Document:

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                                                                    Exhibit 10.5

           EXTENSION OF LIMITED WAIVER AND LOAN MODIFICATION AGREEMENT

      THIS EXTENSION OF LIMITED WAIVER AND LOAN MODIFICATION AGREEMENT (the
"Extension") is made effective as of June 30, 2000 by and among Rocky Shoes &
Boots, Inc., an Ohio corporation ("Rocky Inc."), Five Star Enterprises Ltd., a
Cayman Islands corporation ("Five Star"), Lifestyle Footwear, Inc., a Delaware
corporation ("Lifestyle") (the foregoing parties being referred to herein
individually as a "Borrower" and collectively as the "Borrowers"), Bank One, NA,
a national banking association ("Bank One"), The Huntington National Bank, a
national banking association ("HNB")(Bank One and HNB shall be referred to
herein individually as a "Bank" and collectively as the "Banks"), and Bank One,
NA, as Agent, acting in the manner and to the extent described in Article IX of
the Agreement referred to herein (in such capacity, the "Agent").

                             BACKGROUND INFORMATION
                             ----------------------

      A. The Borrowers, Bank One, HNB and the Agent entered into a certain
Revolving Credit Loan Agreement, dated as of January 28, 1997, as amended by (i)
a Term Loan Agreement and First Amendment to Revolving Credit Loan Agreement,
dated effective as of April 18, 1997, (ii) a Second Amendment to Revolving
Credit Loan Agreement, dated effective as of May 29, 1998, (iii) a Third
Amendment to Revolving Credit Loan Agreement, dated effective as of April 1,
1999, and (iv) a Fourth Amendment to Revolving Credit Loan Agreement, dated
effective as of July 23, 1999 (such agreement, as so amended, the "Agreement"),
pursuant to which Bank One and HNB agreed to provide term and revolving credit
loans to the Borrowers, upon and subject to the terms and conditions as set
forth in the Agreement.

      B. Events of Default have occurred under the terms of the Facility
Documents, and the Borrowers and the Banks entered into a Limited Waiver and
Loan Modification Agreement, made effective as of May 15, 2000 (the "Waiver
Agreement"), pursuant to which the Banks waived certain provisions of the
Agreement and the Facility Documents until June 29, 2000.

      C. Such Events of Default have continued to occur under the terms of the
Facility Documents, and the Borrowers have requested that the Banks extend the
waiver of certain provisions of the Agreement granted pursuant to the Waiver
Agreement, and the Banks are willing do to so, but only in accordance with the
terms as set forth in this Extension.

                                   PROVISIONS
                                   ----------

      NOW, THEREFORE, in consideration of the extension of the waiver of the
Banks as set forth herein, the mutual agreements hereunder and under the
Facility Documents, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Borrowers, the Banks and
the Agent hereby agree as follows:

<PAGE>   2

      SECTION 1. CAPITALIZED TERMS. Except as provided for herein, the
capitalized terms used herein shall have the same meanings as set forth in the
Agreement.

      SECTION 2. CURRENT AMOUNT OF LOANS. The Borrowers certify, acknowledge,
agree and state that as of August 2, 2000, (i) the total principal amount of
Revolving Credit Loans owed to the Banks under the Agreement and the Notes is
$40,700,000 (with $24,420,000 being owed to Bank One and $16,280,000 being owed
to HNB), and that such amounts are payable to the Banks without any offsets,
counterclaim, defense or reductions, (ii) the total principal amount of Term
Loans owed to the Banks under the Agreement and the Term Loan Notes is
$1,250,000 (with $750,000 being owed to Bank One and $500,000 being owed to
HNB), and that such amounts are payable to the Banks without any offsets,
counterclaim, defense or reductions, and (iii) the aggregate undrawn amount of
outstanding Commercial L/Cs and Standby L/Cs is $872,787 (with Bank One's
participation therein being $523,672.21 and HNB's participation therein being
$349,114.79).

      SECTION 3. DEFAULT; WAIVER BY THE BANKS; WAIVER FEE; INCREASE IN INTEREST
RATES.

            (a) The Borrowers acknowledge and agree that the Borrowers continue
      to be in default with respect to the following sections of the Agreement
      (such sections being referred to collectively as the "Subject Sections"):

                  (i) Section 7.2(l) (i) (relating to the Consolidated Net Worth
            financial covenant);

                  (ii) Section 7.2(l) (ii) (relating to the Consolidated Fixed
            Charge Coverage Ratio financial covenant); and

                  (iii) Section 7.2(l)(iii) (relating to the Consolidated Funded
            Debt to Consolidated EBITDA Ratio financial covenant).

            (b) Subject to the terms of this Extension, the Banks hereby extend
      the waiver of compliance (the "Waiver") by the Borrowers with the Subject
      Sections for the period (the "Waiver Period") commencing on June 30, 2000
      (the "Effective Date") and continuing through and including August 31,
      2000 (the "Termination Date"). EACH BORROWER ACKNOWLEDGES AND AGREES THAT,
      EXCEPT AS PROVIDED IN THE FOLLOWING SUBSECTION (C), THE BANKS DO NOT
      INTEND TO EXTEND, AND NEITHER BANK IS MAKING ANY COMMITMENT TO EXTEND, THE
      WAIVER PROVIDED FOR HEREIN BEYOND THE TERMINATION DATE.

            (c) The Termination Date and the Waiver provided by this Extension
      shall be extended from August 31, 2000 to and including September 20,
      2000, and the Waiver Period shall be extended to and including September
      20, 2000, provided that (i) in the judgment of the Agent, no material
      adverse change in the financial condition of the Borrowers has occurred
      prior to August 31, 2000, and (ii) on or prior to August 18, 2000, the
      Borrowers deliver to the Agent (x) a commitment letter (the "Commitment
      Letter")

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      for a refinancing (the "Refinancing") of the Revolving Credit Loans and
      the Term Loans (collectively, the "Loans") from another financing source,
      with such source and the terms of such Commitment Letter being acceptable
      to the Agent, and (y) evidence satisfactory to Banc One Leasing
      Corporation ("BOLC") that all equipment leases between any Borrower and
      BOLC (the "Leases") will be refinanced or otherwise dealt with in a manner
      satisfactory to BOLC by the date of any refinancing of the Loans.

