(iii) Further Assurances. Upon the request of Agent, made in the Permitted Discretion of Agent, Borrowers shall take all reasonable steps necessary to protect Agent’s interest in any Eligible Government Receivable under the Federal Assignment of Claims Act and all other applicable state or local statutes or ordinances and deliver to Agent appropriately endorsed, any instrument or chattel paper connected with any Receivable arising out of contracts between any Borrower and the United States, or any department, agency or instrumentality of it. Each Borrower irrevocably designates and appoints Agent (and all persons designated by Agent) as such Borrower’s true and lawful attorney in fact to (A) take any action as may be necessary or desirable to complete any such US Assignment on behalf of such Borrower and to direct the payment of the proceeds thereof; and (B) to execute and deliver the US Assignment on behalf of such Borrower.

(iv) Central Contractor Registration. No Borrower shall change its registration in the United States Central Contractor Registration database or any replacement registration system established by the United States for the purpose of registering government contractors and accepting payment instructions with respect to Receivables due from the United States, or any department, agency or instrumentality of it (the “CCR”). Each registered Borrower shall annually update its registration in the CCR and take all other steps necessary to maintain an effective registration with payment instructions for all such Receivables to the Collection Accounts only. In the event any Borrower changes its registration such that such Receivables are not paid directly and solely to the Collection Accounts, Agent may exercise the power of attorney granted pursuant to Section 4.15(f) to alter such Borrower’s registration as Agent deems appropriate in its sole discretion.

4.16. Inventory. To the extent Inventory held for sale or lease has been produced by any Borrower, it has been and will be produced by such Borrower in accordance with the Federal Fair Labor Standards Act of 1938, as amended, and all rules, regulations and orders thereunder.

4.17. Maintenance of Equipment. The Equipment shall be maintained in good operating condition and repair (reasonable wear and tear excepted) and all necessary replacements of and repairs thereto shall be made so that the value and operating efficiency of the Equipment shall be maintained and preserved (reasonable wear and tear excepted). Each Borrower shall have the right to sell Equipment to the extent set forth in Section 4.3.

4.18. Exculpation of Liability. Nothing herein contained shall be construed to constitute Agent or any Lender as any Borrower’s agent for any purpose whatsoever, nor shall Agent or any Lender be responsible or liable for any shortage, discrepancy, damage, loss or destruction of any part of the Collateral wherever the same may be located and regardless of the cause thereof, except to the extent caused by Agent’s or such Lender’s gross negligence or willful misconduct. Neither Agent nor any Lender, whether by anything herein or in any assignment or otherwise, will assume any of any Borrower’s obligations under any contract or agreement assigned to Agent or such Lender, and neither Agent nor any Lender shall be responsible in any way for the performance by any Borrower of any of the terms and conditions thereof.

4.19. Environmental Matters.

(a) Borrowers shall ensure that the Real Property and all operations and businesses conducted thereon remains in compliance with all Environmental Laws, and they shall not place or permit to be placed any Hazardous Substances on any Real Property except as permitted by Applicable Law or appropriate governmental authorities and except to the extent that any noncompliance or failure is not reasonably likely to have a Material Adverse Effect.

(b) Borrowers shall establish and maintain a system to assure and monitor continued compliance with all applicable Environmental Laws which system shall include periodic reviews of such compliance, except to the extent that any noncompliance or failure is not reasonably likely to have a Material Adverse Effect.

(c) Borrowers shall (i) employ in connection with the use of the Real Property appropriate technology necessary to maintain compliance with any applicable Environmental Laws and (ii) dispose of any and all Hazardous Waste generated at the Real Property only at facilities and with carriers that maintain valid permits under RCRA and any other applicable Environmental Laws. Borrowers shall comply with all Applicable Law in connection with the transport or disposal of any Hazardous Waste generated at the Real Property.

(d) In the event any Borrower obtains, gives or receives notice of any Release or threat of Release of a reportable quantity of any Hazardous Substances at the Real Property (any such event being hereinafter referred to as a “Hazardous Discharge”) or receives any notice of violation, request for information or notification that it is potentially responsible for investigation or cleanup of environmental conditions at the Real Property, demand letter or complaint, order, citation, or other written notice with regard to any Hazardous Discharge or violation of Environmental Laws affecting the Real Property or any Borrower’s interest therein (any of the foregoing is referred to herein as an “Environmental Complaint”) from any Person, including any governmental agency responsible in whole or in part for environmental matters in the state in which the Real Property is located (any such person or entity hereinafter the “Authority”), in each instance which is reasonably likely to have a Material Adverse Effect, then Borrowing Agent shall, within five (5) Business Days, give written notice of same to Agent detailing facts and circumstances of which any Borrower is aware giving rise to the Hazardous Discharge or Environmental Complaint. Such information is to be provided to allow Agent to protect its security interest in and Lien on the Real Property and the Collateral and is not intended to create nor shall it create any obligation upon Agent or any Lender with respect thereto.

(e) [reserved].

(f) Borrowers shall respond promptly to any such Hazardous Discharge or Environmental Complaint and take all necessary action in order to safeguard the health of any Person and to avoid subjecting the Collateral or Real Property to any Lien. If any Borrower shall fail to respond promptly to any such Hazardous Discharge or Environmental Complaint or any Borrower shall fail to comply with any of the requirements of any Environmental Laws, and Agent shall determine that any such failure could have a Material Adverse Effect, Agent on behalf of Lenders may, but without the obligation to do so, for the sole purpose of protecting Agent’s interest in the Collateral: (A) give such notices or (B) enter onto the Real Property (or authorize third parties to enter onto the Real Property) and take such actions as Agent (or such third parties as directed by Agent) deem reasonably necessary or advisable, to clean up, remove, or mitigate any such Hazardous Discharge or Environmental Complaint. All reasonable costs and expenses incurred by Agent and Lenders (or such third parties) in the exercise of any such rights, including any sums paid in connection with any judicial or administrative investigation or proceedings, fines and penalties, together with interest thereon from the date expended at the Default Rate for Domestic Rate Loans constituting Revolving Advances shall be paid upon demand by Borrowers, and until paid shall be added to and become a part of the Obligations secured by the Liens created by the terms of this Agreement or any other agreement between Agent, any Lender and any Borrower. Evidence of any such expense shall be submitted promptly to Borrowing Agent.

(g) Promptly upon the written reasonable request of Agent from time to time, Borrowers shall provide Agent, at Borrowers’ expense, with an environmental site assessment or environmental audit report prepared by an environmental engineering firm acceptable in the reasonable opinion of Agent, to assess the existence of a Hazardous Discharge and the potential costs in connection with abatement, cleanup and removal of any Hazardous Substances found on, under, at or within the Real Property. Any report or investigation of such Hazardous Discharge proposed and acceptable to an appropriate Authority that is charged to oversee the clean-up of such Hazardous Discharge shall be acceptable to Agent. If such estimates, individually or in the aggregate, exceed $1,000,000, Agent shall have the right to require Borrowers to post a bond, letter of credit or other security reasonably satisfactory to Agent to secure payment of these costs and expenses.

(h) Borrowers shall defend and indemnify Agent and Lenders and hold Agent, Lenders and their respective employees, agents, directors and officers harmless from and against all loss, liability, damage and expense, claims, costs, fines and penalties, including attorney’s fees, suffered or incurred by Agent or Lenders under or on account of any Environmental Laws, including the assertion of any Lien thereunder, with respect to any Hazardous Discharge, the presence of any Hazardous Substances affecting the Real Property, whether or not the same originates or emerges from the Real Property or any contiguous real estate, including any loss of value of the Real Property as a result of the foregoing except to the extent such loss, liability, damage and expense is attributable to any Hazardous Discharge resulting from actions on the part of Agent or any Lender. Borrowers’ obligations under this Section 4.19 shall arise upon the discovery of the presence of any Hazardous Substances at the Real Property, whether or not any federal, state, provincial, or local environmental agency has taken or threatened any action in connection with the presence of any Hazardous Substances. Borrowers’ obligation and the indemnifications hereunder shall survive the termination of this Agreement.

(i) For purposes of Section 4.19 and 5.7, all references to Real Property shall be deemed to include all of each Borrower’s right, title and interest in and to its owned and leased premises.

4.20. Financing Statements. Except as respects the financing statements filed by Agent and the financing statements described on Schedule 1.2(a) and Permitted Encumbrances, no financing statement covering any of the Collateral or any proceeds thereof is on file in any public office.

V REPRESENTATIONS AND WARRANTIES.

Each Borrower represents and warrants as follows:

5.1. Authority. Each Borrower has full power, authority and legal right to enter into this Agreement and the Other Documents and to perform all its respective Obligations hereunder and thereunder. This Agreement and the Other Documents have been duly executed and delivered by each Borrower, and this Agreement and the Other Documents constitute the legal, valid and binding obligation of such Borrower enforceable in accordance with their terms, except as such enforceability may be limited by any applicable bankruptcy, insolvency, moratorium or similar laws affecting creditors’ rights generally. The execution, delivery and performance of this Agreement and of the Other Documents (a) are within such Borrower’s corporate or limited liability company powers, have been duly authorized by all necessary corporate or company action, are not in contravention of law or the terms of such Borrower’s by-laws or certificate or articles of incorporation, or operating agreement or certificate of formation, or other applicable documents relating to such Borrower’s formation or to the conduct of such Borrower’s business or of any material agreement or undertaking to which such Borrower is a party or by which such Borrower is bound, (b) will not conflict with or violate any law or regulation, or any judgment, order or decree of any Governmental Body, (c) will not require the Consent of any Governmental Body or any other Person, except those Consents set forth on Schedule 5.1 hereto, all of which will have been duly obtained, made or compiled prior to the Closing Date and which are in full force and effect and (d) will not conflict with, nor result in any breach in any of the provisions of or constitute a default under or result in the creation of any Lien except Permitted Encumbrances upon any asset of such Borrower under the provisions of any agreement, charter document, instrument, by-law, operating agreement, or other instrument to which such Borrower is a party or by which it or its property is a party or by which it may be bound.

5.2. Formation, Qualification, Equity Interests, Subsidiaries.

(a) Each Borrower is duly incorporated or organized and in good standing under the laws of the jurisdiction listed on Schedule 5.2(a) and is qualified to do business and is in good standing in the jurisdictions listed on Schedule 5.2(a) which constitute all jurisdictions in which qualification and good standing are necessary for such Borrower to conduct its business and own its property and where the failure to so qualify could reasonably be expected to have a Material Adverse Effect on such Borrower. Each Borrower has delivered to Agent true and complete copies of its certificate of incorporation and by-laws or certificate of formation and operating agreement and will promptly notify Agent of any material amendment or changes thereto.

(b) Set forth on Schedule 5.2(b), is a complete and accurate description, as of the Closing Date, of the authorized Equity Interests of each Borrower (other than the Parent) and their respective Subsidiaries, by class, and, as of the Closing Date, a description of the number of shares of each such class that are issued and outstanding. Other than as described on Schedule 5.2(b), there are no subscriptions, options, warrants, or calls relating to any Equity Interests of each Borrower or any of their respective Subsidiaries, including any right of conversion or exchange under any outstanding security or other instrument. Other than as described on Schedule 5.2(b), as of the Closing Date, no Borrower is subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any Equity Interest or any security convertible into or exchangeable for any of its Equity Interests.

5.3. Survival of Representations and Warranties. All representations and warranties of such Borrower contained in this Agreement and the Other Documents shall be true in all material respects at the time of such Borrower’s execution of this Agreement and the Other Documents, and shall survive the execution, delivery and acceptance thereof by the parties thereto and the closing of the transactions described therein or related thereto.

5.4. Tax Returns. Each Borrower’s federal tax identification number or federal business number, as applicable, is set forth on Schedule 5.4. Each Borrower has filed all federal (including the federal government of Canada), state, provincial, and material local tax returns and other reports each is required by law to file and has paid all material taxes, assessments, fees and other governmental charges that are due and payable, except to the extent Properly Contested. The provision for taxes on the books of each Borrower is adequate for all years not closed by applicable statutes, and for its current fiscal year, and no Borrower has any knowledge of any material deficiency or additional material assessment in connection therewith not provided for on its books.

5.5. Financial Statements.

(a) The cash flow, income statement and balance sheet projections of Parent and its Subsidiaries on a consolidated basis, copies of which are annexed hereto as Schedule 5.5(a) (the “Projections”) are based on underlying assumptions which provide a reasonable basis for the projections contained therein and reflect Borrowers’ judgment based on present circumstances of the most likely set of conditions and course of action for the projected period.

(b) The consolidated balance sheets of Parent and its Subsidiaries as of December 31, 2009, and the related consolidated statement of income, changes in stockholder’s equity, and changes in cash flow for the period ended on such date, all accompanied by reports thereon containing opinions without qualification by independent certified public or chartered accountants, copies of which have been delivered to Agent, have been prepared in accordance with GAAP, consistently applied (except for changes in application in which such accountants concur) and present fairly the financial position of Parent and its Subsidiaries on a consolidated basis at such date and the results of their operations for such period. Since December 31, 2009, there has been no change in the condition, financial or otherwise, of Parent or its Subsidiaries as shown on the consolidated balance sheet as of such date and no change in the aggregate value of machinery, equipment and Real Property owned by Parent or its Subsidiaries, in each instance, which individually or in the aggregate has had a Material Adverse Effect.

5.6. Entity Names. Except as set forth on Schedule 5.6, no Borrower, Guarantor or any of their respective Subsidiaries has been known by any other corporate name after December 31, 2006 and does not sell Inventory under any other name, nor has any of them been the surviving or continuing corporation or company of a merger , amalgamation, or consolidation or acquired all or substantially all of the assets of any Person after December 31, 2006.

