlier date as Agent notifies
Borrower that it has completed the primary syndication of the Loans. Such designation by Borrowing
Agent may be changed from time to time pursuant to Section 2.2(D). If on any day a Loan or a
portion of any Loan is outstanding with respect to which notice has not been delivered to Agent in
accordance with the terms of this Agreement specifying the basis for determining the rate of
interest or if LIBOR has been specified and no LIBOR quote is available, then for that day that
Loan or portion thereof shall bear interest determined by reference to the Base Rate.




               After the occurrence and during the continuance of an Event of Default (1) the Loans and all
other Obligations shall, at the election of Agent or Requisite Lenders, bear interest at a rate per
annum equal to two percent (2%) plus the applicable Interest Rate (the “Default Rate”), (2) each
LIBOR Loan shall automatically convert to a Base Rate Loan at the end of any applicable Interest
Period and (3) no Loans may be converted to LIBOR Loans. If an Event of Default has occurred and
is continuing on an Adjustment Date, the Applicable Margin shall be set at its highest level.



          (B) Computation and Payment of Interest. Interest on the Loans and all other Obligations shall be
computed on the daily principal balance on the basis of a three hundred sixty (360) day year for
the actual number of days elapsed. In computing interest on any Loan, the date of funding of the
Loan or the first day of an Interest Period applicable to such Loan or, with





35









 




respect to a Base Rate Loan being converted from a LIBOR Loan, the date of conversion of such LIBOR
Loan to such Base Rate Loan, shall be included; and the date of payment of such Loan or the
expiration date of an Interest Period applicable to such Loan, or with respect to a Base Rate Loan
being converted to a LIBOR Loan, the date of conversion of such Base Rate Loan to such LIBOR Loan,
shall be excluded; provided that if a Loan is repaid on the same day on which it is made, one (1)
day’s interest shall be paid on that Loan. Interest on Base Rate Loans and all other Obligations
other than LIBOR Loans shall be payable to Agent for the benefit of Lenders monthly in arrears on
the first day of each month, on the date of any prepayment of Loans, and at maturity, whether by
acceleration or otherwise. Interest on LIBOR Loans shall be payable to Agent for the benefit of
Lenders on the last day of the applicable Interest Period for such Loan, on the date of any
prepayment of the Loans, and at maturity, whether by acceleration or otherwise. In addition, for
each LIBOR Loan having an Interest Period longer than three (3) months, interest accrued on such
Loan shall also be payable on the last day of each three (3) month interval during such Interest
Period.




          (C) Interest Laws. Notwithstanding any provision to the contrary contained in this Agreement
or any other Loan Document, the Borrowers shall not be required to pay, and neither Agent nor any
Lender shall be permitted to collect, any amount of interest in excess of the maximum amount of
interest permitted by applicable law (“Excess Interest”). If any Excess Interest is provided for
or determined by a court of competent jurisdiction to have been provided for in this Agreement or
in any other Loan Document, then in such event: (1) the provisions of this subsection shall govern
and control; (2) neither any Borrower nor any other Loan Party shall be obligated to pay any Excess
Interest; (3) any Excess Interest that Agent or any Lender may have received hereunder shall be, at
such Lender’s option, (a) applied as a credit against the outstanding principal balance of the
Obligations or accrued and unpaid interest (not to exceed the maximum amount permitted by law), (b)
refunded to the payor thereof, or (c) any combination of the foregoing; (4) the interest rate(s)
provided for herein shall be automatically reduced to the maximum lawful rate allowed from time to
time under applicable law (the “Maximum Rate”), and this Agreement and the other Loan Documents
shall be deemed to have been and shall be, reformed and modified to reflect such reduction; and (5)
neither any Borrower nor any Loan Party shall have any action against Agent or any Lender for any
damages arising out of the payment or collection of any Excess Interest. Notwithstanding the
foregoing, if for any period of time interest on any Obligations is calculated at the Maximum Rate
rather than the applicable rate under this Agreement, and thereafter such applicable rate becomes
less than the Maximum Rate, the rate of interest payable on such Obligations shall remain at the
Maximum Rate until each Lender shall have received the amount of interest which such Lender would
have received during such period on such Obligations had the rate of interest not been limited to
the Maximum Rate during such period.




          (D) Conversion or Continuation. Subject to the other provisions of this Agreement, including,
without limitation, satisfying the conditions set forth in Section 3, Borrowing Agent shall have
the option to (1) convert at any time all or any part of outstanding Loans equal to $500,000 and
integral multiples of $100,000 in excess of that amount from Base Rate Loans to LIBOR Loans or (2)
upon the expiration of any Interest Period applicable to a LIBOR Loan, to (a) continue all or any
portion of such LIBOR Loan equal to $500,000 and integral multiples of $100,000 in excess of that
amount as a LIBOR Loan or (b) convert all or any portion of such LIBOR Loan to a Base Rate Loan.
The succeeding Interest Period(s) of such

36









 








continued or converted Loan commence on the last day of the Interest Period of the Loan to be
continued or converted; provided that no outstanding Loan may be continued as, or be converted
into, a LIBOR Loan, when any Event of Default or Default has occurred and is continuing.




               Borrowing Agent shall deliver a Notice of Borrowing with respect to any such
conversion/continuation to Agent no later than 11:00 a.m. (New York time) at least three (3)
Business Days in advance of the proposed conversion/continuation date. The Notice of Borrowing
with respect to such conversion/continuation shall certify: (1) the proposed
conversion/continuation date (which shall be a Business Day); (2) the amount of the Loan to be
converted/continued; (3) the nature of the proposed conversion/continuation; (4) in the case of
conversion to, or a continuation of, a LIBOR Loan, the requested Interest Period; (5) that no
Default or Event of Default has occurred and is continuing or would result from the proposed
conversion/continuation; and (6) that all conditions to make Loans as set forth in Section 3 have
been satisfied.



               In lieu of delivering a Notice of Borrowing with respect to any such conversion/continuation,
Borrowing Agent may give Agent telephonic notice by the required time of any proposed
conversion/continuation under this subsection 2.2(D) (in such telephonic notice Borrowing Agent
shall certify to the items set forth above with respect to the Notice of Borrowing); provided that
such telephonic notice shall be promptly confirmed in writing by delivery of a Notice of Borrowing
(in form and substance described herein) with respect to such conversion/continuation to Agent on
or before the proposed conversion/continuation date. Once given, the Borrowers shall be bound by
such telephonic notice. Upon the expiration of an Interest Period for a LIBOR Loan, in the absence
of a new Notice of Borrowing or a telephonic notice submitted to Agent not less than three (3)
Business Days prior to the end of such Interest Period, the LIBOR Loan then maturing shall be
automatically converted to a Base Rate Loan.



               Neither Agent nor any Lender shall incur any liability to any Borrower or any other Loan Party
in acting upon any telephonic notice or a Notice of Borrowing referred to above that Agent believes
in good faith to have been given by an officer or other person authorized to act on behalf of
Borrowers or for otherwise acting in good faith under this Section 2.2(D).



     2.3. Fees.



          (A) Unused Line Fee. The Borrowers shall pay to Agent, for the benefit of Lenders, a fee in
an amount equal to the Revolving Loan Commitment less the sum of (1) the average daily balance of
each of the Revolving Loan plus, (2) the average daily face amount of the Letter of Credit Reserve
during the preceding month, multiplied by (3) 3/8th of 1% (0.375%) per annum. Such fee to be
calculated on the basis of a three hundred sixty (360) day year for the actual number of days
elapsed and to be payable monthly in arrears on the first day of each month following the Closing
Date.




          (B) Letter of Credit Fees. The Borrowers shall pay to Agent a fee with respect to the Lender
Letters of Credit for the benefit of all Lenders with a Revolving Loan Commitment (based on their
respective Pro Rata Share) in the amount of the average daily amount of Letter of Credit Liability
outstanding during such month multiplied by 2.75% per annum until the first

37









 








Adjustment Date and thereafter by the applicable percentage specified as the Applicable Margin
for LIBOR Rate Loans consisting of Revolving Advances. Such fees will be calculated on the basis
of a three hundred sixty (360) day year for the actual number of days elapsed and will be payable
monthly in arrears on the first day of each month. The Borrowers shall also reimburse Agent for
any and all fees and expenses, if any, paid by Agent or any Lender to the issuer of any Bank Letter
of Credit.




          (C) Audit Fees. The Borrowers agree to pay all fees and expenses of the firm or individual(s)
engaged by Agent to perform audits and/or appraisals of Loan Parties’ assets and/or operations.
Notwithstanding the foregoing, if Agent uses its internal auditors to perform any audit, the
Borrowers agree to pay to Agent, for its own account, an audit fee with respect to each such audit
equal to $1,000 per internal auditor per day or any portion thereof together with all out of pocket
expenses; provided, however, that prior to a Default, the Borrowers will not have
to pay for more than two (2) audits per year.




          (D) Other Fees and Expenses. The Borrowers shall pay to Agent, for its own account, all
charges for returned items and all other bank charges incurred by Agent, as well as Agent’s
standard wire transfer charges for each wire transfer made under this Agreement.




          (E) Fee Letter. The Borrowers shall pay to GMAC CF, individually, the fees specified in that
certain letter agreement dated December 13, 2004 between the Borrowers and GMAC CF.




     2.4. Payments and Prepayments.



          (A) Manner and Time of Payment. In its sole discretion, Agent may elect to honor the
automatic requests by Borrowing Agent for Revolving Advances, for all principal, Lender Letter of
Credit reimbursement obligations, interest, fees, compensation and any other amounts due hereunder
or under any of the other Loan Documents on their applicable due dates pursuant to the terms of
this Agreement, and the proceeds of each such Revolving Advance, if made, shall be applied as a
direct payment of the relevant Obligation. To the extent such amounts exceed the Revolving Loan
Commitment of all Revolving Loan Lenders, or if Agent elects to bill Borrowers for any amount due
hereunder or under any of the other Loan Documents, such amount shall be immediately due and
payable with interest thereon accruing from the applicable due date. All payments made by
Borrowers with respect to the Obligations shall be made without deduction, defense, setoff or
counterclaim. All payments to Agent hereunder shall, unless otherwise directed by Agent, be made
to Agent’s Account or in accordance with Section 6.4. All proceeds remitted to Agent’s Account via
wire transfer shall be credited to the Obligations (including for the purpose of calculating
interest payable by the Borrowers on the Obligations) on the same Business Day as such proceeds
were received.




          (B) Mandatory Prepayments.




               (1) Over Formula Advance. At any time that the Revolving Loan exceeds the Maximum
Revolving Loan Amount (an “Over Formula Advance”), the Borrowers shall, immediately repay the
Revolving Loan to the extent necessary to eliminate the Over Formula Advance.



38









 





               (2) Prepayments from Proceeds of Asset Dispositions. Immediately upon receipt by any
Loan
Party or any of their respective Subsidiaries of Net Cash Proceeds of any Asset Disposition, which
Net Cash Proceeds (together with all other Net Cash Proceeds of Asset Dispositions theretofore
consummated by the Loan Parties or any of their respective Subsidiaries during any Fiscal Year)
exceed $100,000 in the aggregate in any Fiscal Year (it being understood that if the Net Cash
Proceeds of any Asset Disposition exceed $50,000, the entire amount and not just the portion above
$100,000 shall be subject to this Section 2.4(B)(2)), the Borrowers shall prepay the Obligations in
an amount equal to such proceeds. All such prepayments shall be applied to the Loans in accordance
with Section 2.4(E).



               (3) Prepayments from Issuance of Securities. Immediately upon the receipt by any Loan
Party or any of their respective Subsidiaries of the proceeds of the issuance of equity securities
(other than (i) as a result of the exercise of stock options under equity incentive plans of Parent
and (ii) any proceeds received from another Loan Party), the Borrowers shall, except as otherwise
provided in Section 2.4(E), prepay the Loans in an amount equal to such proceeds, net of
underwriting discounts and commissions and other reasonable costs associated therewith. All such
prepayments shall be applied to the Loans in accordance with Section 2.4(E).



               (4) Prepayments from Tax Refunds. Immediately upon the receipt by any Loan Party or any
of
their respective Subsidiaries of the proceeds of any tax refund, the Borrowers shall prepay the
Loans in an amount equal to such proceeds. All such prepayments shall be applied to the Loans in
accordance with Section 2.4(E).



               (5) Change of Control. Immediately upon the occurrence of any Change of Control,
Borrower
shall prepay the Loans, together with all other then outstanding Obligations, in full, and the
Commitments shall be deemed terminated. All such prepayments shall be applied to the Loans in
accordance with Section 2.4(E).



          (C) Voluntary Prepayments and Repayments. Borrower may, at any time upon not less than three (3)
Business Days prior notice to Agent, (a) reduce the Revolving Loan Commitment in minimum reductions
of $1,000,000 and in integral multiples of $500,000 in excess thereof (but in no event to a
Revolving Loan Commitment of less than $25,000,000) and/or (b) terminate the Revolving Loan
Commitment in full; provided, however, the Revolving Loan Commitment may not be terminated by
Borrower until all other Obligations are paid in full. Any reduction or termination of the
Revolving Loan Commitment permitted in this Section 2.4(C) shall be subject to the payment of all
fees set forth in subsection 2.3, including, without limitation, the fees set forth in the Fee
Letter and the payment of any amounts owing pursuant to Section 2.12 resulting from such
prepayment. In the event any Lender Letters of Credit are outstanding at the time that Borrowers
prepays the Obligations and desires to terminate the Revolving Loan Commitment, the Borrowers shall
cause Agent and each Lender to be released from all liability under any Lender Letters of Credit
or, at Agent’s option,
the Borrowers shall (1) deposit with Agent for the benefit of all Lenders with a Revolving Loan
Commitment cash in an amount equal to one hundred and five percent (105%) of the aggregate
outstanding Letter of Credit Reserve to be available to Agent to reimburse payments of drafts drawn
under such Lender Letters of Credit and pay any fees and expenses related thereto and (2) prepay
the fees payable under Section 2.3(B) with respect to such Lender Letters of Credit for the full
remaining


39









 







terms of such Lender Letters of Credit. Upon termination of any such Lender Letter of
Credit, the unearned portion of such prepaid fee attributable to such Lender Letter of Credit shall
be refunded to the Borrowers.




          (D) Payments on Business Days. Whenever any payment to be made hereunder shall be stated to be due
on a day that is not a Business Day, the payment may be made on the next succeeding Business Day
and such extension of time shall be included in the computation of the amount of interest or fees
due hereunder.




          (E) Application of Prepayment Proceeds. Except as otherwise provided therein, all prepayments
described in Sections 2.4(B)(2) through 2.4(B)(5) shall be applied to reduce the outstanding
principal balance of the Revolving Loans but not as a permanent reduction of the Revolving Loan
Commitment; provided, however, that the application of any proceeds from the
issuance of securities described in Section 2.4(B)(3) may be utilized by Borrower to repay or
prepay, in whole or in part, the Second Priority Senior Secured Notes, with any excess applied to
reduce the outstanding principal balance of the Revolving Loans but not as a permanent reduction of
the Revolving Loan Commitment. Considering each type of Loan being prepaid separately, any such
prepayment shall be applied first to Base Rate Loans of the type required to be prepaid before
application to LIBOR Loans of the type required to be prepaid.




     2.5. Term of this Agreement. This Agreement shall be effective until the earlier of (a)
January 5, 2010 and (b) the acceleration of all Obligations pursuant to Section 7.3 (the
“Termination Date”). The Commitments shall terminate (unless earlier terminated pursuant to the
terms hereof) upon the Termination Date and all Obligations shall become immediately due and
payable without notice or demand. Notwithstanding any termination, until all Obligations have been
fully paid and satisfied, Agent, on behalf of itself and Lenders, shall be entitled to retain
security interests in and liens upon all Collateral; provided, however, that in the event that all
Revolving Loans are repaid in full, and all other due and owing Obligations and all reasonably
anticipated future Obligations (including reasonably anticipated contingent Obligations) are
satisfied in full in a manner reasonably satisfactory to Agent, Agent shall, at the request of
Borrower, terminate its Liens upon all Collateral. Even after payment of all Obligations
hereunder, each Loan Party’s obligation to indemnify Agent and each Lender in accordance with the
terms hereof shall continue.



     2.6. Statements.
Agent shall render a monthly statement of account to Borrowing Agent within twenty (20) days
after the end of each month. Such statement of account shall constitute an account stated unless
any Borrower makes written objection thereto within thirty (30) days from the date such statement
is mailed to Borrowing Agent. Agent shall record in its books and records, including computer
records, (a) all Loans, interest charges and payments thereof, (b) all Letter of Credit Liability,
(c) the charging and payment of all fees, costs and expenses and (d) all other debits and credits
pursuant to this Agreement. The balance in the loan accounts shall constitute presumptive
evidence, absent manifest error, of the accuracy of the information contained therein; provided,
however, that any failure by Agent to so record shall not limit or affect the any Borrower’s
obligation to pay.



     2.7. Grant of Security Interest.



40









 





          (A) Grant of Liens in the Collateral. To secure the payment and performance of the Obligations,
including all renewals, extensions, restructurings and refinancings of any or all of the
Obligations, each Loan Party hereby ratifies and reaffirms its grant pursuant to the Original
Financing Agreement and hereby further grants to Agent, for the benefit of Agent and Lenders, a
continuing security interest in, lien and mortgage in and to, right of setoff against and
collateral assignment of all of such Loan Party’s assets, other than Excluded Property, in each
case, whether now owned or existing or hereafter acquired or arising and regardless of where
located including, without limitation, all: (1) Accounts; (2) Chattel Paper; (3) Commercial Tort
Claims, including those specified on Schedule 2.7(A); (4) Deposit Accounts and cash and other
monies and property of such Loan Party in the possession or under the control of Agent, any Lender
or any participant of any Lender in the Loans; (5) Documents; (6) Equipment; (7) Fixtures; (8)
General Intangibles (including Intellectual Property); (9) Goods; (10) Instruments; (11) Inventory;
(12) Investment Property; (13) Letter-of-Credit Rights and Supporting Obligations; (14) other
Personal Property whether or not subject to the UCC; and (15) Additional Mortgaged Property;
together with all books, records, ledger cards, files, correspondence, computer programs, tapes,
disks and related data processing software that at any time evidence or contain information
relating to any of the property described above or are otherwise necessary or helpful in the
collection thereof or realization thereon; and Proceeds and products of all or any of the property
described above (all of the above being collectively referred to as the “Collateral”).




          (B) Loan Parties Remain Liable. Anything herein to the contrary notwithstanding: (a) each Loan
Parties shall remain liable under the contracts and agreements included in the Collateral to the
extent set forth therein to perform all of their respective duties and obligations thereunder to
the same extent as if this Agreement or the other Loan Documents had not been executed; (b) the
exercise by Agent of any of the rights under this Agreement or the other Loan Documents shall not
release any Loan Party from any of their respective duties or obligations to the parties under the
contracts and agreements included in the Collateral; (c) neither Agent nor any Lender shall have
any obligation or liability under the contracts and agreements included in the Collateral by reason
of this Agreement or the other Loan Documents, nor shall Agent nor any Lender be obligated to
perform any of the obligations or duties of any Loan Party thereunder or to take any action to
collect or enforce any claim for
payment assigned under this Agreement or the other Loan Documents; and (d) neither Agent nor any
Lender shall have any liability in contract or tort for any Loan Party’s acts or omissions.




     2.8. Yield Protection.



          (A) Capital Adequacy and Other Adjustments. In the event any Lender shall have determined that the
adoption after the date hereof of any Law, treaty, governmental (or quasi-governmental) rule,
regulation, guideline or order regarding capital adequacy, reserve requirements or similar
requirements or compliance by such Lender or any corporation controlling such Lender with any
request or directive regarding capital adequacy, reserve requirements or similar requirements
(whether or not having the force of law and whether or not failure to comply therewith would be
unlawful) from any central bank or Governmental Authority or body having jurisdiction does or shall
have the effect of increasing the amount of capital, reserves or other funds required to be
maintained by such Lender or any corporation controlling such Lender and thereby reducing the rate
of return on such Lender’s or such


41









 







corporation’s capital as a consequence of its obligations
hereunder, then the Borrowers shall within fifteen (15) days after notice and demand from such
Lender (together with the certificate referred to in the next sentence and with a copy to Agent)
pay to Agent, for the account of such Lender, additional amounts sufficient to compensate such
Lender for such reduction. A certificate as to the amount of such cost and showing the basis of
the computation of such cost submitted by such Lender to Borrowing Agent shall, absent manifest
error, be conclusive and binding for all purposes.




          (B) Increased LIBOR Funding Costs. If, after the date hereof, the introduction of, change in or
interpretation of any law, rule, regulation, treaty or directive would impose or increase reserve
requirements (other than as taken into account in the definition of LIBOR) or otherwise increase
the cost to any Lender of making or maintaining a LIBOR Loan, then Borrowers shall from time to
time within fifteen (15) days after notice and demand from such affected Lenders (together with the
certificate referred to in the next sentence and with a copy to Agent) pay to Agent, for the
account of such affected Lenders, additional amounts sufficient to compensate such Lenders for such
increased cost. A certificate as to the amount of such cost and showing the basis of the
computation of such cost submitted by such affected Lenders to Borrowing Agent and Agent shall,
absent manifest error, be conclusive and binding on Borrower for all purposes.




     2.9. Taxes.



          (A) No Deductions. Any and all payments or reimbursements made hereunder shall be made free and
clear of and without deduction for any and all Charges and all Liabilities with respect thereto
(all such Charges and all Liabilities with respect thereto referred to herein as “Tax Liabilities”;
excluding, however, taxes imposed on the net income of any Lender or Agent by the jurisdiction
under the laws of which Agent or such Lender is organized or doing business or any political
subdivision thereof and taxes imposed on its net income by the jurisdiction of Agent’s or such
Lender’s applicable lending office or any political subdivision). If any Loan Party shall be
required by
law to deduct any such Tax Liabilities from or in respect of any sum payable hereunder to Agent or
any Lender, then the sum payable hereunder shall be increased as may be necessary so that, after
making all required deductions, Agent or such Lender receives an amount equal to the sum it would
have received had no such deductions been made.




          (B) Changes in Tax Laws. In the event that, subsequent to the Closing Date, (1) any changes in any
existing law, regulation, treaty or directive or in the interpretation or application thereof, (2)
any new law, regulation, treaty or directive enacted or any interpretation or application thereof,
or (3) compliance by Lender with any request or directive (whether or not having the force of law)
from any Governmental Authority;




                    (a) does or shall subject Agent or any Lender to any tax of any
kind whatsoever with respect
to this Agreement, the other Loan Documents or any Loans made or Lender Letters of Credit issued
hereunder, or change the basis of taxation of payments to Agent or such Lender of principal, fees,
interest or any other amount payable hereunder (except for net income taxes, or franchise taxes
imposed in lieu of net income taxes, imposed generally by federal, state or local taxing
authorities with respect to interest or commitment or other fees



42









 







payable hereunder or changes in
the rate of tax on the overall net income of Agent or such Lender); or



                    (b) does or shall impose on Agent or any Lender any other
condition or increased cost in
connection with the transactions contemplated hereby or participations herein; and the result of
any of the foregoing is to increase the cost to Agent or such Lender of issuing any Lender Letter
of Credit or making or continuing any Loan hereunder, as the case may be, or to reduce any amount
receivable hereunder;


then, in any such case, the Borrowers shall pay, within fifteen (15) days after notice and demand
from Agent or the affected Lender, to Agent or such Lender, upon its notice and demand, any
additional amounts necessary to compensate Agent or such Lender, on an after-tax basis, for such
additional cost or reduced amount receivable, as determined by Agent or such Lender with respect to
this Agreement or the other Loan Documents. If Agent or any Lender becomes entitled to claim any
additional amounts pursuant to this subsection, it shall promptly notify Borrowing Agent of the
event by reason of which Agent or such Lender has become so entitled (with any such Lender
concurrently notifying Agent). A certificate as to any additional amounts payable pursuant to the
foregoing sentence submitted by Agent or any Lender to Borrowing Agent shall, absent manifest
error, be conclusive and binding on Borrower for all purposes.




          (C) Foreign Lenders. Each Lender organized under the laws of a jurisdiction outside the US (a
“Foreign Lender”) as to which payments to be made under this Agreement are exempt from US
withholding tax or are subject to US withholding tax at a reduced rate under an applicable statute
or tax treaty shall provide to Borrowing Agent and Agent (1) a properly completed and executed
Internal Revenue Service Form W-8BEN or Form W-8ECI or other applicable form, certificate or
document prescribed by the Internal Revenue Service of the US certifying as to such Foreign
Lender’s
entitlement to such exemption or reduced rate of withholding with respect to payments to be made to
such Foreign Lender under this Agreement, (a “Certificate of Exemption”), or (2) a letter from any
such Foreign Lender stating that it is not entitled to any such exemption or reduced rate of
withholding (a “Letter of Non-Exemption”). Prior to becoming a Lender under this Agreement and
within fifteen (15) days after a reasonable written request of Borrowing Agent or Agent from time
to time thereafter, each Foreign Lender that becomes a Lender under this Agreement shall provide a
Certificate of Exemption or a Letter of Non-Exemption to Borrowing Agent and Agent.




               If a Foreign Lender is entitled to an exemption with respect to payments to be made to such
Foreign Lender under this Agreement (or to a reduced rate of withholding) and does not provide a
Certificate of Exemption to Borrowing Agent and Agent within the time periods set forth in the
preceding paragraph, the Borrowers shall withhold taxes from payments to such Foreign Lender at the
applicable statutory rates and no Borrower shall be required to pay any additional amounts as a
result of such withholding; provided, however, that all such withholding shall cease upon delivery
by such Foreign Lender of a Certificate of Exemption to Borrowing Agent and Agent.



     2.10. Required Termination and Prepayment. If on any date any Lender shall have reasonably
determined (which determination shall be conclusive and binding upon all parties) that the making
or continuation of its LIBOR Loans has become unlawful or impossible by



43









 







compliance by such Lender
in good faith with any law, governmental rule, regulation or order (whether or not having the force
of law and whether or not failure to comply therewith would be unlawful), then, and in any such
event, that Lender shall promptly give notice (by telephone confirmed in writing) to Borrowing
Agent and Agent of that determination. Subject to prior withdrawal of a Notice of Borrowing or
prepayment of LIBOR Loans as contemplated by Section 2.12, the obligation of such Lender to make or
maintain its LIBOR Loans during any such period shall be terminated at the earlier of the
termination of the Interest Period then in effect or when required by law and the Borrowers shall
no later than the termination of the Interest Period in effect at the time any such determination
pursuant to this Section 2.10 is made or, earlier (without any breakage fee) when required by Law,
repay or prepay LIBOR Loans together with all interest accrued thereon or convert LIBOR Loans to
Base Rate Loans.