            (d) (i) The maturity date of the Term Loans shall be extended from
      May 1, 2000 to August 31, 2000, and, if the Termination Date and the
      Waiver provided by this Extension is extended from August 31, 2000 to
      September 20, 2000, and the Waiver Period is extended to and including
      September 20, 2000, pursuant to subsection (c) above, such maturity date
      of the Term Loans shall be extended to September 20, 2000.

                (ii) The interest rate on the Term Loans as set forth in the
            Term Loan Notes shall increase from the rate equal to the sum of the
            "prime" rate plus 25 basis points, to the rate equal to the sum the
            "prime" rate plus 50 basis points, effective as of May 1, 2000.

            (e) (i) The interest rate on the Revolving Credit Loans shall
      increase to a rate equal to the Prime Rate, effective as of June 30, 2000.

                (ii) The option of the Borrowers to have Revolving Credit
            Loans bear interest based on the LIBOR Rate shall terminate on June
            30, 2000, and any outstanding LIBOR Rate Loans on such date shall be
            converted to Prime Rate Loans.

            (f) The Borrowers, jointly and severally, shall pay to the Agent for
      the ratable benefit the Banks the following waiver fee(s) upon the
      occurrence of either or both of the following:

                  (i) if a Commitment Letter satisfying the requirements set
            forth in Section 3(c) is not delivered to the Agent on or prior to
            August 18, 2000, a waiver fee in the amount of $25,000 shall be
            payable immediately; and

                  (ii) if, on or prior to September 20, 2000, (x) the Loans are
            not paid in full or refinanced in a form satisfactory to the Agent,
            and (y) the Leases are not refinanced or otherwise dealt with in a
            manner satisfactory to BOLC, a waiver fee in the amount of $25,000
            shall be payable immediately.

            (g) Although the Banks are agreeing to the Waiver as set forth
      herein, the Banks (i) are not waiving, abandoning, discharging, releasing,
      modifying, extending, canceling or relinquishing any right, claims, or
      causes of action, and (ii) are not accepting any security or promise
      granted herein as payment of any right, claims, or causes of action. The
      Waiver by the Banks as set forth herein shall not affect or impair any
      right that the Banks may have against any Borrower or any other party.

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<PAGE>   4

      SECTION 4. ABSENCE OF WAIVER. The Borrowers and the Banks agree that the
agreements set forth in Section 3 hereof shall not be deemed to:

            (a) except as expressly set forth in Section 3 of this Extension,
      modify or limit any other term of the Facility Documents;

            (b) impose upon the Banks any obligation, express or implied, to
      consent to any amendment or modification of the Facility Documents; or

            (c) prejudice any right or remedy that (i) the Banks and/or the
      Agent may now have or may in the future have under the Facility Documents
      or any instrument or agreement referred to therein including, without
      limitation, any right or remedy resulting from any Default or Event of
      Default not covered by the Waiver with respect to the Subject Sections, or
      any other failure of any Borrowers to comply with the terms of this
      Extension, including without limitation the terms set forth in Section 5
      hereof, or (ii) BOLC may now have or may in the future have under the
      Leases or any instrument or agreement referred to therein.

      SECTION 5. CONTINUING OBLIGATIONS; MODIFICATIONS; ADDITIONAL OBLIGATIONS;
PROVISION OF ADDITIONAL ITEMS.

            (a) Except with respect to the Subject Sections, the Borrowers shall
      continue to comply, observe and perform all of their obligations under the
      Agreement and the other Facility Documents.

            (b) Effective as the date hereof and continuing hereafter,
      notwithstanding anything in the Agreement and the other Facility Documents
      to the contrary, the Borrowers hereby consent and agree that the Banks and
      the Agent shall have, and the Banks and the Agent hereby reserve, the
      right and ability to reduce, modify and otherwise change in any manner the
      Borrowing Base, which right may be exercised in the Banks' and the Agent's
      sole and absolute discretion at anytime and from time to time; without
      limiting the generality of the foregoing, the Banks and the Agent shall
      have the right to (x) reduce the percentage of Eligible Accounts
      Receivable (currently 80%) and Inventory (currently 50%) which may be
      included in calculating the Borrowing Base, (y) determine which Accounts
      Receivable shall constitute Eligible Accounts Receivable, and (z)
      determine which Inventory may be included in calculating the Borrowing
      Base.

            (c) In addition to their current obligations under the Agreement and
      the other Facility Documents, the Borrowers shall:

                  (i) provide to the Agent, not later than 2:00 p.m. on each
            Tuesday during the Waiver Period, a Borrowing Base Certificate in
            the form attached hereto, certified by an officer of the Borrowers
            as true and correct, setting forth the amount of Eligible Accounts
            Receivable and Inventory, in each case as of the close of business
            of the preceding Friday; as currently provided in the Agreement,
            notwithstanding any provision in the Facility Documents or herein to

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            the contrary, the total amount of outstanding Revolving Credit Loans
            under the Aggregate Commitment, when taken together with the total
            aggregate Dollar amount available to be drawn under outstanding
            Commercial L/Cs and Standby L/Cs, shall at no time exceed the lesser
            of (i) the Aggregate Commitment or (ii) the Borrowing Base as set
            forth on the most recent weekly Borrowing Base Certificate provided
            to the Agent, plus 50% of the Dollar amount available to be drawn
            under outstanding Commercial L/Cs;

                  (ii) provide to the Agent as soon as available, but in any
            event not later than 25 days after the end of each month (beginning
            with July, 2000 and continuing during the Waiver Period), the
            unaudited internally prepared consolidated balance sheet of the
            Borrowers as at the end of such month and the related unaudited
            unconsolidated statements of income and shareholders equity of the
            Borrowers for such month and the portion of the Fiscal Year through
            such date, setting forth in each case in comparative form the
            figures for the previous year, certified by an appropriate officer
            as being fairly stated in all material respects;