5.7. O.S.H.A. and Environmental Compliance.

(a) Except as set forth on Schedule 5.7, and for noncompliance that is not reasonably likely to have a Material Adverse Effect, each Borrower has duly complied with, and its facilities, business, assets, property, leaseholds, Real Property and Equipment are in compliance in all material respects with, the provisions of the Federal Occupational Safety and Health Act, the analogous Canadian statutes, and all other Environmental Laws. Except as set forth on Schedule 5.7, there have been no outstanding citations, notices or orders of non-compliance issued to any Borrower or relating to its business, assets, property, leaseholds or Equipment under any such laws, rules or regulations and for noncompliance that is not reasonably likely to have a Material Adverse Effect.

(b) Each Borrower has been issued all required federal, state, provincial, and local licenses, certificates or permits relating to all applicable Environmental Laws except where the failure to obtain the same is not reasonably likely to have a Material Adverse Effect.

(c) Except as set forth on Schedule 5.7, and except for any of the listed items which are not reasonably likely to have a Material Adverse Effect, (i) there are no visible signs of releases, spills, discharges, leaks or disposal (collectively referred to as “Releases”) of Hazardous Substances at, upon, under or within any Real Property; (ii) there are no underground storage tanks or polychlorinated biphenyls on the Real Property; (iii) the Real Property has never been used as a treatment, storage or disposal facility of Hazardous Waste; and (iv) no Hazardous Substances are present on the Real Property or any premises leased by any Borrower, excepting such quantities as are managed in accordance with all applicable manufacturer’s instructions and governmental regulations and as are necessary for the operation of the commercial business of any Borrower or of its tenants, and naturally occurring Hazardous Substances.

5.8. Solvency; No Litigation, Violation, Indebtedness or Default.

(a) Parent and its Subsidiaries on a consolidated basis are Solvent.

(b) No Borrower has (i) any pending or threatened litigation, arbitration, actions or proceedings that individually or in the aggregate is reasonably likely to have a Material Adverse Effect, or (ii) any liabilities or indebtedness for borrowed money other than the Obligations and any Indebtedness permitted under this Agreement.

(c) No Borrower is in violation of any applicable statute, law, rule, regulation or ordinance which violation could reasonably be expected to have a Material Adverse Effect, nor is any Borrower in material violation of any order of any court, Governmental Body or arbitration board or tribunal.

(d) No Borrower nor any member of the Controlled Group maintains or contributes to any Pension Benefit Plan other than those listed on Schedule 5.8(d). Except to the extent that any of the following are not reasonably likely to have a Material Adverse Effect, no Pension Benefit Plan has incurred any “accumulated funding deficiency,” as defined in Section 302(a)(2) of ERISA and Section 412(a) of the Code, whether or not waived, and each Borrower and each member of the Controlled Group has met all applicable minimum funding requirements under Section 302 of ERISA and under Canadian Employee Benefit Laws in respect of each Plan to which it is obligated to contribute. No Termination Event has occurred nor has any other event occurred that is likely to result in a Termination Event, except to the extent that such Termination Event is not reasonably likely to have a Material Adverse Effect. Except as set forth on Schedule 5.8(d), none of the Borrowers or any of the Controlled Group is required to provide security to any Pension Benefit Plan under Section 436(f) of the Code or under Canadian Employee Benefit Laws. As of the Closing Date, Rocky Canada is not and has never been required to contribute to a Canadian Union Plan.

5.9. Patents, Trademarks, Copyrights and Licenses. Except for immaterial items of Intellectual Property, all active registered patents, patent applications, trademarks, trademark applications, service marks, service mark applications, copyrights, copyright applications, design rights, trade names, owned or utilized by any Borrower are set forth on Schedule 5.9 (as of the Closing Date and as such schedule is updated from time to time upon request by Agent), are valid and have been duly registered or filed with all appropriate Governmental Bodies and constitute all of the intellectual property rights which are necessary for the operation of its business. There is no objection to or pending challenge to the validity of any such registered patent, trademark, copyright, design rights, trade name and no Borrower is aware of any grounds for any challenge, except as set forth in Schedule 5.9 hereto that is reasonably likely to have a Material Adverse Effect. Except for immaterial items of Intellectual Property, each patent, patent application, patent license, trademark, trademark application, trademark license, service mark, service mark application, service mark license, design rights, copyright, copyright application and copyright license owned or held by any Borrower and all trade secrets used by any Borrower consist of original material or property developed by such Borrower or was lawfully acquired by such Borrower from the proper and lawful owner thereof. Borrowers have used commercially reasonable efforts to maintain each of such items used in their business. With respect to all software used by any Borrower, such Borrower is in possession of all source and object codes related to each piece of software or is the beneficiary of a source code escrow agreement, each such source code escrow agreement being listed on Schedule 5.9 hereto, except where the failure to have such possession would not reasonably be expected to have a Material Adverse Effect.

5.10. Licenses and Permits. Except as set forth in Schedule 5.10, each Borrower (a) is in compliance with, and (b) has procured and is now in possession of, all material licenses or permits required by any applicable federal, state, provincial or local law, rule or regulation for the operation of its business in each jurisdiction wherein it is now conducting or proposes to conduct business and where the failure to procure such licenses or permits is reasonably likely to have a Material Adverse Effect.

5.11. Default of Indebtedness. No Borrower is in default in the payment of the principal of or interest on any Indebtedness in excess of $500,000 or under any instrument or agreement under or subject to which such Indebtedness has been issued and no event has occurred under the provisions of any such instrument or agreement which with or without the lapse of time or the giving of notice, or both, constitutes or would constitute an event of default thereunder.

5.12. No Default. No Borrower is in default in the payment or performance of any of Material Contract. All Material Contracts are listed on Schedule 5.12 (as it may be updated from time to time), are in full force and effect and no notice of default or termination has been delivered or threatened with respect thereto.

5.13. No Burdensome Restrictions. No Borrower is party to any contract or agreement the performance of which could have a Material Adverse Effect. As of the Closing Date each Borrower has heretofore delivered to Agent true and complete copies of all Material Contracts to which it is a party or to which it or any of its properties is subject. No Borrower has agreed or consented to cause or permit in the future (upon the happening of a contingency or otherwise) any of its property, whether now owned or hereafter acquired, to be subject to a Lien which is not a Permitted Encumbrance.

5.14. No Labor Disputes. No Borrower is involved in any labor dispute; there are no strikes or walkouts or union organization of any Borrower’s employees threatened or in existence and no labor contract is scheduled to expire during the Term other than as set forth on Schedule 5.14 hereto; except where any of the same are not reasonably likely to have a Material Adverse Effect.

5.15. Margin Regulations. No Borrower is engaged, nor will it engage, principally or as one of its important activities, in the business of extending credit for the purpose of “purchasing” or “carrying” any “margin stock” within the respective meanings of each of the quoted terms under Regulation U of the Board of Governors of the Federal Reserve System as now and from time to time hereafter in effect. No part of the proceeds of any Advance will be used for “purchasing” or “carrying” “margin stock” as defined in Regulation U of such Board of Governors.

5.16. Investment Company Act. No Borrower is an “investment company” registered or required to be registered under the Investment Company Act of 1940, as amended, nor is it controlled by such a company.

5.17. Disclosure. No representation or warranty made by any Borrower in this Agreement or in any financial statement, report, certificate or any other document furnished in connection herewith contains any untrue statement of a material fact or omits to state any material fact necessary to make the statements herein or therein not misleading. There is no fact known to any Borrower or which reasonably should be known to such Borrower which such Borrower has not disclosed to Agent in writing with respect to the transactions contemplated by this Agreement which could reasonably be expected to have a Material Adverse Effect.

5.18. Reserved.

5.19. Conflicting Agreements. No provision of any mortgage, indenture, contract, agreement, judgment, decree or order binding on any Borrower or affecting the Collateral conflicts with, or requires any Consent which has not already been obtained to, or would in any way prevent the execution, delivery or performance of, the terms of this Agreement or the Other Documents.

5.20. Application of Certain Laws and Regulations. No Borrower nor any Subsidiary is subject to any law, statute, rule or regulation which regulates the incurrence of any Indebtedness, including laws, statutes, rules or regulations relative to common or interstate carriers or to the sale of electricity, gas, steam, water, telephone, telegraph or other public utility services.

5.21. Business and Property of Borrowers. Upon and after the Closing Date, Borrowers do not propose to engage in any business other than the manufacture, import, export, distribution, and sale of branded footwear and apparel, and related products, and activities necessary to conduct the foregoing and any business reasonably incidental thereto. On the Closing Date, each Borrower will own all the property and possess all of the rights and Consents necessary for the conduct of the business of such Borrower.

5.22. Section 20 Subsidiaries. Borrowers do not intend to use and shall not use any portion of the proceeds of the Advances, directly or indirectly, to purchase during the underwriting period, or for 30 days thereafter, Ineligible Securities being underwritten by a Section 20 Subsidiary.

5.23. Anti-Terrorism Laws.

(a) General. Neither any Borrower nor any Affiliate of any Borrower is in violation of any Anti-Terrorism Law or engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law.

(b) Executive Order No. 13224. Neither any Borrower nor any Affiliate of any Borrower or their respective agents acting or benefiting in any capacity in connection with the Advances or other transactions hereunder, is any of the following (each a “Blocked Person”):

(i) a Person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order No. 13224;

(ii) a Person owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order No. 13224;

(iii) a Person or entity with which any Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law;

(iv) a Person or entity that commits, threatens or conspires to commit or supports “terrorism” as defined in the Executive Order No. 13224;

(v) a Person or entity that is named as a “specially designated national” on the most current list published by the U.S. Treasury Department Office of Foreign Asset Control at its official website or any replacement website or other replacement official publication of such list, or

(vi) a Person or entity who is affiliated or associated with a Person or entity listed above.

(c) Transactions. Neither any Borrower nor to the knowledge of any Borrower, any of its agents acting in any capacity in connection with the Advances or other transactions hereunder (i) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person, or (ii) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order No. 13224.

(d) Foreign Extraterritorial Measures Act (Canada). It shall not be considered a breach of the representations and warranties contained in Section 5.23 or Section 5.24 if Rocky Canada is unable to make any of the foregoing representations and warranties regarding its activities and affairs due to compliance by it with the Foreign Extraterritorial Measures Act (Canada) (“FEMA”) or any other Applicable Law in effect in Canada.

5.24. Trading with the Enemy. No Borrower has engaged, nor does it intend to engage, in any business or activity prohibited by the Trading with the Enemy Act.

5.25. Reserved.

5.26. Withholdings and Remittances. Each Borrower has withheld from each payment made to any of its present or former employees, officers and directors, and to all persons who are non-residents of Canada for the purposes of the Canadian Income Tax Act and provincial tax legislation all amounts required by Applicable Law to be withheld, including all payroll deductions required to be withheld, and furthermore, has remitted such withheld amounts within the prescribed periods to the appropriate Governmental Body. Each Borrower has remitted all Benefit Plan normal or regular contributions, provincial pension plan contributions, all contributions required under the Canada Pension Plan Act (Canada), employment insurance premiums, employer health taxes and other taxes payable by it in respect of its employees and has remitted such amounts to the proper Governmental Body within the time required under Applicable Law.

VI AFFIRMATIVE COVENANTS.

Each Borrower shall, and shall cause Guarantor, and each of their respective Domestic Subsidiaries to, until payment in full of the Obligations and termination of this Agreement:

6.1. Payment of Fees. Pay to Agent on demand all usual and customary fees and expenses which Agent incurs in connection with (a) the forwarding of Advance proceeds and (b) the establishment and maintenance of any Blocked Accounts or Collection Accounts as provided for in Section 4.15(h). Agent may, without making demand, charge Borrowers’ Account for all such fees and expenses.

6.2. Conduct of Business and Maintenance of Existence and Assets. (a) Conduct continuously and operate actively its business according to good business practices and maintain all of its properties useful or necessary in its business in good working order and condition (reasonable wear and tear excepted and except as may be disposed of in accordance with the terms of this Agreement), including all licenses, patents, copyrights, design rights, tradenames, trade secrets and trademarks and take all actions necessary to enforce and protect the validity of any intellectual property right or other right included in the Collateral except where the failure to do so could reasonably be expected to have a Material Adverse Effect; (b) keep in full force and effect its existence and comply in all material respects with Applicable Law governing the conduct of its business where the failure to do so could reasonably be expected to have a Material Adverse Effect; and (c) make all such reports and pay all such franchise and other taxes and license fees and do all such other acts and things as may be lawfully required to maintain its rights, licenses, leases, powers and franchises under the laws of the United States or Canada or any political subdivision thereof where the failure to do so could reasonably be expected to have a Material Adverse Effect.

6.3. Reserved.

6.4. Government Receivables. Take all steps necessary to protect Agent’s interest in any Eligible Government Receivable under the Federal Assignment of Claims Act, the Uniform Commercial Code, the PPSA, and all other Applicable Law and deliver to Agent appropriately endorsed, any instrument or chattel paper connected with any such Receivable arising out of contracts between any Borrower and the United States, any state or any department, agency or instrumentality of any of them.

6.5. Fixed Charge Coverage Ratio. Cause to be maintained for Parent and its Subsidiaries on a consolidated basis, a Fixed Charge Coverage Ratio of not less than 1.10 to 1.00; provided that testing of compliance with the foregoing Fixed Charge Coverage Ratio requirement shall not occur until a Triggering Event. Upon a Triggering Event, the Fixed Charge Coverage Ratio shall be calculated and tested for the twelve (12) months preceding the calendar month in which the Triggering Event occurs. Testing shall continue as of each fiscal quarter end thereafter on a historical rolling four (4) quarters basis until a Satisfaction Event occurs.

6.6. Execution of Supplemental Instruments. Execute and deliver to Agent from time to time, upon demand, such supplemental agreements, statements, assignments and transfers, or instructions or documents relating to the Collateral, and such other instruments as Agent may reasonably request, in order that the full intent of this Agreement may be carried into effect.