     2.11. Optional Prepayment/Replacement of Lenders. Within fifteen (15) days after receipt
by Borrowing Agent of: (a) written notice and demand from any Lender for payment or reimbursement
of additional costs as provided in Section 2.8 or section 2.9, or (b) written notice of any
Lender’s inability to make LIBOR Loans as provided in Section 2.10, or information that such Lender
is a Defaulting Lender (any such Lender demanding such payment or having such inability or being a
Defaulting Lender being referred to herein as an “Affected Lender”), Parent may, at its option
notify Agent and such Affected Lender of its intention to take one of the actions set forth herein
in subparagraphs (A) or (B) below.



          (A) Replacement of an Affected Lender.
The Borrowers may obtain, at Borrowers’ expense, a replacement Lender (“Replacement Lender”)
for an Affected Lender, which Replacement Lender shall be reasonably satisfactory to Agent. In the
event the Borrowers obtain a Replacement Lender that will purchase all outstanding Obligations owed
to such Affected Lender and assume its Commitments hereunder within ninety (90) days following
notice of Borrowers’ intention to do so, the Affected Lender shall sell and assign its Loans and
Commitments to such Replacement Lender in accordance with the provisions of Section 9.5; provided,
however, the Borrowers have (1) reimbursed such Affected Lender for any administrative fee payable
by such Affected Lender to Agent pursuant to Section 9.5 and, (2) in any case where such
replacement occurs as the result of a demand for payment of certain costs pursuant to Section 2.8
or Section 2.9, paid all increased costs for which such Affected Lender is entitled to under
Section 2.8 or Section 2.9 through the date of such sale and assignment; or




          (B) Prepayment of an Affected Lender. Borrowers may prepay in full all outstanding Obligations
owed to an Affected Lender and terminate such Affected Lender’s Commitments. The Borrowers shall,
within ninety (90) days following notice of its intention to do so, prepay in full all outstanding
Obligations owed to such Affected Lender, including such Affected Lender’s increased costs for
which it is entitled to reimbursement under this Agreement through the date of such prepayment, and
terminate such Affected Lender’s Commitments.




     2.12. Compensation. The Borrowers shall promptly compensate Agent for the benefit of
Lenders (Agent’s calculation of such amounts shall, absent manifest error, be conclusive and
binding upon all parties hereto), for any losses, expenses and Liabilities including, without
limitation, any loss (including interest paid) sustained by such Lender in connection with the
re-employment of funds: (a) if for any reason (other than a default by any Lender) a borrowing of
any LIBOR Loan does not occur on a date specified therefor in a Notice of Borrowing or a



44









 







telephonic
request of borrowing by Borrowing Agent; (b) if any prepayment of any of its LIBOR Loans occurs on
a date that is not the last day of an Interest Period applicable to that Loan (regardless of the
source of such prepayment and whether voluntary, by acceleration or otherwise); (c) if any
prepayment of any of its LIBOR Loans is not made on any date specified in a notice of prepayment
given by the Borrowers; or (d) as a consequence of any other default by the Borrowers to repay its
LIBOR Loans when required by the terms of this Agreement; provided, however, during the period
while any such amounts have not been paid, Agent may, in its sole discretion, (i) in accordance
with Section 2.4(B), elect to honor the automatic request by Borrowing Agent for a Revolving
Advance for such amount pursuant to Section 2.1(A) or (ii) reserve an equal amount from amounts
otherwise available to be borrowed under the Revolving Loan.



     2.13. Booking of LIBOR Loans. Each Lender may make, carry or transfer LIBOR Loans at, to,
or for the account of, any of its branch offices or the office of an affiliate of such Lender.



     2.14. Assumptions Concerning Funding of LIBOR Loans.
Calculation of all amounts payable to each Lender under subsection 2.12 shall be made as
though each Lender had actually funded its relevant LIBOR Loan through the purchase of a LIBOR
deposit bearing interest at LIBOR in an amount equal to the amount of that LIBOR Loan and having
maturity comparable to the relevant Interest Period and through the transfer of such LIBOR deposit
from an offshore office to a domestic office in the US; provided, however, each Lender may fund
each of its LIBOR Loans in any manner it sees fit and the foregoing assumption shall be utilized
only for the calculation of amounts payable under Section 2.12.



     2.15. Endorsement; Insurance Claims. Each Borrower hereby constitutes and appoints Agent
and all Persons designated by Agent for that purpose as such Borrower’s true and lawful
attorney-in-fact, with power in the place and stead of such Borrower and in the name of such
Borrower (a) to endorse such Borrower’s name to any of the items of payment or proceeds described
in Section 6.4 below and all proceeds of Collateral that come into Agent’s possession or under
Agent’s control, including without limitation, with respect to any drafts, Instruments, Documents
and Chattel Paper, and (b) after consultation with Parent (unless an Event of Default has occurred
which is then continuing) to obtain, adjust and settle insurance claims, which are required to be
paid to Agent. Each Borrower hereby ratifies and approves all acts of Agent made or taken pursuant
to this Section 2.15. Both the appointment of Agent as each Borrower’s attorney and Agent’s rights
and powers are coupled with an interest and are irrevocable, so long as any of the Commitments
hereunder shall be in effect and until indefeasible payment in full, in cash, of all Obligations
and termination of all Lender Letters of Credit.



SECTION 3. CONDITIONS TO LOANS




     The obligations of Agent and each Lender to make Loans and the obligation of Agent or any
Lender to issue Lender Letters of Credit on the Closing Date and on each Funding Date are subject
to satisfaction of all of the terms and conditions set forth below and the accuracy of all the
representations and warranties of the Borrowers and the other Loan Parties set forth herein and in
the other Loan Documents:



45









 





          (A) Closing Deliveries. Agent shall have received, in form and substance satisfactory to Agent,
all documents, instruments and information identified on Schedule 3 hereto and all other
agreements, notes, certificates, orders, authorizations, financing statements, mortgages and other
documents which Agent may at any time reasonably request.




          (B) Security Interests. Agent shall have received satisfactory evidence that all security
interests and liens granted to Agent for the benefit of Agent and Lenders pursuant to this
Agreement or the other Loan Documents have been duly perfected and constitute first priority liens
on the Collateral, subject only to Permitted Liens.




          (C) Closing Date Availability.
After giving effect to the consummation of the Transactions, and the payment by the Borrowers
of all costs, fees and expenses relating to the Transactions, Undrawn Availability shall not be
less than $15,000,000.




          (D) Representations and Warranties. The representations and warranties contained herein and in the
Loan Documents shall be true, correct and complete in all material respects on and as of that
Funding Date to the same extent as though made on and as of that date, except for any
representation or warranty limited by its terms to a specific date and taking into account any
amendments to the Schedules or Exhibits as a result of any disclosures made by the Borrowers to
Agent after the Closing Date and approved in writing by Agent.




          (E) Fees. With respect to Loans or Lender Letters of Credit to be made or issued on the Closing
Date, the Borrowers shall have paid all fees due to Agent or any Lender and payable on the Closing
Date.




          (F) No Default. No event shall have occurred and be continuing or would result from funding a Loan
or issuing a Lender Letter of Credit requested by Borrowing Agent that would constitute an Event of
Default or a Default.




          (G) Performance of Agreements. Each Loan Party shall have performed in all material respects all
agreements and satisfied all conditions which any Loan Document provides shall be performed by it
on or before that Funding Date.




          (H) No Prohibition. No order, judgment or decree of any court, arbitrator or Governmental
Authority shall purport to enjoin or restrain Agent or any Lender from making any Loans or issuing
any Lender Letters of Credit.




          (I) No Litigation. There shall not be pending or, to the knowledge of any Loan Party, threatened,
any action, charge, claim, demand, suit, proceeding, petition, governmental investigation or
arbitration by, against or affecting any Loan Party or any property of any Loan Party that has not
been disclosed to Agent by a Loan Party in writing, and there shall have occurred no development in
any such action, charge, claim, demand, suit, proceeding, petition, governmental investigation or
arbitration that, in the opinion of Agent, would reasonably be expected to have a Material Adverse
Effect.




          (J) Second Priority Senior Secured Note Investment.
Agent has received or will receive on the Closing Date complete copies of the Note Purchase
Documents (including all exhibits, schedules and disclosure letters referred to therein or
delivered pursuant thereto, if any)

46









 








and all amendments thereto, waivers relating thereto and other
side letters or agreements affecting the terms thereof. None of such documents and agreements has
been amended or supplemented, nor have any of the provisions thereof been waived, except pursuant
to a written agreement or instrument which has heretofore been delivered to Agent. The
transactions contemplated by the Note Purchase Documents shall have been consummated in accordance
with the terms thereof including, without limitation, the issuance by Borrower, issued at par, of
the Second Priority Senior Secured Notes and, in consideration thereof, the receipt by Borrower of
cash proceeds of not less than $40,000,000 (including fees and expenses paid from such sum on or
about the Closing Date in the aggregate not to exceed $2,000,000), which shall be repayable not
earlier than five (5) years from the Closing Date, except as otherwise agreed to by Agent, and
Second Priority Agent shall have entered into the Intercreditor Agreement with Agent.




          (K) Refinancing Transactions. Agent shall have received, on behalf of the Lenders, repayment in
full of all outstanding Obligations in respect of Term Loan A and Term Loan C, and shall have been
satisfied that all outstanding Indebtedness in respect of Term Loan B shall have been paid in full
and that all liens and/or security interests granted by any Borrower in favor of ACFS and/or ACSL
shall have been released or terminated.




SECTION 4. REPRESENTATIONS, WARRANTIES OF THE LOAN PARTIES




     4.1. Representations and Warranties of Loan Parties. As a material inducement to Agent and
each Lender to enter into the Loan Documents, to make and to continue to make Loans and to issue
and continue to issue Lender Letters of Credit or risk participations to the banks that issue Bank
Letters of Credit, each Loan Party as to itself (and Parent as to itself and the other Loan
Parties) represents, warrants to Agent and each Lender as follows:



          (A) Organization and Power. Each of the Loan Parties is a legal entity duly organized, validly
existing and in good standing under the laws of its state of formation. Each of the Loan Parties
has all requisite corporate or other organizational power and authority and all material licenses,
permits, approvals and authorizations necessary to own and operate its properties, to carry on its
businesses as now conducted and presently proposed to be conducted and to carry out the
Transactions, and is qualified to do business in the jurisdictions listed on the “Organizational
Schedule” attached hereto as Schedule 4.1(A), which includes every jurisdiction where the failure
to so qualify might reasonably be expected to have a Material Adverse Effect. Each of the Loan
Parties has its principal place of business as set forth on the Organizational Schedule. The
copies of the Charter Documents and By-Laws of the Loan Parties that have been furnished to Agent
reflect all amendments made thereto and are correct and complete as of the date of this Agreement.




          (B) Principal Business.
The Loan Parties are primarily engaged in the business of assembling and selling specialty
footwear and related apparel and accessories (the “Business”).




          (C) Financial Statements and Financial Projections.




               (1) Financial Statements; Historical Statements. Parent has delivered to Agent copies of
its audited consolidated year-end financial statements for and as of the end of



47









 







the Fiscal Year
ended December 31, 2006 together with an unaudited balance sheet, income statements and cash flow
statements for the fiscal period ended March 31, 2007 (together, the “Financial Statements”). The
Financial Statements were compiled from the books and records maintained by Parent’s management and
are correct and complete in all material respects and fairly represent the consolidated financial
condition of Parent as of their dates and the results of operations for the fiscal periods then
ended and have been prepared in accordance with GAAP consistently applied (with such interim
financial statements being subject to the absence of footnotes required by GAAP and subject to
normal year-end adjustments).



               (2) Pro Forma Balance Sheet. The unaudited pro forma balance sheet of the Rocky
on a
Consolidated Basis as of May 25, 2007, a copy of which has heretofore been delivered to Agent,
gives pro forma effect to the consummation of the Transactions, all as if such events had occurred
on such date (the “Pro Forma Balance Sheet”). The Pro Forma Balance Sheet has been prepared in a
manner consistent with customary accounting practices and the financial statements described in
Section 4.1(c)(i) (subject to the absence of footnotes required by GAAP and subject to normal
year-end adjustments) and, subject to stated assumptions made in good faith and having a reasonable
basis set forth therein, presents fairly the financial condition of the Loan Parties on an
unaudited pro forma basis as of the date set forth therein after giving effect to the consummation
of the Transactions.



               (3) Financial Projections. The Loan Parties have delivered to Agent financial
projections
of Rocky on a Consolidated Basis for the period January 1, 2007 through December 31, 2009 derived
from various assumptions of the Loan Parties’ management (the “Financial Projections”). The
Financial Projections were prepared consistent with GAAP and customary accounting procedures and
reflect all information available to the management of the Loan Parties at the time the Financial
Projections were produced. The Financial Projections in good faith project the Liabilities of the
Loan Parties upon consummation of the Transactions as of the Closing Date



               (4) Accuracy of Financial Statements. As of the dates of such Financial Statements,
Rocky
on a Consolidated Basis did not have any Liabilities, contingent or otherwise, or forward or
long-term commitments that are not disclosed in the Financial Statements or in the notes thereto,
and except as disclosed therein, as of such dates and as disclosed on the Pro-Forma Balance Sheet
as of the date hereof, there are no
unrealized or anticipated losses from any commitments that are reasonably likely to have a Material
Adverse Effect.



          (D) Capitalization and Related Matters. As of the Closing Date and immediately thereafter, the
authorized capital stock of Parent is as set forth on the “Capitalization Schedule” attached hereto
as Schedule 4.1(D). As of the Closing Date, the authorized capital stock or other equity interests
of each of the Subsidiaries of Parent and the number and ownership of all outstanding capital stock
or equity interests of each of the Loan Parties (other than Parent) is set forth on Schedule
4.1(D). Except as set forth on the Schedule 4.1(D), as of the Closing Date, none of the Loan
Parties will have outstanding any stock or securities convertible into or exchangeable for any
shares of its capital stock and none will have outstanding any rights or options to subscribe for
or to purchase its capital stock (or other equity interests) or any stock or securities convertible
into or exchangeable for its capital stock (or other

48









 








equity interests). As of the Closing Date,
none of the Loan Parties will be subject to any obligation (contingent or otherwise) to repurchase
or otherwise acquire or retire any shares of its capital stock or other equity interests. As of
the Closing Date, all of the outstanding shares and capital stock or other equity interests of the
Loan Parties will be validly issued, fully paid and nonassessable. None of the Loan Parties have
violated any applicable federal or state securities Laws, in any material respect, in connection
with the offer, sale or issuance of any of its capital stock or other equity interests, and the
offer, sale and issuance of the Notes hereunder, or of the Second Priority Senior Secured Notes, do
not require registration under the Securities Act or any applicable state securities laws.




          (E) Subsidiaries. As of the Closing Date, the Loan Parties do not own, or hold any rights to
acquire, any shares of stock or any other security or interest in any other Person, and the Loan
Parties have no Subsidiaries, except in each case as set forth on the Organizational Schedule.




          (F) Authorization; No Breach. Except as set forth on Schedule 4.1(F), the execution, delivery and
performance of this Agreement and the other Loan Documents to which any of the Loan Parties is a
party, and the consummation of the Transactions have been duly authorized by each of the Loan
Parties. The execution and delivery by each of the Loan Parties of the Loan Documents and the
consummation of the Transactions do not and will not (i) conflict with or result in a breach of the
terms, conditions or provisions of, (ii) constitute a default under, (iii) except as created
pursuant to the Loan Documents and the Note Purchase Documents result in the creation of any Lien
upon any of the Loan Parties’ capital stock or assets pursuant to, (iv) give any third party the
right to accelerate any obligation under, or (v) result in a violation of, or (vi) require any
authorization, consent, approval, exemption or other action by or notice to any Governmental
Authority pursuant to, the Charter Documents or By-laws of any of the Loan Parties, or any Law to
which any of the Loan Parties is subject, or any material contract or material instrument, or any
order, judgment or decree, to which any of the Loan Parties is a party or to which they or their
assets are subject.




          (G) Governmental Approvals. Except as set forth on Schedule 4.1(G), no registration with or
consent or approval of, or other action by, any Governmental Authority is or will be required in
connection with the consummation of the Transactions. No registration with or consent or approval
of, or other action by, any Governmental Authority was required in connection with the consummation
of the Transactions.




          (H) Enforceability. This Agreement constitutes, and each of the other Loan Documents when duly
executed and delivered by each of the Loan Parties who are parties thereto will constitute, legal,
valid and binding obligations of each of the Loan Parties enforceable in accordance with their
respective terms except as enforceability may be limited by applicable bankruptcy, insolvency,
moratorium or other laws affecting the enforcement of creditors’ rights generally and by general
principles of equity.




          (I) No Material Adverse Change. Since December 31, 2006, there has been no Material Adverse Change
with respect to Rocky and its Subsidiaries, taken as a whole.




49









 








          (J) Litigation. Except as described in the “Litigation Schedule” attached hereto as Schedule
4.1(J), as of and after the Closing Date, there are no actions, suits or proceedings at law or in
equity or by or before any arbitrator or any Governmental Authority now pending or, to the best
knowledge of the Loan Parties’ management after reasonable inquiry, threatened against or filed by
or affecting Company, any of the Loan Parties or any of their directors or officers or the
businesses, assets or rights of any of the Loan Parties which are reasonably likely to have a
Material Adverse Effect.




          (K) Compliance with Laws. The Loan Parties are not in violation in any material respect of any
applicable Law which any such violation (or such violations, if any, in the aggregate) is
reasonably likely to have a Material Adverse Effect. The Loan Parties are not in, and the
consummation of the Transactions will not cause any, default concerning any judgment, order, writ,
injunction or decree of any Governmental Authority. As of and after the Closing Date, there is no
investigation, enforcement action or regulatory action pending or, to the knowledge of the Loan
Parties, threatened against or affecting any of the Loan Parties by any Governmental Authority,
except as set forth on the Litigation Schedule, which is reasonably likely to have a Material
Adverse Effect. Except as set forth in the Litigation Schedule, as of and after the Closing Date,
there is no remedial or other corrective action that any of the Loan Parties is required to take to
remain in compliance with any judgment, order, writ, injunction or decree of any Governmental
Authority or to maintain any material permits, approvals or licenses granted by any Governmental
Authority in full force and effect which is reasonably likely to have a Material Adverse Effect.
To the knowledge of Parent, during the past ten (10) years, none of the executive officers,
directors or management of Parent or any of its Subsidiaries have been arrested or convicted of
any material crime nor have any of them been bankrupt or an officer or director of a bankrupt
corporation or other entity.




          (L) Environmental Protection. Except as specified in “Environmental Schedule” attached hereto as
Schedule 4.1(L), and after giving effect to the Transactions, except for materials, conditions,
operations and noncompliance which is not reasonably likely to have a Material Adverse Effect: (i)
the business of the Loan Parties and each of their Subsidiaries, the methods and means employed by
the Loan Parties (and their Subsidiaries) in the operation thereof (including all operations and
conditions at or in the properties of the Loan Parties or any of their Subsidiaries), the assets
owned, leased, managed, used, controlled, held or operated by the Loan Parties and/or their
Subsidiaries comply in all material respects with all applicable Environmental Laws; (ii) with
respect to the Properties and Facilities, and except as disclosed in the Environmental Schedule,
the Loan Parties (and their Subsidiaries) have obtained, possess, and are in compliance in all
material respects with all permits, licenses, reviews, certifications, approvals, registrations,
consents, and any other authorizations required of a Loan Party (or any Subsidiary thereof) or
other party under any Environmental Laws; (iii) the Loan Parties or any of their Subsidiaries have
not received (x) any claim or notice of violation, lien, complaint, suit, order or other claim or
notice to the effect that the Loan Parties (or any of their Subsidiaries) are or may be liable to
any Person as a result of (A) the environmental condition of any of their Properties and Facilities
or any other property, or (B) the release or threatened release of any Pollutant, or (y) any letter
or request for information under Section 104 of the CERCLA, or comparable state Laws, and to the
best of the any of Loan Parties’ knowledge, none of the operations of the Loan Parties or any of
their Subsidiaries is the subject of any investigation by a Governmental Authority evaluating
whether any remedial action is needed to respond to a

50









 








release or threatened release of any
Pollutant at the Properties and Facilities or at any other location, including any location to
which the Loan Parties or any of their Subsidiaries have transported, or arranged for the
transportation of, any Pollutants with respect to the Properties and Facilities; (iv) except as
disclosed in the Environmental Schedule, neither the Loan Parties, nor any of their Subsidiaries
nor, to the knowledge of the Loan Parties, any prior owner or operator has incurred in the past, or
is now subject to, any Environmental Liabilities; (v) except as disclosed in the Environmental
Schedule, to the knowledge of the Loan Parties, there are no Liens, covenants, deed restrictions,
notice or registration requirements, or other limitations applicable to the Properties and
Facilities, based upon any Environmental Laws or other legal obligations; (vi) to the knowledge of
the Loan Parties, there are no USTs located in, at, on, or under the Properties and Facilities or
other than the USTs identified in the Environmental Schedule as USTs; and, to the knowledge of the
Loan Parties, each of those USTs is in compliance in all material respects with all Environmental
Laws and other legal obligations; and (vii) except as disclosed in the Environmental Schedule, to
the knowledge of the Loan Parties, there are no PCBs, lead paint, asbestos (of any type or form),
or materials, articles or products containing PCBs, lead paint or asbestos, located in, at, on,
under, a part of, or otherwise related to the Properties and Facilities, and, to the knowledge of
the Loan Parties, all of the PCBs, lead paint, asbestos, and materials, articles and products
containing PCBs, lead paint or asbestos identified in the Environmental Schedule are in compliance
in all material respects with all Environmental Laws and other legal obligations.




          (M) Legal Investments; Use of Proceeds.
The Loan Parties will use the proceeds from the Loans to provide for the ongoing working
capital and general corporate requirements of the Loan Parties. The Loan Parties are not engaged
in the business of extending credit for the purpose of purchasing or carrying any “margin stock” or
“margin security” (within the meaning of Regulations T, U or X issued by the Board of Governors of
the Federal Reserve System), and no proceeds of the Loans will be used to purchase or carry any
margin stock or margin security or to extend credit to others for the purpose of purchasing or
carrying any margin stock or margin security.




          (N) Taxes. The Loan Parties have filed or caused to be filed all federal, state and local tax
returns that are required to be filed by it and their Subsidiaries, and have paid or caused to be
paid all taxes shown to be due and payable on such returns or on any assessments received by it,
including payroll taxes, other than such Charges (i) which are being contested in good faith by
such Person, as the case may be, by appropriate proceedings diligently instituted and conducted and
without the risk of the imposition of a Lien with respect to a material portion of the Collateral
and (ii) with respect to which a reserve or other appropriate provision, if any, as is required in
conformity with GAAP shall have been made. Parent has no knowledge of any proposed tax assessment
against Parent or any of its Subsidiaries that is reasonably likely to have a Material Adverse
Effect.




          (O) Labor and Employment. Except where noncompliance is not reasonably likely to have a Material
Adverse Effect, each Loan Party, ERISA Affiliate and each Plan is in compliance in all material
respects with those provisions of ERISA, the Code, the Age Discrimination in Employment Act, and
the regulations and published interpretations thereunder that are applicable to the Loan Party, or
ERISA Affiliate or any such Plan. As of the date hereof, no Reportable Event has occurred with
respect to any Plan maintained by any Loan Party or


51









 







ERISA Affiliate as to which said Loan Party or
ERISA Affiliate is or was required to file a report with the PBGC. No Plan has any amount of
unfunded benefit liabilities (within the meaning of Section 4001(a)(18) of ERISA) or any
accumulated funding deficiency (within the meaning of Section 302(a)(2) of ERISA), whether or not
waived, and none of the Loan Parties, nor any ERISA Affiliate or any member of the Controlled Group
has incurred or expects to incur any withdrawal liability under Subtitle E of Title IV of ERISA to
a Multiemployer Plan. Except where noncompliance is not reasonably likely to have a Material
Adverse Effect, the Loan Parties and ERISA Affiliates are in compliance in all material respects
with all labor and employment laws, rules, regulations and requirements of all applicable domestic
and foreign jurisdictions. There are no pending or threatened labor disputes, work stoppages or
strikes either (x) as of the Closing Date or (y) thereafter that are reasonably likely to have a
Material Adverse Effect.




          (P) Investment Company Act; Public Utility Holding Company Act. None of the Loan Parties are (i)
an “investment company” or “controlled” by an investment company within the meaning of the
Investment Company Act of 1940, as amended, or (ii) a “holding company” or a “subsidiary company”
of a “holding company” or an “affiliate” of a
“holding company” or of a “subsidiary company” of a “holding company,” within the meaning of the
Public Utility Holding Company Act of 1935, as amended.




          (Q) Properties; Security Interests. The Loan Parties have good (and, solely as to real estate,
marketable) title to, or valid leasehold interests in, or valid licenses to use, all of the
material assets and properties used or useful by the Loan Parties in the Business (collectively,
the “Properties and Facilities”), subject to no Liens except for Permitted Liens. On and after the
Closing Date, Agent has a valid, perfected and, except for Liens set forth in clauses (c), (e), (g)
or (h) of the definition of Permitted Liens, first priority Liens in the Properties and Facilities,
all of which constitutes Collateral (except to the extent any of the same constitutes Excluded
Property), securing the payment of the Obligations, and such Liens are entitled to all of the
rights, priorities and benefits afforded by the UCC or other applicable Law as enacted in any
relevant jurisdiction which relates to perfected Liens. All of the Properties and Facilities are in
good repair, working order and condition. As of the Closing Date, all real estate owned or leased
by the Loan Parties is listed on the “Properties Schedule,” attached hereto as Schedule 4.1(Q).




