Document:

EX-10.2

 

Exhibit 10.2

SECOND AMENDMENT TO NOTE PURCHASE AGREEMENT AND WAIVER

     THIS SECOND AMENDMENT TO NOTE PURCHASE AGREEMENT AND WAIVER (this “Amendment and
Waiver”), dated as of November 8, 2006, is by and among ROCKY BRANDS, INC. (formerly known as
Rocky Shoes & Boots, 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, EJ FOOTWEAR LLC, a limited liability company organized and existing
under the laws of the State of Delaware, HM LEHIGH SAFETY SHOE CO. LLC, a limited liability company
organized and existing under the laws of the State of Delaware, GEORGIA BOOT LLC, a limited
liability company organized and existing under the laws of the State of Delaware, GEORGIA BOOT
PROPERTIES LLC, a limited liability company organized and existing under the laws of the State of
Delaware, DURANGO BOOT COMPANY LLC, a limited liability company organized and existing under the
laws of the State of Delaware, NORTHLAKE BOOT COMPANY LLC, a limited liability company organized
and existing under the laws of the State of Delaware, LEHIGH SAFETY SHOE CO. LLC, a limited
liability company organized and existing under the laws of the State of Delaware, LEHIGH SAFETY
SHOE PROPERTIES LLC, a limited liability company organized and existing under the laws of the State
of Delaware (the foregoing entities and together with Parent, collectively, the “Loan
Parties”, and each a “Loan Party”), the note purchasers that are now and hereafter at
any time parties hereto and are listed in Annex A attached to the Note Purchase Agreement
(as defined below) or any amendment or supplement thereto (each a “Purchaser” and
collectively, the “Purchasers”), and AMERICAN CAPITAL FINANCIAL SERVICES, INC., as
administrative and collateral agent for the Purchasers (in such capacity “Agent”).

RECITALS

     WHEREAS, the Loan Parties, American Capital Strategies, Ltd. (the “Initial Purchaser”)
and Agent are parties to a Note Purchase Agreement dated as of January 6, 2005 (as amended,
restated, supplemented or otherwise modified from time to time in accordance with its terms, the
“Note Purchase Agreement”), pursuant to which the Loan Parties sold Senior Secured Term B
Notes to the Initial Purchaser in the aggregate principal amount of $30,000,000.

     WHEREAS, the Initial Purchaser has sold or contributed certain of the Senior Term Notes to the
current Purchasers.

     WHEREAS, as of the date hereof, the Loan Parties are entering into an Amendment No. 4 and
Waiver to the GMAC Credit Agreement (the “Fourth Credit Agreement Amendment”), pursuant to
which the Loan Parties will be provided with certain financial accommodations.

     WHEREAS, the Loan Parties have notified Agent and Purchasers that certain Events of Default
have occurred which are continuing due to (a) the failure of the Loan Parties to comply with the
provisions of Section 7.3(b) of the Note Purchase Agreement as a result of Total Leverage Ratio of
Rocky on a Consolidated Basis for the four fiscal quarter accounting period ended September 30,
2006, being 3.89 to 1.00, which exceeds the required Total Leverage Ratio for such period of 3.80
to 1.00, (a) the failure of the Loan Parties to comply with the provisions of Section 7.3(c) of the
Note Purchase Agreement as a result of EBITDA of Rocky on a Consolidated

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Basis for the four fiscal quarter accounting period ended September 30, 2006, being
$27,364,514, which is less than the required EBITDA for such period of $30,000,000 and (c) the
failure of the Loan Parties to comply with the provisions of Section 7.3(d) of the Note Purchase
Agreement as a result of the Senior Leverage Ratio of Rocky on a Consolidated Basis for the four
fiscal quarter accounting period ended September 30, 2006, being 3.34 to 1.00, which exceeds the
required Senior Leverage Ratio for such period of 3.30 to 1.00 (collectively, the “Designated
Defaults”). The Loan Parties have requested Agent and Purchasers to waive the Designated Defaults,
and Agent and Purchasers are willing to do so on the terms and conditions set forth herein.

     WHEREAS, the Loan Parties have also requested Agent and the Purchasers to reset certain of the
financial covenants, and to amend certain other provisions of the Note Purchase Agreement, and
Agent and the Purchasers are willing to do so on the terms and conditions set forth herein.