6.7. Payment of Indebtedness. Pay, discharge or otherwise satisfy at or before maturity (subject, where applicable, to specified grace periods and matters which may be Properly Contested in accordance with this Agreement, and, in the case of the trade payables, to normal payment practices) all its obligations and liabilities of whatever nature, except when the failure to do so could not reasonably be expected to have a Material Adverse Effect or when the amount or validity thereof is currently being contested in good faith by appropriate proceedings and each Borrower shall have provided for such reserves as Agent may reasonably deem proper and necessary, subject at all times to any applicable subordination arrangement in favor of Lenders.

6.8. Standards of Financial Statements. Cause all financial statements referred to in Sections 9.7, 9.8, 9.9, 9.10, 9.11, 9.12 and 9.13 as to which GAAP is applicable to be complete and correct in all material respects (subject, in the case of interim financial statements, to normal year-end audit adjustments) and to be prepared in reasonable detail and in accordance with GAAP applied consistently throughout the periods reflected therein (except as concurred in by such reporting accountants or officer, as the case may be, and disclosed therein).

6.9. Reserved.

VII NEGATIVE COVENANTS.

No Borrower, Guarantor, nor any of their respective Subsidiaries shall, until satisfaction in full of the Obligations and termination of this Agreement:

7.1. Merger, Consolidation, Acquisition and Sale of Assets.

(a) Other than a Permitted Acquisition, and any merger, consolidation, amalgamation, or other reorganization of a Borrower into another Borrower, enter into any merger, consolidation, amalgamation, or other reorganization with or into any other Person or permit any other Person to consolidate with or merge or amalgamate with it.

(b) Other than a Permitted Acquisition, any Permitted Investment and any acquisition, transfer or contribution of assets of a Borrower to another Borrower, acquire: (i) all or substantially all of the assets of any business, or any operating unit or division of any Person, whether through the purchase of assets, merger, combination, amalgamation or otherwise, or (ii) acquire a majority (by number of share or voting power) of the voting interests or other Equity Interests of any Person.

(c) Sell, lease, transfer or otherwise dispose of any of its properties or assets, except Permitted Dispositions; it being understood that nothing in this clause (c) is intended to restrict advances and payment of customer deposits, trade payables and other accrued expenses and liabilities incurred in the Ordinary Course of Business of Borrowers and Guarantors.

7.2. Creation of Liens. Create or suffer to exist any Lien or transfer upon or against any of its property or assets now owned or hereafter acquired, except Permitted Encumbrances.

7.3. Guarantees. Become liable upon the obligations or liabilities of any Person by assumption, endorsement or guaranty thereof or otherwise (other than to Agent or Lenders) except (a) as disclosed on Schedule 7.3, (b) guarantees made in the Ordinary Course of Business up to an aggregate amount of $100,000 outstanding for Parent and its Subsidiaries on a Consolidated Basis, (c) the endorsement of checks in the Ordinary Course of Business, and (d) Permitted Guarantees.

7.4. Investments. Purchase or acquire obligations or Equity Interests of, or any other interest in, any Person, except Permitted Investments.

7.5. Loans. Make advances, loans or extensions of credit to any Person, including any Affiliate except for Permitted Advances.

7.6. Reserved.

7.7. Dividends. Declare, pay or make any dividend or distribution on any shares of the Equity Interests of Parent (other than dividends or distributions payable in its stock, or split-ups or reclassifications of its stock) or apply any of its funds, property or assets to the purchase, redemption or other retirement of any Equity Interests, or of any options to purchase or acquire any such Equity Interests of Parent, except that Parent shall be permitted to pay dividends to its shareholders or apply any of its funds to such purchase, redemption, retirement or acquisition each fiscal quarter in an amount not in excess of 50% of the net income of the Parent and its Subsidiaries on a consolidated basis for the immediately prior fiscal quarter provided that (a) after giving effect to the payment of any of the foregoing there shall not exist any Event of Default or Default, (b) a notice of termination with regard to this Agreement shall not be outstanding, (c) Undrawn Availability is at least $7,000,000 immediately after giving effect to each such payment, (d) the proforma Fixed Charge Coverage Ratio of Parent and its Subsidiaries on a consolidated basis is at least 1.25 to 1.00 for the twelve (12) month period ending on the last day of the fiscal month prior to the month of the proposed payment, after giving effect to such payment, as evidenced by a pro-forma Compliance Certificate delivered by the Borrowing Agent, and (e) each such payment may be made only after Agent shall have received a Compliance Certificate for such immediately prior fiscal quarter. All calculations and projections to be made pursuant to this Section shall be subject to the Agent’s approval and provided to the Agent prior to the making of the applicable payment.

7.8. Indebtedness. Create, incur, assume or suffer to exist any Indebtedness except in respect of (a) Indebtedness to Lenders; (b) Indebtedness incurred for Capital Expenditures in an amount not in excess of $5,000,000 outstanding at any time for Parent and its Subsidiaries on a Consolidated Basis; (c) Indebtedness included within the Purchase Price for a Permitted Acquisition, provided such Indebtedness is subject to a subordination agreement acceptable to Agent in its sole discretion; (d) intercompany Indebtedness (which, for clarification, does not include trade payables incurred in the Ordinary Course of Business) between any Borrowers, or between Parent and its Subsidiaries, provided that the aggregate outstanding amount of any such intercompany Indebtedness owing at any time by Subsidiaries that are not Borrowers to Borrowers shall not exceed $10,000,000 outstanding; (e) Indebtedness to shareholders of Parent from share repurchases and redemptions under the stockholders agreements not to exceed $500,000 in the aggregate incurred in any Fiscal Year for Parent and its Subsidiaries on a Consolidated Basis; (f) other Indebtedness in the aggregate at any time outstanding of $1,000,000 for Parent and its Subsidiaries on a Consolidated Basis; (g) Indebtedness of any Borrower listed on Schedule 7.8; (h) Indebtedness incurred in connection with the financing of Borrowers’ insurance premiums; (i) Indebtedness incurred in connection with Hedge Agreements, in all cases not for speculative purposes, not to exceed in the aggregate a maximum liability for the termination of such any and all such agreements of $7,500,000 at any time outstanding for Parent and its Subsidiaries on a Consolidated Basis; (j) obligations under any lease which is accounted for by the lessee as an operating lease and under which the lessee is intended to be the “owner” of the leased property for Federal income tax purposes; and (k) Indebtedness permitted by Section 7.3.

7.9. Nature of Business. (a) Substantially change the nature of the businesses in which it is presently engaged, or (b) fail to promptly notify Agent in the event that any Foreign Subsidiary that is not a Borrower or Guarantor, sells goods or services to any Person other than an Affiliate.

7.10. Transactions with Affiliates. Other than any transaction by and between, or among, Parent, Borrowers and their respective Subsidiaries, in each such case in a manner that is not materially economically detrimental to any Borrower, no Borrower or Guarantor shall directly or indirectly, purchase, acquire or lease any property from, or sell, transfer or lease any property to, or otherwise enter into any transaction or deal with, any Affiliate, except to the extent otherwise expressly permitted hereby or pursuant to the reasonable requirements of the Borrowers' businesses and upon fair and reasonable terms no less favorable to Borrowers than would be obtained in a comparable arm's-length transaction with a Person other than an Affiliate.

7.11. Reserved.

7.12. Subsidiaries. Form any Subsidiary unless (a) (i) in the case of a Domestic Subsidiary, it expressly joins in this Agreement as a borrower or Guarantor and becomes jointly and severally liable for the Obligations, or (ii) in the case of a Foreign Subsidiary, 65% of the Equity Interests of such Foreign Subsidiary are pledged as Collateral, and (b) Agent shall have received all documents, including legal opinions, it may reasonably require to establish compliance with each of the foregoing conditions.

7.13. Fiscal Year and Accounting Changes. Change its fiscal year from December 31 or make any significant change (a) in accounting treatment and reporting practices except as required by GAAP or (b) in tax reporting treatment except as required by law.

7.14. Pledge of Credit. Now or hereafter pledge Agent’s or any Lender’s credit on any purchases or for any purpose whatsoever or use any Advances in or for any business other than Borrowers’ or otherwise in accordance with this Agreement.

7.15. Amendment of Articles of Incorporation, By-Laws, Certificate of Formation, Operating Agreement; Change of Name.

(a) Amend, modify or waive any term or material provision of its Articles of Incorporation, By-Laws, Certificate of Formation, or Operating Agreement unless required by law but subject to Section 7.15(b).

(b) Change its name, FEIN, organizational identification number, business number assigned by the Canada Revenue Agency, company number, jurisdiction of organization, or organizational identity or status; provided, however, that a Borrower may change its name and Rocky Canada may continue into another jurisdiction other than Ontario upon at least 15 days’ prior written notice by the applicable Borrower to Agent of such change or continuation and so long as, at the time of such written notification, such Borrower provides any financing or registration statements necessary to perfect and continue perfected Agent’s Liens.

7.16. Compliance with ERISA. (a) Become obligated, or permit a member of the Controlled Group to become obligated, to contribute to a Benefit Plan except the Rocky Brands, Inc. Retirement Plan or as required pursuant to collective bargaining, or (b) fail to comply, or permit a member of the Controlled Group to fail to comply, with the requirements of ERISA or the Code with respect to any Benefit Plans in a manner reasonably likely to have a Material Adverse Effect.

7.17. Prepayment of Indebtedness. Except for the repayment in full of the GECC Loan, at any time, directly or indirectly, prepay any Indebtedness in an amount exceeding $500,000 (other than to Lenders), or repurchase, redeem, retire or otherwise acquire any Indebtedness of any Borrower.

7.18. Anti-Terrorism Laws. No Borrower shall, until satisfaction in full of the Obligations and termination of this Agreement, nor shall it permit any Affiliate or agent to:

(a) Conduct any business or engage in any transaction or dealing with any Blocked Person, including the making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person.

(b) Deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order No. 13224.

(c) Engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in the Executive Order No. 13224, the USA PATRIOT Act or any other Anti-Terrorism Law. Borrower shall deliver to Lenders any certification or other evidence requested from time to time by any Lender in its sole discretion, confirming Borrower’s compliance with this Section.

Provided, however, that Rocky Canada shall be required to comply with Section 7.18 or Section 7.20 to the extent that such compliance would violate or otherwise contravene FEMA or any other Applicable Law in effect in Canada.

7.19. Membership/Partnership Interests. Elect to treat or permit any of its Subsidiaries to (a) treat its limited liability company membership interests or partnership interests, as the case may be, as securities as contemplated by the definition of “security” in Section 8-102(15) and by Section 8-103 of Article 8 of Uniform Commercial Code or by the Securities Transfer Act of any Canadian jurisdiction, or (b) certificate its limited liability company membership interests or partnership interests, as the case may be.

7.20. Trading with the Enemy Act. No Borrower shall, until satisfaction in full of the Obligations and termination of this Agreement, nor shall it permit any Affiliate or agent to engage in any business or activity in violation of the Trading with the Enemy Act.

VIII CONDITIONS PRECEDENT.

8.1. Conditions to Initial Advances. The agreement of Lenders to make the initial Advances requested to be made on the Closing Date is subject to the satisfaction, or waiver by Agent, immediately prior to or concurrently with the making of such Advances, of the following conditions precedent:

(a) Note. Agent shall have received the Note duly executed and delivered by an authorized officer of each Borrower;

(b) Filings, Registrations and Recordings. Each document (including any Uniform Commercial Code or PPSA financing statement) required by this Agreement, any related agreement or under law or reasonably requested by the Agent to be filed, registered or recorded in order to create, in favor of Agent, a perfected security interest in or Lien upon the Collateral shall have been properly filed, registered or recorded in each jurisdiction in which the filing, registration or recordation thereof is so required or requested, and Agent shall have received an acknowledgment copy, or other evidence reasonably satisfactory to it, of each such filing, registration or recordation and reasonably satisfactory evidence of the payment of any necessary fee, tax or expense relating thereto;

(c) Corporate Proceedings of Borrowers. Agent shall have received a copy of the resolutions in form and substance reasonably satisfactory to Agent, of the board of directors or managers of each Borrower authorizing (i) the execution, delivery and performance of this Agreement and the Other Documents (collectively the “Documents”) and (ii) the granting by each Borrower of the security interests in and liens upon the Collateral in each case certified by the Secretary or an Assistant Secretary of each Borrower as of the Closing Date; and, such certificate shall state that the resolutions thereby certified have not been amended, modified, revoked or rescinded as of the date of such certificate;

(d) Incumbency Certificates of Borrowers. Agent shall have received a certificate of the Secretary or an Assistant Secretary of each Borrower, dated the Closing Date, as to the incumbency and signature of the officers of each Borrower executing this Agreement, the Other Documents, any certificate or other documents to be delivered by it pursuant hereto, together with evidence of the incumbency of such Secretary or Assistant Secretary;

(e) Certificates. Agent shall have received a copy of the Articles or Certificate of Incorporation or Formation of each Borrower, and all amendments thereto, certified by the Secretary of State or other appropriate official of its jurisdiction of incorporation (or in the case of Rocky Canada, certified by the Secretary of Rocky Canada) or formation, as applicable, together with copies of the By-Laws (or equivalent governing document) of each Borrower certified as accurate and complete by the Secretary or Assistant Secretary of each such Borrower;

(f) Good Standing Certificates. Agent shall have received good standing certificates for each domestic Borrower dated not more than thirty (30) days prior to the Closing Date, issued by the Secretary of State or other appropriate official of the jurisdiction of incorporation or formation, as applicable, of each such Borrower;

(g) Legal Opinions. Agent shall have received the executed legal opinions of the Borrowers’ U.S. and Canadian counsel in form and substance reasonably satisfactory to Agent which shall cover such matters incident to the transactions contemplated by this Agreement and the Other Documents, and each Borrower hereby authorizes and directs such counsel to deliver such opinions to Agent and Lenders;

(h) No Litigation. (i) No litigation, investigation or proceeding before or by any arbitrator or Governmental Body shall be continuing or threatened against any Borrower or against the officers or directors of any Borrower (A) in connection with this Agreement, the Other Documents or any of the transactions contemplated thereby and which, in the reasonable opinion of Agent, is deemed material or (B) which could, in the reasonable opinion of Agent, have a Material Adverse Effect; and (ii) no injunction, writ, restraining order or other order of any nature materially adverse to any Borrower or the conduct of its business or inconsistent with the due consummation of the Transactions shall have been issued by any Governmental Body;

(i) Financial Condition Certificates. Agent shall have received an executed Financial Condition Certificate in the form of Exhibit 8.1(i).