                  (iii) concurrently with the delivery of the monthly financial
            statements referred to in subsection (ii) above, a certificate of an
            appropriate officer of the Borrowers (in such form as shall be
            reasonably acceptable to the Banks) stated to have been made after
            due examination by such officer (x) stating that, to the best of
            such officer's knowledge, except with respect to the Subject
            Sections, the Borrowers during such period have observed or
            performed in all material respects all of its covenants and other
            agreements, and satisfied every condition, contained in the Facility
            Documents to be observed, performed or satisfied by the Borrowers
            and that such officer has obtained no knowledge of any Default or
            Event of Default except as specified in such certificate, (y)
            showing in detail the calculations used in determining the financial
            covenants set forth in the Subject Sections, and (z) stating that,
            to the best of such officer's knowledge, the representations and
            warranties expressed in Article V are true, correct and complete in
            all material respects on and as of the date of such financial
            statements delivered concurrently therewith, except in each case of
            (x), (y) or (z) as may otherwise be specifically set forth in such
            certificate;

                  (iv) provide to the Agent as soon as available, but in any
            event not later than 15 days after the end of each month (beginning
            with July, 2000 and continuing during the Waiver Period), an
            accounts receivable aging report as of the end of such month, in a
            form acceptable to the Agent;

                  (v) provide to the Agent as soon as available, but in any
            event not later than 15 days after the end of each month (beginning
            with July, 2000 and continuing during the Waiver Period), an
            accounts payable aging report as of the end of such month, in a form
            satisfactory to the Agent;

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<PAGE>   6

                  (vi) provide to the Agent a copy of each appraisal completed
            by third party appraisers in connection with the Refinancing process
            as promptly as possible after receipt thereof by any Borrower, but
            in any event not later than 14 days after receipt; and

                  (vi) execute such additional documents reasonably requested by
            the Banks and/or the Agent to carry out the intent of the Facility
            Documents or this Extension, including without limitation to
            protect, perfect or continue perfection of liens.

      SECTION 6. TRUTH OF REPRESENTATIONS AND WARRANTIES. The Borrowers hereby
represent and warrant that the following are true and correct as of the date of
this Extension:

            (a) the representations and warranties of the Borrowers contained in
      the Facility Documents are true and correct on and as of the date of this
      Extension as if made on and as of such date unless stated to relate to a
      specific earlier date;

            (b) all financial statements of the Borrowers provided to the Banks
      are true, accurate and complete in all material respects as of the date
      of, and for the periods covered by, such financial statements;

            (c) neither this Extension nor any other document, certificate or
      written statement furnished to the Banks or the Agent by or on behalf of
      any Borrower in connection herewith or with the Revolving Credit Loans and
      the transactions contemplated hereby and by the Facility Documents
      contains any untrue statement of a material fact or omits to state a
      material fact necessary in order to make the statements contained herein
      and therein not misleading;

            (d) each Borrower has full power and authority (i) to make the
      borrowings contemplated by the Facility Documents, (ii) to execute,
      deliver and perform this Extension, and (iii) to incur the obligations
      provided for herein, all of which have been duly authorized by all
      necessary and proper corporate action;

            (e) no consent, waiver or authorization of, or filing with, any
      person or any governmental authority is required to be made or obtained by
      the Borrowers in connection with the borrowings under the Facility
      Documents, or the execution, delivery, performance, validity or
      enforceability of this Extension;

            (f) this Extension constitutes the legal, valid and binding
      obligation of each Borrower, enforceable against each Borrower in
      accordance with its terms; and

            (g) the execution and delivery by the Borrowers of this Extension
      and the performance by the Borrowers of this Extension: (i) do not and
      will not violate any law or regulation; (ii) do not and will not violate
      any order, decree or judgment by which any Borrower is bound; (iii) do not
      and will not violate or conflict with, result in a breach of or constitute
      (with notice, lapse of time, or otherwise) a default under any material

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      agreement, mortgage, indenture or other contractual obligation to which
      any Borrower is a party, or by which any Borrower's properties are bound;
      or (iv) do not and will not result in the creation or imposition of any
      lien upon any property or assets of any Borrower.

      SECTION 7. CONDITIONS TO THE BANKS 'S OBLIGATIONS. The obligations of the
Banks to enter into this Extension and be bound by the terms hereof are subject
to the satisfaction of the following conditions precedent:

            (a) DELIVERY OF DOCUMENTS AND ITEMS. Contemporaneously with or
      before the execution of this Extension by the Banks, the Agent shall have
      received the following, each in form and substance satisfactory to the
      Agent, the Banks and their counsel:

                  (i) EXTENSION. This Extension, duly executed by the Borrowers;

                  (ii) OTHER DOCUMENTS AND ITEMS. All certificates, documents
            and other items currently required to be furnished by the Borrowers
            to the Agent and/or the Banks pursuant to this Extension shall have
            been so furnished; and

                  (iii) OTHER REQUIREMENTS. Such other certificates, documents
            and other items as the Banks and/or the Agent deem necessary or
            desirable.

            (b) REPRESENTATIONS AND WARRANTIES. The representations and
      warranties made by the Borrowers in this Extension shall be true and
      correct in all material respects as of the date hereof.

      SECTION 8. ADDITIONAL EVENTS OF DEFAULT; REVOCATION OF WAIVER. Upon (i)
the failure of the Borrowers, or any of them, to observe, comply or perform any
of their obligations under this Extension, (ii) the occurrence of an Event of
Default, other than with respect to the Subject Sections, during the Waiver
Period, or (iii) the failure of the Borrowers, or any of them, to observe,
comply or perform any of their obligations under any of the Leases, the Waiver
provided herein may, in the sole and absolute discretion of the Banks, be
revoked by giving notice thereof by the Agent to the Borrowers, and upon such
revocation, the Waiver shall be null and void and the Banks and the Agent shall
be entitled to exercise all rights and remedies that the Banks and the Agent now
have at law or under the Facility Documents or any instrument or agreement
referred to therein with respect to such failure or Event of Default, including
an Event of Default with respect to any of the Subject Sections.