          (R) Intellectual Property; Licenses. Each of the Loan Parties possesses or licenses all
Proprietary Rights necessary to conduct the Business as heretofore conducted or as proposed to be
conducted by it. All Proprietary Rights registered in the name of the Loan Parties and
applications therefor filed by the Loan Parties are listed on the “Intellectual Property Schedule,”
attached hereto as Schedule 4.1(R). No event has occurred that permits, or after notice or lapse
of time or both would permit, the revocation or termination of any of the foregoing, which taken in
isolation or when considered with all other such revocations or terminations could have a Material
Adverse Effect. None of the Proprietary Rights owned by or used under license by the Loan Parties
infringes, misappropriates or conflicts with any Proprietary Rights or other rights of any other
Person; no products or services sold by any of the Loan Parties in connection with the Business is
infringing on, misappropriating or making any unlawful or unauthorized use of any Proprietary
Rights or other rights of another Person; and no other Person is infringing upon, misappropriating
or making any unlawful or unauthorized use of any Proprietary Rights of any of the Loan Parties;
except, in each case, to the extent any such


52









 








infringement, misappropriation, conflict or unlawful
or unauthorized use could not reasonably be expected to have a Material Adverse Effect. None of
the Loan Parties has notice or knowledge of any facts or any past, present or threatened occurrence
that could preclude or impair the Loan Parties’ ability to retain or obtain any authorization
necessary for the operation of the Business.




          (S) Solvency. After giving effect to the Transactions, (i) the fair value of the assets of the
Loan Parties, at a fair valuation, will exceed their debts and Liabilities, subordinated,
contingent or otherwise, (ii) the present fair saleable value of the property of the Loan Parties
will be greater than the amount that will be required to pay the probable liability of their debts
and other Liabilities, subordinated, contingent or otherwise, as such debts and other Liabilities
become absolute and matured, (iii) the Loan Parties will be able to pay their debts and
Liabilities, subordinated,
contingent or otherwise, as such debts and Liabilities become absolute and matured, and (iv) the
Loan Parties will not have unreasonably small capital with which to conduct the business in which
they are engaged as such business is now conducted and is proposed to be conducted following the
Closing Date. The determination of whether a Person is solvent shall take into account all such
Person’s properties and liabilities regardless of whether, or the amount at which, any such
property or liability is included on a balance sheet of such Person prepared in accordance with
GAAP, including properties such as contingent contribution or subrogation rights, business
prospects, distribution channels and goodwill. The determination of the sum of a Person’s
properties at a fair valuation or the present fair saleable value of a Person’s properties shall be
made on a going concern basis, unless at the time of such determination the liquidation of the
business in which such properties are used or useful is in process or is reasonably anticipated.
In computing the amount of contingent or unrealized properties or contingent or unliquidated
liabilities at any time, such properties and liabilities will be computed at the amounts which, in
light of all the facts and circumstances existing at such time, represent the amount that
reasonably can be expected to become realized properties or matured liabilities, as the case may
be. In computing the amount that would be required to pay a Person’s probable liability on its
existing debts as they become absolute and matured, reasonable valuation techniques, including a
present value analysis, shall be applied using such rates over such periods as are appropriate
under the circumstances, and it is understood that, in appropriate circumstances, the present value
of contingent liabilities or obligations under Guaranties may be zero.




          (T) Complete Disclosure. All factual information furnished by or on behalf of the Loan Parties to
Agent for purposes of or in connection with the GMAC Transactions, or any of the other
Transactions, is, to Parent’s knowledge, and all other such factual information hereafter furnished
by or on behalf of the Loan Parties, except to the extent any of the same relates expressly to any
earlier date, will be, true and accurate in all material respects on the date as of which such
information is furnished and not incomplete by omitting to state any fact necessary to make such
information not misleading at such time in light of the circumstances under which such information
was provided.




          (U) Side Agreements. Except as set forth in Schedule 4.1(U), as of the Closing Date, none of the
Loan Parties nor any Affiliate of the Loan Parties nor any director, officer or employee of the
Loan Parties or any of their Affiliates, respectively, has entered into, as of the date hereof, any
side agreement, either oral or written, with any individual or business, pursuant to which the
director, officer, employee, Loan Party or Affiliate agreed to do anything

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beyond the requirements
of the formal, written contracts executed by the Loan Parties and disclosed to the Lenders and
Agent herein.




          (V) Broker’s or Finder’s Commissions. No broker’s or finder’s or placement fee or commission will
be payable to any broker or agent engaged by the Loan Parties or any of their officers, directors
or agents with respect to the GMAC Transactions, except for fees payable to Agent. The Loan
Parties agree to indemnify Agent and Lenders and to hold them harmless from and against any claim,
demand or liability
for broker’s or finder’s or placement fees or similar commissions, whether or not payable by the
Loan Parties, alleged to have been incurred in connection with the GMAC Transactions, other than
any broker’s or finder’s fees payable to Persons engaged by Agent or Lenders without the knowledge
of the Loan Parties.




          (W) Material Contracts. Schedule 4.1(W) lists, as of the Closing Date, each material contract to
which the Loan Parties are a party, by which any of them or their respective properties is bound or
to which any of them is subject (collectively, “Material Contracts”), and also indicates the
parties, subject matter and term thereof. As of the Closing Date, (i) each Material Contract is in
full force and effect and is enforceable by the Loan Party that is a party thereto in accordance
with its terms, and (ii) none of the Loan Parties (nor, to the knowledge of the Loan Parties, any
other party thereto) is in breach of or default under any Material Contract in any material respect
or has given notice of termination or cancellation of any Material Contract.




          (X) Foreign Assets Control Regulations, Etc. None of the Loan Parties are an “enemy” or an “ally
of the enemy” within the meaning of Section 2 of the Trading with the Enemy Act of the United
States of America (50 U.S.C. App. §§ 1 et seq.), as amended. None of the Loan Parties are in
violation of (a) the Trading with the Enemy Act, as amended, (b) any of the foreign assets control
regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or
any enabling legislation or executive order relating thereto or (c) the USA Patriot Act, Title III
of Pub. L. 107-56, signed into law October 26, 2001 (the “Patriot Act”). No Loan Party (i) is a
blocked person described in section 1 of the Anti-Terrorism Order or (ii) to the best of its
knowledge, engages in any dealings or transactions, or is otherwise associated, with any such
blocked person.




          (Y) Parent SEC Reports.





     (i) Parent has filed all required material forms, reports, schedules,
statements and other documents (including exhibits and other information
incorporated therein) with the SEC since December 31, 2001 (collectively, the
“Parent SEC Reports”). As of their respective dates, or, if amended, as of the date
of the last such amendment, each Parent SEC Report, (a) complied in all material
respects with the applicable requirements of the Securities Act, the Securities
Exchange Act, and the rules and regulations thereunder applicable to such Parent SEC
Reports and (b) did not, and in the case of such forms, reports, schedules,
statements and other documents filed after the date hereof will not as of the time
they are filed, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements made
therein, in the light of the circumstances under which they were made, not



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misleading. Each of the consolidated financial statements included in or
incorporated by reference into the Parent SEC Reports (including the related notes
and schedules) were, and in the case of such consolidated financial statements filed
after the date hereof will be, prepared materially in accordance with the published
rules and regulations of the SEC, and fairly presents (as to such
previously filed items) in all material respects the consolidated financial
position of Parent and its Subsidiaries as of its date, and each of the consolidated
statements of operations, stockholders’ equity and cash flows included in or
incorporated by reference into the Parent SEC Reports (including any related notes
and schedules) fairly presents (as to such previously filed items) in all material
respects the financial position, results of operations and cash flows, as the case
may be, of Parent and its Subsidiaries for the periods set forth therein, in each
case in accordance with GAAP consistently applied during the periods involved,
except as may be noted therein (and subject, in the case of unaudited statements, to
normal year-end audit adjustments and the absence of footnotes).




     (ii) As of the Closing Date, (x) there is no investigation by the SEC pending
or threatened with respect to any Parent SEC Report, (y) none of the Parent SEC
Reports are the subject of open, unresolved comments from the SEC and (z) to the
knowledge of Parent, there is no material unresolved violation of the Securities
Exchange Act or the published rules and regulations of the SEC asserted by the SEC
with respect to the Parent SEC Reports.



          (Z) Current Business Practices. None of the Loan Parties, nor, to the knowledge of the Loan
Parties, any of their respective directors, officers, agents, employees or representatives in their
capacities as such has knowingly (or unknowingly, in the case where such conduct is reasonably
likely to have had a Material Adverse Effect): (i) used any funds for unlawful contributions,
unlawful gifts, unlawful entertainment or other unlawful expenses relating to political activity;
(ii) directly or indirectly paid or delivered any fee, commission or other sum of money or item of
property, however characterized, to any finder, agent or other party acting on behalf of or under
the auspices of a governmental official or Governmental Authority, in the US or any other country,
which is in any manner related to the Business that was illegal under federal, state or local laws
of the US or any other country having jurisdiction; (iii) made any payment to any customer or
subcontractor of the Business or to any officer, director, partner, employee or agent of any such
customer or subcontractor, for the unlawful influence of any such customer or subcontractor or any
such officer, director, partner, employee or agent; (iv) engaged in any other unlawful reciprocal
practice, or made any other unlawful payment or given any other unlawful consideration to any such
customer or subcontractor or any such officer, director, partner, employee or agent, in respect of
the Business; or (v) except as set forth on Schedule 4.1(Z), violated any federal, state or local
campaign finance, election or similar laws.




     4.2. Absolute Reliance on the Representations and Warranties. All representations and
warranties contained in this Agreement and any financial statements, instruments, certificates,
schedules or other documents delivered in connection herewith, shall survive the execution and
delivery of this Agreement, regardless of any investigation made by Agent or Lenders or on Agent’s
or Lenders’ behalf.



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SECTION 5. COVENANTS




     5.1. Affirmative Covenants. Each Loan Party (unless otherwise specified) covenants that,
so long as any of the Commitments hereunder shall be in effect and until indefeasible payment in
full, in cash, of all Obligations and termination of all Lender Letters of Credit, each of the Loan
Parties shall:



          (A) Existence. Do or cause to be done all things necessary to preserve, renew and keep in full
force and effect its legal existence.




          (B) Businesses and Properties; Compliance with Laws. At all times (i) do or cause to be done all
things necessary to preserve, renew and keep in full force and effect the rights, licenses,
registrations, permits, certifications, approvals, consents, franchises, Patents, Copyrights,
Trademarks and trade names, and any other trade names that are material to the conduct of its
businesses; (ii) comply in all material respects with all Laws applicable to the operation of such
business, including but not limited to, all Environmental Laws, whether now in effect or hereafter
enacted, (iii) take all action that may be required to obtain, preserve, renew and extend all
rights, Patents, Copyrights, Trademarks, tradenames, franchises, registrations, certifications,
approvals, consents, licenses, permits and any other authorizations that are material to the
operation of such business, (iv) maintain, preserve and protect all property material to the
conduct of such business, and (v) except for obsolete, worn-out equipment or equipment no longer
useful in the operation of the Business and ordinary wear and tear, keep its property in good
repair, working order and condition and from time to time make, or cause to be made, all needful
and proper repairs, renewals, additions, improvements and replacements thereto deemed necessary by
Parent or such Loan Party in order that the Business may be properly conducted at all times.




          (C) Insurance. Maintain insurance required by the Loan Documents and any and all contracts entered
into by the Loan Parties, including but not limited to: (i) coverage on their insurable properties
(including all Inventory, Equipment and real property) against the perils of fire, theft, hazard
and burglary; (ii) public liability; (iii) workers’ compensation; (iv) business interruption; (v)
product liability; and (vi) such other risks as are customary with companies similarly situated and
in the same or similar business as that of the Loan Parties under policies issued by financially
sound and reputable insurers in such amounts as are customary with companies similarly situated and
in the same or similar business. Each of the Loan Parties shall pay or shall cause to be paid all
insurance premiums payable by it or its Subsidiaries and, upon Agent’s request, shall deliver a
copy of the policy or policies of such insurance (or certificates of insurance with copies of such
policies) to Agent. All insurance policies of the Loan Parties shall contain endorsements, in form
and substance reasonably satisfactory to Agent, providing that the insurance shall not be
cancelable except upon prior written notice to Agent given within a period satisfactory to Agent.
Agent, on behalf of Lenders, shall be shown as a loss payee and an additional named insured party
under all such insurance policies (as well as under all business interruption insurance of Loan
Parties), in each case pursuant to appropriate endorsements in form and substance
satisfactory to Agent. No notice of cancellation has been received with respect to such policies
and each Loan Party, and each of its Subsidiaries, is in material compliance with all conditions
contained in such policies. Loan Parties shall provide Agent evidence of the insurance coverage
and of the assignments and endorsements required by

56









 








this Agreement immediately upon request by
Agent and upon renewal of any existing policy. If Borrower elects to change insurance carriers,
policies or coverage amounts, Borrower shall notify Agent and provide Agent with evidence of the
updated insurance coverage and of the assignments and endorsements required by this Agreement. In
the event Borrower fails to provide Agent with evidence of the insurance coverage required by this
Agreement, Agent may, but is not required to, purchase insurance at Loan Parties’ expense to
protect Agent’s and the Lender’s interests in the Collateral. This insurance may, but need not,
protect any Loan Party’s interests. The coverage purchased by Agent may not pay any claim made by
any Loan Party or any claim that is made against any Loan Party in connection with the Collateral.
Loan Parties may later cancel any insurance purchased by Agent, but only after providing Agent with
evidence that the applicable Loan Party has obtained insurance as required by this Agreement. If
Agent purchases insurance for the Collateral, Loan Parties will be responsible for the costs of
that insurance, including interest thereon and other charges imposed on Agent in connection with
the placement of the insurance, until the effective date of the cancellation or expiration of the
insurance, and such costs may be added to the Obligations. The costs of the insurance may be more
than the cost of insurance Loan Parties are able to obtain on their own. Any proceeds received from
any policies of insurance relating to Collateral shall be applied to the Obligations in accordance
with Section 2.4(E); provided, however, if Borrower reasonably expects the proceeds of any
insurance to be reinvested within one hundred eighty (180) days to repair or replace such assets
with like assets, to the extent not paid directly to Agent by the applicable insurance company,
Borrower shall deliver such insurance proceeds to Agent to be applied to the Revolving Loan and
Agent shall establish a reserve against available funds for borrowing purposes under the Revolving
Loan for such amount, until such time as such proceeds have been re-borrowed or applied to other
Obligations as set forth herein and Borrower may, so long as no Default or Event of Default shall
have occurred and be continuing, reborrow such proceeds only for such repair or replacement. If
Borrower fails to reinvest such insurance proceeds within one hundred eighty (180) days, Borrower
hereby authorizes Agent and Lenders to make a Revolving Advance in the amount of the remaining
reserve to repay the Loans in the manner set forth in Section 2.4(E).




          (D) Obligations and Taxes. Pay and discharge promptly when due all taxes, assessments and
governmental charges or levies imposed upon them or upon their income or profits or in respect of
their properties before the same shall become delinquent or in default, as well as all lawful
claims for labor, materials and supplies or otherwise, which, if unpaid, might give rise to Liens
or charges upon such properties or any part thereof; provided, however, that the Loan Parties shall
not be required to pay and discharge or to cause to be paid and discharged any such tax,
assessment, charge, levy or claim so long as (i) the validity or amount thereof shall be contested
in good faith by appropriate proceedings and (ii) the Loan Parties shall have set aside on their
books adequate reserves with respect thereto in accordance with GAAP.




          (E) Financial Statements; Reports. Parent will furnish to Agent:




               (1) Annual Financial Statements. Within ninety (90) days after the end of each
Fiscal Year
of Rocky on a Consolidated Basis, financial statements of Rocky on a Consolidated Basis including,
but not limited to, statements of income and stockholders’ equity and cash flow from the beginning
of the current Fiscal Year to the end of such Fiscal Year and the balance sheet as at the end of
such Fiscal Year, all prepared in accordance with GAAP



57









 







applied on a basis consistent with prior
practices, and in reasonable detail and reported upon without qualification by an independent
certified public accounting firm selected by Parent and satisfactory to Agent (the “Accountants”).
The report of the Accountants shall be accompanied by a statement of the Accountants certifying
that (i) they have caused the Loan Agreement to be reviewed, (ii) in making the examination upon
which such report was based either no information came to their attention which to their knowledge
constituted an Event of Default under this Agreement or any related agreement or, if such
information came to their attention, specifying any such Event of Default, its nature, when it
occurred and whether it is continuing, and such report shall contain or have appended thereto
calculations which set forth Loan Parties’ compliance with each covenant set forth in Section 5.3.
In addition, the reports shall be accompanied by a certificate of Parent’s Chief Financial Officer
which shall state that, based on an examination sufficient to permit him to make an informed
statement, no Default or Event of Default exists, or, if such is not the case, specifying such
Default or Event of Default, its nature, when it occurred, whether it is continuing and the steps
being taken by Loan Parties with respect to such event, and such certificate shall have appended
thereto calculations which set forth Loan Parties’ compliance with the covenant set forth. The
foregoing certificate of Parent’s Chief Financial Officer shall also set forth a calculation of the
Total Leverage Ratio for purposes of determining the Applicable Margin with respect to the then
current Calculation Period.



               (2) Quarterly Financial Statements. Within forty-five (45) days after the end of
each
fiscal quarter, other than the fourth fiscal quarter of each Fiscal Year, an unaudited balance
sheet of Rocky on a Consolidated Basis and unaudited statements of income and stockholders’ equity
and cash flow of Rocky on a Consolidated Basis reflecting results of operations from the beginning
of the Fiscal Year to the end of such quarter and for such quarter, prepared on a basis consistent
with prior practices and complete and correct in all material respects, subject to normal and
recurring year end adjustments that individually and in the aggregate are not material to the
business of Rocky on a Consolidated Basis. Each such balance sheet, statement of income and
stockholders’ equity and statement of cash flow shall set forth a comparison of the figures for (w)
the current fiscal period and (x) the current year-to-date with the figures for (y) the same fiscal
period and year-to-date period of the immediately preceding Fiscal Year and (z) the projections for
such fiscal period and year-to-date period delivered pursuant to Section 5.1(E)(e). The financial
statements shall be accompanied by a certificate signed by the Chief Financial Officer of Parent,
which shall state that, based on an examination sufficient to permit him to make an informed
statement, no Default or Event of Default exists, or, if such is not the case, specifying such
Default or Event of Default, its nature, when it occurred, whether it is continuing and the steps
being taken by Loan Parties with respect to such default and, such certificate shall have appended
thereto calculations which set forth Loan Parties’ compliance with the covenant set forth in
Section 5.3. The foregoing certificate of Parent’s Chief Financial Officer shall also set forth a
calculation of the
Total Leverage Ratio for purposes of determining the Applicable Margin with respect to the then
current Calculation Period.



               (3) Monthly Financial Statements. Within (a) ninety (90) days after the end of
each
December, (b) sixty (60) days after the end of each January and (c) thirty (30) days after the end
of each other month, an unaudited balance sheet of Rocky on a Consolidated Basis and unaudited
statements of income and stockholders’ equity of Rocky on a Consolidated Basis reflecting results
of operations from the beginning of the Fiscal Year to the end of such month and for such month,
prepared on a basis consistent with prior practices and complete and



58









 







correct in all material
respects, subject to normal and recurring year end adjustments that individually and in the
aggregate are not material to the business of Loan Parties. Each such balance sheet, statement of
income and stockholders’ equity shall set forth a comparison of the figures for (w) the current
fiscal period and (x) the current year-to-date with the figures for (y) the same fiscal period and
year-to-date period of the immediately preceding Fiscal Year and (z) the projections for such
fiscal period and year-to-date period delivered pursuant to Section 5.1(E)(e). The financial
statements shall be accompanied by a certificate of Parent’s Chief Financial Officer, which shall
state that, based on an examination sufficient to permit him to make an informed statement, no
Default or Event of Default exists, or, if such is not the case, specifying such Default or Event
of Default, its nature, when it occurred, whether it is continuing and the steps being taken by
Loan Parties with respect to such event and, such certificate shall have appended thereto
calculations which set forth Loan Parties’ compliance with the covenants set forth in Section 5.3.



               (4) Reserved.



               (5) Projections. As soon as available, but in no event later than December 31 of
each
Fiscal Year, a projection of the balance sheets, and income, retained earnings and cash flow
statements, respectively, for the then current Fiscal Year (which shall be provided in monthly
format) and comparable actual and budgeted figures for the current year, each of the foregoing for
Rocky on a Consolidated Basis, and within ten (10) days after any material update or amendment of
any such plan or forecast, a copy of such update or amendment, including a description of and
reasons for such update or amendment. Each such projection, update or amendment shall be
accompanied by a written certificate signed by Parent’s Chief Financial Officer to the effect that
it has been prepared on the basis of the Loan Parties’ historical financial statements and records,
together with the assumptions set forth in such projection and that it reflects expectations, after
reasonable analysis, of the Loan Parties’ management as to the matters set forth therein.



               (6) Variances From Operating Budget. Upon request of Agent, concurrently with the
delivery
of the financial statements referred to in Sections 5.1(E)(a), (b), and (c), a written report
summarizing all material variances from budgets submitted by Loan Parties pursuant to Section
5.1(E)(e) and a discussion and analysis by Parent’s management with respect to such variances.



               (7) Borrowing Base Certificate. (A) On a monthly basis, within fifteen
(15) days after the
end of each calendar month, a Borrowing Base Certificate calculated as of the last Business Day of
the immediately preceding month; provided, however, that if Undrawn Availability is less
than $15,000,000 for any five (5) consecutive Business Days, then, a Borrowing Base Certificate
calculated as of the last Business Day of the immediately preceding week shall be delivered a
weekly basis (or more frequently if required by Agent), on Tuesday of each week (unless a different
day or more frequent days are required by Agent); (B) provided further, however that if
Undrawn Availability is greater than $17,000,000 (including, for clarification purposes, the
requirements of Section 5.3(C)) for any ten (10) consecutive Business Days thereafter, then
Borrower shall provide monthly a Borrowing Base Certificate pursuant to and subject to the
conditions of clause (A) above; and provided, however, in any case, that the
information set forth on each Borrowing Base Certificate with respect to Eligible Inventory shall



59









 







be (x) calculated as of the last Business Day of the immediately preceding month for each monthly
Borrowing Base Certificate and (y) calculated as of date not earlier than thirty (30) days prior to
the preparation thereof for each weekly or more frequently delivered Borrowing Base Certificate.



               (8) Collateral Reports. On or before the thirtieth (30th) day of each month as and for
the
prior month (a) accounts receivable agings (which shall be in summary form unless a more detailed
format is requested by the Agent), (b) accounts payable agings, and (c) Inventory reports. In
addition, each Loan Party shall deliver to Agent at such intervals as Agent may require: (i)
confirmatory assignment schedules, (ii) copies of Customer’s invoices, (iii) evidence of shipment
or delivery, and (iv) such further schedules, documents and/or information regarding the Collateral
as Agent may require including, without limitation, trial balances and test verifications. Agent
shall have the right to confirm and verify all Accounts by any manner and through any medium it
considers advisable and do whatever it may deem reasonably necessary to protect its interests
hereunder. The items to be provided under Section 5.1(E)(g) and (h) are to be in form satisfactory
to Agent and delivered to Agent from time to time solely for Agent’s convenience in maintaining
records of the Collateral, and any Loan Party’s failure to deliver any of such items to Agent shall
not affect, terminate, modify or otherwise limit Agent’s Lien with respect to the Collateral.



               (9) Additional Information. Promptly, from time to time, such other information
regarding
the compliance by the Loan Parties with the terms of this Agreement and the other Loan Documents or
the affairs, operations or condition (financial or otherwise) of the Loan Parties, and any tax
returns filed by the Loan Parties, all as Agent may reasonably request and that is capable of being
obtained, produced or generated by the Loan Parties or of which the Loan Parties have knowledge.



               (10) Reconciliation Statements. If, as a result of any change in accounting principles
and
policies from those used in the preparation of the audited financial statements referred to in
Section 5.1(E) hereof (other than an immaterial change in GAAP), the consolidated financial
statements of the Loan Parties delivered
pursuant to Section 5.1(E) (a), (b) or (e) hereof will differ in any material respect from the
consolidated financial statements that would have been delivered pursuant to such Sections had no
such change in accounting principles and policies been made, then (A) together with the first
delivery of financial statements pursuant to Section 5.1(E) (a), (b) or (e) hereof following such
change, consolidated financial statements of the Loan Parties for (y) the current Fiscal Year to
the effective date of such change and (z) the two full Fiscal Years immediately preceding the
Fiscal Year in which such change is made, in each case prepared on a pro forma basis as if such
change had been in effect during such periods, and (B) together with each delivery of financial
statements pursuant to Section 5.1(E) (a), (b) or (e) hereof following such change, a written
statement of the chief financial officer of each Loan Party setting forth the differences
(including any differences that would affect any calculations relating to the financial covenants
set forth in Section 5.3) which would have resulted if such financial statements had been prepared
without giving effect to such change.



               (11) Inventory Location Statements. On or prior to December 31 in each year, in a
form
similar to the Schedule 6.1(L) delivered on or about the Closing Date,



60









 







indicating all locations
where Inventory valued in excess of $50,000 (based upon cost) is then in the possession of any
consignee, bailee, warehouseman, agent or processor.



          (F) Litigation and Other Notices. Give Agent written notice (and copies, as applicable) of the
following promptly after any Loan Party has or receives notice or knowledge of the following:




               (1) Orders; Injunctions. The issuance by any court or Governmental Authority of any
injunction, order, decision or other restraint prohibiting, or having the effect of prohibiting,
the making of any loan or the initiation of any litigation or similar proceeding seeking any such
injunction, order or other restraint.



               (2) Litigation. The notice, filing or commencement of any action, suit or proceeding
against any of the Loan Parties whether at law or in equity or by or before any court or any
Federal, state, municipal or other Governmental Authority and that, if adversely determined against
any of the Loan Parties, could result in uninsured liability in excess of $1,000,000 in the
aggregate and notice of any material development in such matter.



          (G) Environmental Matters. Promptly notify Agent in writing upon the occurrence of (A) Any Release
or threatened Release of any Pollutant required to be reported by a Loan Party or any of its
Subsidiaries to any Governmental Authority under any applicable Environmental Laws with respect to
the Properties and Facilities or any other property, (B) any Removal, Remedial or Response action
taken by any of the Loan Parties or any of their Subsidiaries or any other Person in response to
any
Pollutant in, at, on or under, a part of or about any of the Properties and Facilities or any other
property, (C) any violation by any of the Loan Parties of any Environmental Law, in each case, is
reasonably likely to have a Material Adverse Effect, or (D) any notice, claim or other information
received by, or knowledge of which is possessed by, a Loan Party that any of the Loan Parties or
any of their Subsidiaries might be subject to an Environmental Liability that could result in
uninsured Liability in excess of $1,000,000.