(j) Collateral Examination. Agent shall have completed Collateral examinations and received appraisals, the results of which shall be satisfactory in form and substance to Lenders, of the Receivables, Inventory, Eligible Real Property, and Equipment of each Borrower and all books and records in connection therewith;

(k) Fees. Agent shall have received all fees payable to Agent and Lenders on or prior to the Closing Date hereunder, including pursuant to Article III;

(l) Insurance. Agent shall have received in form and substance satisfactory to Agent, certified copies of Borrowers’ casualty insurance policies, together with loss payable endorsements on Agent’s standard form of loss payee endorsement naming Agent as loss payee, and certified copies of Borrowers’ liability insurance policies, together with endorsements naming Agent as a co-insured or as an additional insured in the case of Canadian insurance policies;

(m) Payment Instructions. Agent shall have received written instructions from Borrowing Agent directing the application of proceeds of the initial Advances made pursuant to this Agreement;

(n) Blocked Accounts. Agent shall have received duly executed agreements establishing the Blocked Accounts or Collection Accounts with financial institutions acceptable to Agent for the collection or servicing of the Receivables and proceeds of the Collateral;

(o) Consents. Agent shall have received any and all Consents necessary to permit the effectuation of the transactions contemplated by this Agreement and the Other Documents; and, Agent shall have received such Consents and waivers of such third parties as might assert claims with respect to the Collateral;

(p) No Adverse Material Change. (i) since December 31, 2009 there shall not have occurred any event, condition or state of facts which could reasonably be expected to have a Material Adverse Effect and (ii) no representations made or information supplied to Agent or Lenders shall have been proven to be inaccurate or misleading in any material respect;

(q) Collateral Access Agreements. Agent shall have received Collateral Access Agreements satisfactory to Agent with respect to the Access Agreement Locations;

(r) Other Documents. Agent shall have received the executed Other Documents, all in form and substance satisfactory to Agent;

(s) Contract Review. Agent shall have reviewed all Material Contracts of Borrowers including leases, union contracts, labor contracts, vendor supply contracts, license agreements and distributorship agreements and such contracts and agreements shall be satisfactory in all respects to Agent;

(t) Borrowing Base. Agent shall have received evidence from Borrowers that the aggregate amount of Eligible Receivables and Eligible Inventory is sufficient in value and amount to support Advances in the amount requested by Borrowers on the Closing Date;

(u) Undrawn Availability. After giving effect to the initial Advances hereunder, including for all fees and expenses related to the subject transactions, Borrowers shall have Undrawn Availability of at least $10,000,000; and

(v) Compliance with Laws. Agent shall be reasonably satisfied that each Borrower is in compliance with all pertinent federal, state, provincial, local or territorial regulations, including those with respect to the Federal Occupational Safety and Health Act, the Environmental Protection Act, ERISA and the Trading with the Enemy Act.

(w) Other. All corporate and other proceedings, and all documents, instruments and other legal matters in connection with the Transactions shall be satisfactory in form and substance to Agent and its counsel.

8.2. Conditions to Each Advance. The agreement of Lenders to make any Advance requested to be made on any date (including the initial Advance), is subject to the satisfaction of the following conditions precedent as of the date such Advance is made:

(a) Representations and Warranties. Each of the representations and warranties made by any Borrower in or pursuant to this Agreement, the Other Documents and any related agreements to which it is a party, and each of the representations and warranties contained in any certificate, document or financial or other statement furnished at any time under or in connection with this Agreement, the Other Documents or any related agreement shall be true and correct in all material respects on and as of such date as if made on and as of such date, except to the extent that any such representation or warranty relates to a specified date, in which each such representation and warranty shall be true and correct in all material respects on and as of such specified date;

(b) No Default. No Event of Default or Default shall have occurred and be continuing on such date, or would exist after giving effect to the Advances requested to be made, on such date; provided, however that Agent, in its sole discretion, may (subject to the provisions in Section 16.2(b)) continue to make Advances notwithstanding the existence of an Event of Default or Default and that any Advances so made shall not be deemed a waiver of any such Event of Default or Default; and

(c) Maximum Advances. In the case of any type of Advance requested to be made, after giving effect thereto, the aggregate amount of such type of Advance shall not exceed the maximum amount of such type of Advance permitted under this Agreement.

Each request for an Advance by any Borrower hereunder shall constitute a representation and warranty by each Borrower as of the date of such Advance that the conditions contained in this subsection shall have been satisfied.

IX INFORMATION AS TO BORROWERS.

Each Borrower shall, or (except with respect to Section 9.11) shall cause Borrowing Agent on its behalf to, until satisfaction in full of the Obligations and the termination of this Agreement:

9.1. Disclosure of Material Matters. Immediately upon learning thereof, report to Agent all matters materially affecting the value, enforceability or collectability of any material portion of the Collateral, including any Borrower’s reclamation or repossession of, or the return to any Borrower of, a material amount of goods or claims or disputes asserted by any Customer or other obligor.

9.2. Schedules. Deliver to Agent on or before the fifteenth (15th) day of each month as and for the prior month (a) Receivables ageings inclusive of reconciliations to the general ledger, (b) accounts payable schedules inclusive of reconciliations to the general ledger, (c) a report of sales, credits, and collections, (d) Inventory reports, and (e) a Borrowing Base Certificate in form and substance satisfactory to Agent (which shall be calculated as of the last day of the prior month and which shall not be binding upon Agent or restrictive of Agent’s rights under this Agreement); provided that, the Borrowers may, but shall not be obligated to (except as set forth in the following sentence), deliver the foregoing more frequently than once per month. Commencing upon Undrawn Availability plus Qualified Cash being less than $15,000,000 for a period in excess of five (5) consecutive days after the 45th day following the Closing Date, unless waived by Agent in its sole discretion or until Undrawn Availability plus Qualified Cash exceeds $17,000,000 for a period in excess of ten (10) consecutive days thereafter), deliver to Agent on or before the second (2nd) Business Day of each week as and for the prior week, a report of sales, credits, and collections (which shall be calculated as of the last day of the prior week and which shall not be binding upon Agent or restrictive of Agent’s rights under this Agreement). In addition, each Borrower will deliver to Agent at such intervals as Agent may require in its Permitted Discretion: (i) confirmatory assignment schedules, (ii) copies of Customer’s invoices, (iii) evidence of shipment or delivery, (iv) reports on Priority Payables, and (v) such further schedules, documents and/or information regarding the Collateral as Agent may reasonably require including trial balances and test verifications. Agent shall have the right to confirm and verify all Receivables by any manner and through any medium it considers advisable and do whatever it may deem reasonably necessary to protect its interests hereunder. The items to be provided under this Section are to be in form reasonably satisfactory to Agent and executed by Borrowing Agent and delivered to Agent from time to time solely for Agent’s convenience in maintaining records of the Collateral, and any Borrower’s failure to deliver any of such items to Agent shall not affect, terminate, modify or otherwise limit Agent’s Lien with respect to the Collateral.

9.3. Environmental Reports. Furnish Agent, concurrently with the delivery of the financial statements referred to in Sections 9.7 and 9.9, with a Compliance Certificate stating, to his actual knowledge, that each Borrower, Guarantor and each of their respective Subsidiaries is in compliance in all material respects with all federal, state, provincial and local Environmental Laws. To the extent any Borrower, Guarantor or any of their respective Subsidiaries is not in compliance with the foregoing laws, the certificate shall set forth with specificity all areas of non-compliance and the proposed action it will implement in order to achieve full compliance. In each case where potential liability or responsibility is reasonably likely to be in excess of $500,000, Borrowing Agent shall also promptly forward to Agent copies of any request for information, notification of potential liability, demand letter relating to potential responsibility with respect to the investigation or cleanup of Hazardous Substances at any site owned, operated or used by Borrower, Guarantor or any of their respective Subsidiaries to dispose of Hazardous Substances and shall continue to forward copies of material correspondence between it and the Authority regarding such claims to Agent until the claim is settled. Borrowing Agent shall promptly forward to Agent copies of all documents and reports concerning a Hazardous Discharge at the Real Property that any Borrower is required to file under any Environmental Laws. Such information is to be provided solely to allow Agent to protect Agent’s security interest in and Lien on the Collateral.

9.4. Litigation. Promptly notify Agent in writing of any claim, litigation, suit or administrative proceeding affecting any Borrower, Guarantor or any of their respective Subsidiaries which involves an amount in excess of $500,000.

9.5. Material Occurrences. Promptly notify Agent in writing upon the occurrence of (a) any Event of Default or Default; (b) any event, development or circumstance whereby any financial statements or other reports furnished to Agent fail in any material respect to present fairly, in accordance with GAAP consistently applied, the financial condition or operating results of any Borrower as of the date of such statements; (c) any accumulated retirement plan funding deficiency which, if such deficiency continued for two plan years and was not corrected as provided in Section 4971 of the Code, could subject any Borrower to a tax imposed by Section 4971 of the Code; (d) each and every default by any Borrower which might result in the acceleration of the maturity of any Indebtedness in the amount of $500,000 or more, including the names and addresses of the holders of such Indebtedness with respect to which there is a default existing or with respect to which the maturity has been or could be accelerated, and the amount of such Indebtedness; and (e) any other development in the business or affairs of any Borrower, Guarantor or any of their respective Subsidiaries which could reasonably be expected to have a Material Adverse Effect; in each case describing the nature thereof and the action Borrowers propose to take with respect thereto.

9.6. Government Receivables. Furnish Agent with any material correspondence or amendments related to any contracts between Borrower and any Governmental Body.

9.7. Annual Financial Statements. Furnish Agent within ninety (90) days after the end of each fiscal year, financial statements of Parent and its Subsidiaries on a consolidated basis including, but not limited to, statements of income and stockholders’ equity and cash flow from the beginning of the current fiscal year to the end of such fiscal year and the balance sheet as at the end of such fiscal year, all prepared in accordance with GAAP applied on a basis consistent with prior practices, and in reasonable detail and reported upon without qualification by an independent certified public accounting firm selected by Borrowers. The reports shall be accompanied by a Compliance Certificate with a calculation of the Fixed Charge Coverage Ratio for the applicable fiscal year.

9.8. Reserved.

9.9. Monthly Financial Statements. Furnish Agent within thirty (30) days after the end of each month (other than the months of March, June and September, which shall be furnished within forty-five (45) days after the end of each such month and ninety (90) days after the end of December) for Parent and its Subsidiaries on a consolidated basis, an unaudited balance sheet and unaudited statements of income and cash flow reflecting results of operations from the beginning of the fiscal year to the end of such month and for such month, prepared on a basis consistent with prior practices and complete and correct in all material respects, subject to normal and recurring year-end adjustments. The reports shall be accompanied by a Compliance Certificate, and each Compliance Certificate corresponding with a quarter-end shall include a calculation of the Fixed Charge Coverage Ratio for the most recent four (4) quarters.

9.10. Other Reports. Except to the extent the following are made available to the public generally and can be obtained by Agent without cost or expense on a timely basis, furnish Agent as soon as available, but in any event within ten (10) days after the issuance thereof, with copies of (i) such financial statements, reports and returns as each Borrower shall send to its stockholders, (ii) all press releases and all statements concerning material changes or developments in the business of any Borrower, Guarantor or their respective Subsidiaries made available by the Borrower, Guarantor and each of their respective Subsidiaries to the public or any other creditor, and (iii) copies of all reports and registration statements filed with the SEC or any national or foreign securities exchange or the National Association of Securities Dealers, Inc.

9.11. Additional Information. Furnish Agent with such additional information as Agent shall reasonably request in order to enable Agent to determine whether the terms, covenants, provisions and conditions of this Agreement and the Note have been complied with by Borrowers including, without the necessity of any request by Agent, (a) copies of all environmental audits and reviews, (b) at least thirty (30) days prior thereto, notice of any Borrower’s opening of any new office or place of business or any Borrower’s closing of any existing office or place of business, and (c) promptly upon any Borrower’s learning thereof, notice of any labor dispute to which any Borrower may become a party, any strikes or walkouts relating to any of its plants or other facilities, and the expiration of any labor contract to which any Borrower is a party or by which any Borrower is bound.

9.12. Projected Operating Budget. Furnish Agent, no later than thirty (30) days after the beginning of each Borrower’s fiscal year commencing with fiscal year 2011, for Parent and its Subsidiaries on a consolidated basis, a month by month projected income statement, cash flow and balance sheet for such fiscal year.

9.13. Variances From Operating Budget. Borrowing Agent shall provide to Agent, upon request, a written analysis of specified material variances from the budget described in Section 9.12.

9.14. Notice of Suits, Adverse Events. Furnish Agent with prompt written notice of (i) any lapse or other termination of any Consent issued to any Borrower by any Governmental Body or any other Person that is reasonably likely to have a Material Adverse Effect, and (ii) any refusal by any Governmental Body or any other Person to renew or extend any such Consent.