      SECTION 9. REAFFIRMATION OF LIABILITY; RELEASE OF CLAIMS.

            (a) Each Borrower hereby reaffirms its liability to (i) the Banks
      and the Agent under the Facility Documents and all other agreements and
      instruments executed by the Borrowers for the benefit of the Banks and the
      Agent in connection therewith, and (ii) to BOLC under the Leases and all
      other agreements and instruments executed by the Borrowers for the benefit
      of BOLC in connection therewith.

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            (b) Each Borrower acknowledges and agrees that (i) the Banks and the
      Agent have performed all of their respective obligations under the
      Facility Documents, (ii) BOLC has performed all of its obligations under
      the Leases, (iii) the Banks and the Agent, or any of them, are not in
      default under any obligation it has or ever did have to any Borrower under
      the Facility Documents or any other agreement or otherwise, and (iv) BOLC
      is not in default under any obligation it has or ever did have to any
      Borrower under the Leases or any other agreement or otherwise.

            (c) As a specific inducement and consideration to the Banks to enter
      into this Extension and agree to the transactions contemplated hereby,
      each Borrower hereby waives and releases the Banks, the Agent and BOLC,
      their respective officers, directors, employees and representatives, from
      any and all claims or causes of actions, if any, accruing on or before the
      date hereof and arising out of the past and/or present business
      relationship between any Borrower and the Banks, the Agent and/or BOLC
      which any Borrower now has or may have or in the future may have against
      the Banks, the Agent and/or BOLC or any of their respective officers,
      directors, employees or representatives.

      SECTION 10. EFFECTIVENESS OF FACILITY DOCUMENTS. The Borrowers have read
and understand all terms and provisions of the Facility Documents and this
Extension and, subject to the Waiver provided hereby, all of the terms,
covenants and conditions of, and the obligations of the Borrowers under, all
Facility Documents shall remain valid, binding and in full force and effect. No
delay on the part of the Banks or the Agent in the exercise of any right or
remedy under the Facility Documents shall operate as a waiver. No single or
partial exercise by the Banks or the Agent of any such right or remedy shall
preclude any other future exercise of such right or remedy or the exercise of
any other right or remedy. No waiver or indulgence by the Banks of any Default
or Event of Default shall be effective unless in writing and signed by the
Banks, nor shall a waiver on one occasion be construed as a bar to or waiver of
that right on any future occasion.

      SECTION 11. PRESERVATION OF EXISTING SECURITY INTERESTS. Each mortgage,
security interest, pledge, assignment, lien or other conveyance or encumbrance,
including without limitation pursuant to the Security Agreement, of any right,
title, or interest in any property of any kind delivered to the Banks at any
time by any person or entity in connection with the Facility Documents or to
secure the performance of the obligations of the Borrowers under the Facility
Documents, , shall remain in full force and effect following the execution of
this Extension.

      SECTION 12. APPLICABLE LAW. This Extension shall be deemed to be a
contract made under the laws of the State of Ohio and for all purposes shall be
construed in accordance with the laws of such state.

      SECTION 13. SEVERABILITY. Any provision of this Extension which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective only to the extent of such prohibition or unenforceability,
without invalidating the remaining provisions hereof or affecting the validity
or enforceability of such provision in any other jurisdiction.

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      SECTION 14. INTERPRETATION. This Extension is to be deemed to have been
prepared jointly by the parties hereto, and any uncertainty or ambiguity
existing herein shall not be interpreted against any party but shall be
interpreted according to the rules for the interpretation of arm's length
agreements. The various headings in this Extension are inserted for convenience
of reference only and shall not affect the meaning or interpretation of this
Extension or any provision hereof.

      SECTION 15. ENTIRE AGREEMENT. This Extension embodies the entire agreement
and understanding among the Borrowers, the Agent and the Banks relating to, and
supersedes all prior agreements and understandings among the Borrower, the Agent
and the Banks relating to, the subject matter hereof.

      SECTION 16. COVENANTS TO SURVIVE, BINDING AGREEMENT. This Extension shall
be binding upon and inure to the benefit of the Agent, the Banks, the Borrowers
and their respective successors or assigns; provided, however, that the
Borrowers may not assign or otherwise dispose of any of its rights or
obligations hereunder.

      SECTION 17. AMENDMENTS AND SUPPLEMENTS. This Extension may not be amended
or supplemented except by an instrument in writing executed by the Borrowers,
the Banks and the Agent.

      SECTION 18. EXPENSES. The Borrowers, jointly and severally, shall
reimburse the Banks and the Agent for any costs, internal charges and
out-of-pocket expenses (including reasonable auditors' fees, attorneys' fees and
time charges of attorneys for the Banks and the Agent, which auditors and
attorneys may be employees of the Banks or the Agent) paid or incurred by the
Banks and/or the Agent in connection with the preparation, negotiation,
execution, delivery, review, amendment, modification, and administration of this
Extension and the other Facility Documents. The Borrowers, jointly and
severally, also agree to reimburse the Banks for any costs, internal charges and
out-of-pocket expenses (including reasonable attorneys' fees and time charges of
attorneys for the Banks, which attorneys may be employees of the Banks) paid or
incurred by the Banks in connection with the collection and enforcement of the
Facility Documents.

      SECTION 19. COUNTERPARTS. This Extension may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and
any of the parties hereto may execute this Extension by signing any such
counterpart. This Extension shall become effective upon receipt by the Agent of
counterparts hereof signed by each of the parties hereto or, in the case of any
party as to which an executed counterpart shall not have been received, receipt
by the Agent in form satisfactory to it of telegraphic, facsimile or other
written confirmation from such party of execution of a counterpart hereof by
such party. Any such telegraphic, facsimile or other written confirmation from
such party of execution of a counterpart hereof shall be fully effective as an
original counterpart hereof.