          (H) Default; Material Occurrences. Promptly notify Agent in writing upon the occurrence of (a) any
Event of Default or Default, specifying the nature and extent thereof and the action (if any) that
is proposed to be taken with respect thereto; (b) any event of default under the Note Purchase
Agreement; (c) any event which with the giving of notice or lapse of time, or both, would
constitute an event of default under the Note Purchase Agreement; (d) any event, development or
circumstance whereby any financial statements or other reports furnished to Agent fail in any
material respect to present fairly, in accordance with GAAP consistently applied, the financial
condition or operating results of any Loan Party as of the date of such statements; (e) any
accumulated retirement plan funding deficiency which, if such deficiency continued for two plan
years and was not corrected as provided in Section 4971 of the IRC, could subject any Loan Party to
a tax imposed by Section 4971 of the IRC; (f) each and every default by any Loan Party which might
result in the acceleration of the maturity of any Indebtedness with an outstanding balance in
excess of $500,000, including the names and addresses of the holders of such Indebtedness with
respect to which there is a default existing or with respect to which the maturity has been or
could be accelerated, and the amount of such Indebtedness; (g) termination of any of the Material
License Agreements which such termination

61









 








is reasonably likely to have a Material Adverse Effect
and (h) any other development in the business or affairs of any Loan Party which is reasonably
likely to have a Material Adverse Effect; in each case describing the nature thereof and the action
Loan Parties propose to take with respect thereto.




          (I) ERISA. Comply in all material respects with the applicable provisions of ERISA and the
provisions of the Code relating thereto and furnish to Agent, and if requested by them in writing,
furnish to Lenders, (i) as soon as possible, and in any event within thirty (30) days after the
Loan Parties know or have reason to know thereof, notice of (A) the establishment by the Loan
Parties or ERISA Affiliate of any Plan, (B) the commencement by the Loan Parties or ERISA Affiliate
of contributions to a Multiemployer Plan, (C) any failure by the Loan Parties or any of their ERISA
Affiliates to make contributions required by Section 302 of ERISA (whether or not such requirement
is waived pursuant to Section 303 of ERISA), or (D) the occurrence of any Reportable Event with
respect to any Plan or Multiemployer Plan for which the reporting requirement is not waived,
together with a statement of an officer setting forth details as to such Reportable Event and the
action that the Loan Parties propose to take with respect thereto, together with a copy of the
notice of such Reportable Event given to the PBGC if any such notice was provided by the Loan
Parties, and (ii) promptly after receipt thereof, a copy of any notice a Loan Party or ERISA
Affiliate may receive from the PBGC relating to the intention of the PBGC to terminate any Plan or
Multiemployer Plan, or to appoint a trustee to administer any Plan or
Multiemployer Plan, and (iii) promptly after receipt thereof, a copy of any notice of withdrawal
liability from any Multiemployer Plan.




          (J) Maintaining Records; Access to Premises and Inspections. Maintain financial records in
accordance with generally accepted practices and, upon reasonable notice, at all reasonable times
and as often as Agent may reasonably request (and at any time after the occurrence and during the
continuation of a Default or Event of Default), permit any authorized representative designated by
Agent, subject to the same confidentiality provisions for Agent and Lenders as set forth in this
Agreement, to visit and inspect the properties and financial records of the Loan Parties and to
make extracts from such financial records, all at the Loan Parties’ reasonable expense, and permit
any authorized representative designated by Agent to discuss the affairs, finances and condition of
the Loan Parties with the Loan Parties’ chief financial officers and such other officers as the
Loan Parties shall deem appropriate, and the Loan Parties’ independent public accountants.




          (K) Other Reports. Furnish Agent as soon as available, but in any event within ten (10) days after
the issuance thereof, (i) with copies of such financial statements, reports and returns as each
Loan Party shall send to its stockholders and (ii) copies of all notices sent pursuant to the Note
Purchase Agreement.




          (L) Patriot Act Compliance. Loan Parties shall provide such information and take such actions as
are reasonably requested by the Agent or any Lender in order to assist the Agent and the Lenders in
maintaining compliance with the Patriot Act.




          (M) SEC Filings; Press Release. Promptly after the sending or filing thereof, Parent shall (x)
send to Agent (either in writing or by e-mail) copies of all press releases and all statements
concerning material changes or developments in the business of the Loan Parties

62









 








made available by
the Loan Parties to the public or any other creditor and (y) use reasonable efforts to send to
Agent (either in writing or by e-mail) copies of all reports sent to the holders of the Common
Stock of Parent generally and all reports and registration statements filed with the SEC or any
national or foreign securities exchange or the National Association of Securities Dealers, Inc.




     5.2. Negative Covenants. The Loan Parties, jointly and severally, covenant that, so long
as any of the Commitments hereunder shall be in effect and until indefeasible payment in full, in
cash, of all Obligations and termination of all Lender Letters of Credit:



          (A) Indebtedness.
None of the Loan Parties shall create, incur, assume guarantee or be or remain liable for,
contingently or otherwise, or suffer to exist any Indebtedness, except:




                    (a) Indebtedness under this Agreement;



                    (b) Indebtedness of Borrower incurred in the ordinary course of
business with respect to
customer deposits, trade payables and other unsecured current Liabilities not the result of
borrowing and not evidenced by any note or other evidence of Indebtedness;



                    (c) Indebtedness under the Note Purchase Agreement;



                    (d) Purchase money Indebtedness of Borrower and Indebtedness
consisting of Capital Leases, in
the aggregate, not to exceed $2,500,000 at any time outstanding;



                    (e) Intercompany Indebtedness between the Loan Parties, including
between Parent and its
Subsidiaries (which, for the sake of clarification, do not include trade payables incurred in the
ordinary course of business), provided that the aggregate outstanding amount of Intercompany
Indebtedness owing at any time by Subsidiaries that are not Loan Parties to Loan Parties shall not
exceed $10,000,000;



                    (f) Indebtedness to shareholders of Parent from share repurchases
and redemptions under the
Stockholders Agreement not to exceed $500,000 in the aggregate in any Fiscal Year;



                    (g) Other Indebtedness of Loan Parties in the aggregate at any
time outstanding of $1,000,000;
provided that such Indebtedness is unsecured and/or subordinated to the Indebtedness under this
Agreement on terms reasonably satisfactory to Agent;



                    (h) Indebtedness of Borrower listed on the Permitted Indebtedness
Schedule attached hereto as
Schedule 5.2(A);



                    (i) Indebtedness incurred in connection with the financing of
Loan Parties’ insurance
premiums;



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                    (j) Indebtedness incurred in connection with Interest Rate
Protection Agreements, in all cases
not for speculative purposes, not to exceed in the aggregate a maximum potential Liability for the
termination of such any and all such agreements, of $7,500,000 at any time outstanding;



                    (k) Indebtedness incurred in connection with the purchase,
financing or refinancing of real
property, not to exceed the sum of $5,000,000 in the aggregate at any time outstanding;



                    (l) obligations under any lease which is accounted for by the
lessee as an operating lease and
under which the lessee is intended to be the “owner” of the leased property for Federal income tax
purposes; and



                    (m) Indebtedness incurred in connection with a Permitted
Sale/Leaseback, not to exceed the sum
of $7,000,000.



          (B) Negative Pledge; Liens. The Loan Parties shall not create, incur, assume or suffer to exist
any Lien of any kind on any of their properties or assets of any kind, except the following
(collectively, “Permitted Liens”):




                    (a) Liens created in connection with the Loan Documents;



                    (b) Liens created in connection with the Note Purchase Documents
which are subordinate and
junior to the Liens of Agent and the Lenders and are subject to the terms of the Intercreditor
Agreement;



                    (c) Liens for or priority claims imposed by law that are
incidental to the conduct of business
or the ownership of properties and assets (including mechanic’s, warehousemen’s, attorneys’ and
statutory landlords’ Liens) and deposits and pledges incurred in the ordinary course of business
and not in connection with the borrowing of money; provided, however, that in each case, the
obligation secured is not overdue, or, if overdue, is being contested in good faith and adequate
reserves have been set up by the Loan Parties as the case may be; and provided, further, that the
Lien and security interest provided in the Loan Documents or any portion thereof created or
intended to be created thereby is not, in the opinion of Agent, unreasonably jeopardized thereby;



                    (d) Liens securing the payments of Charges incurred in the
ordinary course of business that
either (A) are not delinquent, or (B) are being contested in good faith by appropriate legal or
administrative proceedings and as to which adequate reserves have been set aside on their books,
and so long as during the period of any such contest, the Loan Parties shall suffer no loss of any
privilege of doing business or any other right, power or privilege necessary or material to the
operation of the Business; provided, however, that a stay of enforcement of any such Lien is in
effect and the first priority status of the Lien of Agent under the Loan Documents shall not be
affected thereby;



                    (e) Liens securing Capital Leases, purchase money Indebtedness
permitted under Section
5.2(A)(d) and Indebtedness incurred in connection with a



64









 







Permitted Sale/Leaseback, in either case
which attach solely to the assets being leased or purchased;



                    (f) Liens securing Indebtedness permitted under
Section 5.2(A)(i) which attach solely to the
applicable insurance policies and proceeds thereof;



                    (g) Liens securing Indebtedness permitted under
Section 5.2(A)(k) which attach solely to the
relevant real property and improvements;



                    (h) Liens listed on the “Permitted Liens Schedule”
attached hereto as Schedule 5.2(B); and



                    (i) Extensions, renewals and replacements of Liens referred to in
clauses (a), (b), (e), (g)
or (j) of this Section 5.2(B); provided, however, that any such extension, renewal or replacement
Lien shall be limited to the property or assets covered by the Lien extended, renewed or replaced
and that the obligations secured by any such extension, renewal or replacement Lien shall be in an
amount not greater than the amount of the obligations secured by the Lien extended, renewed or
replaced at the time of such extension, renewal or replacement;



                    (j) Liens of any licensor or licensee in connection with license
agreements entered into in
the ordinary course of business, which such Liens do not constitute security interests in any
assets of any Loan Party;



                    (k) any Lien or encumbrance, UCC financing statement, interest or
title of a lessor under any
operating lease entered into in the ordinary course of business, or any interest or title of any
lessee under any leases or subleases of real property, with respect solely to the leased property
and not to any other Collateral;



                    (l) with respect solely to real property, defects and
irregularities in title, survey
exceptions, encumbrances, licenses, covenants, restrictions, easements or reservations of others
for rights-of-way, roads, pipelines, railroad crossings, services, utilities or other similar
purposes; outstanding mineral rights or reservations (including rights with respect to the removal
of material resources) which do not materially diminish the value of the surface estate, assuming
usage of such surface estate similar to that being carried on by any Person as of the effective
date, and Liens arising with respect to zoning restrictions, licenses, covenants, building
restrictions and other similar charges or encumbrances on the use of real property of such Person
which do not materially interfere with the ordinary conduct of such Person’s business;



                    (m) Liens on any interest in life insurance on any officer,
director or employee;



                    (n) Liens incurred or pledges and deposits made in the ordinary
course of business in
connection with worker’s compensation, unemployment insurance, pensions or other types of social
security benefits, or to secure the performance of statutory obligations or to secure the
performance of bids, tenders, sales and contracts (other than for the repayment of borrowed money)
and Liens incurred to secure any surety bonds, appeal bonds,



65









 







supersedeas bonds or other instruments
serving a similar purpose in connection with the appeal of any judgment or defense of any claim
relating to a prejudgment Lien;



                    (o) Liens consisting of financing statements or similar notices
filed by a Person of a type
listed in Section 9-505 of the UCC solely in such capacity; and



                    (p) Liens consisting of judgments or attachments that would not
constitute an Event of
Default under Section 7.1(J).



          (C) Contingent Liabilities. The Loan Parties shall not become liable for any Guaranties, except
for (i) the endorsement of negotiable instruments for deposit or collection or similar transactions
in the ordinary course of business, (ii) guaranties by a Loan Party with respect to Indebtedness of
Borrower permitted under Section 5.2(A), (iii) Guaranties of Borrower with respect to a maximum
potential liability of $1,000,000 at any time outstanding, (iv) Guaranties, obligations, warranties
and indemnities, not with respect to senior or funded Indebtedness of any Person, which have been
or are undertaken or made in the ordinary course of business, in connection with the Transactions
or in connection with the issuance of securities of the Parent, and (v) Guaranties of any Loan
Party on behalf of such Loan Party’s Subsidiary which is not a Loan Party, not to exceed in the
aggregate at any time outstanding, guaranteed Indebtedness in the sum of $1,000,000.




          (D) Intentionally Omitted.




          (E) Mergers, etc. Except for a merger or consolidation of any Subsidiary or Loan Party into
another Loan Party (except for mergers or consolidations of Borrowers into Guarantors unless
consented to in writing by Agent in its sole reasonable discretion), Loan Parties shall not alter
the corporate, capital or legal structure of the Loan Parties, or merge into or consolidate or
combine with any other Person, or liquidate, wind-up or dissolve itself (or suffer any liquidation
or dissolution) or purchase, lease or otherwise acquire (in one transaction or a series of related
transactions) all or any substantial part of the property or assets of any Person in excess of the
aggregate sum of $5,000,000 during the term hereof in connection with a Permitted Acquisition. The
Loan Parties shall not sell, transfer or otherwise dispose of any of its assets, including without
limitation the Collateral, other than (i) sales, leases, assignments, transfers, conveyances or
other dispositions of Inventory in the ordinary course of business; (ii) sales, assignments,
transfers, conveyances or other dispositions (other than leases or subleases of leases) of
properties outside of the ordinary course of business not to exceed in the aggregate more than
$100,000 in any Fiscal Year; (iii) in addition to dispositions permitted under clauses (i) and (ii)
above, the disposition of Equipment of any Loan Party if such Equipment is obsolete or no longer
useful in the ordinary course of such Loan Party’s business; (iv) assignments and licenses of
intellectual property in the ordinary course of business; (v) the sale or transfer of property of
any Loan Party to any other Loan Party (except for sales or transfers by Borrowers to Guarantors
unless consented to in writing by Agent in its sole reasonable discretion); (vi) subleases of
leases or leases of property which, at the time of such sublease or lease, is then not currently
being utilized in the Business; and (vii) any Permitted Sale/Leaseback.




          (F) Affiliate Transactions. Other than by and between, or among, Parent, the Loan Parties and
their respective Subsidiaries, in each case in a manner that is not materially

66









 








economically
detrimental to any Borrower, the Loan Parties shall not make any loan or advance to any director,
officer or employee of the Loan Parties or any Affiliate, or enter into or be a party to any
transaction or arrangement with any Affiliate of the Loan Parties, including, without limitation,
the purchase from, sale to or exchange of property with, or the rendering of any service by or for,
any
Affiliate, except pursuant to the reasonable requirements of the Loan Parties’ business and upon
fair and reasonable terms no less favorable to the Loan Parties than would be obtained in a
comparable arm’s-length transaction with a Person other than an Affiliate.




          (G) Dividends. The Loan Parties shall not, directly or indirectly, declare or pay any dividends or
make any distribution of any kind on their outstanding capital stock or any other payment of any
kind to any of their stockholders or its Affiliates (including any redemption, purchase or
acquisition of, whether in cash or in property, securities or a combination thereof, any
partnership interests or capital accounts or warrants, options or any of their other securities),
or set aside any sum for any such purpose other than for such dividends, distributions or payments
paid solely to other Loan Parties and for any other purpose up to $500,000 in the aggregate in any
Fiscal Year.




          (H) Advances, Investments and Loans. The Loan Parties shall not purchase, or hold beneficially any
stock, other securities or evidences of Indebtedness of, or make or permit to exist any loan,
Guaranty or advance to, or make any Investment or acquire any interest whatsoever in, any other
Person (including, but not limited to, the formation or acquisition of any Subsidiaries), except,
prior to the occurrence and continuance of any Default or Event of Default, and subject to the
substantially contemporaneous delivery to Agent of such agreements, documents or instruments
reasonably requested by Agent to obtain a first priority perfected security interest in any such
Investment (other than those described in clauses (x), (xii) and (xiv) below, which would not
constitute Collateral), any of the following (each, a “Permitted Investment”):





     (i) securities issued or directly and fully guaranteed or insured by the US or
any agency or instrumentality thereof having maturities of not more than six (6)
months from the date of acquisition;




     (ii) US dollar-denominated time deposits, certificates of deposit and bankers
acceptances of any bank whose short-term debt rating from Standard & Poor’s Ratings
Group, a division of The McGraw-Hill Companies, Inc. (“S&P”), is at least A-1 or the
equivalent or whose short-term debt rating from Moody’s Investors Service, Inc.
(“Moody’s”) is at least P-1 or the equivalent with maturities of not more than six
months from the date of acquisition;




     (iii) commercial paper with a rating of at least A-1 or the equivalent by S&P
or at least P-1 or the equivalent by Moody’s maturing within six months after the
date of acquisition;




     (iv) marketable direct obligations issued by any state of the US or any
political subdivision of any such state or any public instrumentality thereof
maturing within six months from the date of acquisition thereof and, at the time of



67









 







acquisition, having one of the two highest ratings obtainable from either S&P or
Moody’s;




     (v) Investments in money market funds substantially all the assets of which are
comprised of securities of the types described in clauses (i) through (iv) above;




     (vi) Deposit Accounts maintained in accordance with the Blocked Account
Agreements;




     (vii) Investments (including debt obligations) received in connection with the
bankruptcy or reorganization of suppliers and customers and in settlement of
delinquent obligations of, and other disputes with, customers and suppliers arising
in the ordinary course of business;




     (viii) Accounts owing to the Loan Parties, prepaid expenses and accrued
expenses created or acquired in the ordinary course of Business and payable on
customary trade terms of the Loan Parties;




     (ix) deposits made in the ordinary course of Business consistent with past
practices to secure the performance of leases or in connection with bidding on
government contracts;




     (x) loans to employees in an aggregate amount not in excess of $100,000 at any
one time per such employee (not to exceed in the aggregate at any time outstanding
the sum of $1,000,000 with respect to all employees of the Loan Parties), for the
purpose of assisting such employees in the purchase of Common Stock;




     (xi) Investments or intercompany loans and advances of (A) Parent or a
Subsidiary in or to any other Subsidiary (subject to a maximum amount of such loans
and advances (which, for the sake of clarification, do not include trade payables
incurred in the ordinary course of business) by Parent and any other Borrower to any
and all such Subsidiaries of $10,000,000 in the aggregate at any one time
outstanding and provided that each such loan and advance is evidenced by a
promissory note in form and substance satisfactory to Agent which is pledged by the
payee as additional security for the Obligations), (B) any Subsidiary in or to the
Parent or (C) any Guarantor in or to any other Loan Party;




     (xii) advances to sales representatives of Parent or any of its Subsidiaries in
the ordinary course of Business and consistent with past practices;




     (xiii) additional Investments not otherwise permitted in this Section not to
exceed $1,000,000 in the aggregate at any one time outstanding;




     (xiv) Investments in certificates of deposit and bank deposits with financial
institutions located in Puerto Rico and the Dominican Republic, solely to the extent
necessary to maintain preferred tax treatment or country of origin status



68









 







in such
locations, not to exceed $5,000,000 in the aggregate at any time outstanding;




     (xv) Investments made pursuant to acquisitions permitted by this Agreement;




     (xvi) Investments in Interest Rate Protection Agreements, derivative
agreements, materials future contracts or other arrangements in connection with
Indebtedness, in all cases not for speculative purposes, not to exceed in the
aggregate a notional amount of $60,000,000 at any time outstanding; and




     (xvii) Deposit Accounts with financial institutions available for withdrawal on
demand, subject to the provisions of Sections 6.1(K) and 6.4.



          (I) Use of Proceeds. The Loan Parties shall not use any proceeds from the Loans advanced
hereunder, directly or indirectly, for the purposes of purchasing or carrying any “margin
securities” within the meaning of Regulations T, U or X promulgated by the Board of Governors of
the Federal Reserve Board or for the purpose of arranging for the extension of credit secured,
directly or indirectly, in whole or in part by collateral that includes any “margin securities.”




          (J) Press Release; Public Offering Materials. After the Closing Date, the Loan Parties shall not
disclose the name of Agent or any Lender in any press release or in any prospectus, proxy statement
or other materials filed with any governmental entity relating to a public offering of the capital
stock of any Loan Party except as may be required by Law and then only (x) to the extent required
by Law and (y) after providing Agent with prior written notice of such disclosure.




          (K) Amendment of Charter Documents. The Loan Parties shall not amend, terminate, modify or waive
or agree to the amendment, modification or waiver of any material term or provision of their
Charter Documents, or By-laws, other than any amendment, modification or other change to any
Charter Document or By-laws that does not adversely affect the rights and privileges of Parent or
any Loan Party under the Loan Documents, or the interests of Agent or the Lenders under the Loan
Documents or in the Collateral.




          (L) Subsidiaries. The Loan Parties shall not establish nor acquire any new Subsidiary except (i)
Foreign Subsidiaries, with the prior written consent of Agent not to be unreasonably withheld or
(ii) domestic Subsidiaries, in connection with any acquisition permitted by this Agreement and/or
where such Subsidiary becomes a Borrower or obligated pursuant to a Guaranty and grants Agent a
first priority perfected security interest in substantially all of its assets, subject only to
Permitted Liens.




          (M) Business.
The Loan Parties shall not engage, directly or indirectly, in any business other than the
Business, and any business reasonably incidental thereto.




          (N) Fiscal Year; Accounting. The Loan Parties shall not change their Fiscal Year from ending on
December 31, or method of accounting (other than immaterial changes in

69









 








methods), except as
permitted or required by GAAP, in which case Agent shall be provided with not less than thirty (30)
days advance written notice of any such change.




          (O) Establishment of New or Changed Business Locations. The Loan Parties shall not relocate their
principal executive offices or other facilities or establish new business locations or store any
Inventory or other assets at a location not identified to Agent on or before the date hereof,
without providing not less than thirty (30) days advance written notice to Agent.




          (P) Business Practices. The Loan Parties shall not engage in, or permit any of their respective
directors, officers, agents, employees or representatives in their capacities to engage in, any of
the following: (i) use any funds for unlawful contributions, unlawful gifts, unlawful entertainment
or other unlawful expenses relating to political activity; (ii) directly or indirectly pay or
deliver any fee, commission or other sum of money or item of property, however characterized, to
any finder, agent or other party acting on behalf of or under the auspices of a governmental
official or Governmental Authority, in the US or any other country, which is in any manner related
to the Business that was illegal under federal, state or local laws of the US or any other country
having jurisdiction; (iii) make any payment to any customer or subcontractor of the Business or to
any officer, director, partner, employee or agent of any such customer or subcontractor, for the
unlawful influence of any such customer or subcontractor or any such officer, director, partner,
employee or agent; (iv) engage in any other unlawful reciprocal practice, or make any other
unlawful payment or give any other unlawful consideration to any such customer or subcontractor or
any such officer, director, partner, employee or agent, in respect of the Business; or (v) violate
any federal, state or local campaign finance, election or similar Laws, where any such conduct is
either (x) done knowingly or (y) reasonably likely to have a Material Adverse Effect.




          (Q) Sale or Discount of Accounts. The Loan Parties shall not, directly or indirectly, sell with
recourse, or discount or otherwise sell for less than the face value thereof, any of its Accounts,
except without recourse in the ordinary course of business in connection with the compromise or
collection thereof and not as part of any financing transactions.




          (R) Changes Relating to Note Purchase Documents; Prepayments. The Loan Parties shall not change or
amend the terms of the Note Purchase Agreement, or any Second Priority Senior Secured Note, if such
amendment shall not be permitted in accordance
with the terms of the Intercreditor Agreement, as amended from time to time, nor shall Loan Parties
make any prepayments in any Fiscal Year in respect of any Second Priority Senior Secured Note
except as contemplated in Section 2.4(E).




     5.3. Financial Covenants. Parent covenants that, so long as any of the Commitments
hereunder shall be in effect and until indefeasible payment in full, in cash of all Obligations and
termination of all Lender Letters of Credit, it shall maintain, on a consolidated basis, the
following:



          (A) Fixed Charge Coverage. A minimum Fixed Charge Coverage Ratio as of the end of each period set
forth below of not less than the respective ratio set forth below:





70









 





	 	 	 
	 	 	Fixed Charge
	Period	 	Coverage Ratio
	Four Quarters ending June 30, 2007

	 	1.30 to 1.00
	Four Quarters ending September 30, 2007

	 	1.20 to 1.00
	Four Quarters ending December 31, 2007

	 	1.15 to 1.00
	Four Quarters ending March 31, 2008

	 	1.10 to 1.00
	Four Quarters ending June 30, 2008

	 	1.10 to 1.00
	Four Quarters ending September 30, 2008

	 	1.10 to 1.00
	Four Quarters ending December 31, 2008

	 	1.10 to 1.00
	Each four Quarter period ending thereafter

	 	1.10 to 1.00






          (B) Capital Expenditures. Capital Expenditures made by Rocky on a Consolidated Basis during any
Fiscal Year set forth below, in the aggregate together with all expenditures in respect of Capital
Leases, that would exceed the amount set forth opposite each Fiscal Year below; provided, that any
unused portion of any such annual amount in each Fiscal Year, up to twenty-five percent (25%) of
such maximum amount set forth below may be carried over solely to the immediately succeeding Fiscal
Year:




	 	 	 	 
	 	 	Maximum
	Period	 	Capital Expenditures
	Fiscal Year ending December 31, 2007

	 	$	6,500,000
	Fiscal Year ending December 31, 2008

	 	$	6,500,000
	Fiscal Year ending December 31, 2009

	 	$	6,500,000






          (C) Undrawn
Availability. At all times Undrawn Availability shall not be less
than $5,000,000.