9.15. ERISA Notices and Requests. Furnish Agent with written notice promptly and in any event within fifteen (15) days after any Borrower or any member of the Controlled Group thereof knows or has reason to know, of the following described events which individually or in the aggregate are reasonably likely to have a Material Adverse Effect: (i) (A) any Termination Event with respect to any Pension Benefit Plan or Canadian Pension Plan (if applicable) has occurred, or (B) an accumulated funding deficiency has been incurred or an application has been made to the Secretary of the Treasury for a waiver or modification of the minimum funding standard (including installment payments) or an extension of any amortization period under Section 412 of the Code or the equivalent provision under any federal, state, provincial, local or foreign counterparts or equivalents thereof (other than any Canadian Employee Benefit Laws) with respect to a Pension Benefit Plan, a statement of an officer of Borrowing Agent setting forth the details of such occurrence and the action, if any, which Borrowers or such member of the Controlled Group proposes to take with respect thereto, (ii) receipt thereof by any Borrower or any member of the Controlled Group thereof from the PBGC, copies of each notice received by any Borrower or any member of the Controlled Group thereof of the PBGC’s intention to terminate any Pension Benefit Plan or to have a trustee appointed to administer any Pension Benefit Plan, (iii) if requested by Agent, copies of each Schedule B (Actuarial Information) or the federal, state, provincial, local or foreign equivalent thereof to the annual report (Form 5500 Series) or the federal, state, local or foreign equivalent thereof with respect to each Canadian Pension Plan, Pension Benefit Plan and Multiemployer Plan, (iv) any required installment within the meaning of Section 412 of the Code or the equivalent provision under any federal, state, provincial, local or foreign counterparts or equivalents thereof has not been made when due with respect to a Pension Benefit Plan or Canadian Pension Plan, (v) receipt thereof by any Borrower or any member of the Controlled Group thereof from a sponsor of a Multiemployer Plan or from the PBGC, a copy of each notice received by any Borrower or any member of the Controlled Group thereof concerning the imposition or amount of withdrawal liability under Section 4202 of ERISA or the equivalent provision under any federal, state, provincial, local or foreign counterparts or equivalents thereof (other than any other than any Canadian Employee Benefit Laws) or indicating that such Multiemployer Plan may enter reorganization status under Section 4241 of ERISA or the equivalent provision under any federal, state, provincial, local or foreign counterparts or equivalents thereof (other than any other than any Canadian Employee Benefit Laws), and (vi) copies of each notice of a plant closing or mass layoff (as defined in WARN) to employees sent by any Borrower or any member of the Controlled Group thereof. Borrowing Agent shall furnish Agent written notice if any Borrower is ever required to contribute to a Canadian Union Plan.

9.16. Additional Documents. Execute and deliver to Agent, upon request, such documents and agreements as Agent may, from time to time, reasonably request to carry out the purposes, terms or conditions of this Agreement.

9.17. Cash Reporting; Liquidity Calculation.

(a) Furnish Agent, no later than the second (2nd) Business Day of each week, a schedule of Qualified Cash by account and Undrawn Availability, each as of the end of each Business Day during the prior week; provided however, notwithstanding such daily calculation of total Undrawn Availability, the trade payable component of Undrawn Availability shall only be updated and adjusted for the purpose of this Section on the fifteenth (15th) and thirtieth (30th) day of each calendar month (or the next following Business Day if not a Business Day).

(b) Furnish Agent, no later than the fifth (5th) Business Day of each fiscal quarter, a Liquidity Calculation for the prior fiscal quarter.

X EVENTS OF DEFAULT.

The occurrence of any one or more of the following events shall constitute an “Event of Default”:

10.1. Nonpayment. (a) Failure to pay any principal or interest on the Obligations when due, whether at maturity or by reason of acceleration pursuant to the terms of this Agreement or by notice of intention to prepay, or by required prepayment, or (b) failure to pay any other liabilities or make any other payment, fee or charge provided for herein when due or in any Other Document within three (3) Business Days after the same shall become due, provided however that such three (3) Business Day cure period shall only be applicable in the event that Agent fails to charge such amounts to the Borrowers’ Account and such failure by Agent is not the result of any condition set forth in Section 8.2 being unsatisfied;

10.2. Breach of Representation. Any representation or warranty made or deemed made in this Agreement, any Other Document or any related agreement or in any certificate, document or financial or other statement furnished at any time in connection herewith or therewith shall prove to have been misleading in any material respect on the date when made or deemed to have been made;

10.3. Financial Information. Failure by any Borrower, Guarantor or their respective Subsidiaries to (a) furnish financial information, (i) required to be furnished on or before a certain date or within a specified period in accordance with this Agreement, which is not cured within two (2) Business Days from the earlier of notice of such failure from the Agent to the Borrowing Agent or the time the Chief Executive Officer or Chief Financial Officer of the Borrowing Agent first becomes aware of such failure, or (ii) when requested in writing which is unremedied for a period of five (5) Business Days after such request, or (b) permit the inspection of its books or records in accordance with this Agreement, which is not cured within two (2) Business Days from the earlier of notice of such failure from the Agent to the Borrowing Agent or the time the Chief Executive Officer or Chief Financial Officer of the Borrowing Agent first becomes aware of such failure;

10.4. Judicial Actions. Issuance by the United States of America or any department or instrumentality thereof or by any state or other governmental agency of a notice of Lien, levy, assessment, injunction or attachment (other than a Permitted Lien) in excess of $500,000 against any Collateral which is not stayed, discharged, or lifted within thirty (30) days;

10.5. Noncompliance. Except as otherwise provided for in Sections 10.1 and 10.3, failure or neglect of any Borrower, Guarantor, or any of their respective Subsidiaries to perform, keep or observe any term, provision, condition, covenant contained in this Agreement, any Other Document, or any other agreement, now or hereafter entered into between Borrower, Guarantor, or any of their respective Subsidiaries, and Agent or any Lender and the failure or inability of it to cure within fifteen (15) days after notice thereof from Agent; provided that such notice and cure period will not apply to any such failure or neglect: (i) which Agent determines cannot be cured during such period, (ii) which has previously occurred two (2) times or more during the Term, (iii) which is with respect to any negative covenant in Article VII herein, (iv) which is with respect to any of Sections 2.5, 4.10, 4.11, 4.13, 4.14, 4.15(d), (h) or (j), or 6.5 herein, or (v) which is with respect to any Lender-Provided Hedge;

10.6. Judgments. Any judgment or judgments for the payment of money shall be rendered against any Borrower, Guarantor, or any of their respective Subsidiaries unless: (a) (i) such judgment or judgments are less than $1,500,000 in the aggregate, (ii) enforcement of each such judgment is stayed, (iii) each such judgment is being contested in good faith, and (iv) reserves satisfactory to Agent are established by Borrowers or each such judgment is covered by valid insurance satisfactory to Agent, or (b) such judgment or judgments are less than $1,500,000 in the aggregate and are satisfied within 14 days after entry thereof;

10.7. Bankruptcy. Any Borrower, Guarantor, or any of their respective Subsidiaries shall (i) apply for, consent to or suffer the appointment of, or the taking of possession by, a receiver, custodian, trustee, liquidator or similar fiduciary of itself or of all or a substantial part of its property, (ii) make a general assignment for the benefit of creditors, (iii) commence a voluntary case under any state, provincial or federal bankruptcy laws (as now or hereafter in effect), (iv) be adjudicated a bankrupt or insolvent, (v) file a petition seeking to take advantage of any other law providing for the relief or reorganization of debtors, (vi) acquiesce to, or fail to have dismissed, within sixty (60) days, any petition filed against it in any involuntary case under such bankruptcy laws, or (vii) take any action for the purpose of effecting any of the foregoing;

10.8. Inability to Pay. Any Borrower, Guarantor, or any of their respective Subsidiaries shall admit in writing its inability, or be generally unable, to pay its debts as they become due or cease operations of its present business unless such ceased operations are assumed by another Borrower, Guarantor, or their respective Subsidiaries;

10.9. [Reserved].

10.10. Lien Priority. Any Lien created hereunder or provided for hereby or under any Other Document for any reason ceases to be or is not a valid and perfected Lien having a first priority interest, subject to Permitted Encumbrances and except as otherwise permitted under this Agreement, in each instance other than as a direct result of the failure of Agent or any Lender to take any action within its control;

10.11. Cross Default. A failure of any Borrower, Guarantor, or any of their respective Subsidiaries to pay when due any principal or interest on any Indebtedness (other than the Obligations) in the individual principal amount in excess of $750,000 or having an aggregate principal amount in excess of $1,500,000 under any agreement for borrowed money or default by any Borrower, Guarantor, or any of their respective Subsidiaries in any agreement evidencing any such Indebtedness, if such breach causes the holder of such Indebtedness to accelerate the maturity thereof or declare such Indebtedness due prior to its stated maturity;

10.12. Breach of Guaranty. Termination or breach of any Guaranty or Guaranty Security Agreement executed and delivered to Agent in connection with the Obligations of any Borrower, or if any Guarantor attempts to terminate, challenges the validity of, or its liability under, any such Guaranty or Guaranty Security Agreement;

10.13. Change of Control. Any Change of Control shall occur;

10.14. Invalidity. Any material provision of this Agreement or of any material Other Document shall, for any reason, ceases to be valid and binding on any Borrower or Guarantor, or any Borrower or Guarantor shall so claim in writing to Agent or any Lender;

10.15. Licenses. (i) Any Governmental Body shall (A) revoke, terminate, suspend or adversely modify any license, permit, patent trademark or tradename of any Borrower, Guarantor, or any of their respective Subsidiaries, the continuation of which is material to the continuation of any of their businesses, or (B) commence proceedings to suspend, revoke, terminate or adversely modify any such license, permit, trademark, tradename or patent and such proceedings shall not be dismissed or discharged within sixty (60) days, or (C) schedule or conduct a hearing on the renewal of any license, permit, trademark, tradename or patent necessary for the continuation of any Borrower’s, Guarantor’s, or any of their respective Subsidiaries’ business and the staff of such Governmental Body issues a report recommending the termination, revocation, suspension or material, adverse modification of such license, permit, trademark, tradename or patent, and such revocation, termination, suspension, proceeding or recommendation is reasonably likely to have a Material Adverse Effect; (ii) any agreement which is necessary or material to the operation of any Borrower’s, Guarantor’s, or any of their respective Subsidiaries’ business shall be revoked or terminated and not replaced by a substitute acceptable to Agent within thirty (30) days after the date of such revocation or termination, and such revocation or termination and non-replacement would reasonably be expected to have a Material Adverse Effect;

10.16. Seizures. A portion of the Collateral with a value in excess of $1,000,000 shall be seized or taken by a Governmental Body, or any Borrower, Guarantor, or any of their respective Subsidiaries or the title and rights of any Borrower, Guarantor, or any of their respective Subsidiaries shall have become the subject matter of a claim, litigation, suit or other proceeding which Agent has determined in the exercise of its Permitted Discretion, upon final determination, is reasonably likely result in impairment or loss of the security provided by this Agreement or the Other Documents;

10.17. Operations. The operations of any Borrower’s, Guarantor’s, or any of their respective Subsidiaries’ manufacturing facility are interrupted at any time for more than thirty (30) consecutive days, unless such Borrower, Guarantor or Subsidiary shall (i) be entitled to receive for such period of interruption, proceeds of business interruption insurance sufficient to assure that its per diem cash needs during such period is at least equal to its average per diem cash needs for the consecutive three (3) month period immediately preceding the initial date of interruption and (ii) receive such proceeds in the amount described in clause (i) preceding not later than thirty (30) days following the initial date of any such interruption; provided, however, that notwithstanding the provisions of clauses (i) and (ii) of this Section, an Event of Default shall be deemed to have occurred if such Borrower, Guarantor or Subsidiary shall be receiving the proceeds of business interruption insurance for a period of six (6) months; or

XI LENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT.

11.1. Rights and Remedies.

(a) Upon the occurrence and during the continuance of (i) an Event of Default pursuant to Section 10.7, all Obligations shall be immediately due and payable and this Agreement and the obligation of Lenders to make Advances shall be deemed terminated; and, (ii) any of the other Events of Default and at any time thereafter, at the option of Required Lenders, all Obligations shall be immediately due and payable and Lenders shall have the right to terminate this Agreement and to terminate the obligation of Lenders to make Advances. Upon the occurrence and during the continuance of any Event of Default, Agent shall have the right to exercise any and all rights and remedies provided for herein, under the Other Documents, under the Uniform Commercial Code and PPSA and at law or equity generally, including the right to foreclose the security interests granted herein and to realize upon any Collateral by any available judicial procedure and/or to take possession of and sell any or all of the Collateral with or without judicial process. In compliance with Applicable Law, Agent may enter any of any Borrower’s premises or other premises without legal process and without incurring liability to any Borrower therefor, and Agent may thereupon, or at any time thereafter, in its discretion without notice or demand, take the Collateral and remove the same to such place as Agent may deem advisable and Agent may require Borrowers to make the Collateral available to Agent at a convenient place. With or without having the Collateral at the time or place of sale, Agent may sell the Collateral, or any part thereof, at public or private sale, at any time or place, in one or more sales, at such price or prices, and upon such terms, either for cash, credit or future delivery, as Agent may elect. Except as to that part of the Collateral which is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, Agent shall give Borrowers reasonable notification of such sale or sales, it being agreed that in all events written notice mailed to Borrowing Agent at least ten (10) Business Days prior to such sale or sales is reasonable notification. At any public sale Agent or any Lender may bid for and become the purchaser, and Agent, any Lender or any other purchaser at any such sale thereafter shall hold the Collateral sold absolutely free from any claim or right of whatsoever kind, including any equity of redemption and all such claims, rights and equities are hereby expressly waived and released by each Borrower. Each Borrower waives any right to require a marshalling of assets. The cash proceeds realized from the sale of any Collateral shall be applied to the Obligations in the order set forth in Section 11.6. Noncash proceeds will only be applied to the Obligations as they are converted into cash. If any deficiency shall arise, Borrowers shall remain liable to Agent and Lenders therefor.