      SECTION 20. WAIVER OF JURY TRIAL. THE BANKS, THE AGENT AND EACH BORROWER,
AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL,
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY

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WAIVE ANY RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED
UPON OR ARISING OUT OF THIS EXTENSION, THE AGREEMENT, THE NOTES, THE OTHER
FACILITY DOCUMENTS, OR ANY RELATED INSTRUMENT OR AGREEMENT, OR ANY OF THE
TRANSACTIONS CONTEMPLATED THEREBY, OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN), OR ACTIONS OF ANY OF THEM. THIS WAIVER SHALL NOT IN
ANY WAY AFFECT THE AGENT'S OR THE BANKS' ABILITY TO PURSUE REMEDIES PURSUANT TO
ANY CONFESSION OF JUDGMENT OR COGNOVIT PROVISION CONTAINED IN ANY FACILITY
DOCUMENT. NEITHER THE BANKS, THE AGENT NOR ANY BORROWER SHALL SEEK TO
CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE, ANY ACTION IN WHICH A JURY TRIAL HAS
BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT
BEEN WAIVED. THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED IN ANY
RESPECT OR RELINQUISHED BY THE BANKS, THE AGENT OR THE BORROWERS EXCEPT BY A
WRITTEN INSTRUMENT EXECUTED BY ALL OF THEM.

      SECTION 21. CONFESSION OF JUDGMENT. Each Borrower irrevocably authorizes
any attorney-at-law, including any attorney-at-law employed or retained by the
Banks or the Agent, to appear for the Borrower in any court of record in
Franklin County, Ohio (which the Borrower acknowledges to be the place where the
Agreement and this Extension were made) or any other state or jurisdiction
wherein the Borrower may then reside, to (i) waive the issuing and service of
process, (ii) confess judgment against the Borrower in favor of the holder of
the Agreement for all amounts then due thereunder and under the Notes, together
with costs of suit, (iii) release all errors, and (iv) waive all rights of
appeal. Each Borrower consents to the jurisdiction and venue of that court. Each
Borrower waives any conflict of interest that any attorney-at-law employed or
retained by the Banks or the Agent may have in confessing judgment under the
Agreement and the Notes and consents to payment of a legal fee to any
attorney-at-law confessing judgment thereunder. After judgment is entered
against one or more of the Borrowers, the power conferred may be exercised as to
one or more of the other Borrowers.

                   [Balance of Page Intentionally Left Blank]

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      IN WITNESS WHEREOF, the parties hereto have caused this Extension to be
executed by their duly authorized officers as of the date first written above.

BORROWERS:

Rocky Shoes & Boots, Inc.,
 an Ohio corporation

By: /s/s David Fraedrich
   ----------------------------

Title: Exec V.P.
      -------------------------

      WARNING -- BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO
      NOTICE AND COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT
      JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE
      AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU
      REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR
      WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART
      TO COMPLY WITH THE AGREEMENT, OR ANY OTHER CAUSE.

Five Star Enterprises Ltd.,              Lifestyle Footwear, Inc.,
 a Cayman Islands corporation             a Delaware corporation

By: /s/ David Fraedrich                  By: /s/ David Fraedrich
   ---------------------------              --------------------------

Title: Exec V.P.                         Title: V.P.
      ------------------------                 -----------------------

                       [Signatures continued on next page]

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BANKS:

Bank One, NA,
 a national banking association

By: /s/ Michael A. Reeves
   -----------------------------------
   Michael A. Reeves, Vice President

The Huntington National Bank,
  a national banking association

By: /s/ David A. Kirkley
   -----------------------------------
   David A. Kirkley, Vice President

AGENT:

Bank One, NA, as Agent,
 a national banking association

By: /s/ Michael A. Reeves
   -----------------------------------
   Michael A. Reeves, Vice President

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ANNEX A

                       FORM OF BORROWING BASE CERTIFICATE
                       ----------------------------------

                                       13<PAGE>   1
Exhibit 10.1

                          THIRD MODIFICATION AGREEMENT

      This Third Modification Agreement (the "Agreement") is made and entered
into this 17th day of May, 2000, by and between FIRSTAR BANK, N.A., formerly
known as Star Bank, N.A., a national banking corporation, with an office located
at 175 South Third Street, Columbus, Ohio 43215 (the "Bank"), and PH GROUP INC.,
an Ohio corporation formerly known as Resource General Corporation, and
successor by merger to PH Hydraulics and Automation, Inc., whose address is 2241
CityGate Drive, Columbus, Ohio 43219 (the "Borrower"), and PHOENIX MANAGEMENT,
LTD., an Ohio limited liability company, whose address is 2241 CityGate Drive,
Columbus, Ohio 43219, and CHARLES T. SHERMAN, individually, who resides at 354
Whitaker Avenue, Powell, Ohio 43065 (collectively the "Guarantors").

                                    RECITALS:

      A. On April 28, 1997, the Borrower and the Bank entered into an Amended
and Restated Revolving Credit/Term Loan Agreement which provided the terms and
conditions under which the Bank agreed to extend to the Borrower a revolving
line of credit in the amount of $2,500,000.00, a term loan in the amount of
$500,000.00, and a term loan in the amount of $600,000.00. Each of these loans
was evidenced by a separate promissory note and secured by a security interest
in all of the business assets of the Borrower as evidenced by security
agreements and perfected by financing statements filed with the Secretary of
State of Ohio and with the Recorder of Franklin County, Ohio.

      B. On June 29, 1998, the Borrower and the Bank entered into a Second
Amended and Restated Revolving Credit/Term Loan Agreement (the "Credit
Agreement"), by the terms of which the Bank agreed to replace the revolving line
of credit for $2,500,000.00 with a new revolving line of credit in the amount of
$3,500,000.00 (the "Revolving Loan"), and also agreed to consolidate the
outstanding balances on the term loans, along with approximately $500,000.00 of
outstanding indebtedness on the existing revolving line of credit, into one
consolidated term loan in the amount of $1,200,000.00 (the "Term Loan").

      C. The Credit Agreement provided that, subject to there being no event of
default, as described in the Credit Agreement, or any circumstance which would,
with the passage of time or the giving of notice, become an event of default,
the Bank would make advances to the Borrower on the Revolving Loan according to
the terms of the Credit Agreement, up to a maximum amount of $3,500,000.00,
which line of credit would remain in effect until June 30, 2000 (the "Maturity
Date").