SECTION 6. ADDITIONAL REPRESENTATIONS AND COVENANTS




     6.1. Representations. As a material inducement to Agent and each Lender to enter into the
Loan Documents, to make and to continue to make Loans and to issue and to continue to issue Lender
Letters of Credit or risk participations to the banks that issue Bank Letters of Credit, each of
the Loan Parties represents, warrants and covenants as to itself (and Parent as to all Loan
Parties) to Agent and each Lender that the following statements are and will be true, correct and
complete and, unless specifically limited, shall remain so for so long as any of the Commitments
hereunder shall be in effect and until indefeasible payment in full, in cash, of all Obligations
and termination of all Lender Letters of Credit:



          (A) Accounts Warranties and Covenants. Except as otherwise disclosed to Agent in writing, as to
each Loan Party’s existing Accounts and each of its hereafter arising Accounts that: at the time of
its creation, such Account is a valid, bona fide obligation, representing an undisputed
indebtedness incurred by the Account Debtor (and any other Person obligated on such Account) for
property actually sold and delivered or for
services rendered; there are no defenses, setoffs, offsets, claims, or counterclaims, genuine or
otherwise, against such Account; such Account does not represent a sale or provision of services to
a Subsidiary or an Affiliate, or a consignment, sale or return or a bill and hold transaction; the
amount




71









 




represented by Loan Parties to Agent as owing by each Account Debtor (and by each of the
other Persons obligated on such Account) is, or will be, the correct amount actually and
unconditionally owing, no agreement exists permitting any other deduction or discount except in the
ordinary course of business; the respective Loan Party is the lawful owner of such Account and has
the right to assign the same to Agent, for the benefit of Agent and Lenders; such Account is free
of all Liens, other than Permitted Liens and those in favor of Agent, on behalf of itself and
Lenders, such Account constitutes, the legally valid and binding obligation of the applicable
Account Debtor (and any other Person obligated on such Account) and is due and payable in
accordance with its terms.




               Each Loan Party shall, at its own expense: (i) cause all invoices evidencing such Loan
Party’s
Accounts and all copies thereof to bear a notice that such invoices are payable to the lockboxes
established in accordance with Section 6.4 and (ii) use its reasonable efforts to assure prompt
payment of all amounts due or to become due under Accounts. No discounts, credits or allowances
will be issued, granted or allowed by any Loan Party to customers and no returns will be accepted
without Agent’s prior written consent; provided, however, so long as such discounts, credits,
allowances or returns are customarily issued or accepted in the ordinary course of business and are
in amounts which are not material to any Loan Party, or until Agent notifies Borrower to the
contrary, each Loan Party may presume consent. Borrower will promptly notify Agent in the event
that any Account Debtor (or any other Person obligated on such Account) alleges any dispute or
claim with respect to any Account in excess of an invoice amount of $250,000 or of any other
circumstances known to any Loan Party that may impair the validity or collectibility of any such
Account. Agent, or its designee, shall have the right, at any time or times hereafter, to verify
the validity, amount or any other matter relating to any Account, by mail, telephone or in person.
After the occurrence of an Event of Default and upon the written request of Agent: (i) no Loan
Party shall, without the prior consent of Agent, adjust, settle or compromise the amount or payment
of any Account, or release wholly or partly any Account Debtor (or any other Person obligated on
such Account), or allow any credit or discount thereon, and (ii) Agent shall have the right at any
such time (A) to exercise the rights of any Loan Party, with respect to the obligation of the
Account Debtor (or any other Person obligated on such Account) to make payment or otherwise render
performance to the applicable Loan Party, and with respect to any property that secures the
obligations of the Account Debtor or of any such other Person obligated on such Account; and (B) to
adjust, settle or compromise the amount or payment of any such Account or release wholly or partly
any Account Debtor or obligor thereunder or allow any credit or discount thereon.



          (B) Inventory Warranties and Covenants. Except as otherwise disclosed to Agent in writing, all of
each Loan Party’s Inventory is of good and merchantable quality, free from any defects, such
Inventory is not subject to any licensing, patent, trademark, trade name or copyright agreement
with any Person that restricts such Loan Party’s ability to manufacture and/or sell the Inventory.
The completion and manufacturing process of such Inventory by a Person other than a Loan Party
would be permitted under any contract to which a Loan Party is a party or to which the Inventory is
subject. None of any Loan party’s Inventory has been or will be produced in violation of the Fair
Labor Standards Act and
subject to the so-called “hot goods” provisions contained in Title 29 U.S.C. Section 215 or in
violation of any other law. All inventory and products owned by Persons other than Loan Parties
and located on any premises owned, leased or controlled by a Loan Party, shall be separately and
conspicuously identified as



72









 







such and shall be segregated from Loan Parties’ own Inventory located
at such premises. In the event Inventory of Loan Party valued at more than $500,000 is located on
the premises of a consignee, the applicable Loan Party shall perfect a security interest in such
Inventory and, at the request of Agent, shall assign of record such security interest to Agent
pursuant to documentation in form and substance satisfactory to Agent. In the event Inventory of
Loan Party valued at more than $250,000 is located on the premises of a bailee, the applicable Loan
Party shall use reasonable efforts to obtain and deliver to Agent a bailee waiver in form and
substance satisfactory to Agent.



          (C) Equipment Warranties and Covenants. Each Loan Party has maintained and shall cause all of its
material Equipment used in the Business to be maintained and preserved in the same condition,
repair and working order as when new, ordinary wear and tear excepted, and in accordance with any
manufacturer’s manual, and shall promptly make or cause to be made all repairs, replacements, and
other improvements in connection therewith that Borrower deems necessary or desirable.



          (D) Chattel Paper Warranties and Covenants. As of the Closing Date, Borrower does not hold any
Chattel Paper and does not anticipate holding any Chattel Paper in the ordinary course of its
business in excess of $100,000. To the extent Borrower holds or obtains any such Chattel Paper,
Borrower will promptly (i) deliver to Agent all such Tangible Chattel Paper duly endorsed and
accompanied by duly executed instruments of transfer or assignment, all in form and substance
satisfactory to Agent and (ii) provide Agent with Control of all such Electronic Chattel Paper, by
having Agent identified as the assignee of the Records(s) pertaining to the single authoritative
copy thereof and otherwise complying with the applicable elements of Control set forth in the UCC.
Borrower will also deliver to Agent all security agreements securing any Chattel Paper and execute
an authorization to file UCC financing statement amendments assigning to Agent any UCC financing
statements filed by Borrower in connection with such security agreements. Borrower will mark
conspicuously all such Chattel Paper with a legend, in form and substance satisfactory to Agent,
indicating that such Chattel Paper is subject to the Lien of Agent.



          (E) Instruments Warranties and Covenants. Upon the request of Agent, each Loan Party will deliver
to Agent all Instruments in excess of $100,000 which constitute Collateral it holds or obtains duly
endorsed and accompanied by duly executed instruments of transfer or assignment, all in form and
substance satisfactory to Agent. Each Loan Party will also deliver to Agent all security
agreements securing any Instruments and execute an authorization to file UCC financing statement
amendments assigning to Agent any UCC financing statements filed by any Loan Party in connection
with such security agreements.



          (F) Investment Property Warranties and Covenants. Upon the request of Agent, each Loan Party will
take any and all actions necessary (or required or requested by Agent), from time to time, to (i)
cause Agent to obtain exclusive Control of any Investment Property in excess of $50,000 which
constitutes Collateral owned by any Loan Party in a manner acceptable to Agent and (ii) obtain from
any issuers of such Investment Property and
such other Persons, for the benefit of Agent, written confirmation of Agent’s Control over such
Investment Property upon terms and conditions acceptable to Agent.



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          (G) Letters of Credit Warranties and Covenants. If requested by Agent, at all times after the
occurrence of an Event of Default and during the continuance thereof, each Loan Party will deliver
to Agent (i) all Letters of Credit under which it is the beneficiary or is otherwise entitled to
receive proceeds duly endorsed and accompanied by duly executed instruments of transfer or
assignment, all in form and substance satisfactory to Agent and (ii) all security agreements
securing any such Letters of Credit and execute UCC financing statement amendments assigning to
Agent any UCC financing statements filed by any Loan Party in connection with such security
agreements. Each Loan Party will take any and all actions reasonably necessary (or required or
requested by Agent), from time to time, to cause Agent to obtain exclusive Control of any
Letter-of-Credit Rights owned by any Loan Party in a manner acceptable to Agent.



          (H) General Intangibles Warranties and Covenants. Each Loan Party shall use its reasonable efforts
to obtain any consents, waivers or agreements necessary to enable Agent to exercise remedies
hereunder and under the other Loan Documents with respect to any of such Loan Party’s rights under
any General Intangibles, including Loan Parties’ rights as a licensee of computer software.



          (I) Intellectual Property Covenants. Each Loan Party hereby ratifies and reaffirms all of the
representations, warranties, covenants and other agreements made by each Loan Party in each
Copyright Security Agreement, Patent Security Agreement and Trademark Security Agreement and in all
other documents, instruments and other items as may be necessary for Agent to file such agreements
with the U.S. Copyright Office and the U.S. Patent and Trademark Office. The Copyrights, Patents
and Trademarks listed on the respective schedules to each of the Copyright Security Agreement,
Patent Security Agreement and Trademark Security Agreement constitute all of the US Patents,
Trademarks and government registered Copyrights owned by Loan Parties and their respective
Subsidiaries. If, before the Obligations are indefeasibly paid in full, in cash, any Loan Party
acquires or becomes entitled to any new or additional US Patents, Trademarks or federally
registered Copyrights, or rights thereto, such Loan Party shall give to Agent prompt written notice
thereof, and shall amend the schedules to the respective security agreements or enter into new or
additional security agreements to include any such new Patents, Trademarks or government registered
Copyrights. Each Loan Party shall: (a) prosecute diligently any copyright, patent or trademark
application at any time pending, except to the extent the failure to do so is not reasonably likely
to have a Material Adverse Effect; (b) make application for registration or issuance of all new
copyrights, patents and trademarks as reasonably deemed appropriate by such Loan Party, except to
the extent the failure to do so is not reasonably likely to have a Material Adverse Effect; (c)
preserve and maintain all rights in the Intellectual Property, except to the extent the failure to
do so is not reasonably likely to have a Material Adverse Effect; and (d) use its reasonable
efforts to obtain any consents, waivers or agreements necessary to enable Agent to exercise its
remedies with respect to the Intellectual Property. Except to the extent the failure to do so is
not reasonably likely to have a Material Adverse Effect, no Loan Party shall abandon any material
right to file a copyright, patent or trademark application nor shall any Loan Party abandon any
material pending copyright, patent or trademark application, or Copyright, Patent or Trademark
without the prior written consent of Agent. All government registered Intellectual Property owned
by any Loan Party and their respective Subsidiaries is valid, subsisting and enforceable and all
filings necessary to maintain the effectiveness of such registrations have been made, except to the
extent



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the failure to do so is not reasonably likely to have a Material Adverse Effect. The
execution, delivery and performance of this Agreement by each Loan Party will not violate or cause
a default under any material item of Intellectual Property or any agreement in connection
therewith.



          (J) Commercial Tort Claims Warranties and Covenants. Except for matters disclosed on Schedule
2.7(A), as of the Closing Date, no Loan Party owns any Commercial Tort Claims. Each Loan Party
shall advise Agent promptly upon any Loan Party becoming aware that it owns any additional
Commercial Tort Claims in excess of the sum of $500,000. With respect to any such new Commercial
Tort Claim, each Loan Party will execute and deliver such documents as Agent deems necessary to
create, perfect and protect Agent’s security interest in such Commercial Tort Claim.



          (K) Deposit Accounts; Bank Accounts Warranties and Covenants. Schedule 6.1(K) sets forth the
account numbers and locations of all Deposit Accounts or other bank accounts of each Loan Party.
No Loan Party shall establish any new Deposit Account or other bank accounts (including any term
deposit, certificate of deposit or money market account with any Person) or amend or terminate any
Blocked Account Agreement or lockbox agreement without Agent’s prior written consent.
Notwithstanding the foregoing, or any provision of Section 6.4 to the contrary, each retail and
Rocky Retail shoe center location of Borrower may open and maintain a Deposit Account in which a
monthly average balance of not more than $25,000 is maintained.



          (L) Bailees. Except as disclosed on Schedule 6.1(L) and Inventory in transit from time to time, as
of the Closing Date none of the Collateral is in the possession of any consignee, bailee,
warehouseman, agent or processor, and no Collateral shall at any time be in the possession or
control of any warehouse, bailee or any of Loan Parties’ agents or processors without Agent’s prior
written consent and unless Agent, if Agent has so requested, has received warehouse receipts or
bailee lien waivers satisfactory to Agent prior to the commencement of such possession or control.
If any Collateral is at any time in the possession or control of any warehouse, bailee or any of
Loan Parties’ agents or processors, the applicable Loan Party shall, upon the request of Agent,
notify such warehouse, bailee, agent or processor of the Liens in favor of Agent, for the benefit
of Agent and Lenders, created hereby, shall instruct such Person to hold all such Collateral for
Agent’s account subject to Agent’s instructions, and shall obtain such Person’s acknowledgement
that it is holding the Collateral for Agent’s benefit.



          (M) Collateral Description; Use of Collateral. Each Loan Party will furnish to Agent, from time to
time upon request, statements and schedules further identifying, updating, and describing the
Collateral and such other information, reports and evidence concerning the Collateral, as Agent may
reasonably request, all in reasonable detail. No Loan Party will use or permit any Collateral to
be used unlawfully or in violation of any provision of applicable law, or any policy of insurance
covering any of the Collateral.



          (N) Collateral Filing Requirements; Collateral Records. None of the Collateral is of a type in
which Liens may be registered, recorded or filed under, or notice thereof given under, any federal
statute or regulation except for Collateral described on the schedules to the Copyright Security
Agreement, the Patent Security Agreement and the Trademark Security



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Agreement. Each Loan Party
shall promptly notify Agent in writing upon acquiring any interest hereafter in Collateral that is
of a type where a Lien may be registered, recorded or filed under, or notice thereof given under,
any federal statute or regulation. Each Loan Party shall keep full and accurate books and records
relating to the Collateral and shall stamp or otherwise mark such books and records in such manner
as Agent may reasonably request to indicate Agent’s Liens in the Collateral, for the benefit of
Agent and Lenders.



          (O) Federal Claims. None of the Collateral constitutes a claim against the US, or any State or
municipal government or any department, instrumentality or agency thereof, the assignment of which
claim is restricted by law. Each Loan Party shall notify Agent of any Collateral in excess of the
sum of $100,000 which constitutes a claim against the US, or any State or municipal government or
any department, instrumentality or agency thereof, the assignment of which claim is restricted by
law. Upon the request of Agent, the applicable Loan Party shall take such steps as may be
necessary to comply with any applicable federal assignment of claims laws and other comparable
laws.



          (P) Agent Authorized. Each Loan Party hereby authorizes and, until such time as the Obligations
are indefeasibly paid in full, in cash, shall continue to authorize Agent to file one or more
financing or continuation statements, and amendments thereto (or similar documents required by any
laws of any applicable jurisdiction), relating to all or any part of the Collateral without the
signature of such Loan Party and hereby specifically ratifies all such actions previously taken by
Agent.



          (Q) Names and Locations. As of the Closing Date, Schedule 6.1(Q) sets forth (a) all legal names
and all other names (including trade names, fictitious names and business names) under which each
Loan Party currently conducts business, or has at any time conducted business since the Initial
Closing Date, (b) the name of any entity which any Loan Party has acquired in whole or in part or
from whom any Loan Party has acquired a significant amount of assets since the Initial Closing
Date, (c) the location of each Loan Party’s principal place of business, (d) the state or other
jurisdiction of organization for each Loan Party and sets forth each Loan Party’s organizational
identification number or specifically designates that one does not exist, (e) the location of each
Loan Party’s books and records, (f) the location of all other offices of each Loan Party, and (g)
all Collateral locations (designating Inventory and Equipment locations and indicating between
owned, leased, warehouse, storage, and processor locations. The locations designated on Schedule
6.1(Q) are Loan Parties’ sole locations for their respective businesses and the Collateral. Each
Loan Party will give Agent at least thirty (30) days advance written notice of any: (a) change of
name or of any new trade name or fictitious business name of such Loan Party, (b) change of
principal place of business of such Loan Party, (c) change in the location of such Loan Party’s
books and records or the Collateral, (d) new location for such Loan Party’s books and records or
the Collateral, or (e) changes in any Loan Party’s state or other jurisdiction of organization or its
organizational identification number.



          (R) Additional Mortgaged Property. Borrower shall as promptly as possible (and in any event within
sixty (60) days after such designation) deliver to Agent a fully executed Mortgage, in form and
substance satisfactory to Agent together with title insurance policies and surveys on any
Additional Mortgaged Property designated by Agent.



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          (S) Disclosure of Material Matters. Immediately upon learning thereof, report to Agent all matters
materially affecting the value, enforceability or collectibility of any material portion of the
Collateral including, without limitation, any Loan Party’s reclamation or repossession of, or the
return to any Loan Party of, a material amount of goods or claims or disputes asserted by any
Customer or other obligor.



     6.2. Access to Accountants and Management. Each Loan Party authorizes Agent and Lenders to
discuss the financial condition and financial statements of such Loan Party with its Accountants
upon reasonable prior notice to Borrower of its intention to do so, and authorizes such Accountants
to respond to all of Agent’s inquiries. Agent may from time to time (except, during the continuance
of an Event of Default, as may be reasonably requested and during normal business hours) confer
with each Loan Party’s management directly regarding such Loan Party’s business, operations and
financial condition.



     6.3. Amendment of Schedules. Borrower may amend any one or more of the Schedules referred
in this Section 6 (subject to prior notice to Agent, as applicable) and any representation,
warranty, or covenant contained herein which refers to any such Schedule shall from and after the
date of any such amendment refer to such Schedule as so amended; provided however, that in no event
shall the amendment of any such Schedule constitute a waiver by Agent and Lenders of any Default or
Event of Default that exists notwithstanding the amendment of such Schedule.



     6.4. Collection of Accounts and Payments. Loan Parties shall establish lockboxes and
blocked accounts (collectively, “Blocked Accounts”) in the name of such Loan Party with such banks
(“Collecting Banks”) as are reasonably acceptable to Agent (subject to irrevocable instructions
reasonably acceptable to Agent as hereinafter set forth) to which all Account Debtors or other
payment obligors shall directly remit all payments on such Loan Party’s Accounts and in which each
Collecting Bank or Loan Party will immediately deposit all such payments constituting proceeds of
Collateral received by such Loan Party in the identical form in which such payment was made,
whether by cash or check (excluding proceeds deposited in local accounts in connection with retail
and Rocky Retail shoe center locations to the extent permitted under Section 6.1(K)). Each
Collecting Bank shall acknowledge and agree, in a manner reasonably satisfactory to Agent, and with
the written consent of the respective Loan Party, to an agreement (each such agreement, a “Blocked
Account Agreement”) which provides, to the extent required by Agent in each instance, that (a) all
payments made to the Blocked Accounts are the sole and exclusive property of Agent, for its benefit
and for the benefit of Lenders, (b) except with respect to making account adjustments related only
to the Blocked Accounts, charging fees and expenses associated with this Blocked
Accounts and returned unpaid deposit items associated with the Blocked Accounts, the Collecting
Banks have no right to setoff against the Blocked Accounts, (c) the Collecting Banks will not take
any Lien in the Blocked Accounts, (d) the Collecting Banks will comply with instructions originated
by Agent directing disposition of the funds in the Blocked Accounts without the further consent of
any Loan Party and (e) all such payments received will be promptly transferred to Agent’s Account.
Each Loan Party hereby agrees that all payments made to such Blocked Accounts or otherwise received
by Agent and whether on the Accounts or as proceeds of other Collateral or otherwise, after
delivery of a notice of exclusive control, will be under the sole dominion and control of Agent,
for the benefit of itself and Lenders. Each Loan Party shall irrevocably instruct each Collecting
Bank to, after



77









 







delivery of a notice of exclusive control, promptly transfer all payments or
deposits to the Blocked Accounts into Agent’s Account to be applied to the Obligations in
accordance with the terms of this Agreement. Other than as set forth above, if any Loan Party, or
its Affiliates, employees, agents or any other Persons acting for or in concert with any Loan
Party, shall receive any monies, checks, notes, drafts or any other payments relating to and/or
proceeds of such Loan Party’s Accounts or other Collateral, the respective Loan Party or such
Person shall hold such instrument or funds in trust for Agent, and shall, immediately upon receipt
thereof, remit the same or cause the same to be remitted, in kind, to the Blocked Accounts or to
Agent at its address set forth in Section 10.3 below.



     6.5. Further Assurances. Each Loan Party shall, from time to time, execute such
guaranties, financing or continuation statements, documents, security agreements, reports and other
documents or deliver to Agent such instruments, certificates of title, mortgages, deeds of trust,
or other documents as Agent at any time may reasonably request to evidence, perfect or otherwise
implement the guaranties and security for repayment of the Obligations provided for in the Loan
Documents. In the event any Loan Party acquires an ownership interest in real property with a value
greater than $500,000 after the Closing Date which is unencumbered by a mortgage or deed of trust
in favor of an entity which provides financing for the acquisition thereof by such Loan Party, if
then requested by Agent, such Loan Party shall deliver to Agent a fully executed mortgage or deed
of trust over such real property in form and substance reasonably satisfactory to Agent, together
with such title insurance policies, surveys, appraisals, evidence of insurance, legal opinions,
environmental assessments and other documents and certificates as shall be reasonably required by
Agent.



SECTION 7. DEFAULT, RIGHTS AND REMEDIES




     7.1. Event of Default. “Event of Default” shall mean the occurrence or existence of any
one or more of the following (for each subsection a different grace or cure period may be
specified, if no grace or cure period is specified, such occurrence or existence constitutes an
immediate Event of Default):



          (A) Payment. Failure to make payment of any of the Obligations when due; or



          (B) Default in Other Agreements. (1) Failure of any Loan Party to pay when due any principal or
interest on any Indebtedness (other than the Obligations) or (2) breach or default of any Loan
Party with respect to any
Indebtedness (other than the Obligations); if such failure to pay, breach or default entitles the
holder to cause such Indebtedness having an individual principal amount in excess of $750,000 or
having an aggregate principal amount in excess of $1,500,000 to become or be declared due prior to
its stated maturity; or



          (C) Breach of Certain Provisions. Failure of any Loan Party to perform or comply with any term or
condition (i) contained in Section 5.1(A), or (ii) contained in Section 5.1 (C), (E) or (J) and the
failure to comply or perform is not remedied or waived within five (5) days after notice from Agent
or Requisite Lenders to Borrowing Agent of such default or (iii) contained in Section 5.2, 5.3 or
Section 6 (exclusive of any representation contained in Section 6 which shall be subject to clause
(D) below); or



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          (D) Breach of Warranty. Any representation, warranty, certification or other statement made by any
Loan Party in any Loan Document or in any statement or certificate at any time given by such Person
in writing pursuant or in connection with any Loan Document is false in any material respect on the
date made; or



          (E) Other Defaults Under Loan Documents. Any Loan Party defaults in the performance of or
compliance with any term contained in this Agreement other than those otherwise set forth in this
Section 7.1, or defaults in the performance of or compliance with any term contained in the other
Loan Documents and such default is not remedied or waived within fifteen (15) days after notice
from Agent, or Requisite Lenders, to Borrowing Agent of such default; or



          (F) Change in Control. A Change of Control shall have occurred;



          (G) Involuntary Bankruptcy; Appointment of Receiver, etc. (1) A court enters a decree or order for
relief with respect to any Borrower, or other Loan Party having assets in excess of $1,000,000, in
an involuntary case under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, which decree or order is not stayed or other similar relief is not granted
under any applicable federal or state law; or (2) the continuance of any of the following events
for sixty (60) days unless dismissed, bonded or discharged: (a) an involuntary case is commenced
against any Borrower, or against any other Loan Party having assets in excess of $1,000,000, under
any applicable bankruptcy, insolvency or other similar law now or hereafter in effect; or (b) a
receiver, liquidator, sequestrator, trustee, custodian or other fiduciary having similar powers
over any Loan Party, or over all or a substantial part of their respective property, is appointed;
or



          (H) Voluntary Bankruptcy; Appointment of Receiver, etc. (1) Any Loan Party commences a voluntary
case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect,
or consents to the entry of an order for relief in an involuntary case or to the conversion of an
involuntary case to a voluntary case under any such law or consents to the appointment of or taking
possession by a receiver, trustee or other custodian for all or a substantial part of its property;
or (2) any Borrower, or other Loan Party
having assets in excess of $1,000,000, makes any assignment for the benefit of creditors; or (3)
the board of directors of any such Loan Party adopts any resolution or otherwise authorizes action
to approve any of the actions referred to in this Section 7.1(H); or



          (I) Liens. Any Lien, levy or assessment, in the aggregate in excess of the sum of $500,000, is
filed or recorded with respect to or otherwise imposed upon all or any part of the Collateral or
the assets of any Loan Party by the US or any department or instrumentality thereof or by any
state, county, municipality or other governmental agency (other than Permitted Liens) and such
lien, levy or assessment is not stayed, vacated, paid or discharged within ten (10) days; or



          (J) Judgment and Attachments. Any money judgment, writ or warrant of attachment, or similar
process involving (1) an amount in any individual case in excess of $500,000 or (2) an amount in
the aggregate at any time in excess of $1,000,000 (in either case not adequately covered by
insurance as to which the insurance company has acknowledged



79









 







coverage) is entered or filed against
any Loan Party or any of their respective assets and remains undischarged, unvacated, unbonded or
unstayed for a period of forty (40) days, but in any event not later than five (5) days prior to
the date of any proposed sale thereunder; or



          (K) Dissolution. Any order, judgment or decree is entered against any Borrower, or any Loan Party
having assets in excess of $1,000,000, decreeing the dissolution or split up of such Borrower or
any such other Loan Party and such order remains undischarged or unstayed for a period in excess of
twenty (20) days, but in any event not later than five (5) days prior to the date of any proposed
dissolution or split up; or



          (L) Solvency. Any Borrower, or other Loan Party having assets in excess of $1,000,000, ceases to
be solvent (as represented by Loan Parties in Section 4.1(S)) or admits in writing its present or
prospective inability to pay its debts as they become due; or



          (M) Injunction. Any Loan Party is enjoined, restrained or in any way prevented by the order of any
court or any administrative or regulatory agency from conducting all or any material part of its
business and such order continues for thirty (30) days or more; or



          (N) Invalidity of Loan Documents. Any of the Loan Documents for any reason, other than a partial
or full release in accordance with the terms thereof, ceases to be in full force and effect or is
declared to be null and void, or any Loan Party denies that it has any further liability under any
Loan Documents to which it is party, or gives notice to such effect; or



          (O) Failure of Security. Agent, on behalf of itself and Lenders, does not have or ceases to have a
valid and perfected first priority security interest in the Collateral (except as otherwise
permitted pursuant to this
Agreement), in each case, for any reason other than the failure of Agent or any Lender to take any
action within its control; or



          (P) Damage, Strike, Casualty. Any material damage to, or loss, theft or destruction of, any
Collateral, if not adequately insured, or any strike, lockout, labor dispute, embargo,
condemnation, act of God or public enemy, or other casualty which causes, for more than thirty (30)
consecutive days, the cessation or substantial curtailment of revenue producing activities at any
facility of any Loan Party if any such event or circumstance is reasonably likely to have a
Material Adverse Effect; or



          (Q) Licenses and Permits. The loss, suspension or revocation of, or failure to renew, any license
or permit now held or hereafter acquired by any Loan Party, if such loss, suspension, revocation or
failure to renew is reasonably likely to have a Material Adverse Effect; or



          (R) Forfeiture. There is filed against any Loan Party any civil or criminal action, suit or
proceeding under any federal or state racketeering statute (including, without limitation, the
Racketeer Influenced and Corrupt Organization Act of 1970), which action, suit or proceeding (1) is
not dismissed within one hundred twenty (120) days; and (2) could reasonably be expected to result
in the confiscation or forfeiture of any material portion of the Collateral.