(b) Upon the occurrence and during the continuance of an Event of Default, in connection with the exercise of the foregoing remedies, including the sale of Inventory, Agent is granted a perpetual irrevocable, royalty free, nonexclusive license and Agent is granted permission to use all of each Borrower’s (i) trademarks, trademark applications, trade styles, trade names, patents, patent applications, copyrights, service marks, licenses, franchises and other proprietary rights which are used or useful in connection with Inventory for the purpose of marketing, advertising for sale and selling or otherwise disposing of such Inventory, and (ii) Equipment for the purpose of completing the manufacture of unfinished goods.

(c) Upon the occurrence and during the continuance of an Event of Default, to the extent that Applicable Law imposes duties on the Agent to exercise remedies in a commercially reasonable manner, each Borrower acknowledges and agrees that it is not commercially unreasonable for the Agent (i) to fail to incur expenses reasonably deemed significant by the Agent to prepare Collateral for disposition or otherwise to complete raw material or work in process into finished goods or other finished products for disposition, (ii) to fail to obtain third party consents for access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain governmental or third party consents for the collection or disposition of Collateral to be collected or disposed of, (iii) to fail to exercise collection remedies against Customers or other Persons obligated on Collateral or to remove Liens on or any adverse claims against Collateral, (iv) to exercise collection remedies against Customers and other Persons obligated on Collateral directly or through the use of collection agencies and other collection specialists, (v) to advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized nature, (vi) to contact other Persons, whether or not in the same business as any Borrower, for expressions of interest in acquiring all or any portion of such Collateral, (vii) to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not the Collateral is of a specialized nature, (viii) to dispose of Collateral by utilizing internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capacity of doing so, or that match buyers and sellers of assets, (ix) to dispose of assets in wholesale rather than retail markets, (x) to disclaim disposition warranties, such as title, possession or quiet enjoyment, (xi) to purchase insurance or credit enhancements to insure the Agent against risks of loss, collection or disposition of Collateral or to provide to the Agent a guaranteed return from the collection or disposition of Collateral, or (xii) to the extent deemed appropriate by the Agent, to obtain the services of other brokers, investment bankers, consultants and other professionals to assist the Agent in the collection or disposition of any of the Collateral. Each Borrower acknowledges that the purpose of this Section 11.1(b) is to provide non-exhaustive indications of what actions or omissions by the Agent would not be commercially unreasonable in the Agent’s exercise of remedies against the Collateral and that other actions or omissions by the Agent shall not be deemed commercially unreasonable solely on account of not being indicated in this Section 11.1(b). Without limitation upon the foregoing, nothing contained in this Section11.1(b) shall be construed to grant any rights to any Borrower or to impose any duties on Agent that would not have been granted or imposed by this Agreement or by Applicable Law in the absence of this Section 11.1(b).

11.2. Agent’s Discretion. Agent shall have the right in its sole discretion to determine which rights, Liens, security interests or remedies Agent may at any time pursue, relinquish, subordinate, or modify or to take any other action with respect thereto and such determination will not in any way modify or affect any of Agent’s or Lenders’ rights hereunder.

11.3. Setoff. Subject to Section 14.12, in addition to any other rights which Agent or any Lender may have under Applicable Law, upon the occurrence and during the continuance of an Event of Default hereunder, Agent and such Lender shall have a right, immediately and without notice of any kind, to apply any Borrower’s property held by Agent and such Lender to reduce the Obligations.

11.4. Appointment of Receiver.

(a) Upon the occurrence and during the continuation of an Event of Default, Agent shall be entitled to the immediate appointment of a receiver for all or part of the Collateral, whether such receivership is incidental to a proposed sale of the Collateral or otherwise. In such event, Agent may take proceedings in any court of competent jurisdiction for the appointment of a receiver of the Collateral or of any part thereof or may, to the extent permitted by Applicable Law, by instrument in writing appoint any Person to be a receiver of the Collateral or of any part thereof and may remove any receiver so appointed by Agent and appoint another in that Person's stead. Any such receiver appointed by instrument in writing shall, to the extent permitted by Applicable Law, have all of the rights, remedies, benefits and powers of Agent under this Agreement or under the PPSA or otherwise and, without limiting the generality of the foregoing, any such receiver (or Agent) shall have the power to, to the full extent permitted by Applicable Law:

(i) take possession of the Collateral or any part thereof;

(ii) carry on or concur in carrying on all or any part or parts of the business of the Borrowers relating to the Collateral;

(iii) file such proofs of claim and other documents as may be necessary or advisable in order to have such receiver's claim lodged in any bankruptcy, winding-up or other judicial proceedings relative to the Borrowers or Guarantors;

(iv) borrow money required for the seizure, repossession, retaking, repair, insurance, maintenance, preservation, protection, collection, preparation for disposition, disposition or realization of the Collateral or any part thereof and for the enforcement of this Agreement or for the carrying on of the business of the Borrowers or Guarantors on the security of the Collateral in priority to the security interest created under this Agreement; and

(v) sell, lease or otherwise dispose of, or concur in the sale, lease or other disposition of, the whole or any part of the Collateral at public auction, by public tender or by private sale, lease or other disposition, either for cash or upon credit, at such time and upon such terms and conditions as the receiver may determine.

Any such receiver shall for all purposes be deemed to be the agent of the Borrowers and Guarantors. Agent may from time to time fix a commercially reasonable remuneration of such receiver. Agent shall not in any way be responsible for any misconduct or negligence of any such receiver. Each Borrower hereby consents to the appointment of any such a receiver without bond, to the full extent permitted by Applicable Law.

(b) Without limiting the generality of the foregoing, upon the occurrence and during the continuance of an Event of Default, with respect to any Collateral located in Canada, Agent is hereby specifically authorized to seek the appointment of a receiver or a receiver-manager under the laws of Canada or any Province thereof (a “Canadian Receiver”) upon or during the continuation of an Event of Default, to take possession of all or any portion of the Collateral or to operate same and, to the maximum extent permitted by Applicable Law, may seek the appointment of such a Canadian Receiver without the requirement of prior notice or a hearing. Any such Canadian Receiver shall, so far as concerns responsibility for his/her acts, be deemed agent of Borrowers and Guarantors and not Agent or the Lenders. Agent shall not incur any liability to the Canadian Receiver, the Borrowers or Guarantor or otherwise and shall not in any way be responsible for any misconduct or negligence of any such Canadian Receiver. Subject to the provisions of the instrument appointing him/her, to the extent by Applicable Law, any such Canadian Receiver shall have power to take possession of Collateral, to preserve Collateral or its value, to carry on or concur in carrying on all or any part of the business of the Borrowers and Guarantors and to sell, lease, license or otherwise dispose of or concur in selling, leasing, licensing or otherwise disposing of Collateral. To facilitate the foregoing powers, any such Canadian Receiver may, to the exclusion of all others, including the Borrowers and Guarantors, to the extent permitted by Applicable Law, enter upon, use and occupy all premises owned or occupied by the Borrowers or Guarantors wherein Collateral may be situated, maintain Collateral upon such premises, borrow money on a secured or unsecured basis and use Collateral of the Borrowers and Guarantors directly in carrying on their business or as security for loans or advances to enable the Canadian Receiver to carry on the their business or otherwise, as such Canadian Receiver shall, in its discretion, determine. Except as may be otherwise directed by Agent, all money received from time to time by such Canadian Receiver in carrying out his/her appointment shall be received in trust for and paid over to Agent. Every such Canadian Receiver may, in the discretion of Agent, be vested with all or any of the rights and powers of Agent and Lenders. Agent may, either directly or through its nominees, exercise any or all powers and rights given to a Canadian Receiver by virtue of the foregoing provisions of this Section.

11.5. Rights and Remedies not Exclusive. The enumeration of the foregoing rights and remedies is not intended to be exhaustive and the exercise of any rights or remedy shall not preclude the exercise of any other right or remedies provided for herein or otherwise provided by law, all of which shall be cumulative and not alternative.

11.6. Allocation of Payments After Event of Default. Notwithstanding any other provisions of this Agreement to the contrary, after the occurrence and during the continuance of an Event of Default, all amounts collected or received by the Agent on account of the Obligations or any other amounts outstanding under any of the Other Documents or in respect of the Collateral may, at Agent’s discretion, be paid over or delivered as follows:

FIRST, to the payment of all reasonable out-of-pocket costs and expenses (including reasonable attorneys’ fees) of the Agent in connection with enforcing its rights and the rights of the Lenders under this Agreement and the Other Documents and any protective advances made by the Agent with respect to the Collateral under or pursuant to the terms of this Agreement;

SECOND, to payment of any fees owed to the Agent;

THIRD, to the payment of all reasonable out-of-pocket costs and expenses (including reasonable attorneys’ fees) of each of the Lenders to the extent owing to such Lender pursuant to the terms of this Agreement;

FOURTH, to the payment of all of the Obligations consisting of accrued fees and interest;

FIFTH, to the payment of the outstanding principal amount of the Obligations (including the payment or cash collateralization of any outstanding Letters of Credit);

SIXTH, to all other Obligations and other obligations which shall have become due and payable under the Other Documents or otherwise and not repaid pursuant to clauses “FIRST” through “FIFTH” above; and

SEVENTH, to the payment of the surplus, if any, to whoever may be lawfully entitled to receive such surplus.

In carrying out the foregoing, (i) amounts received shall be applied in the numerical order provided until exhausted prior to application to the next succeeding category; (ii) each of the Lenders shall receive (so long as it is not a Defaulting Lender) an amount equal to its pro rata share (based on the proportion that the then outstanding Advances held by such Lender bears to the aggregate then outstanding Advances) of amounts available to be applied pursuant to clauses “FOURTH”, “FIFTH” and “SIXTH” above and Agent may convert any amounts to Dollars or Canadian Dollars as necessary to make such application; and (iii) to the extent that any amounts available for distribution pursuant to clause “FIFTH” above are attributable to the issued but undrawn amount of outstanding Letters of Credit, such amounts shall be held by the Agent in a cash collateral account and applied (A) first, to reimburse the Issuer from time to time for any drawings under such Letters of Credit and (B) then, following the expiration of all Letters of Credit, to all other obligations of the types described in clauses “FIFTH” and “SIXTH” above in the manner provided in this Section 11.6.

XII WAIVERS AND JUDICIAL PROCEEDINGS.

12.1. Waiver of Notice. Each Borrower hereby waives notice of non-payment of any of the Receivables, demand, presentment, protest and notice thereof with respect to any and all instruments, notice of acceptance hereof, notice of loans or advances made, credit extended, Collateral received or delivered, or any other action taken in reliance hereon, and all other demands and notices of any description, except such as are expressly provided for herein.

12.2. Delay. No delay or omission on Agent’s or any Lender’s part in exercising any right, remedy or option shall operate as a waiver of such or any other right, remedy or option or of any Default or Event of Default.

12.3. Jury Waiver. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR ANY OTHER DOCUMENT, OR (B) IN ANY WAY CONNECTED WITH OR RELATED TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER DOCUMENT IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HEREBY CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

XIII EFFECTIVE DATE AND TERMINATION.

13.1. Term. This Agreement, which shall inure to the benefit of and shall be binding upon the respective successors and permitted assigns of each Borrower, Agent and each Lender, shall become effective on the date hereof and shall continue in full force and effect until October 20, 2015 (the “Term”) unless sooner terminated as herein provided. Borrowers may terminate this Agreement at any time upon ten (10) days’ prior written notice and payment in full of the Obligations. Such notice shall be irrevocable. .

13.2. Termination.

(a) The termination of the Agreement shall not affect any Borrower’s, Agent’s or any Lender’s rights, or any of the Obligations having their inception prior to the effective date of such termination, and the provisions hereof shall continue to be fully operative until all transactions entered into, rights or interests created or Obligations have been fully and indefeasibly paid, disposed of, concluded or liquidated. Until such event, the security interests, Liens and rights granted to Agent and Lenders hereunder and the financing statements filed hereunder shall continue in full force and effect, notwithstanding the termination of this Agreement or the fact that Borrowers’ Account may from time to time be temporarily in a zero or credit position, until all of the Obligations of each Borrower have been indefeasibly paid and performed in full after the termination of this Agreement or each Borrower has furnished Agent and Lenders with an indemnification reasonably satisfactory to Agent and Lenders with respect thereto. Accordingly, in such event, each Borrower waives any rights which it may have under the Uniform Commercial Code, the PPSA, or other Applicable Law, to demand the filing of termination statements (or the equivalent) with respect to the Collateral, and Agent shall not be required to send such termination statements (or the equivalent) to each Borrower, or to file them with any filing office, unless and until this Agreement shall have been terminated in accordance with its terms and all Obligations have been indefeasibly paid in full in immediately available funds. All representations, warranties, covenants, waivers and agreements contained herein shall survive termination hereof until all Obligations are indefeasibly paid and performed in full.

(b) Upon termination of this Agreement and full and indefeasible payment of the Obligations to Agent and Lender (other than any Obligations which expressly survive the termination of this Agreement) in accordance with Section 13.1(a), (i) all rights and remedies of each Borrower, Agent and each Lender hereunder shall cease, other than those which survive termination, and (ii) Agent and each Lender agrees to execute and deliver, as applicable, to Borrowing Agent or a designated agent (i) all property pledged and delivered to Agent or any Lender (including without limitation stock or other certificates, notes receivable, certificates of title, direct pay notices to account debtors, change of address forms and other instruments, together with accompanying stock powers and allonges in the forms delivered to Agent or any Lender; (2) the original promissory notes executed in connection with the Obligations marked “CANCELLED”; (3) all guaranty agreements, indemnification agreements and other accommodation agreement executed by any guarantor, marked “CANCELLED”; (4) mortgage or deed of trust releases against any Real Property of any Borrower or Guarantor, releases of any liens or encumbrances filed against any Intellectual Property or property subject to any title laws and other like releases, and (5) UCC-3 termination statements with respect to the Uniform Commercial Code and PPSA filings made by Agent in respect of each Borrower or Guarantor, as applicable.