      D. The Credit Agreement further provided that the amounts outstanding
under the Revolving Loan would accrue interest pursuant to either the "Prime
Interest Rate" option, or the "LIBOR Interest Rate" option, as described in the
Credit Agreement.

      E. The Credit Agreement further provided that both the Revolving Loan and
the Term Loan, as well as all other obligations as described in the Credit
Agreement, would be secured by the following:

      (1)   A first priority security interest in all of the Borrower's accounts
            receivable, inventory, equipment, fixtures and furniture, whether
            then owned or thereafter acquired, as well as their proceeds (cash
            or non-cash), and any insurance proceeds related thereto;

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       (2)    A Collateral Assignment of Life Insurance covering a policy on the
              life of Charles T. Sherman in the amount of $500,000.00, which
              assignment would be a first and best assignment;

       (3)    A first mortgage lien on approximately 505 acres of real property
              owned by the Borrower and located in Perry County, Ohio; and

       (4)    Provisions, by the terms of which all obligations of the Borrower
              to the Bank shall be cross-collateralized and cross-defaulted to
              all other existing debt owed by the Borrower to the Bank.

      In addition, the Revolving Loan and the Term Loan were to be secured by
the guarantys of Charles T. Sherman, the President of the Borrower, and by
Phoenix Management, Ltd., a limited liability company. All of the collateral,
including the guarantys, is collectively referred to as the "Collateral".

      F. On June 29, 1998, in accordance with the terms of the Credit Agreement,
the Borrower executed and delivered to the Bank its Promissory Note in the
amount of $3,500,000.00 (the "Revolving Note"). The Revolving Note provided that
the principal amount outstanding thereunder would accrue interest as described
therein, and in the Credit Agreement, and further, that the Borrower would make
regular monthly payments of the accrued and unpaid interest on the 30th day of
each month beginning July 30, 1998, and continuing until June 30, 2000, at which
time the principal amount, plus any remaining accrued and unpaid interest, will
be paid in full. The Credit Agreement provided that if the LIBOR Interest Rate
option is selected, interest will be paid on the Maturity Date of each contract
for a LIBOR Rate Advance, as defined in the Credit Agreement.

      G. On June 29, 1998, in accordance with the terms of the Credit Agreement,
the Borrower executed and delivered to the Bank its Promissory Note in the
amount of $1,200,000.00 (the "Term Note"). The Term Note provided that the
amounts outstanding thereunder will bear interest at a fixed rate of 8.070% and
be paid in eighty-three (83) principal payments of $14,285.71 plus interest,
followed by one payment of $14,385.35, plus interest, with the first payment
being due on July 30, 1998, and such payments continuing on the same day of each
month thereafter until June 30, 2005, at which time any remaining principal and
interest are to be paid in full.

      H. On June 29, 1998, Charles T. Sherman, individually, executed and
delivered to the Bank his Commercial Guaranty, by the terms of which he
absolutely and unconditionally guaranteed the payment to the Bank of all of the
obligations of the Borrower to the Bank; provided, however, that his maximum
liability would not exceed the principal sum of $600,000.00, plus all interest
thereon, and such other costs, expenses and attorney fees as described in the
Commercial Guaranty.

      I. On June 29, 1998, Phoenix Management, Ltd., an Ohio limited liability
company, executed and delivered to the Bank its Commercial Guaranty, by the
terms of which it absolutely and unconditionally guaranteed the payment to the
Bank of all of the obligations of the Borrower in an amount not to exceed the
principal sum of $4,700,000.00, plus all interest thereon, and such other costs,
expenses and fees as described in the Commercial Guaranty.

      J. On July 1, 1999, the Bank, the Borrower and the Guarantors entered into
a Modification Agreement (the "Modification Agreement"), by the terms of which
the parties agreed that the Borrower was in default pursuant to various
provisions of the Credit Agreement, Revolving Note and Term Note, which defaults
were referred to as the "Covenant Defaults". The Modification Agreement also
reflected the commitment of the Borrower to pursue the acquisition of additional
equity and/or subordinated debt in order to strengthen the capital base of the
Borrower. The Modification Agreement also indicated the Bank's unwillingness to
continue the

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Revolving Loan in the absence of such equity or debt. The Bank agreed to waive
the Covenant Defaults contingent upon the execution of the Modification
Agreement by all of the parties.

      K. The Modification Agreement reduced the Revolving Loan and the Revolving
Note, effective on the date of the Modification Agreement, to $3,000,000.00 and
accelerated the Maturity Date to September 30, 1999. It also provided that until
that time the Bank would continue to make available to the Borrower loan
proceeds in an amount not to exceed $3,000,000.00 pursuant to the Borrowing Base
requirements as set forth therein. Included in the Borrowing Base was a special
temporary advance of $250,000.00 (the "Special Temporary Advance"). The
Modification Agreement also provided for the principal amounts outstanding
thereunder to bear interest at either the Prime Interest Rate option or the
LIBOR Interest Rate option as described in the Credit Agreement. Further, the
Bank waived all of the Covenant Defaults and in consideration for this waiver,
the Borrower paid to the Bank a waiver fee of $5,000.00 at the time of the
execution of the Agreement. In addition, COVENANT (J) of the Credit Agreement
entitled "TANGIBLE NET WORTH" was deleted and replaced with a new section.

      L. The Modification Agreement further provided that the Borrower and the
Guarantors would exercise their best efforts to obtain a commitment for the
injection of additional equity or subordinated debt into the Borrower. The
Borrower and the Guarantors further agreed that if no commitment for additional
equity or subordinated debt satisfactory to the Bank in all respects had been
obtained by the Borrower by July 31, 1999, then they would pay the Bank a fee of
$10,000.00, and in addition the Bank would select an appraiser who would conduct
an appraisal of the Borrower's fixed assets. It further provided that if no such
commitment had been entered into by the Borrower, or if entered into, but not
consummated, by September 30, 1999, then the Borrower would pay the Bank another
$10,000.00 fee. The Borrower was unable to obtain a commitment for additional
equity or subordinated debt by July 31, 1999 and, therefore, paid the $10,000.00
fee which was due. By September 30, 1999, the Borrower had still not obtained
the commitment, and was unable to pay the required $10,000.00 fee.