     NOW, THEREFORE, the parties hereto, in consideration of the promises and their mutual
covenants and agreements herein set forth and intending to be legally bound hereby, covenant and
agree as follows:

     1. Definitions. All capitalized terms used and not otherwise defined herein shall
have the meanings assigned to such terms in the Note Purchase Agreement.

     2. Amendments to Note Purchase Agreement. Subject to satisfaction of the conditions
precedent set forth in Section 4 below, the Note Purchase Agreement is hereby amended as follows:

     (a) The last sentence of Section 3.1(a) of the Note Purchase Agreement is hereby amended and
restated to read as follows:

“The Senior Term Notes shall bear interest on the outstanding principal
thereof at a rate equal to the LIBOR Rate, as such rate may adjust from time
to time, plus eight and one-half percent (8.5%).”

     (b) Section 7.3(a) of the Note Purchase Agreement is hereby amended and restated solely to the
extent of the accounting periods commencing with the Four Quarters ending December 31, 2006 through
and including the Four Quarters ending December 31, 2007 as follows:

     “(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:

	 	 	 	 	 
	 	 	Fixed Charge
	Period	 	Coverage Ratio
	Four Quarters ending December 31, 2006
	 	 	0.88 to 1.00	 
	Four Quarters ending March 31, 2007
	 	 	0.85 to 1.00	 
	Four Quarters ending June 30, 2007
	 	 	0.90 to 1.00	 
	Four Quarters ending September 30, 2007
	 	 	0.95 to 1.00	 
	Four Quarters ending December 31, 2007
	 	 	0.95 to 1.00	 

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     (c) Section 7.3(b) of the Note Purchase Agreement is hereby amended and restated solely to the
extent of the accounting periods commencing with the Four Quarters ending December 31, 2006 through
and including the Four Quarters ending December 31, 2007 as follows:

(b) Total Leverage. A Total Leverage Ratio as of the end of
each period set forth below in a ratio not greater than the respective ratio
set forth below:

	 	 	 	 	 
	Period	 	Total Leverage Ratio
	Four Quarters ending December 31, 2006
	 	 	4.25 to 1.00	 
	Four Quarters ending March 31, 2007
	 	 	4.25 to 1.00	 
	Four Quarters ending June 30, 2007
	 	 	4.20 to 1.00	 
	Four Quarters ending September 30, 2007
	 	 	4.10 to 1.00	 
	Four Quarters ending December 31, 2007
	 	 	4.00 to 1.00	 

     (d) Section 7.3(c) of the Note Purchase Agreement is hereby amended and restated solely to the
extent of the accounting periods commencing with the Four Quarters ending December 31, 2006 through
and including the Four Quarters ending December 31, 2007 as follows:

(c) Minimum EBITDA. EBITDA as of the end of each period set forth
below in an amount not less than the respective amount set forth below:

	 	 	 	 	 
	Period	 	Minimum EBITDA
	Four Quarters ending December 31, 2006
	 	$	25,500,000	 
	Four Quarters ending March 31, 2007
	 	$	25,500,000	 
	Four Quarters ending June 30, 2007
	 	$	25,500,000	 
	Four Quarters ending September 30, 2007
	 	$	25,500,000	 
	Four Quarters ending December 31, 2007
	 	$	25,800,000	 

     (e) Section 7.3(d) of the Note Purchase Agreement is hereby amended and restated solely to the
extent of the accounting periods commencing with the Four Quarters ending December 31, 2006 through
and including the Four Quarters ending December 31, 2007 as follows:

(d) Senior Leverage Ratio. A Senior Leverage Ratio as of the end of
each period set forth below in a ratio not greater than the respective ratio
set forth below:

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	Period	 	Senior Leverage Ratio
	Four Quarters ending December 31, 2006
	 	 	3.70 to 1.00	 
	Four Quarters ending March 31, 2007
	 	 	3.65 to 1.00	 
	Four Quarters ending June 30, 2007
	 	 	3.60 to 1.00	 
	Four Quarters ending September 30, 2007
	 	 	3.50 to 1.00	 
	Four Quarters ending December 31, 2007
	 	 	3.40 to 1.00	 

     3. Waiver of Designated Defaults. Subject to satisfaction of the conditions set forth
in Section 4 below, Required Purchasers hereby waive the Designated Defaults.