XIV REGARDING AGENT.

14.1. Appointment. Each Lender hereby designates PNC to act as Agent for such Lender under this Agreement and the Other Documents. Each Lender hereby irrevocably authorizes Agent to take such action on its behalf under the provisions of this Agreement and the Other Documents and to exercise such powers and to perform such duties hereunder and thereunder as are specifically delegated to or required of Agent by the terms hereof and thereof and such other powers as are reasonably incidental thereto and Agent shall hold all Collateral, payments of principal and interest, fees (except the fees set forth in the Fee Letter), charges and collections (without giving effect to any collection days) received pursuant to this Agreement, for the ratable benefit of Lenders. Agent may perform any of its duties hereunder by or through its agents or employees. As to any matters not expressly provided for by this Agreement (including collection of the Note) Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Required Lenders, and such instructions shall be binding; provided, however, that Agent shall not be required to take any action which exposes Agent to liability or which is contrary to this Agreement or the Other Documents or Applicable Law unless Agent is furnished with an indemnification reasonably satisfactory to Agent with respect thereto.

14.2. Nature of Duties. Agent shall have no duties or responsibilities except those expressly set forth in this Agreement and the Other Documents. Neither Agent nor any of its officers, directors, employees or agents shall be (i) liable for any action taken or omitted by them as such hereunder or in connection herewith, unless caused by their gross (not mere) negligence or willful misconduct (as determined by a court of competent jurisdiction in a final non-appealable judgment), or (ii) responsible in any manner for any recitals, statements, representations or warranties made by any Borrower or any officer thereof contained in this Agreement, or in any of the Other Documents or in any certificate, report, statement or other document referred to or provided for in, or received by Agent under or in connection with, this Agreement or any of the Other Documents or for the value, validity, effectiveness, genuineness, due execution, enforceability or sufficiency of this Agreement, or any of the Other Documents or for any failure of any Borrower to perform its obligations hereunder. Agent shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any of the Other Documents, or to inspect the properties, books or records of any Borrower. The duties of Agent as respects the Advances to Borrowers shall be mechanical and administrative in nature; Agent shall not have by reason of this Agreement a fiduciary relationship in respect of any Lender; and nothing in this Agreement, expressed or implied, is intended to or shall be so construed as to impose upon Agent any obligations in respect of this Agreement except as expressly set forth herein.

14.3. Lack of Reliance on Agent and Resignation. Independently and without reliance upon Agent or any other Lender, each Lender has made and shall continue to make (i) its own independent investigation of the financial condition and affairs of each Borrower and each Guarantor in connection with the making and the continuance of the Advances hereunder and the taking or not taking of any action in connection herewith, and (ii) its own appraisal of the creditworthiness of each Borrower and each Guarantor. Agent shall have no duty or responsibility, either initially or on a continuing basis, to provide any Lender with any credit or other information with respect thereto, whether coming into its possession before making of the Advances or at any time or times thereafter except as shall be provided by any Borrower pursuant to the terms hereof. Agent shall not be responsible to any Lender for any recitals, statements, information, representations or warranties herein or in any agreement, document, certificate or a statement delivered in connection with or for the execution, effectiveness, genuineness, validity, enforceability, collectability or sufficiency of this Agreement or any Other Document, or of the financial condition of any Borrower or any Guarantor, or be required to make any inquiry concerning either the performance or observance of any of the terms, provisions or conditions of this Agreement, the Note, the Other Documents or the financial condition of any Borrower, or the existence of any Event of Default or any Default.

Agent may resign on sixty (60) days’ written notice to each of Lenders and Borrowing Agent and upon such resignation, the Required Lenders will promptly designate a successor Agent reasonably satisfactory to Borrowers.

Any such successor Agent shall succeed to the rights, powers and duties of Agent, and the term “Agent” shall mean such successor agent effective upon its appointment, and the former Agent’s rights, powers and duties as Agent shall be terminated, without any other or further act or deed on the part of such former Agent. After any Agent’s resignation as Agent, the provisions of this Article XIV shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement.

14.4. Certain Rights of Agent. If Agent shall request instructions from Lenders with respect to any act or action (including failure to act) in connection with this Agreement or any Other Document, Agent shall be entitled to refrain from such act or taking such action unless and until Agent shall have received instructions from the Required Lenders; and Agent shall not incur liability to any Person by reason of so refraining. Without limiting the foregoing, Lenders shall not have any right of action whatsoever against Agent as a result of its acting or refraining from acting hereunder in accordance with the instructions of the Required Lenders.

14.5. Reliance. Agent shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, statement, certificate, telex, teletype or telecopier message, cablegram, order or other document or telephone message believed by it to be genuine and correct and to have been signed, sent or made by the proper person or entity, and, with respect to all legal matters pertaining to this Agreement and the Other Documents and its duties hereunder, upon advice of counsel selected by it. Agent may employ agents and attorneys-in-fact and shall not be liable for the default or misconduct of any such agents or attorneys-in-fact selected by Agent with reasonable care.

14.6. Notice of Default. Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder or under the Other Documents, unless Agent has received notice from a Lender or Borrowing Agent referring to this Agreement or the Other Documents, describing such Default or Event of Default and stating that such notice is a “notice of default”. In the event that Agent receives such a notice, Agent shall give notice thereof to Lenders. Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders; provided, that, unless and until Agent shall have received such directions, Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of Lenders.

14.7. Indemnification. To the extent Agent is not reimbursed and indemnified by Borrowers, each Lender will reimburse and indemnify Agent in proportion to its respective portion of the Advances (or, if no Advances are outstanding, according to its Commitment Percentage), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against Agent in performing its duties hereunder, or in any way relating to or arising out of this Agreement or any Other Document; provided that, Lenders shall not be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from Agent’s gross (not mere) negligence or willful misconduct (as determined by a court of competent jurisdiction in a final non-appealable judgment).

14.8. Agent in its Individual Capacity. With respect to the obligation of Agent to lend under this Agreement, the Advances made by it shall have the same rights and powers hereunder as any other Lender and as if it were not performing the duties as Agent specified herein; and the term “Lender” or any similar term shall, unless the context clearly otherwise indicates, include Agent in its individual capacity as a Lender. Agent may engage in business with any Borrower as if it were not performing the duties specified herein, and may accept fees and other consideration from any Borrower for services in connection with this Agreement or otherwise without having to account for the same to Lenders.

14.9. Delivery of Documents. To the extent Agent receives financial statements required under Sections 9.7, 9.8, 9.9, 9.12 and 9.13 or Borrowing Base Certificates from any Borrower pursuant to the terms of this Agreement which any Borrower is not obligated to deliver to each Lender, Agent will promptly furnish such documents and information to Lenders.

14.10. Borrowers’ Undertaking to Agent. Without prejudice to their respective obligations to Lenders under the other provisions of this Agreement, each Borrower hereby undertakes with Agent to pay to Agent from time to time on demand all amounts from time to time due and payable by it for the account of Agent or Lenders or any of them pursuant to this Agreement to the extent not already paid. Any payment made pursuant to any such demand shall pro tanto satisfy the relevant Borrower’s obligations to make payments for the account of Lenders or the relevant one or more of them pursuant to this Agreement.

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14.11. No Reliance on Agent’s Customer Identification Program. Each Lender acknowledges and agrees that neither such Lender, nor any of its Affiliates, participants or assignees, may rely on the Agent to carry out such Lender’s, Affiliate’s, participant’s or assignee’s customer identification program, or other obligations required or imposed under or pursuant to the USA PATRIOT Act or the regulations thereunder, including the regulations contained in 31 CFR 103.121 (as hereafter amended or replaced, the “CIP Regulations”), or any other Anti-Terrorism Law, including any programs involving any of the following items relating to or in connection with any Borrower, its Affiliates or its agents, this Agreement, the Other Documents or the transactions hereunder or contemplated hereby: (1) any identity verification procedures, (2) any record-keeping, (3) comparisons with government lists, (4) customer notices or (5) other procedures required under the CIP Regulations or such other laws.

14.12. Other Agreements. Each of the Lenders agrees that it shall not, without the express consent of Agent, and that it shall, to the extent it is lawfully entitled to do so, upon the request of Agent, set off against the Obligations, any amounts owing by such Lender to any Borrower or any deposit accounts of any Borrower now or hereafter maintained with such Lender. Anything in this Agreement to the contrary notwithstanding, each of the Lenders further agrees that it shall not, unless specifically requested to do so by Agent, take any action to protect or enforce its rights arising out of this Agreement or the Other Documents, it being the intent of Lenders that any such action to protect or enforce rights under this Agreement and the Other Documents shall be taken in concert and at the direction or with the consent of Agent or Required Lenders.

14.13. Delegation. The Agent may execute any of its duties under this Agreement and the Other Documents by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care. The Agent reserves the right to execute any of its duties under this Agreement or any Other Document by or through agents, including a separate Canadian agent, to hold or realize on the Collateral or enforce this Agreement or any Other Document.

XV BORROWING AGENCY.

15.1. Borrowing Agency Provisions.

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

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(b) The handling of this credit facility as a co-borrowing facility with a borrowing agent in the manner set forth in this Agreement is solely as an accommodation to Borrowers and at their request. Neither Agent nor any Lender shall incur liability to Borrowers as a result thereof. To induce Agent and Lenders to do so and in consideration thereof, each Borrower hereby indemnifies Agent and each Lender and holds Agent and each Lender harmless from and against any and all liabilities, expenses, losses, damages and claims of damage or injury asserted against Agent or any Lender by any Person arising from or incurred by reason of the handling of the financing arrangements of Borrowers as provided herein, reliance by Agent or any Lender on any request or instruction from Borrowing Agent or any other action taken by Agent or any Lender with respect to this Section 15.1 except due to willful misconduct or gross (not mere) negligence by the indemnified party (as determined by a court of competent jurisdiction in a final and non-appealable judgment).

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

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

15.3. Cross Guaranty. Without limiting the joint and several nature of the Obligations, each Borrower hereby unconditionally guaranties the full and prompt payment and performance when due, whether by acceleration or otherwise, and at all times thereafter, of any and all present and future Obligations of each other Borrower. This guaranty shall in all respects be a continuing, absolute and unconditional guaranty of payment and performance (and not of collection), and shall remain in full force and effect (notwithstanding, without limitation, the dissolution of any Borrower). Each Borrower hereby absolutely, unconditionally and irrevocably waives and agrees not to assert or take advantage of any defense based upon an election of remedies by Agent or any Lender, including an election to proceed by non-judicial rather than judicial foreclosure, which destroys or impairs any right of subrogation or the right of a Borrower to proceed against any Person for reimbursement or both.

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15.4. Subordination.

(a) Each Borrower hereby covenants and agrees that, as provided herein, all indebtedness, intercompany charges and other sums owing and claims of any nature whatsoever owed (other than payments or remittances of employee withholding, wages, pension payments, tax payments, trust funds and similar items) to such Borrower by any other Borrower, Guarantor or any of their respective Subsidiaries (“Intercompany Obligations”), the payment of the principal of and interest thereon and any lien or security interest therefor are hereby expressly made subordinate and subject in right of payment to this Agreement or the prior payment in full of: (a) all Obligations now or hereafter incurred by any Borrower under this Agreement or any of the Other Documents, (b) interest thereon (including any such interest accruing subsequent to the filing by or against any Borrower of any proceeding brought under the Bankruptcy Code, whether or not such interest is allowed as a claim pursuant to the provisions of the Bankruptcy Code), and (c) all fees, expenses, indemnities and other amounts now or hereafter payable pursuant to or in connection with this Agreement and all Other Documents (collectively the “Senior Obligations”), and any lien on any property or asset securing the Senior Obligations. No payment or prepayment of any Intercompany Obligations (whether of principal, interest or otherwise) shall be made at any time prior to the payment in full, in cash, of the Senior Obligations, provided that the Borrowers may make payments (but not prepayments) of Intercompany Obligations in the Ordinary Course of Business to the extent that such payments are not otherwise prohibited by this Agreement and at the time of, and immediately after giving effect to, any such payment, no Event of Default exists and is continuing. If any default occurs under the Intercompany Obligations, no Borrower will demand, accelerate, declare a default under, sue for, set off, accept, take or receive, directly or indirectly, in cash or other property or in any other manner, any payment of all or any part of the Intercompany Obligations without Agent’s prior written consent, which consent shall not be unreasonably withheld or delayed.

(b) Each Borrower agrees that any right of possession it has to any Real Property (pursuant to a written lease or otherwise) shall be subject and subordinate to the rights of Agent hereunder and under any Mortgage thereon. Each Borrower which holds title to any of the Real Property hereby waives any Lien it holds on the Collateral of any other Borrower located at such Real Property and shall grant access to Agent to such Real Property and Collateral in accordance with this Agreement notwithstanding the terms of any lease or other occupancy agreement to the contrary.

15.5. No Disposition. No Borrower will sell, assign, pledge, encumber or otherwise dispose of any of the Intercompany Obligations owed to it unless permitted by the terms of this Agreement or Other Documents.

XVI MISCELLANEOUS

16.1. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Ohio applied to contracts to be performed wholly within the State of Ohio. Any judicial proceeding brought by or against any Borrower with respect to any of the Obligations, this Agreement, the Other Documents or any related agreement may be brought in any court of competent jurisdiction in the State of Ohio, United States of America, and, by execution and delivery of this Agreement, each Borrower accepts for itself and in connection with its properties, generally and unconditionally, the non-exclusive jurisdiction of the aforesaid courts, and irrevocably agrees to be bound by any judgment rendered thereby in connection with this Agreement. Each Borrower waives any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. Each Borrower waives the right to remove any judicial proceeding brought against such Borrower in any state court to any federal court. Any judicial proceeding by any Borrower against Agent or any Lender involving, directly or indirectly, any matter or claim in any way arising out of, related to or connected with this Agreement or any related agreement, shall be brought only in a federal or state court located in the State of Ohio.