      M. On December 22, 1999, the Bank, the Borrower and the Guarantors entered
into a Second Modification Agreement by the terms of which the Maturity Date of
the Revolving Loan and the Revolving Note was extended to February 29, 2000. It
also provided that until that time the Bank would make available to the Borrower
loan proceeds in an amount not to exceed $2,476,000.00 pursuant to the terms of
the Credit Agreement, except as modified by the Modification Agreement and the
Second Modification Agreement. It further provided that the amount outstanding
under the Revolving Loan would, at all times, be supported by the Borrowing Base
as described therein, and that on the first day of each month the Borrower would
submit to the Bank a Borrowing Base Certificate in the form attached to the
Second Modification Agreement.

      N. The Second Modification Agreement also provided that the amounts
outstanding under the Revolving Loan would accrue interest at a rate equal to
the Prime Commercial Rate of the Bank (as defined in the Credit Agreement), plus
one and three-quarters of one percent (1.75%), and also that COVENANT (J) of the
Credit Agreement, entitled "Tangible Net Worth", was deleted in its entirety.

      O. The Second Modification Agreement further provided for the payment at
the time of signing of a $5,000.00 renewal fee by the Borrower and the payment
of the additional $10,000.00 fee that was due September 30, 1999. Further,
Borrower agreed to pay to the Bank at the time of signing, $25,000.00 to be
applied to the Term Note and also agreed to pay an additional $25,000.00 on the
Term Note on January 31, 2000, and an additional $50,000.00 on February 28,
2000. All of these payments have been made except for the $50,000.00 due on
February 28, 2000.

      P. The Second Modification Agreement further provided that the Revolving
Note and the Term Note would continue to be secured by all of the Collateral
except for the mortgage on

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the Perry County property which had previously been released. It further
provided that the Bank waived the defaults by the Borrower in relation to the
"Fifth Third Loan" as described therein.

      Q. There is an outstanding principal balance on the Revolving Loan and the
Revolving Note as of March 2, 2000 of $2,474,715.85. There is an outstanding
principal balance on the Term Loan and the Term Note of $639,003.68 as of March
2, 2000, and the next payment of principal and interest is due March 30, 2000.

      R. The Bank has continued to express to the Borrower its unwillingness to
extend credit under the terms of the Revolving Loan and, therefore, has
encouraged the Borrower to look elsewhere for its financing needs. The Borrower
and the Guarantors are seeking new financing from another source in order to pay
off the indebtedness owed to the Bank, but have requested additional time from
the Bank in order to accomplish this. The Bank has agreed to this additional
extension of time to find new financing contingent upon the execution of this
Agreement by all of the parties.

      NOW, THEREFORE, based on the foregoing recitals (which are incorporated
herein as agreements, representations, warranties and covenants of the
respective parties, as the case may be), and for other good and valuable
consideration, receipt of which is hereby mutually acknowledged, the parties
hereto agree as follows:

      1. The Maturity Date of the Revolving Loan and the Revolving Note are, as
of the date of this Agreement, extended to May 31, 2000 (the "New Maturity
Date"). Until that time, the Bank will make available to the Borrower loan
proceeds in an amount not to exceed $2,476,000.00, pursuant to the terms of the
Credit Agreement, except as modified by the Modification Agreement, the Second
Modification Agreement and herein. The Borrower may borrow, repay and reborrow
up to the "Maximum Amount", which shall be the lesser of: a) the sum of 80% of
billed accounts receivable acceptable to the Bank which are outstanding less
than ninety (90) days from date of invoice, plus 50% of raw materials (up to a
maximum raw materials advance of $250,000.00), plus 20% of work-in-process (up
to a maximum work-in-process advance of $500,000.00), plus 60% of finished
goods, (subject, however, to an overall limitation of $1,500,000.00 on all
advances for raw materials, work-in-process and finished goods), (the sum of
which shall be called the "Borrowing Base"); or b) $2,476,000.00. At all times,
the Maximum Amount outstanding must be supported by the Borrowing Base.

      2. On the first day of each month, the Borrower shall continue to submit
to the Bank a Borrowing Base Certificate in the form of "Exhibit A" attached to
the Second Modification Agreement.

      3. The principal amount outstanding under the Revolving Loan will continue
to be evidenced by the Revolving Note. However, the principal amounts
outstanding will accrue interest at a rate equal to the Prime Commercial Rate of
the Bank (as defined in the Credit Agreement), plus two percent (2%).

      4. The interest on the Revolving Note shall continue to be paid in
consecutive monthly payments with the next one due March 30, 2000, and
continuing thereafter on the same day of each month until the New Maturity Date,
at which time the principal, and any accrued and unpaid interest, shall be paid
in full.

      5. At the time of the execution of this Agreement, the Borrower shall pay
to the Bank a renewal fee of $3,000.00, and also pay $25,000.00 of the
$50,000.00 that was due on the Term Note on February 28, 2000, with the
remaining $25,000.00 to be paid on March 31, 2000. The Term Loan will otherwise
continue to be paid as provided in the Term Note. The Borrower

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acknowledges and agrees that the Bank will debit the Borrower's checking account
for each payment on the Term Note when it is due, and apply it on the Term Note.

      6. The amounts outstanding under both the Revolving Note and the Term Note
will continue to be secured by the Collateral, except for the mortgage on the
505 acres of real property owned by the Borrower in Perry County, Ohio, which
was previously released. The Borrower will also execute and deliver to Parker
Industrial LLC, as its landlord, such acknowledgments and agreements as will
then enable Parker Industrial LLC to execute and deliver to the Bank a
Landlord's Waiver, the form of which has been agreed upon by the Bank and Parker
Industrial LLC. The Borrower will enter into such additional agreements as the
Bank may require in order to further evidence and perfect its security and lien
interests in the Collateral, including a security agreement and financing
statement covering the overhead cranes installed on the Borrower's premises.

