Exhibit 10.1
AMENDMENT NO. 4
TO
LOAN AND SECURITY AGREEMENT
AND WAIVER
THIS AMENDMENT NO. 4 AND WAIVER (“Amendment No. 4 and Waiver”) is entered into as of November
8, 2006, by and among ROCKY BRANDS, INC., a corporation organized and existing under the laws of
the State of Ohio, 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, jointly and severally, “Borrower”), the financial institutions
party thereto (each a “Lender” and collectively, the “Lenders”), and GMAC COMMERCIAL FINANCE LLC,
as administrative agent and sole lead arranger for the Lenders (in such capacities, the “Agent”).
BACKGROUND
Borrowers, Agent and Lenders are parties to a Loan and Security Agreement dated as of January
6, 2005 (as amended by Amendment No. 1 to Loan and Security Agreement and Consent dated as of
January 19, 2005, Amendment No. 2 to Loan and Security Agreement dated as of April 30, 2006, and
Amendment No. 3 to Loan and Security Agreement dated as of June 28, 2006 and as further amended,
restated, supplemented or otherwise modified from time to time, the “Loan Agreement”) pursuant to
which Agent and Lenders provide Borrowers with certain financial accommodations.
Borrower has notified Agent and Lenders that certain Events of Default have occurred which are
continuing due to(a) the failure of Borrower to comply with the provisions of Section 5.3(B) of the
Loan 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 Borrower to
comply with the provisions of Section 5.3(C) of the Loan Agreement as a result of EBITDA of Rocky
on a Consolidated 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 Borrower to comply with the provisions of Section 5.3(D) of the Loan 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 (the
“Designated Defaults”). Borrower has requested Agent and Lenders to waive the Designated Defaults,
and Agent and Lenders are willing to do so on the terms and conditions set forth herein.
Borrowers have also requested Lenders to reset certain of the financial covenants, and to
amend certain other provisions of the Loan Agreement; Lenders have agreed to effectuate such
modifications to the Loan Agreement on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of any loan or advance or grant of credit heretofore or
hereafter made to or for the account of Borrowers by Agent and Lenders, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties
hereto hereby agree as follows:
1. Definitions. All capitalized terms not otherwise defined herein shall have the
meanings given to them in the Loan Agreement.
2. Amendment to Loan Agreement. Subject to satisfaction of the conditions precedent
set forth in Section 4 below, the Loan Agreement is amended as follows:
(a) Section 1.1 of the Loan Agreement is amended by inserting the following defined terms in
their appropriate alphabetical order:
“Amendment No. 4” shall mean Amendment No. 4 and Waiver to this Agreement
dated as of November 8, 2006.
“Amendment No. 4 Closing Date” shall mean the date upon which all of the
conditions precedent to the effectiveness of Amendment No. 4 have been
satisfied.
(b) Section 5.3(A) of the Loan 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:
| |
|
|
|
|
| Period |
|
Fixed Charge 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 |
|
2
(c) Section 5.3(B) of the Loan 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 5.3(C) of the Loan 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 5.3(D) of the Loan 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:
3
| |
|
|
|
|
| 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, Requisite Lenders hereby waive the Designated Defaults.
4. Conditions of Effectiveness. This Amendment No. 4 and Waiver shall become
effective upon satisfaction of the following conditions precedent:
(a) Agent shall have received eight (8) copies of this Amendment No. 4 and Waiver duly
executed by each Borrower and Requisite Lenders;
(b) Agent shall have received, for the pro rata benefit of the Lenders executing Amendment No.
4 and Waiver on or before the Amendment No. 4 Closing Date, based upon their respective
Commitments, the sum of $225,000, which shall be fully earned on the Amendment No. 4 Closing Date
and not subject to rebate, refund, proration and/or reduction for any reason;
(c) Agent shall have received six (6) copies of Amendment No. 2 to Intercreditor Agreement in
the form annexed hereto as Exhibit B dated as of the Amendment No. 4 Closing Date duly
executed by ACAS; and
(d) Agent shall have received a true and correct copy of an amendment to the Note Purchase
Agreement in form and substance satisfactory to Agent in all respects.
5. Representations and Warranties. Each Borrower hereby represents and warrants as
follows:
(a) This Amendment No. 4 and Waiver and the Loan Agreement, as amended hereby, constitute
legal, valid and binding obligations of Borrowers and are enforceable against each Borrower in
accordance with their respective terms.
(b) Upon the effectiveness of this Amendment No. 4 and Waiver, each Borrower hereby reaffirms
all covenants, representations and warranties made in the Loan 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 Amendment No. 4 and Waiver, except to
the extent any such representation or warranty expressly relates to an earlier date.
(c) No Event of Default or Default has occurred and is continuing or would exist after giving
effect to this Amendment No. 4 and Waiver.
(d) No Borrower has any defense, counterclaim or offset with respect to the Loan Agreement.
4
(e) The issuance of this Amendment No. 4 and Waiver is permitted pursuant to all applicable
law and all material agreements, documents and instruments to which any Loan Party is a party or by
which any of their respective properties or assets are bound.
6. Effect on the Loan Agreement.
(a) Upon the effectiveness of Section 2 hereof, each reference in the Loan Agreement to “this
Agreement,” “hereunder,” “hereof,” “herein” or words of like import shall mean and be a reference
to the Loan Agreement as amended hereby.
(b) Except as specifically amended herein, the Loan 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 No. 4 and Waiver shall not operate as a waiver of any right, power or remedy of Agent or
Lenders, nor constitute a waiver of any provision of the Loan Agreement, or any other documents,
instruments or agreements executed and/or delivered under or in connection therewith.