     7.2. Suspension of Commitments. Upon the occurrence of any Default or Event of Default,
notwithstanding any grace period or right to cure, Agent may or upon demand by



80









 







Requisite Lenders
shall, without notice or demand, immediately cease making additional Loans and the Commitments
shall be suspended; provided that, in the case of a Default, if the subject condition or event is
waived or cured within any applicable grace or cure period, the Commitments shall be reinstated.



     7.3. Acceleration. Upon the occurrence of any Event of Default described in the foregoing
Sections 7.1(G) or 7.1(H), all Obligations shall automatically become immediately due and payable,
without presentment, demand, protest or other requirements of any kind, all of which are hereby
expressly waived by each Loan Party, and the Commitments shall thereupon terminate. Upon the
occurrence and during the continuance of any other Event of Default, Agent may, and upon demand by
Requisite Lenders shall, by written notice to Borrowing Agent, (a) declare all or any portion of
the Obligations to be, and the same shall forthwith become, immediately due and payable and the
Commitments shall thereupon terminate and (b) demand that Loan Parties immediately deposit with
Agent an amount equal to one hundred five percent (105%) of the Letter of Credit Reserve and
deposit the prepayment of fees payable under Section 2.3(B) with respect to such Lender Letters of
Credit for the full remaining terms of such Lender Letters of Credit; provided, however, if any of
such Lender Letters of Credit are terminated, the unearned portion of such prepaid fee attributable
to such Lender Letter of Credit shall be refunded to Borrower.



     7.4. Remedies. If any Event of Default shall have occurred and be continuing, in addition to and not in
limitation of any other rights or remedies available to Agent and Lenders at law or in equity,
Agent may, and shall upon the request of Requisite Lenders, exercise in respect of the Collateral,
in addition to all other rights and remedies provided for herein or otherwise available to it, all
the rights and remedies of a secured party on default under the UCC (whether or not the UCC applies
to the affected Collateral) and may also (a) require Loan Parties to, and each Loan Party hereby
agrees that it will, at its expense and upon request of Agent forthwith, assemble all or part of
the Collateral as directed by Agent and make it available to Agent at a place to be designated by
Agent which is reasonably convenient to both parties; (b) withdraw all cash in the Blocked Accounts
and apply such monies in payment of the Obligations in the manner provided in Section 7.7; and (c)
without notice or demand or legal process, enter upon any premises of Loan Parties and take
possession of the Collateral. Each Loan Party agrees that, to the extent notice of sale of the
Collateral or any part thereof shall be required by law, at least ten (10) days notice to Borrowing
Agent of the time and place of any public disposition or the time after which any private
disposition (which notice shall include any other information required by law) is to be made shall
constitute reasonable notification. At any disposition of the Collateral (whether public or
private), if permitted by law, Agent or any Lender may bid (which bid may be, in whole or in part,
in the form of cancellation of indebtedness) for the purchase, lease, or licensing of the
Collateral or any portion thereof for the account of Agent or such Lender. Agent shall not be
obligated to make any disposition of Collateral regardless of notice of disposition having been
given. Each Loan Party shall remain liable for any deficiency. Agent may adjourn any public or
private disposition from time to time by announcement at the time and place fixed therefor, and
such disposition may, without further notice, be made at the time and place to which it was so
adjourned. Agent is not obligated to make any representations or warranties in connection with any
disposition of the Collateral. To the extent permitted by law, each Loan Party hereby specifically
waives all rights of redemption, stay or appraisal, which it



81









 







has or may have under any law now
existing or hereafter, enacted. Agent shall not be required to proceed against any Collateral but
may proceed against one or more Loan Parties directly.



     7.5. Appointment of Attorney-in-Fact. Each Loan Party hereby constitutes and appoints
Agent as such Loan Party’s attorney-in-fact with full authority in the place and stead of such Loan
Party and in the name of such Loan Party, Agent or otherwise, from time to time in Agent’s
discretion while an Event of Default is continuing to take any action and to execute any instrument
that Agent may deem necessary or advisable to accomplish the purposes of this Agreement, including:
(a) to ask, demand, collect, sue for, recover, compound, receive and give acquittance and receipts
for moneys due and to become due under or in respect of any of the Collateral; (b) to enforce the
obligations of any Account Debtor or other Person obligated on the Collateral and enforce the
rights of any Loan Party with respect to such obligations and to any property that secures such
obligations; (c) to file any claims or take any action or institute any proceedings that Agent may
deem necessary or desirable for the collection of or to preserve the value of any of the Collateral
or otherwise to enforce the rights of Agent and Lenders with respect to any of the Collateral; (d)
to pay or discharge taxes or Liens levied or placed upon or threatened against the Collateral, the
legality or validity thereof and the amounts necessary to discharge the same to be determined by
Agent in its sole discretion, and such payments made by Agent to become Obligations, due and
payable immediately without demand; (e) to sign and endorse any invoices, freight or express bills,
bills of lading, storage or warehouse receipts, assignments, verifications and notices in
connection
with Accounts, Chattel Paper or General Intangibles and other Documents relating to the Collateral;
and (f) generally to take any act required of any Loan Party under Section 4 or Section 5 of this
Agreement, and to sell, transfer, pledge, make any agreement with respect to or otherwise deal with
any of the Collateral as fully and completely as though Agent were the absolute owner thereof for
all purposes, and to do, at Agent’s option and Loan Parties’ expense, at any time or from time to
time, all acts and things that Agent deems necessary Loan Parties’ protect, preserve or realize
upon the Collateral. Each Loan Party hereby ratifies and approves all acts of Agent made or taken
pursuant to this Section 7.5. The appointment of Agent as each Loan Party’s attorney and Agent’s
rights and powers are coupled with an interest and are irrevocable, so long as any of the
Commitments hereunder shall be in effect and until indefeasible payment in full, in cash, of all
Obligations and termination of all Lender Letters of Credit.



     7.6. Limitation on Duty of Agent and Lenders with Respect to Collateral. Beyond the safe
custody thereof, Agent and each Lender shall have no duty with respect to any Collateral in its
possession (or in the possession of any agent or bailee) or with respect to any income thereon or
the preservation of rights against prior parties or any other rights pertaining thereto. Agent
shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral
in its possession if the Collateral is accorded treatment substantially equal to that which Agent
accords its own property. Neither Agent nor any Lender shall be liable or responsible for any loss
or damage to any of the Collateral, or for any diminution in the value thereof, by reason of the
act or omission of any warehouse, carrier, forwarding agency, consignee, broker or other agent or
bailee selected by Loan Parties or selected by Agent in good faith.



     7.7. Application of Proceeds. Notwithstanding anything to the contrary contained in this
Agreement, upon the occurrence and during the continuance of an Event of Default, (a) each



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Loan Party irrevocably waives the right to direct the application of any and all payments at any time or
times thereafter received by Agent from or on behalf of any Loan Party, and Agent shall have the
continuing and exclusive right to apply and to reapply any and all payments received at any time or
times after the occurrence and during the continuance of an Event of Default against the
Obligations in such manner as Agent may deem advisable notwithstanding any previous application by
Agent and (b) in the absence of a specific determination by Agent with respect thereto, the
proceeds of any sale of, or other realization upon, all or any part of the Collateral shall be
applied: first, to all fees, costs and expenses incurred by or owing to Agent and then any Lender
with respect to this Agreement, the other Loan Documents or the Collateral; second, to accrued and
unpaid interest on the Obligations (including any interest which but for the provisions of any
bankruptcy or insolvency law would have accrued on such amounts); third, to the principal amounts
of the Obligations outstanding and fourth, to any other Obligations or other obligations or
indebtedness of any Loan Party owing to Agent or any Lender under the Loan Documents. Any balance
remaining shall be delivered to Borrowing Agent or to whomever may be lawfully entitled to receive
such balance or as a court of competent jurisdiction may direct. Notwithstanding the foregoing,
Agent shall not apply any payments to any Obligations consisting of Liabilities of any Loan Party
to any Lender under any Interest Rate Protection Agreements, or banking and cash management
arrangements and agreements with any Lender, until such time as all other
Obligations of Loan Parties, including but not limited to those set forth in clause (b) of the
preceding sentence, have been satisfied in full.”



     7.8. License of Intellectual Property. Each Loan Party hereby ratifies and reaffirms its
previous assignment, transfer and conveyance to Agent, and hereby further assigns, transfers and
conveys to Agent, for the benefit of Agent and Lenders, in any event effective upon the occurrence
and during the continuance of any Event of Default hereunder, the non-exclusive right and license
to use all Intellectual Property owned or used by any Loan Party together with any goodwill
associated therewith, all to the extent necessary to enable Agent to realize on the Collateral and
any successor or assign to enjoy the benefits of the Collateral. This right and license shall
inure to the benefit of all successors, assigns and transferees of Agent and its successors,
assigns and transferees, whether by voluntary conveyance, operation of law, assignment, transfer,
foreclosure, deed in lieu of foreclosure or otherwise. Such right and license is granted free of
charge and does not require the consent of any other person.



     7.9. Waivers; Non-Exclusive Remedies. No failure on the part of Agent or any Lender to
exercise, and no delay in exercising and no course of dealing with respect to, any right under this
Agreement or the other Loan Documents shall operate as a waiver thereof; nor shall any single or
partial exercise by Agent or any Lender of any right under this Agreement or any other Loan
Document preclude any other or further exercise thereof or the exercise of any other right. The
rights in this Agreement and the other Loan Documents are cumulative and shall in no way limit any
other remedies provided by law.



SECTION 8. GUARANTY




     8.1. Each Guarantor hereby unconditionally ratifies and reaffirms its guaranty pursuant to the
Original Financing Agreement and hereby further guarantees, as a primary obligor and not merely as
a surety, jointly and severally with each other Guarantor when and as due, whether at maturity, by
acceleration, by notice of prepayment or otherwise, the due and



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punctual performance of all
Obligations of each other party hereto. Each payment made by any Guarantor pursuant to this
Guaranty shall be made in lawful money of the US in immediately available funds, (a) without
set-off or counterclaim and (b) free and clear of and without deduction or withholding for or on
account of any present and future Charges and any conditions or restrictions resulting in Charges
and all penalties, interest and other payments on or in respect thereof (except for Charges based
on the overall net income of Agent or a Lender) (“Tax” or “Taxes”) unless Guarantor is compelled by
law to make payment subject to such Taxes.



     8.2. All Taxes in respect of this Guaranty or any amounts payable or paid under this Guaranty
shall be paid by Guarantor when due and in any event prior to the date on which penalties attach
thereto. Each Guarantor will indemnify Agent and each of the Lenders against and in respect of all
such Taxes. Without limiting the generality of the foregoing, if any Taxes or amounts in respect
thereof must be deducted or withheld from any amounts payable or paid by any Guarantor hereunder,
such Guarantor shall pay such additional amounts as may be necessary to ensure that the Agent and
each of the Lenders receives a net amount equal to the full amount which it would have received had
payment (including of any additional amounts payable under this Section 8.2) not been made subject
to such Taxes. Within thirty (30) days of each payment by any Guarantor hereunder of Taxes or in
respect of Taxes, such Guarantor shall deliver to
Agent satisfactory evidence (including originals, or certified copies, of all relevant
receipts) that such Taxes have been duly remitted to the appropriate authority or authorities.



     8.3. Each Guarantor hereby absolutely, unconditionally and irrevocably waives (i) promptness,
diligence, notice of acceptance, notice of presentment of payment and any other notice hereunder,
(ii) demand of payment, protest, notice of dishonor or nonpayment, notice of the present and future
amount of the Obligations and any other notice with respect to the Obligations, (iii) any
requirement that the Agent or any Lender protect, secure, perfect or insure any security interest
or Lien or any property subject thereto or exhaust any right or take any action against any other
Loan Party, or any Person or any Collateral, (iv) any other action, event or precondition to the
enforcement hereof or the performance by each such Guarantor of the Obligations, and (v) any
defense arising by any lack of capacity or authority or any other defense of any Loan Party or any
notice, demand or defense by reason of cessation from any cause of Obligations other than payment
and performance in full of the Obligations by the Loan Parties and any defense that any other
guarantee or security was or was to be obtained by Agent.



     8.4. No invalidity, irregularity, voidableness, voidness or unenforceability of this Agreement
or any Loan Document or any other agreement or instrument relating thereto, or of all or any part
of the Obligations or of any collateral security therefor shall affect, impair or be a defense
hereunder.



     8.5. The Guaranty hereunder is one of payment and performance, not collection, and the
obligations of each Guarantor hereunder are independent of the Obligations of the other Loan
Parties, and a separate action or actions may be brought and prosecuted against any Guarantor to
enforce the terms and conditions of this Section 8.5, irrespective of whether any action is brought
against any other Loan Party or other Persons or whether any other Loan Party or other Persons are
joined in any such action or actions. Each Guarantor waives any right to require that any resort
be had by Agent or any Lender to any security held for payment of the Obligations or to any balance
of any deposit account or credit on the books of any Agent or any Lender in favor of



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any Loan Party
or any other Person. No election to proceed in one form of action or proceedings, or against any
Person, or on any Obligations, shall constitute a waiver of Agent’s right to proceed in any other
form of action or proceeding or against any other Person unless Agent has expressed any such waiver
in writing. Without limiting the generality of the foregoing, no action or proceeding by Agent
against any Loan Party under any document evidencing or securing indebtedness of any Loan Party to
Agent shall diminish the liability of any Guarantor hereunder, except to the extent Agent receives
actual payment on account of Obligations by such action or proceeding, notwithstanding the effect
of any such election, action or proceeding upon the right of subrogation of any Guarantor in
respect of any Loan Party.



     8.6. As an original and independent obligation under this Guaranty, each Guarantor shall (a)
indemnify the Agent and each of the Lenders and keep the Agent and each of the Lenders indemnified
against all costs, losses, expenses and liabilities of whatever kind resulting from the failure by
any party to make due and punctual payment of any of the Obligations or resulting from any of the
Obligations being or becoming void, voidable, unenforceable or ineffective against Borrowers
(including, but without limitation, all legal and other costs, Charges and expenses incurred by the
Agent and each of the Lenders, or any of them in connection with preserving or enforcing, or
attempting to preserve or enforce, its rights under
this Guaranty), except to the extent that any of the same results from the gross negligence or
willful misconduct by Agent or any Lender; and (b) pay on demand the amount of such costs, losses,
expenses and liabilities whether or not Agent or any of the Lenders have attempted to enforce any
rights against any Borrower or any other Person or otherwise.



     8.7. The liability of each Guarantor hereunder shall be absolute, unlimited and unconditional
and shall not be subject to any reduction, limitation, impairment, discharge or termination for any
reason, including, without limitation, any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to any claim, defense or setoff, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality or unenforceability of any other
Obligation or otherwise. Without limiting the generality of the foregoing, the obligations of each
Guarantor shall not be discharged or impaired, released, limited or otherwise affected by:




     (i) any change in the manner, place or terms of payment or performance, and/or
any change or extension of the time of payment or performance of, release, renewal
or alteration of, or any new agreements relating to any Obligation, any security
therefor, or any liability incurred directly or indirectly in respect thereof, or
any rescission of, or amendment, waiver or other modification of, or any consent to
departure from, this Agreement or any Loan Document, including any increase in the
Obligations resulting from the extension of additional credit to any Borrower or
otherwise;




     (ii) any sale, exchange, release, surrender, loss, abandonment, realization
upon any property by whomsoever at any time pledged or mortgaged to secure, or
howsoever securing, all or any of the Obligations, and/or any offset there against,
or failure to perfect, or continue the perfection of, any Lien in any such property,
or delay in the perfection of any such Lien, or any amendment or



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waiver of or
consent to departure from any other guaranty for all or any of the Obligations;




     (iii) the failure of the Agent or any Lender to assert any claim or demand or
to enforce any right or remedy against any Borrower or any other Loan Party or any
other Person under the provisions of this Agreement or any Loan Document or any
other document or instrument executed an delivered in connection herewith or
therewith;




     (iv) any settlement or compromise of any Obligation, any security therefor or
any liability (including any of those hereunder) incurred directly or indirectly in
respect thereof or hereof, and any subordination of the payment of all or any part
thereof to the payment of any obligation (whether due or not) of any Loan Party to
creditors of any Loan Party other than any other Loan Party;




     (v) any manner of application of Collateral, or proceeds thereof, to all or any
of the Obligations, or any manner of sale or other disposition of any Collateral for
all or any of the Obligations or any other assets of any Loan Party; and




     (vi) any other agreements or circumstance of any nature whatsoever that may or
might in any manner or to any extent vary the risk of any Guarantor, or that might
otherwise at law or in equity constitute a defense available to, or a discharge of,
the Guaranty hereunder and/or the obligations of any Guarantor, or a defense to, or
discharge of, any Loan Party or any other Person or party hereto or the Obligations
or otherwise with respect to the Advances, Letters of Credit or other financial
accommodations to any Borrower pursuant to this Agreement and/or the Loan Documents.



     8.8. The Agent shall have the right to take any action set forth in Section 8.7 without notice
to or the consent of any Guarantor and each Guarantor expressly waives any right to notice of,
consent to, knowledge of and participation in any agreements relating to any of the above or any
other present or future event relating to Obligations whether under this Agreement or otherwise or
any right to challenge or question any of the above and waives any defenses of such Guarantor which
might arise as a result of such actions.



     8.9. Agent may at any time and from time to time (whether prior to or after the revocation or
termination of this Agreement) without the consent of, or notice to, any Guarantor, and without
incurring responsibility to any Guarantor or impairing or releasing the Obligations, apply any sums
by whomsoever paid or howsoever realized to any Obligations regardless of what Obligations remain
unpaid.



     8.10. (a) The Guaranty provisions herein contained shall continue to be effective or be
reinstated, as the case may be, if claim is ever made upon the Agent or any Lender for repayment or
recovery of any amount or amounts received by such Person in payment or on account of any of the
Obligations and such Person repays all or part of said amount for any reason whatsoever, including,
without limitation, by reason of any judgment, decree or order of



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any court or administrative body
having jurisdiction over such Person or the respective property of each, or any settlement or
compromise of any claim effected by such Person with any such claimant (including any Loan Party);
and in such event each Guarantor hereby agrees that any such judgment, decree, order, settlement or
compromise or other circumstances shall be binding upon such Guarantor, notwithstanding any
revocation hereof or the cancellation of any note or other instrument evidencing any Obligation,
and each Guarantor shall be and remain liable to the Agent and/or the Lenders for the amount so
repaid or recovered to the same extent as if such amount had never originally been received by such
Person(s).



          (b) Agent shall not be required to marshal any assets in favor of any Guarantor, or against or
in payment of Obligations.




          (c) No Guarantor shall be entitled to claim against any present or future security held by
Agent from any Person for Obligations in priority to or equally with any claim of Agent, or assert
any claim for any liability of any Loan Party to any Guarantor in priority to or equally with
claims of Agent for Obligations, and no Guarantor shall be entitled to compete with Agent with
respect to, or to advance any equal or prior claim to any security held by Agent for Obligations.




          (d) If any Loan Party makes any payment to Agent, which payment is wholly or partly
subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be
repaid to any Person under any federal or provincial statute or at common law or under equitable
principles, then to the extent of such payment, the Obligation intended to be paid shall be revived
and continued in full force and effect as if the payment had not been made, and the resulting
revived Obligation shall continue to be guaranteed, uninterrupted, by each Guarantor hereunder.




          (e) All present and future monies payable by any Loan Party to any Guarantor, whether arising
out of a right of subrogation or otherwise, are assigned to Agent for its benefit and for the
ratable benefit of the Lenders as security for such Guarantor’s liability to Agent and the Lenders
hereunder and are postponed and subordinated to Agent’s prior right to payment in full of
Obligations. Except to the extent prohibited otherwise by this Agreement, all monies received by
any Guarantor from any Loan Party shall be held by such Guarantor as agent and trustee for Agent.
This assignment, postponement and subordination shall only terminate when the Obligations are paid
in full in cash and this Agreement is irrevocably terminated.




          (f) Each Loan Party acknowledges this assignment, postponement and subordination and, except
as otherwise set forth herein, agrees to make no payments to any Guarantor without the prior
written consent of Agent. Each Loan Party agrees to give full effect to the provisions hereof.




     8.11. Upon the occurrence and during the continuance of any Event of Default, the Agent may
and upon written request of the Requisite Lenders shall, without notice to or demand upon any Loan
Party or any other Person, declare any obligations of such Guarantor hereunder immediately due and
payable, and shall be entitled to enforce the obligations of each Guarantor. Upon such declaration
by the Agent, the Agent and the Lenders are hereby authorized at any time and from time to time to
set off and apply any and all deposits (general or special, time or



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demand, provisional or final)
at any time held and other indebtedness at any time owing by the Agent or the Lenders to or for the
credit or the account of any Guarantor against any and all of the obligations of each Guarantor now
or hereafter existing hereunder, whether or not the Agent or the Lenders shall have made any demand
hereunder against any other Loan Party and although such obligations may be contingent and
unmatured. The rights of the Agent and the Lenders hereunder are in addition to other rights and
remedies (including other rights of set-off) which the Agent and the Lenders may have. Upon such
declaration by the Agent, with respect to any claims (other than those claims referred to in the
immediately preceding paragraph) of any Guarantor against any Loan Party (the “Claims”), the Agent
shall have the full right on the part of the Agent in its own name or in the name of such Guarantor
to collect and enforce such Claims by legal action, proof of debt in bankruptcy or other
liquidation proceedings, vote in any proceeding for the arrangement of debts at any time proposed,
or otherwise, the Agent and each of its officers being hereby irrevocably constituted
attorneys-in-fact for each Guarantor for the purpose of such enforcement and for the purpose of
endorsing in the name of each Guarantor any instrument for the payment of money. Each Guarantor
will receive as trustee for the Agent and will pay to the Agent forthwith upon receipt thereof any
amounts which such Guarantor may receive from any Loan Party on account of the Claims. Each
Guarantor agrees that at no time hereafter will any of the Claims be represented by any notes,
other negotiable instruments or writings, except and in such event they shall either be made
payable to the Agent, or if payable to
any Guarantor, shall forthwith be endorsed by such Guarantor to the Agent. Each Guarantor
agrees that no payment on account of the Claims or any security interest therein shall be created,
received, accepted or retained during the continuance of any Event of Default nor shall any
financing statement be filed with respect thereto by any Guarantor.



     8.12. Any acknowledgment or new promise, whether by payment of principal or interest or
otherwise and whether by any Loan Party or others with respect to any of the Obligations shall, if
the statute of limitations in favor of any Guarantor against the Agent or the Lenders shall have
commenced to run, toll the running of such statute of limitations and, if the period of such
statute of limitations shall have expired, prevent the operation of such statute of limitations.



     8.13. All amounts due, owing and unpaid from time to time by any Guarantor hereunder shall
bear interest at the interest rate per annum then chargeable with respect to Base Rate Loans
constituting Revolving Advances (without duplication of interest on the underlying Obligation).



     8.14. For purposes of the Interest Act (Canada), where in this Guaranty a rate of interest is
to be calculated on the basis of a year of 360 or 365 days, the yearly rate of interest to which
the rate is equivalent is the rate multiplied by the number of days in the year for which the
calculation is made and divided by 360 or 365, as applicable.



     8.15. Without limiting any other rights in this Agreement, if for the purposes of obtaining
judgment in any court in any jurisdiction with respect to this Guaranty or any other Loan Document
it becomes necessary to convert into the currency of such jurisdiction (herein called the “Judgment
Currency”) any amount due hereunder in any currency other than the Judgment Currency, then
conversion shall be made at the rate of exchange prevailing on the Business Day before the day on
which judgment is given. For this purpose, “rate of exchange”



88









 







means the rate at which Agent would,
on the relevant date at or about 12:00 noon (New York time), be prepared to sell a similar amount
of such currency in New York, New York against the Judgment Currency. In the event that there is a
change in the rate of exchange prevailing between the Business Day before the day on which the
judgment is given and the date of payment of the amount due, Guarantor will, on the date of
payment, pay such additional amounts (if any) as may be necessary to ensure that the amount paid on
such date is the amount in the Judgment Currency which when converted at the rate of exchange
prevailing on the date of payment is the amount then due under this Guaranty or any other Loan
Document in such other currency. Any additional amount due from Guarantor under this Section 8.15
will be due as a separate debt and shall not be affected by judgment being obtained for any other
sums due under or in respect of this Agreement or any of the other Loan Documents.



     8.16. Each Guarantor acknowledges receipt of a copy of each of this Agreement and the other
Loan Documents. Each Guarantor has made an independent investigation of the Loan Parties and of
the financial condition of the Loan Parties. Neither Agent nor any Lender has made and neither
Agent nor any Lender does make any representations or warranties as to the income, expense,
operation, finances or any other matter or thing affecting any Loan Party nor has Agent or any
Lender made any representations or warranties as to the amount or nature of the Obligations of any
Loan Party to which this Section 8 applies as specifically herein set forth,
nor has Agent or any Lender or any officer, agent or employee of Agent or any Lender or any
representative thereof, made any other oral representations, agreements or commitments of any kind
or nature, and each Guarantor hereby expressly acknowledges that no such representations or
warranties have been made and such Guarantor expressly disclaims reliance on any such
representations or warranties.



     8.17. The provisions of this Section 8 shall remain in effect until the indefeasible payment
in full in cash of all Obligations and irrevocable termination of this Agreement. Payments
received from Guarantors pursuant to this Section 8 shall be applied in accordance with Section 7.7
of this Agreement.



SECTION 8A. BORROWING AGENCY.




     8A.1. Borrowing Agency Provisions.