      7. The Bank continues to have the right at any time to select an appraiser
to conduct an appraisal of the Borrower's fixed assets and provide the Bank with
both an orderly liquidation value and a forced liquidation value of these
assets. The costs of any such appraisal will be paid by the Borrower.

      8. The Bank continues to have the right, at any time, to sell, assign and
transfer to a third party, all of its right, title and interest in and to the
Credit Agreement, Revolving Note, Term Note, Commercial Guaranty, as well as all
other instruments and Collateral documents relating to the Revolving Loan, the
Term Loan and the Collateral.

      9. Upon the occurrence of an event of default, and the expiration of any
applicable cure period, including any under the terms of the Credit Agreement,
the Bank, in its sole discretion, shall continue to have the right to establish
a cash collateral deposit account into which all of the proceeds from the sale
of Borrower's inventory and the collection of its receivables shall flow. If the
Bank establishes a cash collateral deposit account, it shall immediately give
the Borrower notice of this fact. The Bank shall have exclusive control over the
account and the exclusive right to make withdrawals and apply the proceeds to
any amounts then due and owing on the Borrower's obligations. Borrower shall
continue to maintain its lockbox with the Bank and in directing its accounts
receivable to remit all payments to the lockbox. In the event the Bank chooses
to establish a cash collateral deposit account, all monies from the lockbox will
flow directly into the account.

      10. The Borrower and the Guarantors jointly and severally acknowledge and
agree that their obligations under the Revolving Loan and the Term Loan, as
evidenced by the Credit Agreement, Revolving Note, Term Note, the security
agreements and financing statements, and all other documents related thereto as
modified by this Agreement (the "Loan Documents"), and all other obligations of
any one or more of them to the Bank, are owing without setoff, recoupment,
defense or counterclaim, in law or in equity, of any nature or kind; that the
obligations are secured by valid, perfected, indefeasible, and enforceable first
priority liens in all of the assets of the Borrower, as more specifically
described in the Loan Documents.

      11. The Borrower and each of the Guarantors represent and warrant that
they are not aware of, and do not possess, any claims or causes of action
against the Bank. Notwithstanding the representation, and as further
consideration for the agreements and understandings herein, the Borrower and
each of the Guarantors, in every capacity including without limitation,
shareholders, officers, partners, directors, investors or creditors, or any one
or more of the parties, and each of their employees, agents, executors,
successors and assigns, hereby release the Bank and its officers, directors,
employees, agents, attorneys, affiliates, subsidiaries, successors and assigns
from any liability, claim, right or cause of action which now exists, or
hereafter arises, whether known or unknown, arising from or in any way related
to facts in existence as of the date hereof.

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<PAGE>   6

      12. No failure or delay on the part of the Bank in the exercise of any
power or right, and no course of dealing between any one or more of the
Borrower, the Guarantors and the Bank operates as a waiver of such power or
right, nor shall any single or partial exercise of any power or right preclude
other or further exercise thereof or the exercise of any other power or right.
The remedies provided for in the Loan Documents are cumulative and not exclusive
of any remedies which may be available to the Bank at law or in equity.

      13. The Borrower and the Guarantors represent and warrant that the
execution, delivery and performance of this Agreement by the Borrower and the
Guarantors, and all agreements and documents delivered in conjunction herewith
have been duly authorized by all necessary corporate or limited liability
company action and do not and will not require any consent or approval of
stockholders or members, nor violate any provision of any law, rule, regulation,
order, writ, judgment, injunction or decree presently in effect having
applicability to the Borrower or the Guarantors, or the governing documents of
either, or result in a breach of or constitute a default under any indenture or
loan or credit agreement or any other agreement, lease or instrument to which
the Borrower or the Guarantors are a party or by which they or their properties
may be bound or affected.

      14. Except as expressly modified and amended by the terms of this
Agreement, all other terms and conditions of the Credit Agreement and the other
Loan Documents shall remain in full force and effect and are hereby ratified,
confirmed and approved. If there is an express conflict between the terms of
this Agreement and the terms of the Credit Agreement or the other Loan
Documents, the terms of this Agreement govern and control.

      15. This written Agreement represents the final agreement between the
Borrower, the Guarantors and the Bank and may not be contradicted by evidence of
prior contemporaneous or subsequent oral agreements by the parties. All prior
and contemporaneous oral agreements, if any, between the Bank on the one hand,
and any one or more of the Borrower or any of the Guarantors on the other hand,
are merged into this Agreement and do not survive the execution of this
Agreement. Modifications or amendments to this Agreement must be in writing and
signed by all parties in order to be effective.

      16. The Borrower and the Guarantors agree that they shall pay the costs
and expenses, including attorney fees, incurred by the Bank arising from or
relating in any way to the Loan Documents, this Agreement, or any subsequent
negotiations, agreements and disputes. Furthermore, the costs and expenses shall
constitute a part of the obligation under the Credit Agreement and shall be
secured by all of the Collateral securing the Revolving Loan and the Term Loan.
The Revolving Loan and the Term Loan shall continue to be cross-collateralized
and cross-defaulted in all respects.

      17. This Agreement is governed by the laws of the State of Ohio and is
binding on each party and their respective successors, assigns, heirs and
personal representatives, and shall inure to the benefit of the Bank and its
successors and assigns. If any provision of this Agreement conflicts with any
applicable statute or law, or is otherwise unenforceable, such offending
provision is null and void only to the extent of such conflict or
unenforceability, and is deemed separate from and does not invalidate any other
provision of this Agreement.

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      IN WITNESS WHEREOF, this Agreement is effective on the date indicated on
the first page.

BORROWER:                                       BANK:

         PH Group Inc.                          Firstar Bank, N.A.

By:                                    By:
   --------------------------             ------------------------------------
         Charles T. Sherman                     Martin J. Durkin
         President                                    Assistant Vice President

                                   GUARANTORS:

                                                      Phoenix Management, LTD.

                                                By:
-----------------------------                      ---------------------------
         Charles T. Sherman                           Charles T. Sherman,
                                                      Member

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