     4. Conditions of Effectiveness. This Amendment and Waiver shall become effective upon
satisfaction of the following conditions precedent, each of which shall be in form and substance
reasonably satisfactory to Agent:

     (a) Agent shall have received six (6) copies of this Amendment and Waiver duly executed by the
Loan Parties and Required Purchasers;

     (b) The Loan Parties shall have paid to Agent, for the ratable benefit of the Purchasers, a
fee in the amount of $50,000, earned as of the date hereof and not subject to rebate, refund,
proration and/or reduction for any reason and payable fully in cash;

     (c) Agent shall have received Secretary’s Certificates from each Loan Party authorizing the
execution, delivery and performance of this Amendment and Waiver in form and substance acceptable
to Agent;

     (d) Agent shall have received a true and correct duly executed copy of the Fourth Credit
Agreement Amendment and related documents in form and substance reasonably satisfactory to Agent;

     (e) Agent and the GMAC Agent shall have entered into an amendment to the Intercreditor
Agreement; and

     (f) Agent shall have received such other certificates, instruments, documents, and agreements
as may be reasonably required by Agent or its counsel relating to the transactions contemplated in
this Amendment and Waiver.

     5. Representations and Warranties. Each of the Loan Parties hereby represents and
warrants as follows:

     (a) This Amendment and Waiver and the Note Purchase Agreement, as amended hereby, constitute
legal, valid and binding obligations of each of the Loan Parties and are enforceable against each
of the Loan Parties in accordance with their respective terms.

     (b) Upon the effectiveness of this Amendment and Waiver, each of the Loan Parties hereby
reaffirms all covenants, representations and warranties made in the Note Purchase
Agreement to the extent the same are not amended hereby, and agrees that all such covenants,
representations and warranties shall be deemed to have been remade as of the effective date of this

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Amendment and Waiver, except for those representations and warranties made only as of the Closing
Date or as of a particular date prior to the date hereof.

     (c) No Event of Default or Default has occurred and is continuing or would exist after giving
effect to this Amendment and Waiver.

     (d) None of the Loan Parties has any defense, counterclaim or offset with respect to the Note
Purchase Agreement.

     6. Effect on the Note Purchase Agreement.

     (a) Upon the effectiveness of this Amendment and Waiver hereof, each reference in the Note
Purchase Agreement to “this Agreement,” “hereunder,” “hereof,” “herein” or words of like import
shall mean and be a reference to the Note Purchase Agreement as amended hereby.

     (b) Except as specifically amended herein, the Note Purchase Agreement, and all other
documents, instruments and agreements executed and/or delivered in connection therewith, shall
remain in full force and effect, and are hereby ratified and confirmed.

     (c) Except as specifically provided herein, the execution, delivery and effectiveness of this
Amendment and Waiver shall not operate as a waiver of any right, power or remedy of Agent or
Purchasers, nor constitute a waiver of any provision of the Note Purchase Agreement, or any other
documents, instruments or agreements executed and/or delivered under or in connection therewith.

     7. Governing Law. This Amendment and Waiver shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns and shall be governed by
and construed in accordance with the laws of the State of Maryland, without regard to conflict of
laws principles.

     8. Costs and Expenses. The Loan Parties agree to reimburse Agent and Purchasers for
all fees and expenses incurred in the preparation, negotiation and execution of this Amendment and
Waiver and the consummation of the transaction contemplated hereby, including without limitation,
the reasonable fees and expenses of counsel.

     9. Headings. Section headings in this Amendment and Waiver are included herein for
convenience of reference only and shall not constitute a part of this Amendment and Waiver for any
other purpose.

     10. Counterparts; Facsimile. This Amendment and Waiver may be executed by the parties
hereto in one or more counterparts, each of which shall be deemed an original and all of which when
taken together shall constitute one and the same agreement. Any signature delivered by a party by
facsimile transmission shall be deemed to be an original signature
hereto.

* * *

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     IN WITNESS WHEREOF, the parties hereto have executed this Amendment and Waiver as of the day
and year first above written.

LOAN PARTIES:

ROCKY BRANDS, INC.

LIFESTYLE FOOTWEAR, INC.