          (a) Each Borrower hereby irrevocably designates Borrowing Agent to be its attorney and agent
and in such capacity to borrow, sign and endorse notes, and execute and deliver all instruments,
documents, writings and further assurances now or hereafter required hereunder, on behalf of such
Borrower or Borrowers, and hereby authorizes Agent to pay over or credit all loan proceeds
hereunder in accordance with the request of Borrowing Agent.




          (b) The handling of this credit facility as a co-borrowing facility with a Borrowing Agent in
the manner set forth in this Agreement is solely as an accommodation to Borrowers and at their
request. None of Agent, any Issuing Lender or any Lender shall incur liability to Borrowers as a
result thereof. To induce Agent and the Lenders to do so and in consideration thereof, each
Borrower hereby indemnifies Agent, each Issuer and each Lender and holds Agent, each Issuer and
each Lender harmless from and against any and all liabilities, expenses, losses, damages and claims
of damage or injury asserted against Agent, any Issuer or

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any Lender by any Person arising from or
incurred by reason of the handling of the financing arrangements of Borrowers as provided herein,
reliance by Agent or any Lender on any request or instruction from Borrowing Agent or any other
action taken by Agent or any Lender with respect to this Section 8A.1 except due to willful
misconduct or gross (not mere) negligence by the indemnified party.




          (c) All Obligations shall be joint and several, and each Borrower shall make payment upon the
maturity of the Obligations by acceleration or otherwise, and such obligation and liability on the
part of each Borrower shall in no way be affected by any extensions, renewals and forbearance
granted by Agent or any Lender to any Loan Party, failure of Agent or any Lender to give any
Borrower notice of borrowing or any other notice, any failure of Agent or any Lender to pursue or
preserve its rights against any Loan Party, the release by Agent or any Lender of any Collateral
now or thereafter acquired from any Loan Party, and such agreement by each Loan Party to pay upon
any notice issued pursuant thereto is unconditional and unaffected by prior recourse by Agent or
any Lender to the other Loan Parties or any Collateral for such Loan Party’s Obligations or the
lack thereof.




     8A.2. Waiver of Subrogation. Each Loan Party expressly waives any and all rights of
subrogation, reimbursement, indemnity, exoneration, contribution of any other claim which such Loan
Party may now or hereafter have against the other Loan Parties or other Person directly or
contingently liable for the Obligations hereunder, or against or with respect to the other Loan
Parties’ property (including, without limitation, any property which is Collateral for the
Obligations), arising from the existence or performance of this Agreement, until termination of
this Agreement and repayment in full of the Obligations.



SECTION 9. AGENT




     9.1. Agent.



          (A) Appointment. Each Lender hereto and, upon obtaining an interest in any Loan, any participant,
transferee or other assignee of any Lender irrevocably appoints, designates and authorizes GMAC CF
as Agent to take such actions or refrain from taking such action as its agent on its behalf and to
exercise such powers hereunder and under the other Loan Documents as are delegated by the terms
hereof and thereof, together with such powers as are reasonably incidental thereto. Neither the
Agent nor any of its directors, officers, employees or agents shall be liable for any action so
taken. The provisions of this subsection 9.1 are solely for the benefit of Agent and Lenders and
no Loan Party shall have any rights as a third party beneficiary of any of the provisions hereof.
In performing its functions and duties under this Agreement and the other Loan Documents, Agent
shall act solely as agent of Lenders and does not assume and shall not be deemed to have assumed
any obligation toward or relationship of agency or trust with or for any Loan Party. Agent may
perform any of its duties hereunder, or under the Loan Documents, by or through its agents or
employees.




          (B) Nature of Duties. Agent shall have no duties, obligations or responsibilities except those
expressly set forth in this Agreement or in the Loan Documents. The duties of Agent shall be
mechanical and administrative in nature. Agent shall not have by reason of this Agreement a
fiduciary, trust or agency relationship with or in respect of any




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Lender or any Loan Party.
Nothing in this Agreement or any of the Loan Documents, express or implied, is intended to or shall
be construed to impose upon Agent any obligations in respect of this Agreement or any of the Loan
Documents except as expressly set forth herein or therein. Each Lender shall make its own
appraisal of the credit worthiness of each Loan Party, and shall have independently taken whatever
steps it considers necessary to evaluate the financial condition and affairs of Loan Parties, and
Agent shall have no duty or responsibility, either initially or on a continuing basis, to provide
any Lender with any credit or other information with respect thereto (other than as expressly
required herein), whether coming into its possession before the Closing Date or at any time or
times thereafter. If Agent seeks the consent or approval of any Lenders to the taking or
refraining from taking any action hereunder, then Agent shall send notice thereof to each Lender.
Agent shall promptly notify each Lender any time that the Requisite Lenders have instructed Agent
to act or refrain from acting pursuant hereto.




          (C) Rights, Exculpation, Etc. Neither Agent nor any of its officers, directors, employees or agents shall be liable to any
Lender for any action taken or omitted by them hereunder or under any of the Loan Documents, or in
connection herewith or therewith, except that Agent shall be liable to the extent of its own gross
negligence or willful misconduct as determined by a court of competent jurisdiction. Agent shall
not be liable for any apportionment or distribution of payments made by it in good faith and if any
such apportionment or distribution is subsequently determined to have been made in error, the sole
recourse of any Lender to whom payment was due but not made, shall be to recover from other Lenders
any payment in excess of the amount to which they are determined to be entitled (and such other
Lenders hereby agree to return to such Lender any such erroneous payments received by them).
Neither Agent nor any of its agents or representatives shall be responsible to any Lender for any
recitals, statements, representations or warranties herein or for the execution, effectiveness,
genuineness, validity, enforceability, collectibility, or sufficiency of this Agreement or any of
the Loan Documents or the transactions contemplated thereby, or for the financial condition of any
Loan Party. Agent shall not be required to make any inquiry concerning either the performance or
observance of any of the terms, provisions or conditions of this Agreement or any of the Loan
Documents or the financial condition of any Loan Party, or the existence or possible existence of
any Default or Event of Default. Agent may at any time request instructions from Lenders with
respect to any actions or approvals which by the terms of this Agreement or of any of the Loan
Documents Agent is permitted or required to take or to grant, and if such instructions are promptly
requested, Agent shall be absolutely entitled to refrain from taking any action or to withhold any
approval and shall not be under any liability whatsoever to any Person for refraining from any
action or withholding any approval under any of the Loan Documents until it shall have received
such instructions from Requisite Lenders or all or such other portion of the Lenders as shall be
prescribed by this Agreement. Without limiting the foregoing, no Lender shall have any right of
action whatsoever against Agent as a result of Agent acting or refraining from acting under this
Agreement or any of the other Loan Documents in accordance with the instructions of Requisite
Lenders in the absence of an express requirement for a greater percentage of Lender approval
hereunder for such action.




          (D) Reliance. Agent shall be under no duty to examine, inquire into, or pass upon the validity,
effectiveness or genuineness of this Agreement, any other Loan Document, or any instrument,
document or communication furnished pursuant hereto or in connection herewith. Agent shall be
entitled to rely, and shall be fully protected in relying, upon any

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written or oral notices,
statements, certificates, orders or other documents or any telephone message or other communication
(including any writing, fax, telecopy or telegram) believed by it in good faith to be genuine and
correct and to have been signed, sent or made by the proper Person, and with respect to all matters
pertaining to this Agreement or any of the Loan Documents and its duties hereunder or thereunder.
Agent shall be entitled to rely upon the advice of legal counsel, independent accountants, and
other experts selected by Agent in its sole discretion.




          (E) Indemnification. Lenders will reimburse and indemnify Agent for and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses
(including, without limitation, attorneys’ fees and expenses), advances or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by, or asserted against Agent in any
way relating to or arising out of this Agreement or any of the Loan Documents or any action taken
or omitted
by Agent under this Agreement or any of the Loan Documents, in proportion to each Lender’s Pro Rata
Share, but only to the extent that any of the foregoing is not promptly reimbursed by Loan Parties;
provided, however, no Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses, advances or disbursements
resulting from Agent’s gross negligence or willful misconduct as determined by a final
non-appealable judgment by a court of competent jurisdiction. If any indemnity furnished to Agent
for any purpose shall, in the opinion of Agent, be insufficient or become impaired, Agent may call
for additional indemnity and cease, or not commence, to do the acts indemnified against, even if so
directed by Lenders or Requisite Lenders, until such additional indemnity is furnished. The
obligations of Lenders under this subsection 9.1(E) shall survive the payment in full of the
Obligations and the termination of this Agreement.




          (F) GMAC CF Individually. With respect to its Commitments and the Loans made by it, GMAC CF shall
have and may exercise the same rights and powers hereunder and is subject to the same obligations
and liabilities as and to the extent set forth herein for any other Lender. The terms “Lenders” or
“Requisite Lenders” or any similar terms shall, unless the context clearly otherwise indicates,
include GMAC CF in its individual capacity as a Lender or one of the Requisite Lenders. GMAC CF,
either directly or through strategic affiliations, may lend money to, acquire equity or other
ownership interests in, provide advisory services to and generally engage in any kind of banking,
trust or other business with any Loan Party as if it were not acting as Agent pursuant hereto and
without any duty to account therefor to Lenders. GMAC CF, either directly or through strategic
affiliations, may accept fees and other consideration from any Loan Party for services in
connection with this Agreement or otherwise without having to account for the same to Lenders.




          (G) Successor Agent.




               (1) Resignation. Agent may resign from the performance of all its agency functions and
duties hereunder at any time by giving at least thirty (30) Business Days’ prior written notice to
Borrowing Agent and the Lenders. Such resignation shall take effect upon the acceptance by a
successor Agent of appointment as provided below.



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               (2) Appointment of Successor. Upon any such notice of resignation pursuant to subsection
9.1(G)(1) above, Requisite Lenders shall appoint a successor Agent which, unless an Event of
Default has occurred and is continuing, shall be reasonably acceptable to Borrowing Agent. If a
successor Agent shall not have been so appointed within said thirty (30) Business Day period, the
retiring Agent, upon notice to Borrowing Agent, shall then appoint a successor Agent who shall
serve as Agent until such time, if any, as Requisite Lenders appoint a successor Agent as provided
above.



               (3) Successor Agent. Upon the acceptance of any appointment as Agent under the Loan
Documents by a successor Agent, such successor Agent shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent
shall be discharged from its duties and obligations under the Loan Documents. After any retiring
Agent’s resignation as Agent, the provisions of this Section 9 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent.



          (H) Collateral Matters.




               (1) Release of Collateral. Lenders hereby irrevocably authorize Agent, at its option and
in its discretion, to release any Lien granted to or held by Agent upon any Collateral (a) upon
termination of the Commitments and upon payment and satisfaction of all Obligations (other than
contingent indemnification obligations to the extent no claims giving rise thereto have been
asserted); or (b) constituting property being sold or disposed of if a Loan Party certifies to
Agent that the sale or disposition is made in compliance with the provisions of this Agreement (and
Agent may rely in good faith conclusively on any such certificate, without further inquiry). In
addition, with the consent of Requisite Lenders, Agent may release Liens granted to or held by
Agent upon any Collateral having a book value of not greater than ten percent (10%) of the total
book value of all Collateral, as determined by Agent, either in a single transaction or in a series
of related transactions; provided, however, in no event will Agent, acting under the authority
granted to it pursuant to this sentence, release during any calendar year Liens granted to or held
by Agent upon any Collateral having a total book value in excess of twenty percent (20%) of the
total book value of all Collateral, as determined by Agent.



               (2) Confirmation of Authority; Execution of Releases. Without in any manner limiting
Agent’s authority to act without any specific or further authorization or consent by Lenders (as
set forth in subsection 9.1(H)(1) above), each Lender agrees to confirm in writing, upon request by
Agent or Borrowing Agent, the authority to release any Collateral conferred upon Agent under
clauses (a) and (b) of subsection 9.1(H)(1). To the extent Agent agrees to release any Lien
granted to or held by Agent as authorized under subsection 9.1(H)(1), (a) Agent is hereby
irrevocably authorized by Lenders to, execute such documents as may be necessary to evidence the
release of the Liens granted to Agent, for the benefit of Agent and Lenders, upon such Collateral;
provided, however, that Agent shall not be required to execute any such document on terms which, in
Agent’s opinion, would expose Agent to liability or create upon Agent any obligation or entail any
consequence other than the release of such Liens without recourse or warranty, and (b) Loan Parties
shall provide at least ten (10) Business Days prior written notice of any request for any document
evidencing such release of the Liens and Loan Parties agree that any such release shall not in any
manner discharge, affect or impair the Obligations or any Liens granted to Agent on behalf of Agent
and Lenders upon (or obligations



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of any Loan Party, in respect of) all interests retained by any
Loan Party, including, without limitation, the proceeds of any sale, all of which shall continue to
constitute part of the property covered by this Agreement or the Loan Documents.



               (3) Absence of Duty. Agent shall have no obligation whatsoever to any Lender or any
other
Person to assure that the property covered by this Agreement or the Loan Documents exists or is
owned by any Loan Party or is cared for, protected or insured or has been encumbered or that the
Liens granted to Agent on behalf of Agent and Lenders herein or pursuant hereto have been properly
or sufficiently or lawfully created, perfected, protected or enforced or are entitled to any
particular priority, or to exercise at all or in any particular manner or under any duty of care,
disclosure or
fidelity, or to continue exercising, any of the rights, authorities and powers granted or available
to Agent in this Agreement or in any of the Loan Documents, it being understood and agreed that in
respect of the property covered by this Agreement or the Loan Documents or any act, omission or
event related thereto, Agent may act in any manner it may deem appropriate, in its discretion,
given Agent’s own interest in property covered by this Agreement or the Loan Documents as one of
the Lenders and that Agent shall have no duty or liability whatsoever to any of the other Lenders;
provided, however, that Agent shall exercise the same care which it would in dealing with loans for
its own account.



          (I) Agency for Perfection. Agent and each Lender hereby appoint each other Lender as agent for the
purpose of perfecting Agent’s security interest in assets which, in accordance with the Uniform
Commercial Code in any applicable jurisdiction, can be perfected by possession or Control. Should
any Lender (other than Agent) obtain possession of any such assets, such Lender shall notify Agent
thereof, and, promptly upon Agent’s request therefor, shall deliver such assets to Agent or in
accordance with Agent’s instructions. The Agent may file such proofs of claim or documents as may
be necessary or advisable in order to have the claims of the Agent and the Lenders (including any
claim for the reasonable compensation, expenses, disbursements and advances of the Agent and the
Lenders, their respective agents, financial advisors and counsel), allowed in any judicial
proceedings relative to any Loan Party, or any of their respective creditors or property, and shall
be entitled and empowered to collect, receive and distribute any monies, securities or other
property payable or deliverable on any such claims. Any custodian in any judicial proceedings
relative to any Loan Party is hereby authorized by each Lender to make payments to the Agent and,
in the event that the Agent shall consent to the making of such payments directly to the Lenders,
to pay to the Agent any amount due for the reasonable compensation, expenses, disbursements and
advances of the Agent, its agents, financial advisors and counsel, and any other amounts due the
Agent. Nothing contained in this Agreement or the other Loan Documents shall be deemed to
authorize the Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan
of reorganization, arrangement, adjustment or composition affecting the Loans, or the rights of any
holder thereof, or to authorize the Agent to vote in respect of the claim of any Lender in any such
proceeding, except as specifically permitted herein.




          (J) Exercise of Remedies. Each Lender agrees that it will not have any right individually to
enforce or seek to enforce this Agreement or any Loan Document or to realize upon any collateral
security for the Obligations, unless instructed to do so by Agent, it being understood and agreed
that such rights and remedies may be exercised only by Agent.




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     9.2. Notice of Default. Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default except with respect to defaults in the payment of
principal, interest and fees required to be paid to Agent for the account of Lenders, unless Agent
shall have received written notice from a Lender or Borrowing Agent referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a “notice of default”.
Agent will notify each Lender of its receipt of any such notice.



     9.3. Action by Agent. Agent shall take such action with respect to any Default or Event of Default as may be
requested by Requisite Lenders in accordance with Section 7. Unless and until Agent has received
any such request, Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to any Default or Event of Default as it shall deem advisable or
in the best interests of Lenders.



     9.4. Amendments, Waivers and Consents.



          (A) Percentage of Lenders Required. Except as otherwise provided herein or in any of the other
Loan Documents, no amendment, modification, termination or waiver of any provision of this
Agreement or any other Loan Document, or consent to any departure by any Loan Party therefrom,
shall in any event be effective unless the same shall be in writing and signed by Requisite Lenders
(or, Agent, if expressly set forth herein or in any of the other Loan Documents) and the applicable
Loan Party; provided however, no amendment, modification, termination, waiver or consent shall be
effective, unless in writing and signed by all Lenders, to do any of the following: (1) increase
any of the Commitments; (2) reduce the principal of or the rate of interest on any Loan or reduce
the fees payable with respect to any Loan or Lender Letter of Credit other than in accordance with
the terms of this Agreement; (3) extend the Termination Date or the scheduled due date for all or
any portion of principal of the Loans or any interest or fees due hereunder; (4) amend the
definition of the term “Requisite Lenders” or the percentage of Lenders which shall be required for
Lenders to take any action hereunder; (5) amend or waive this Section 9.4 or the definitions of the
terms used in this Section 9.4 insofar as the definitions affect the substance of this Section 9.4;
(6) increase by more than five percent (5%) each of the percentages contained in the definition of
Borrowing Base; (7) release Collateral in excess of Collateral having a value of $1,000,000 in any
Fiscal Year (except if the sale, disposition or release of such Collateral is permitted under
Section 5.2(E), Section 9.1(H)(1) or under any other Loan Document); (8) amend Section 5.3(F) or
the definition of the term Undrawn Availability; or (9)consent to the assignment, delegation or
other transfer by any Loan Party of any of its rights and obligations under any Loan Document;
provided, further, that no amendment, modification, termination, waiver or consent affecting the
rights or duties of Agent under this Section 9 or under any Loan Document shall in any event be
effective, unless in writing and signed by Agent, in addition to the Lenders required to take such
action. Any amendment, modification, termination, waiver or consent effected in accordance with
this Section 9 shall be binding upon each Lender or future Lender and, if signed by a Loan Party,
on such Loan Party.




          (B) Specific Purpose or Intent. Each amendment, modification, termination, waiver or consent shall
be effective only in the specific instance and for the specific purpose for which it was given. No
amendment, modification, termination, waiver or consent shall be required for Agent to take
additional Collateral.




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          (C) Failure to Give Consent; Replacement of Non-Consenting Lender. In the event Agent requests the
consent of a Lender and does not receive a written consent or denial thereof within ten (10)
Business Days after such Lender’s receipt of such request, then such Lender will be deemed to have
denied the giving of such consent. If, in connection with any proposed amendment, modification,
termination or waiver of any of the provisions of this
Agreement requiring the consent or approval of all Lenders under this subsection 9.4, the consent
of Requisite Lenders is obtained but the consent of one or more other Lenders whose consent is
required is not obtained, then Borrowers shall have the right, so long as all such non consenting
Lenders are either replaced or prepaid as described in clauses (1) or (2) below, to either (1)
replace the non consenting Lenders with one or more Replacement Lenders pursuant to subsection
2.11(A), as if such Lender were an Affected Lender thereunder, but only so long as each such
Replacement Lender consents to the proposed amendment, modification, termination or waiver, or (2)
prepay in full the Obligations of the non-consenting Lenders and terminate the non consenting
Lenders’ Commitments pursuant to subsection 2.11(B), as if such Lender were an Affected Lender
thereunder.




               Notwithstanding anything in this subsection 9.4, Agent and Loan Parties, without the consent
of either Requisite Lenders or all Lenders, may execute amendments to this Agreement and the Loan
Documents, which consist solely of the making of typographical corrections.



     9.5. Assignments and Participations in Loans.



          (A) Assignments. Each Lender may assign its rights and delegate its obligations under this
Agreement to an Eligible Assignee; provided, however, (1) such Lender (other than GMAC CF) shall
first obtain the written consent of Agent, and, provided that no Event of Default shall then exist
and be continuing, Borrowing Agent, neither of which shall not be unreasonably withheld, (2) the
amount of Commitments and Loans of the assigning Lender being assigned shall in no event be less
than the lesser of (a) $5,000,000 or (b) the entire amount of the Commitments and Loans of such
assigning Lender and (3)(a) each such assignment shall be of a pro rata portion of all such
assigning Lender’s Loans and Commitments hereunder, and (b) the parties to such assignment shall
execute and deliver to Agent for acceptance and recording a Assignment and Acceptance Agreement
together with (i) a processing and recording fee of $3,500 payable by the assigning Lender to Agent
and (ii) the Note originally delivered to the assigning Lender. The administrative fee referred to
in clause (3) of the preceding sentence shall not apply to an assignment of a security interest in
all or any portion of a Lender’s rights under this Agreement or the other Loan Documents, as
described in clause (1) of subsection 9.5(D) below. Upon receipt of all of the foregoing, Agent
shall notify Borrowing Agent of such assignment and the Borrowers shall comply with its obligations
under the last sentence of subsection 2.1(D). In the case of an assignment authorized under this
subsection 9.5, the assignee shall be considered to be a “Lender” hereunder and Loan Parties hereby
acknowledge and agree that any assignment will give rise to a direct obligation of Loan Parties to
the assignee. The assigning Lender shall be relieved of its obligations to make Loans hereunder
with respect to the assigned portion of its Commitment. Notwithstanding any provision to the
contrary, any Lender (an “Assigning Lender”) may assign to one or more special purpose funding
vehicles (each, an “SPV”) all or any portion of its funded Loans (without the corresponding
Commitment), without the consent of any Person or the payment of a fee, by execution of a

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written
assignment agreement in a form agreed to by such Assigning Lender and such SPV, and may grant any
such SPV the option, in such SPV’s sole discretion, to provide Borrowers all or any part of any
Loans that such Assigning Lender would otherwise be obligated to make pursuant to this Agreement.
Such SPV shall have all the rights which a Lender making or holding such Loans would have under
this Agreement,
but no obligations. The Assigning Lender shall remain liable for all its original obligations
under this Agreement, including its Commitment (although the unused portion thereof shall be
reduced by the principal amount of any Loans held by an SPV). Notwithstanding such assignment,
Agent and Borrowers may deliver notices to the Assigning Lender (as agent for the SPV) and not
separately to the SPV unless the Agent and Borrowers are requested in writing by the SPV (or its
agent) to deliver such notices separately to it. Borrowers shall, at the request of any Assigning
Lender, execute and deliver to such Person as such Assigning Lender may designate, a Note in the
amount of such Assigning Lender’s original Note, to evidence the Loans of such Assigning Lender and
related SPV.




          (B) Participations. Each Lender may sell participations in all or any part of any Loans or
Commitments made by it to another Person; provided, however, such Lender shall first obtain the
prior written consent of Agent, which consent shall not be unreasonably withheld. All amounts
payable by Loan Parties hereunder shall be determined as if that Lender had not sold such
participation and the holder of any such participation shall not be entitled to require such Lender
to take or omit to take any action hereunder except action directly effecting (1) any reduction in
the principal amount or an interest rate on any Loan in which such holder participates; (2) any
extension of the Termination Date or the date fixed for any payment of interest or principal (other
than any mandatory prepayment) payable with respect to any Loan in which such holder participates;
and (3) any release of substantially all of the Collateral. Loan Parties hereby acknowledge and
agree that the participant under each participation shall for purposes of subsections 2.8, 2.9,
2.10, 9.6 and 10.2 be considered to be a “Lender”.




          (C) No Relief of Obligations; Cooperation; Ability to Make LIBOR Loans. Except as otherwise
provided in subsection 9.5(A) no Lender shall, as between Borrower and that Lender, be relieved of
any of its obligations hereunder as a result of any sale, assignment, transfer or negotiation of,
or granting of participation in, all or any part of the Loans or other Obligations owed to such
Lender. Each Lender may furnish any information concerning Loan Parties in the possession of that
Lender from time to time to Eligible Assignees and participants (including prospective assignees
and participants). Loan Parties agree that they will use their reasonable efforts to assist and
cooperate with Agent and any Lender in any manner reasonably requested by Agent or such Lender to
effect the sale of a participation or an assignment described above, including without limitation
assistance in the preparation of appropriate disclosure documents or placement memoranda.
Notwithstanding anything contained in this Agreement to the contrary, so long as the Requisite
Lenders shall remain capable of making LIBOR Loans, no Person shall become a Lender hereunder
unless such Person shall also be capable of making LIBOR Loans.




          (D) Security Interests; Assignment to Affiliates. Notwithstanding any other provision set forth in
this Agreement, any Lender may at any time following written notice to Agent (1) pledge the
Obligations held by it or create a security interest in all or any portion of its rights under this
Agreement or the other Loan Documents in favor of any Person; provided,

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however (a) no such pledge
or grant of security interest to any Person shall release such Lender from its obligations
hereunder or under any other Loan Document and (b) the acquisition of title to such Lender’s
Obligations pursuant to any foreclosure or other exercise of remedies by such Person shall be
subject to the provisions of this
Agreement and the other Loan Documents in all respects including, without limitation, any consent
required by subsection 9.5; and (2) subject to complying with the provisions of subsection 9.5(A),
assign all or any portion of its funded loans to an Eligible Assignee which is a Subsidiary of such
Lender or its parent company, to one or more other Lenders, or to a Related Fund.





          (E) Recording of Assignments. Agent shall maintain at its office in New York, New York a copy of
each Assignment and Acceptance Agreement delivered to it and a register for the recordation of the
names and addresses of Lenders, and the commitments of, and principal amount of the Loans owing to
each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the
Register shall be presumptive evidence of the amounts due and owing to Lender in the absence of
manifest error. Loan Parties, Agent and each Lender may treat each Person whose name is recorded
in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by Borrowing Agent and any Lender, at
any reasonable time upon reasonable prior notice.




               At the request of Agent from time to time both before and after the Closing Date, the Loan
Parties will assist Agent in the syndication of the credit facility provided pursuant to this
Agreement and the other Loan Documents. Such assistance shall include, but not be limited to (i)
prompt assistance in the preparation of an information memorandum and the verification of the
completeness and accuracy of the information and the reasonableness of the projections contained
therein, (ii) preparation of offering materials and financial projections by Loan Parties and their
advisors, (iii) providing Agent with all information reasonably deemed necessary by Agent to
successfully complete the syndication, (iv) confirmation as to the accuracy and completeness of
such offering materials and information and confirmation that management’s projections are based on
assumptions believed by the Loan Parties to be reasonable at the time made, and (v) participation
of the Loan Parties’ senior management in meetings and conference calls with potential lenders at
such times and places as Agent may reasonably request.