7. Release. Each Borrower hereby acknowledges and agrees that: (a) neither it nor any
of its Affiliates has any claim or cause of action against Agent or any Lender (or any of their
respective Affiliates, officers, directors, employees, attorneys, consultants or agents) and (b)
Agent and each Lender has heretofore properly performed and satisfied in a timely manner all of its
obligations to Borrowers under the Loan Agreement and the other Loan Documents. Notwithstanding
the foregoing, Agent and the Lenders wish (and Borrowers agree) to eliminate any possibility that
any past conditions, acts, omissions, events or circumstances would impair or otherwise adversely
affect any of the Agent’s and the Lenders’ rights, interests, security and/or remedies under the
Loan Agreement and the other Loan Documents. Accordingly, for and in consideration of the
agreements contained in this Amendment and other good and valuable consideration, each Borrower
(for itself and its Affiliates and the successors, assigns, heirs and representatives of each of
the foregoing) (collectively, the “Releasors”) does hereby fully, finally, unconditionally
and irrevocably release and forever discharge Agent and each Lender and each of their respective
Affiliates, officers, directors, employees, attorneys, consultants and agents (collectively, the
“Released Parties”) from any and all debts, claims, obligations, damages, costs, attorneys’
fees, suits, demands, liabilities, actions, proceedings and causes of action, in each case, whether
known or unknown, contingent or fixed, direct or indirect, and of whatever nature or description,
and whether in law or in equity, under contract, tort, statute or otherwise, which any Releasor has
heretofore had or now or hereafter can, shall or may have against any Released Party by reason of
any act, omission or thing whatsoever done or omitted to be done on or prior to the Amendment No. 4
Closing Date arising out of, connected with or related in any way to this Amendment No. 4 and
Waiver, the Loan Agreement or any other Loan Document, or any act, event or transaction related or
attendant thereto, or the agreements of Agent or any Lender
contained therein, or the possession, use, operation or control of any of the assets of any
Borrower, or the making of any Advance, or the management of such Advance or the Collateral.
5
8. Governing Law. This Amendment No. 4 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 New York.
9. Headings. Section headings in this Amendment No. 4 and Waiver are included herein
for convenience of reference only and shall not constitute a part of this Amendment No. 4 and
Waiver for any other purpose.
10. Counterparts; Facsimile. This Amendment No. 4 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.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
6
IN WITNESS WHEREOF, this Amendment No. 4 and Waiver has been duly executed as of the day and
year first written above.
| |
|
|
|
|
| |
|
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
Borrowers |
|
|
|
|
|
| |
|
GMAC COMMERCIAL FINANCE LLC |
|
|
|
|
|
|
|
By:
|
|
/s/ Thomas Brent |
|
|
|
|
|
| |
|
Name: Thomas Brent |
| |
|
Title: Director |
|
|
|
|
|
| |
|
Revolving Loan Commitment: |
| |
|
$27,118,640.00 |
| |
|
Term Loan A Commitment: |
| |
|
$1,211,815.95 |
| |
|
Term Loan C Commitment: |
| |
|
$4,000,709.63 |
|
|
|
|
|
| |
|
BANK OF AMERICA, N.A. |
|
|
|
|
|
|
|
By:
|
|
/s/ William J. Wilson |
|
|
|
|
|
| |
|
Name: William J. Wilson |
| |
|
Title: Vice President |
|
|
|
|
|
| |
|
Revolving Loan Commitment: |
| |
|
$21,186,440.00 |
| |
|
Term Loan A Commitment: |
| |
|
$946,731.33 |
| |
|
Term Loan C Commitment: |
| |
|
$3,125,554.77 |
Signature Page to Amendment No. 4 and Waiver
| |
|
|
|
|
| |
|
CHARTER ONE BANK, N.A. |
|
|
|
|
|
|
|
By:
|
|
/s/ James G. Zamborsky |
|
|
|
|
|
| |
|
Name: James G. Zamborsky |
| |
|
Title: Vice President |
|
|
|
|
|
| |
|
Revolving Loan Commitment: |
| |
|
$17,796,610.00 |
| |
|
Term Loan A Commitment: |
| |
|
$795,254.33 |
| |
|
Term Loan C Commitment: |
| |
|
$2,625,466.07 |
|
|
|
|
|
| |
|
PNC BANK, NATIONAL ASSOCIATION |
|
|
|
|
|
|
|
By:
|
|
/s/ Peter Redington |
|
|
|
|
|
| |
|
Name: Peter Redington |
| |
|
Title: A.V.P. |
|
|
|
|
|
| |
|
Revolving Loan Commitment: |
| |
|
$17,796,610.00 |
| |
|
Term Loan A Commitment: |
| |
|
$795,254.33 |
| |
|
Term Loan C Commitment: |
| |
|
$2,625,466.07 |
|
|
|
|
|
| |
|
COMERICA BANK |
|
|
|
|
|
|
|
By:
|
|
/s/ Harold Dalton |
|
|
|
|
|
| |
|
Name: Harold Dalton |
| |
|
Title: V.P. |
|
|
|
|
|
| |
|
Revolving Loan Commitment: |
| |
|
$16,101,700.00 |
| |
|
Term Loan A Commitment: |
| |
|
$719,516.06 |
| |
|
Term Loan C Commitment: |
| |
|
$2,375,422.45 |
Signature Page to Amendment No. 4 and Waiver