EJ FOOTWEAR LLC

HM LEHIGH SAFETY SHOE CO. LLC

GEORGIA BOOT LLC

GEORGIA BOOT PROPERTIES LLC

DURANGO BOOT COMPANY LLC

NORTHLAKE BOOT COMPANY LLC

LEHIGH SAFETY SHOE CO. LLC

LEHIGH SAFETY SHOE PROPERTIES LLC

	 	 	 	 	 
	 	 	 
	 	By:  	            /s/ James E. McDonald
 	 
	 	 	Name:  	James E. McDonald 	 
	 	 	Title:  	Chief Financial Officer of each of the
foregoing Loan Parties 	 
	 
	 	AGENT:

AMERICAN CAPITAL FINANCIAL SERVICES, INC.

 	 
	 	By:  	/s/ Kenneth E. Jones
 	 
	 	 	Name:  	Kenneth E. Jones 	 
	 	 	Title:  	Vice President 	 
	 
	 	PURCHASERS:

AMERICAN CAPITAL STRATEGIES, LTD.

 	 
	 	By:  	/s/ Kenneth E. Jones
 	 
	 	 	Name:  	Kenneth E. Jones 	 
	 	 	Title:  	Vice President 	 
	 

	 	 	 	 	 

[Signature Page No. 1 to Second Amendment and Waiver to Note Purchase Agreement]

 

 

	 	 	 	 	 
	 	ACAS BUSINESS LOAN TRUST 2004-1, a 

Delaware statutory trust

By: AMERICAN CAPITAL STRATEGIES, LTD.,

as Servicer

 	 
	 	  By:	/s/ Kenneth E. Jones
 	 
	 	 	Name:  	Kenneth E. Jones 	 
	 	 	Title:  	Vice President 	 
	 
	 	ACAS BUSINESS LOAN TRUST 2005-1, a

Delaware statutory trust

AMERICAN CAPITAL STRATEGIES, LTD.,

as Servicer

 	 
	 	  By:	/s/ Kenneth E. Jones
 	 
	 	 	Name:  	Kenneth E. Jones 	 
	 	 	Title:  	Vice President 	 
	 

[Signature Page No. 2 to Second Amendment and Waiver to Note Purchase Agreement]EX-10.1

 

EXHIBIT 10.1

AGREEMENT

THIS
AGREEMENT MADE AND ENTERED INTO this 9th day of November, 2006, by and between
FOREST CITY ENTERPRISES, INC., an Ohio corporation, (“the Company”), and BRUCE C. RATNER (“the
Employee”).

     WHEREAS, the Company and the Employee desire to enter into a new Employment Agreement under
which the Employee shall serve as an executive of the Company, as well as continue to serve as the
President and Chief Executive Officer of the Forest City Ratner Companies (the “NY SBU”), reporting
to the Company’s President and Chief Executive Officer; and

     WHEREAS, the NY SBU shall operate in a manner that is consistent with the Company’s corporate
policies and requirements for all of its Strategic Business Units.

     NOW, THEREFORE, it is agreed that:

     1. The
effective date of this Employment Agreement is November 9, 2006 (the “Effective
Date”).

     2. Term: The Employee, in consideration of the promises and agreements of the
Company herein contained, hereby promises to continue in the employ of the Company for a period of
one (1) year from the Effective Date, as an executive of the Company, as well as continue to serve
as the President and Chief Executive Officer of Forest City Ratner Companies (the “NY SBU”), and to
perform such duties as may be required of him in such capacities by the Company, faithfully,
honestly, diligently and to the satisfaction of the Company. Said employment shall continue for
additional periods of one (1) year each until termination by mutual consent, death, or by either
party giving ninety (90) days written notice to either amend or terminate this Employment Agreement
to the other party prior to the termination of any such one (1) year period.

     3. Compensation:

	 	a)	 	The Company promises and agrees to pay the Employee a base salary of
FOUR HUNDRED AND FIFTY THOUSAND DOLLARS ($450,000.00) per year, payable during each
employment year in accordance with the Company’s customary payroll practices for
executives.
	 
	 	b)	 	The Employee will be eligible to participate in the Company’s executive
bonus plan in accordance with the terms established by the Compensation Committee
on the same basis as other senior management executives.
	 
	 	c)	 	The employee will be eligible to receive equity based awards in
accordance with the terms established by the Compensation Committee on the same
basis as other senior management executives.