     9.6. Set Off and Sharing of Payments. In addition to any rights now or hereafter granted
under applicable law and not by way of limitation of any such rights, upon the occurrence and
during the continuance of any Event of Default, each Lender is hereby authorized by each Loan Party
at any time or from time to time, with reasonably prompt subsequent notice to Borrowing Agent (any
prior or contemporaneous notice being hereby expressly waived) to set off and to appropriate and to
apply any and all (a) balances held by such Lender at any of its offices for the account of Loan
Parties (regardless of whether such balances are then due to Loan Parties), and (b) other property
at any time held or owing by such Lender to or for the credit or for the account of any Loan Party,
against and on account of any of the Obligations; except that no Lender shall exercise any such
right without the prior written consent of Agent. Any Lender exercising its right to set off shall
purchase for cash (and the other Lenders shall sell) interests in each of such other Lender’s Pro
Rata Share of the Obligations as would be necessary to cause all Lenders to share the amount so set
off with each other Lender in accordance with their



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respective Pro Rata Shares. Each Loan Party
agrees, to the fullest extent permitted by law, that any Lender may exercise its right to set off
with respect to amounts in excess of its Pro Rata Share of the Obligations and upon doing so shall
deliver
such amount so set off to Agent for the benefit of Agent and of all Lenders in accordance with
their Pro Rata Shares.



     9.7. Disbursement of Funds. Agent may, on behalf of Lenders, disburse funds to Borrowers
for Loans requested. Each Lender shall reimburse Agent on demand for all funds disbursed on its
behalf by Agent, or if Agent so requests, each Lender will remit to Agent its Pro Rata Share of any
Loan or Advance before Agent disburses same to Borrowers. If Agent elects to require that each
Lender make funds available to Agent prior to a disbursement by Agent to Borrower, Agent shall
advise each Lender by telephone, telex, fax or telecopy of the amount of such Lender’s Pro Rata
Share of the Loan requested by Borrowing Agent no later than 1:00 p.m. New York time on the Funding
Date applicable thereto, and each such Lender shall pay Agent such Lender’s Pro Rata Share of such
requested Loan, in same day funds, by wire transfer to Agent’s account on such Funding Date.



     9.8. Settlements, Payments and Information.



          (A) Revolving Advances and Payments; Fee Payments.




               (1) Fluctuation of Revolving Loan Balance. The Revolving Loan balance may fluctuate from
day to day through Agent’s disbursement of funds to, and receipt of funds from, Loan Parties. In
order to minimize the frequency of transfers of funds between Agent and each Lender notwithstanding
terms to the contrary set forth in Section 2 and subsection 9.7, Revolving Advances and repayments,
except as set forth in subsection 2.1(A), will be settled according to the procedures described in
this subsection 9.8. Notwithstanding these procedures, each Lender’s obligation to fund its portion
of any advances made by Agent to Borrowers will commence on the date such advances are made by
Agent. Such payments will be made by such Lender without set-off, counterclaim or reduction of any
kind.



               (2) Settlement Dates. Once each week for the Revolving Loan or more frequently
(including
daily), if Agent so elects (each such day being a “Settlement Date”), Agent will advise each Lender
by telephone, fax or telecopy of the amount of each such Lender’s Pro Rata Share of the Revolving
Loan. In the event payments are necessary to adjust the amount of such Lender’s required Pro Rata
Share of the Revolving Loan balance to such Lender’s actual Pro Rata Share of the Revolving Loan
balance as of any Settlement Date, the party from which such payment is due will pay the other, in
same day funds, by wire transfer to the other’s account not later than 3:00 p.m. New York time on
the Business Day following the Settlement Date.



               (3) Settlement Definitions. For purposes of this subsection 9.8(A), the following terms
and conditions will have the meanings indicated:



                    (a) “Daily Loan Balance” means an amount calculated as
of the end of each calendar day by
subtracting (i) the cumulative principal amount paid by Agent to a Lender on a Loan from the
Closing Date through and including such calendar day, from (ii) the cumulative principal amount on
a Loan advanced by such Lender to Agent on that Loan from the Closing Date through and including
such calendar day.



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                    (b) “Daily Interest Rate” means an amount calculated by
dividing the interest rate payable to
a Lender on a Loan (as set forth in subsection 2.2) as of each calendar day by three hundred sixty
(360).



                    (c) “Daily Interest Amount” means an amount calculated
by multiplying the Daily Loan Balance
of a Loan by the associated Daily Interest Rate on that Loan.



                    (d) “Interest Ratio” means a number calculated by
dividing the total amount of the interest on
a Loan received by Agent with respect to the immediately preceding by the total amount of interest
on that Loan due from Borrower during the immediately preceding month.



               (4) Settlement Payments. On the first Business Day of each month (“Interest
Settlement
Date”), Agent will advise each Lender by telephone, fax or telecopy of the amount of such Lender’s
share of interest and fees on each of the Loans as of the end of the last day of the immediately
preceding month. Provided that such Lender has made all payments required to be made by it under
this Agreement, Agent will pay to such Lender, by wire transfer to such Lender’s account (as
specified by such Lender on the signature page of this Agreement or the applicable Assignment and
Acceptance Agreement, as amended by such Lender from time to time after the date hereof or in the
applicable Assignment and Acceptance Agreement) not later than 3:00 p.m. New York time on the next
Business Day following the Interest Settlement Date, such Lender’s share of interest and fees on
each of the Loans. Such Lender’s share of interest on each Loan will be calculated for that Loan
by adding together the Daily Interest Amounts for each calendar day of the prior month for that
Loan and multiplying the total thereof by the Interest Ratio for that Loan. Such Lender’s share of
the unused line fee described in Section 2.3(A) shall be an amount equal to (a)(i) such Lender’s
average Revolving Loan Commitment during such month, less (ii) the sum of (x) such Lender’s average
Daily Loan Balance of the Revolving Loans, plus (y) such Lender’s Pro Rata Share of the average
daily aggregate amount of Letter of Credit Reserve, in each case for the preceding month,
multiplied by (b) the percentage required by Section 2.3(A). Such Lender’s share of all other fees
paid to Agent for the benefit of Lenders hereunder shall be paid and calculated based on such
Lender’s Commitment with respect to the Loans on which such fees are associated. To the extent
Agent does not receive the total amount of any fee owing by Borrowers under this Agreement, each
amount payable by Agent to a Lender under this subsection 9.8(A)(4) with respect to such fee shall
be reduced on a pro rata basis. Any funds disbursed or received by Agent pursuant to this
Agreement, including, without limitation, under Sections 9.7, 9.8(A)(1), and 9.9, prior to the
Settlement Date for such disbursement or payment shall be deemed advances or remittances by GMAC
CF, in its capacity as a Lender, for purposes of calculating interest and fees pursuant to this
subsection 9.8(A)(4).



          (B) Return of Payments.




               (1) Recovery after Non-Receipt of Expected Payment. If Agent pays an amount to a Lender
under this Agreement in the belief or expectation that a related payment has been or will be
received by Agent from any Loan Party and such related payment is not received by Agent, then Agent
will be entitled to recover such amount from such
Lender without set-off, counterclaim or deduction of any kind together with interest thereon, for
each day from



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and including the date such amount is made available by Agent to such Lender to but
excluding the date of repayment to Agent, at the greater of the Federal Funds Effective Rate and a
rate determined by Agent in accordance with banking industry rules on interbank compensation.



               (2) Recovery of Returned Payment. If Agent determines at any time that any amount
received
by Agent under this Agreement must be returned to any Loan Party or paid to any other Person
pursuant to any requirement of law, court order or otherwise, then, notwithstanding any other term
or condition of this Agreement, Agent will not be required to distribute any portion thereof to any
Lender. In addition, each Lender will repay to Agent on demand any portion of such amount that
Agent has distributed to such Lender, together with interest at such rate, if any, as Agent is
required to pay to any Loan Party or such other Person, without set-off, counterclaim or deduction
of any kind.



     9.9. Discretionary Advances. Notwithstanding anything contained herein to the contrary,
Agent may, in its sole discretion, for a period of not more than thirty (30) consecutive days make
Revolving Advances in an aggregate amount of not more than $2,500,000 in excess of the limitations
set forth in the Borrowing Base but not in excess of the Revolving Loan Commitment for the purpose
of preserving or protecting the Collateral or for incurring any costs associated with collection or
enforcing rights or remedies against the Collateral, or incurred in any action to enforce this
Agreement or any other Loan Document.



     9.10. Other Agents. The entities identified in the Recitals section of this Agreement as
the ‘Syndication Agent’ and ‘Documentation Agent’ shall not have any right, power, obligation,
liability, responsibility or duty under this Agreement (or any of the Loan Documents) other than
those applicable to all Lenders as such. Without limiting the foregoing, the entities so
identified as the ‘Syndication Agent’ and the ‘Documentation Agent’ shall not have or be deemed to
have any fiduciary relationship with any Lender or Borrower. Each Lender acknowledges that it has
not relied, and will not rely, on the entity so identified as the ‘Syndication Agent’ or the
‘Documentation Agent’ in deciding to enter into this Agreement and each of the Loan Documents to
which it is a party or in taking or not taking action hereunder or thereunder.”



SECTION 10. MISCELLANEOUS




     10.1. Expenses and Attorneys’ Fees. Whether or not any of the Transactions shall be
consummated, each Loan Party agrees to promptly pay all reasonable fees, costs and expenses of
Agent incurred in connection with any matters contemplated by or arising out of this Agreement or
the other Loan Documents including the following, and all such fees, costs and expenses shall be
part of the Obligations, payable on demand and secured by the Collateral: (a) reasonable fees,
costs and expenses incurred by Agent (including attorneys’ fees and expenses, the allocated costs
of Agent’s internal legal staff and fees of environmental consultants, accountants and other
professionals retained by Agent) incurred in connection with the examination, review, due diligence
investigation, documentation and closing of the financing arrangements evidenced by the Loan
Documents; (b) reasonable
fees, costs and expenses incurred by Agent (including attorneys’ fees and expenses, the allocated
reasonable costs of Agent’s internal legal staff and fees of environmental consultants, accountants
and other professionals retained by Agent) incurred in connection with the review, negotiation,
preparation, documentation, execution, syndication and administration of the Loan Documents, the
Loans, and any amendments,



101









 







waivers, consents, forbearances and other modifications relating thereto
or any subordination or intercreditor agreements, including reasonable documentation charges
assessed by Agent for amendments, waivers, consents and any other documentation prepared by Agent’s
internal legal staff; (c) reasonable fees, costs and expenses (including attorneys’ fees and
allocated costs of internal legal staff) incurred by Agent in creating, perfecting and maintaining
perfection of Liens in favor of Agent, on behalf of Agent and Lenders; (d) reasonable fees, costs
and expenses incurred by Agent in connection with forwarding to Borrowers the proceeds of Loans
including Agent’s or any Lenders’ standard wire transfer fee; (e) reasonable fees, costs, expenses
and bank charges, including bank charges for returned checks, incurred by Agent or any Lender in
establishing, maintaining and handling lock box accounts, Blocked Accounts or other accounts for
collection of the Collateral; (f) reasonable fees, costs, expenses (including attorneys’ fees and
allocated costs of internal legal staff) of Agent or any Lender and costs of settlement incurred in
collecting upon or enforcing rights against the Collateral or incurred in any action to enforce
this Agreement or the other Loan Documents or to collect any payments due from any Loan Party under
this Agreement or any other Loan Document or incurred in connection with any refinancing or
restructuring of the credit arrangements provided under this Agreement, whether in the nature of a
“workout” or in connection with any insolvency or bankruptcy proceedings or otherwise.



     10.2. Indemnity. In addition (and without duplication of) to the payment of expenses
pursuant to subsection 10.1, whether or not any of the Transactions shall be consummated, each Loan
Party agrees to indemnify, pay and hold Agent and each Lender, and the officers, directors,
employees, agents, consultants, auditors, persons engaged by Agent or any Lender, to evaluate or
monitor the Collateral, affiliates and attorneys of Agent, Lender and such holders (collectively
called the “Indemnities”) harmless from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs, expenses and disbursements of any
kind or nature whatsoever (including the reasonable fees and disbursements of counsel for such
Indemnities in connection with any investigative, administrative or judicial proceeding commenced
or threatened, whether or not such Indemnity shall be designated a party thereto) that may be
imposed on, incurred by, or asserted against that Indemnity, in any manner relating to or arising
out of this Agreement or the other Loan Documents, the consummation of the GMAC Transactions, the
statements contained in the commitment letters, if any, delivered by Agent or any Lender, Agent’s
and each Lender’s agreement to make the Loans hereunder, the use or intended use of the proceeds of
any of the Loans or the exercise of any right or remedy hereunder or under the other Loan Documents
(the “Indemnified Liabilities”); provided that no Loan Party shall have any obligation to an
Indemnity hereunder with respect to Indemnified Liabilities arising from the gross negligence or
willful misconduct of that Indemnity as determined by a final non-appealable judgment by a court of
competent jurisdiction.



     10.3. Notices. Unless otherwise specifically provided herein, all notices shall be in
writing addressed to the respective party as set forth below and may be personally served, faxed,
telecopied or sent by
overnight courier service or US mail and shall be deemed to have been given: (a) if delivered in
person, when delivered; (b) if delivered by fax or telecopy, on the date of transmission if
transmitted on a Business Day before 4:00 p.m. New York time or, if not, on the next succeeding
Business Day; (c) if delivered by overnight courier, two (2) days after delivery to such courier
properly addressed; or (d) if by U.S. Mail, four (4) Business Days after depositing in the US mail,
with postage prepaid and properly addressed.



102









 





	 	 	 
	If to any Loan Party:

	 	Rocky Brands, Inc.

39 East Canal Street

Nelsonville, Ohio 45764

Attn: James E. McDonald

          Chief Financial Officer

Fax/Telecopy No.: (740) 753-4024
	 
	 	 
	With a copy to:

	 	Porter, Wright, Morris & Arthur LLP

41 South High Street

Columbus, Ohio 43215

Attn: Timothy E. Grady, Esq.

Fax/Telecopy No.: (614) 227-2100
	 
	 	 
	If to Agent or to GMACCF:

	 	GMAC Commercial Finance LLC

1290 Avenue of the Americas, 3rd Floor

New York, New York 10104

Attn: Rocky Portfolio Manager

Fax/Telecopy No.: (212) 884-7692
	 
	 	 
	With copies to:

	 	GMAC Commercial Finance LLC

1290 Avenue of the Americas

New York, New York 10104

Attn: Legal Services/SFD

Fax/Telecopy No.: (212) 884-7693
	 
	 	 
	 

	 	Hahn & Hessen LLP

488 Madison Avenue

New York, New York 10022

Attn: Daniel J. Krauss, Esq.

Fax/Telecopy No.: (212) 478-7400






          If to any Lender: Its address indicated on the signature page hereto, in an Assignment and
Acceptance Agreement or in a notice to Agent and Borrowing Agent or to such other address as the
party addressed shall have previously designated by written notice to the serving party, given in
accordance with this subsection 10.3.



     10.4. Survival of Representations and Warranties and Certain Agreements. All agreements,
representations and warranties made herein shall survive the execution and delivery of this
Agreement and the making of the Loans hereunder. Notwithstanding anything in this Agreement or
implied by law to the contrary, the agreements of each Loan Party, Agent, and
Lenders set forth in subsections 9.1(E), 10.1, 10.2, 10.6, 10.11, 10.14, and 10.15 shall survive
the payment of the Loans and the termination of this Agreement.



     10.5. Indulgence Not Waiver. No failure or delay on the part of Agent, any Lender or any
holder of any Note in the exercise of any power, right or privilege hereunder or under any Note
shall impair such power, right or privilege or be construed to be a waiver of any default or



103









 







acquiescence therein, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other right, power or privilege.



     10.6. Marshaling; Payments Set Aside. Neither Agent nor any Lender shall be under any
obligation to marshal any assets in favor of any Loan Party or any other party or against or in
payment of any or all of the Obligations. To the extent that any Loan Party makes a payment or
payments to Agent and/or any Lender or Agent and/or any Lender enforces its security interests or
exercises its rights of setoff, and such payment or payments or the proceeds of such enforcement or
setoff or any part thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside and/or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then to the extent of such
recovery, the Obligations or part thereof originally intended to be satisfied, and all Liens,
rights and remedies therefor, shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or setoff had not occurred.



     10.7. Entire Agreement. This Agreement and the other Loan Documents embody the entire
agreement among the parties hereto and supersede all prior commitments, agreements,
representations, and understandings, whether written or oral, relating to the subject matter
hereof, and may not be contradicted or varied by evidence of prior, contemporaneous, or subsequent
oral agreements or discussions of the parties hereto.



     10.8. Severability. The invalidity, illegality or unenforceability in any jurisdiction of
any provision in or obligation under this Agreement or the other Loan Documents shall not affect or
impair the validity, legality or enforceability of the remaining provisions or obligations under
this Agreement, or the other Loan Documents.



     10.9. Lenders’ Obligations Several; Independent Nature of Lenders’ Rights. The obligation
of each Lender hereunder is several and not joint and neither Agent nor any Lender shall be
responsible for the obligation or Commitment of any other Lender hereunder. In the event that any
Lender at any time should fail to make a Loan as herein provided, the Lenders, or any of them, at
their sole option, may make the Loan that was to have been made by the Lender so failing to make
such Loan. Nothing contained in any Loan Document and no action taken by Agent or any Lender
pursuant hereto or thereto shall be deemed to constitute Lenders to be a partnership, an
association, a joint venture or any other kind of entity. The amounts payable at any time hereunder
to each Lender shall be a separate and independent debt.



     10.10. Headings. Section and subsection headings in this Agreement are included herein for convenience of
reference only and shall not constitute a part of this Agreement for any other purpose or be given
any substantive effect.



     10.11. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES.



104









 






     10.12. Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns, provided, however, no
Loan Party may assign its rights or obligations hereunder without the written consent of Lenders.



     10.13. No Fiduciary Relationship; No Duty; Limitation of Liabilities.



          (A) No Fiduciary Relationship. No provision in this Agreement or in any of the other Loan
Documents and no course of dealing between the parties shall be deemed to create any fiduciary duty
by Agent or any Lender to any Loan Party.




          (B) No Duty. All attorneys, accountants, appraisers, and other professional Persons and
consultants retained by Agent or any Lender shall have the right to act exclusively in the interest
of Agent or such Lender and shall have no duty of disclosure, duty of loyalty, duty of care, or
other duty or obligation of any type or nature whatsoever to any Loan Party or any of any Loan
Party’s shareholders or any other Person.




          (C) Limitation of Liabilities. Neither Agent nor any Lender, nor any affiliate, officer, director,
shareholder, employee, attorney, or agent of Agent or any Lender shall have any liability with
respect to, and each Loan Party hereby waives, releases, and agrees not to sue any of them upon,
any claim for any special, indirect, incidental, or consequential damages suffered or incurred by
any Loan Party in connection with, arising out of, or in any way related to, this Agreement or any
of the other Loan Documents, any of the GMAC Transactions or any of the other Transactions. Each
Loan Party hereby waives, releases, and agrees not to sue Agent or any Lender or any of Agent’s or
any Lender’s affiliates, officers, directors, employees, attorneys, or agents for punitive damages
in respect of any claim in connection with, arising out of, or in any way related to, this
Agreement or any of the other Loan Documents, any of the GMAC Transactions or any of the other
Transactions.




     10.14. CONSENT TO JURISDICTION. EACH LOAN PARTY HEREBY CONSENTS TO THE JURISDICTION OF ANY
STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF NEW YORK, STATE OF NEW YORK AND IRREVOCABLY
AGREES THAT, SUBJECT TO AGENT’S ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS SHALL BE LITIGATED IN SUCH
COURTS. EACH LOAN PARTY EXPRESSLY SUBMITS AND CONSENTS TO THE JURISDICTION OF THE AFORESAID COURTS
AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS. EACH LOAN PARTY HEREBY WAIVES PERSONAL SERVICE OF
ANY AND ALL PROCESS AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON BORROWING AGENT BY
CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO BORROWING AGENT, AT THE
ADDRESS SET FORTH IN THIS AGREEMENT AND SERVICE SO MADE SHALL BE COMPLETE TEN (10) DAYS AFTER THE
SAME HAS BEEN POSTED. EACH LOAN PARTY IN ANY EVENT WILL USE ALL COMMERCIALLY REASONABLE EFFORTS TO
PRODUCE IN ANY SUCH DISPUTE RESOLUTION PROCEEDING, AT THE TIME AND IN THE MANNER REQUESTED BY AGENT
OR ANY LENDER, ALL PERSONS, DOCUMENTS (WHETHER IN TANGIBLE, ELECTRONIC OR OTHER FORM) OR OTHER
THINGS UNDER ITS CONTROL AND RELATING TO THE DISPUTE.



105









 





     10.15. WAIVER OF JURY TRIAL. EACH LOAN PARTY, AGENT AND EACH LENDER HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS. EACH LOAN PARTY, AGENT AND EACH LENDER ACKNOWLEDGE THAT
THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS RELIED ON
THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THAT EACH WILL CONTINUE
TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH LOAN PARTY, AGENT AND EACH LENDER
WARRANT AND REPRESENT THAT EACH HAS HAD THE OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL
COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.



     10.16. Construction. Each Loan Party, Agent and each Lender each acknowledge that it has
had the benefit of legal counsel of its own choice and has been afforded an opportunity to review
this Agreement and the other Loan Documents with its legal counsel. This Agreement and the other
Loan Documents shall be construed as if jointly drafted by Loan Parties, Agent and each Lender.



     10.17. Counterparts; Effectiveness. This Agreement and any amendments, waivers, consents,
or supplements may be executed via telecopier or facsimile transmission in any number of
counterparts and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all of which counterparts together shall
constitute one and the same instrument. This Agreement shall become effective upon the execution of
a counterpart hereof by each of the parties hereto.



     10.18. Confidentiality. Agent and each Lender agree to exercise their best efforts to keep
confidential any non-public information delivered pursuant to the Loan Documents and identified as
such by Borrowing Agent and not to disclose such information to Persons other than to: its
respective affiliates, officers, directors and employees; or its potential assignees or
participants; or Persons employed
by or engaged by Agent, a Lender or a Lender’s assignees or participants including, without
limitation, attorneys, auditors, professional consultants, rating agencies and portfolio management
services. The confidentiality provisions contained in this subsection shall not apply to
disclosures (a) required to be made by Agent or any Lender to any regulatory or governmental agency
or pursuant to legal process or (b) consisting of general portfolio information that does not
identify any Loan Party. The obligations of Agent and Lenders under this subsection 10.18 shall
supersede and replace the obligations of Agent and Lenders under any confidentiality agreement in
respect of this financing executed and delivered by Agent or any Lender prior to the date hereof.
In no event shall Agent or any Lender be obligated or required to return any materials furnished by
Loan Parties ;provided, however, each potential assignee or participant shall be required to agree
that if it does not become an assignee (or participant) it shall return all materials furnished to
it by Loan Parties in connection herewith.



          Notwithstanding the foregoing, and notwithstanding any other express or implied agreement or
understanding to the contrary, each of the parties hereto and their respective employees,
representatives, and other agents are authorized to disclose the tax treatment and tax structure of
the Transactions to any and all persons, without limitation of any kind. Each of the



106









 







parties hereto may disclose all materials of any kind (including opinions or other tax analyses) insofar as
they relate to the tax treatment and tax structure of the Transactions. This authorization does
not extend to disclosure of any other information including (without limitation) (a) the identities
of participants or potential participants in the GMAC Transactions (b) the existence or status of
any negotiations, (c) any pricing or other financial information or (d) any other term or detail
not related to the tax treatment and tax structure of the GMAC Transactions. The confidentiality
provisions contained in this Agreement shall not prohibit disclosures to any trustee,
administrator, collateral manager, servicer, backup servicer, lender, rating agency or secured
party of any SPV or its affiliates in connection with the evaluation, administration, servicing of,
or the reporting on, the assets or securitization activities of such SPV or its affiliates.



     10.19. Publication. Each Loan Party consents to the publication by Agent of a tombstone or
similar advertising material relating to the GMAC Transactions; provided, however, Agent shall
provide a draft of any such tombstone or similar advertising material to Borrowing Agent for review
prior to the publication thereof. Agent and Lenders reserve the right to provide industry trade
organizations information necessary and customary for inclusion in league table measurements.



[SIGNATURE PAGES FOLLOW]




107









 





     Witness the due execution of this Loan and Security Agreement by the respective duly
authorized officers of the undersigned as of the date first written above.



	 	 	 	 	 	 	 
	 	 	ROCKY BRANDS, INC.

FEIN: 31-1364046

LIFESTYLE FOOTWEAR, INC.

FEIN: 66-0448782

ROCKY BRANDS WHOLESALE LLC

FEIN: 22-3709787

ROCKY BRANDS RETAIL LLC

FEIN: 22-3709780	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ James E. McDonald
 

James E. McDonald
	 	 
	 

	 	Title:
	 	Executive Vice President, Chief Financial

Officer and Treasurer of

each of the foregoing Borrowers	 	 
	 
	 	 	 	 	 	 
	 	 	GMAC COMMERCIAL FINANCE LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Thomas Brent
 

Thomas Brent
	 	 
	 

	 	Title:
	 	Director	 	 
	 
	 	 	 	 	 	 
	 	 	Revolving Loan Commitment: $27,118,640.00	 	 
	 
	 	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ William J. Wilson
 

William J. Wison
	 	 
	 

	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	Revolving Loan Commitment: $21,186,440.00	 	 






1









 





	 	 	 	 	 	 	 
	 	 	CHARTER ONE BANK, N.A.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ James G. Zamborsky
 

James G. Zamborsky
	 	 
	 

	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	Revolving Loan Commitment: $17,796,610.00	 	 
	 
	 	 	 	 	 	 
	 	 	PNC BANK, NATIONAL ASSOCIATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Richard F. Muse, Jr.
 

Richard F. Muse, Jr.
	 	 
	 

	 	Title:
	 	Sr. Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	Revolving Loan Commitment: $17,796,610.00	 	 
	 
	 	 	 	 	 	 
	 	 	COMERICA BANK	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Harold Dalton
 

Harold Dalton
	 	 
	 

	 	Title:
	 	V.P.	 	 
	 
	 	 	 	 	 	 
	 	 	Revolving Loan Commitment: $16,101,700.00	 	 







2