     4. Noncompetition, Nonsolicitation:

	 	a)	 	Except for the rights granted to Employee under provision 4(b), the
Company acknowledges that the Employee owns and will continue to own, alone or in
conjunction with others, a certain resort condominium development which has not
been transferred to the Company. This property may be managed, developed,
expanded, operated and sold by the owners, independently of the business of the
Company. Should the Employee sell a portion or all of this property, Employee may
purchase additional property, to effectuate a Section 1031 tax free exchange under
the Internal Revenue Code, with the prior approval of the Company’s Audit
Committee. Except for this property, and any potential purchase of property to
effect a tax deferred transaction, Employee will engage in all business activities
of the type conducted by the Company only through and on behalf of the Company, as
long as he is employed by the Company. Employee further agrees to update such
disclosure on an annual basis in connection with the Company’s annual conflict of
interest questionnaire distributed to management, as required by the Audit
Committee of the Board of Directors.

 

 

	 	b)	 	Employee agrees that so long as he is employed by the Company, and for
a period of two (2) years thereafter, he will not without the prior consent of the
Company, directly or indirectly, become an employee, shareholder, owner, officer,
agent, director of, render consulting services, advise, or otherwise be associated
with any firm, person, business enterprise or other entity which is engaged in or
competitive with, any business engaged in by the Company or its affiliates in any
of its core markets, as such core markets are defined in the Company’s most
recently filed Form 10-K or 10-Q . Notwithstanding the foregoing, Employee may
invest in commercial, industrial and residential real estate properties or projects
as a passive investor holding directly and indirectly, up to 10 percent (10%) of
the equity of any such entity, as long as such ownership interest is not deemed a
majority or controlling interest in the entity. For purposes of this provision,
Employee will be deemed to be a passive investor in an entity only if he does not,
directly or indirectly, participate in or control either the day to day or
strategic management of the entity. Employee shall also be permitted to perform
philanthropic activities or work for not-for-profit entities, public agencies or
governmental authorities provided such activities have been previously disclosed to
the Company’s Audit Committee and do not present a conflict of interest and
Employee receives no compensation for such philanthropic activities. If, and only
if, Employee’s employment under this Agreement is terminated by the Company without
“Cause” (as hereinafter defined), the two (2) year period set forth in this
provision 4(b) shall be reduced to one (1) year. Cause shall be defined as gross
neglect of duty, dishonesty, conviction of a felony, disloyalty, intoxication, drug
addiction or other similar misconduct adverse to the best interests of the Company.
	 
	 	c)	 	Employee agrees that so long as he is employed by the Company, and for
a one (1) year period thereafter, Employee shall not, directly or indirectly, (i)
solicit or induce any employee of the Company or any of its affiliates to terminate
their employment, or (ii) employ or offer employment to any person who was employed
by the Company or its affiliates in other than a purely administrative capacity
unless such person shall have ceased to be employed by the Company or its
affiliates for a period of at least one (1) year.
	 
	 	d)	 	It is the intention of the parties hereto that the restriction
contained in this paragraph 4 be enforceable to the fullest extent permitted by
applicable law. Therefore, to the extent any court of competent jurisdiction shall
determine that any portion of the foregoing restrictions is excessive, such
provision shall not be entirely void, but rather shall be limited or revised only
to the extent necessary to make it enforceable.

     5. It is mutually agreed by and between the parties hereto that the Company may cancel or
terminate this Employment Agreement at any time prior to the expiration of said one (1) year
period, or any renewal thereof, without notice, for any conduct on the part of the Employee which
injures the Company’s business, such as, but not limited to, intemperance, negligence, failure to
follow instructions or perform and fulfill the obligations on the Employee’s part to be performed
hereunder to the satisfaction of the Company.

     IN WITNESS WHEREOF, the parties hereto have set their hands the day and year first above
written.

	 	 	 	 	 	 	 
	 	 	FOREST CITY ENTERPRISES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ CHARLES A. RATNER
	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Charles A. Ratner, CEO	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ THOMAS G. SMITH	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Thomas G. Smith, Secretary	 	 
	 
	 	 	 	 	 	 
	 	 	/s/ BRUCE C. RATNER	 	 
	 	 	 	 	 
	 	 	BRUCE C. RATNER, Employee

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