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16.2. Entire Understanding.

(a) This Agreement and the documents executed concurrently herewith contain the entire understanding between each Borrower, Agent and each Lender and supersedes all prior agreements and understandings, if any, relating to the subject matter hereof. Any promises, representations, warranties or guarantees not herein contained and hereinafter made shall have no force and effect unless in writing, signed by each Borrower’s, Agent’s and each Lender’s respective officers. Neither this Agreement nor any portion or provisions hereof may be changed, modified, amended, waived, supplemented, discharged, cancelled or terminated orally or by any course of dealing, or in any manner other than by an agreement in writing, signed by the party to be charged. Each Borrower acknowledges that it has been advised by counsel in connection with the execution of this Agreement and Other Documents and is not relying upon oral representations or statements inconsistent with the terms and provisions of this Agreement.

(b) The Required Lenders, Agent with the consent in writing of the Required Lenders, and Borrowers may, subject to the provisions of this Section 16.2 (b), from time to time enter into written supplemental agreements to this Agreement or the Other Documents executed by Borrowers, for the purpose of adding or deleting any provisions or otherwise changing, varying or waiving in any manner the rights of Lenders, Agent or Borrowers thereunder or the conditions, provisions or terms thereof or waiving any Event of Default thereunder, but only to the extent specified in such written agreements; provided, however, that no such supplemental agreement shall, without the consent of all Lenders:

(i) increase the Commitment Percentage, the maximum dollar commitment of any Lender or the Maximum Revolving Advance Amount.

(ii) extend the maturity of any Note or the due date for any amount of interest, fees, or principal payable hereunder (other than mandatory prepayments), or decrease the rate of interest or reduce any fee payable by Borrowers to Lenders pursuant to this Agreement.

(iii) alter the definition of the term Required Lenders or alter, amend or modify this Section 16.2.

(iv) release any Collateral during any calendar year (other than in accordance with the provisions of this Agreement) having an aggregate value in excess of $250,000.

(v) change the rights and duties of Agent.

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(vi) permit any Revolving Advance to be made if after giving effect thereto the total of Revolving Advances outstanding hereunder would exceed the Formula Amount for more than sixty (60) consecutive Business Days or exceed one hundred and five percent (105%) of the Formula Amount.

(vii) increase the Advance Rates above the Advance Rates in effect on the Closing Date.

(viii) release any Borrower or Guarantor (other than in accordance with the provisions of this Agreement).

Any such supplemental agreement shall apply equally to each Lender and shall be binding upon Borrowers, Lenders and Agent and all future holders of the Obligations. In the case of any waiver, Borrowers, Agent and Lenders shall be restored to their former positions and rights, and any Event of Default waived shall be deemed to be cured and not continuing, but no waiver of a specific Event of Default shall extend to any subsequent Event of Default (whether or not the subsequent Event of Default is the same as the Event of Default which was waived), or impair any right consequent thereon.

(c) In the event that Agent requests the consent of a Lender pursuant to Section 16.2(b) and such consent is denied, then PNC may, at its option, require such Lender to assign its interest in the Advances to PNC or to another Lender or to any other Person designated by the Agent (the “Designated Lender”), for a price equal to (i) the then outstanding principal amount thereof plus (ii) accrued and unpaid interest and fees due such Lender, which interest and fees shall be paid when collected from Borrowers. In the event PNC elects to require any Lender to assign its interest to PNC or to the Designated Lender, PNC will so notify such Lender in writing within forty five (45) days following such Lender’s denial, and such Lender will assign its interest to PNC or the Designated Lender no later than five (5) days following receipt of such notice pursuant to a Commitment Transfer Supplement executed by such Lender, PNC or the Designated Lender, as appropriate, and Agent.

(d) Notwithstanding (a) the existence of a Default or an Event of Default, (b) that any of the other applicable conditions precedent set forth in Section 8.2 hereof have not been satisfied or (c) any other provision of this Agreement, Agent may at its discretion and without the consent of the Required Lenders, voluntarily permit the outstanding Revolving Advances at any time to exceed the Formula Amount by up to five percent (5%) of the Formula Amount for up to sixty (60) consecutive days (the “Out-of-Formula Loans”). If Agent is willing in its sole and absolute discretion to make such Out-of-Formula Loans, such Out-of-Formula Loans shall be payable on demand and shall bear interest at the Default Rate for Revolving Advances consisting of Domestic Rate Loans; provided that, if Lenders do make Out-of-Formula Loans, neither Agent nor Lenders shall be deemed thereby to have changed the limits of Section 2.1(a). For purposes of this paragraph, the discretion granted to Agent hereunder shall not preclude involuntary overadvances that may result from time to time due to the fact that the Formula Amount was unintentionally exceeded for any reason, including, but not limited to, Collateral previously deemed to be either “Eligible Receivables” or “Eligible Inventory”, as applicable, becomes ineligible, collections of Receivables applied to reduce outstanding Revolving Advances are thereafter returned for insufficient funds or overadvances are made to protect or preserve the Collateral. In the event Agent involuntarily permits the outstanding Revolving Advances to exceed the Formula Amount by more than five percent (5%), Agent shall use its efforts to have Borrowers decrease such excess in as expeditious a manner as is practicable under the circumstances and not inconsistent with the reason for such excess. Revolving Advances made after Agent has determined the existence of involuntary overadvances shall be deemed to be involuntary overadvances and shall be decreased in accordance with the preceding sentence.

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(e) In addition to (and not in substitution of) the discretionary Revolving Advances permitted above in this Section 16.2, the Agent is hereby authorized by Borrowers and the Lenders, from time to time in the Agent’s sole discretion, (A) after the occurrence and during the continuation of a Default or an Event of Default, or (B) at any time that any of the other applicable conditions precedent set forth in Section 8.2 hereof have not been satisfied, to make Revolving Advances to Borrowers on behalf of the Lenders which the Agent, in its reasonable business judgment, deems necessary or desirable (a) to preserve or protect the Collateral, or any portion thereof, (b) to enhance the likelihood of, or maximize the amount of, repayment of the Advances and other Obligations, or (c) to pay any other amount chargeable to Borrowers pursuant to the terms of this Agreement; provided, that at any time after giving effect to any such Revolving Advances the outstanding Revolving Advances do not exceed the lesser of: (i) one hundred and five percent (105%) of the Formula Amount, and (ii) the Maximum Revolving Advance Amount.

16.3. Successors and Assigns; Participations; New Lenders.

(a) This Agreement shall be binding upon and inure to the benefit of Borrowers, Agent, each Lender, all future holders of the Obligations and their respective successors and permitted assigns, except that no Borrower may assign or transfer any of its rights or obligations under this Agreement without the prior written consent of Agent and each Lender.

(b) Each Borrower acknowledges that in the regular course of commercial banking business one or more Lenders may at any time and from time to time sell participating interests in the Advances to other financial institutions (each such transferee or purchaser of a participating interest, a “Participant”). Each Participant may exercise all rights of payment (including rights of set-off) with respect to the portion of such Advances held by it or other Obligations payable hereunder as fully as if such Participant were the direct holder thereof provided that Borrowers shall not be required to pay to any Participant more than the amount which it would have been required to pay to Lender which granted an interest in its Advances or other Obligations payable hereunder to such Participant had such Lender retained such interest in the Advances hereunder or other Obligations payable hereunder and in no event shall Borrowers be required to pay any such amount arising from the same circumstances and with respect to the same Advances or other Obligations payable hereunder to both such Lender and such Participant. Each Borrower hereby grants to any Participant a continuing security interest in any deposits, moneys or other property held by such Participant as security for the Participant’s interest in the Advances.

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(c) Any Lender, with the consent of Agent which shall not be unreasonably withheld or delayed, may sell, assign or transfer all or any part of its rights and obligations under or relating to Revolving Advances under this Agreement and the Other Documents to one or more additional banks or financial institutions and one or more additional banks or financial institutions may commit to make Advances hereunder (each a “Purchasing Lender”), in minimum amounts of not less than $5,000,000, pursuant to a Commitment Transfer Supplement, executed by a Purchasing Lender, the transferor Lender, and Agent and delivered to Agent for recording. Upon such execution, delivery, acceptance and recording, from and after the transfer effective date determined pursuant to such Commitment Transfer Supplement, (i) Purchasing Lender thereunder shall be a party hereto and, to the extent provided in such Commitment Transfer Supplement, have the rights and obligations of a Lender thereunder with a Commitment Percentage as set forth therein, and (ii) the transferor Lender thereunder shall, to the extent provided in such Commitment Transfer Supplement, be released from its obligations under this Agreement, the Commitment Transfer Supplement creating a novation for that purpose. Such Commitment Transfer Supplement shall be deemed to amend this Agreement to the extent, and only to the extent, necessary to reflect the addition of such Purchasing Lender and the resulting adjustment of the Commitment Percentages arising from the purchase by such Purchasing Lender of all or a portion of the rights and obligations of such transferor Lender under this Agreement and the Other Documents. Each Borrower hereby consents to the addition of such Purchasing Lender and the resulting adjustment of the Commitment Percentages arising from the purchase by such Purchasing Lender of all or a portion of the rights and obligations of such transferor Lender under this Agreement and the Other Documents. Borrowers shall execute and deliver such further documents and do such further acts and things in order to effectuate the foregoing.

(d) Any Lender, with the consent of Agent which shall not be unreasonably withheld or delayed, may directly or indirectly sell, assign or transfer all or any portion of its rights and obligations under or relating to Revolving Advances under this Agreement and the Other Documents to an entity, whether a corporation, partnership, trust, limited liability company or other entity that (i) is engaged in making, purchasing, holding or otherwise investing in bank loans and similar extensions of credit in the ordinary course of its business and (ii) is administered, serviced or managed by the assigning Lender or an Affiliate of such Lender (a “Purchasing CLO” and together with each Participant and Purchasing Lender, each a “Transferee” and collectively the “Transferees”), pursuant to a Commitment Transfer Supplement modified as appropriate to reflect the interest being assigned (“Modified Commitment Transfer Supplement”), executed by any intermediate purchaser, the Purchasing CLO, the transferor Lender, and Agent as appropriate and delivered to Agent for recording. Upon such execution and delivery, from and after the transfer effective date determined pursuant to such Modified Commitment Transfer Supplement, (i) Purchasing CLO thereunder shall be a party hereto and, to the extent provided in such Modified Commitment Transfer Supplement, have the rights and obligations of a Lender thereunder and (ii) the transferor Lender thereunder shall, to the extent provided in such Modified Commitment Transfer Supplement, be released from its obligations under this Agreement, the Modified Commitment Transfer Supplement creating a novation for that purpose. Such Modified Commitment Transfer Supplement shall be deemed to amend this Agreement to the extent, and only to the extent, necessary to reflect the addition of such Purchasing CLO. Each Borrower hereby consents to the addition of such Purchasing CLO. Borrowers shall execute and deliver such further documents and do such further acts and things in order to effectuate the foregoing.

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(e) Agent shall maintain at its address a copy of each Commitment Transfer Supplement and Modified Commitment Transfer Supplement delivered to it and a register (the “Register”) for the recordation of the names and addresses of each Lender and the outstanding principal, accrued and unpaid interest and other fees due hereunder. The entries in the Register shall be conclusive, in the absence of manifest error, and each Borrower, Agent and Lenders may treat each Person whose name is recorded in the Register as the owner of the Advance recorded therein for the purposes of this Agreement. The Register shall be available for inspection by Borrowing Agent or any Lender at any reasonable time and from time to time upon reasonable prior notice. Agent shall receive a fee in the amount of $3,500 payable by the applicable Purchasing Lender and/or Purchasing CLO upon the effective date of each transfer or assignment (other than to an intermediate purchaser) to such Purchasing Lender and/or Purchasing CLO.

(f) Subject to the provisions set forth in Section 16.15, each Borrower authorizes each Lender to disclose to any Transferee and any prospective Transferee any and all financial information in such Lender’s possession concerning such Borrower which has been delivered to such Lender by or on behalf of such Borrower pursuant to this Agreement or in connection with such Lender’s credit evaluation of such Borrower.

(g) Anything herein to the contrary notwithstanding, unless the Obligations are then due in full or a notice of termination of this Agreement has been issued, no Lender may assign or participate any of its interests hereunder to a competitor of any Borrower. As used herein, the term “competitor” means a Person which derives greater than 50% of its revenues from the same or a similar line of business as any Borrower or any Affiliate of such Person.

(h) Each Borrower shall be deemed to consent to the addition of a Transferee (and, if applicable, the resulting adjustment of the Revolving Percentages arising from the purchase by a Purchasing Lender of all or a portion of the rights and obligations of such transferor Lender under this Agreement and the Other Documents), to the extent such Transferee is Agent or a Lender, or an Affiliate of Agent or any Lender, or to the extent such addition is made during the continuance of any Default or Event of Default. If no Default or Event of Default is continuing at the time which a Transferee is selected and such Transferee is not Agent or a Lender, or an Affiliate of Agent or any Lender, the transferor Lender shall provide Borrowing Agent with notice of the identity of the proposed Transferee and a five (5) Business Day period to object the identity of the proposed Transferee on any reasonable grounds. If Borrowing Agent asserts no reasonable written objection to the identity of the proposed Transferee during such period, Borrowers will be deemed to have consented to the addition of such Transferee. U.S. Bank National Association is an approved Transferee and shall not be subject to the foregoing notice and objection period.

16.4. Application of Payments. Agent shall have the continuing and exclusive right to apply or reverse and re-apply any payment and any and all proceeds of Collateral to any portion of the Obligations. To the extent that any Borrower makes a payment or Agent or any Lender receives any payment or proceeds of the Collateral for any Borrower’s benefit, which are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, debtor in possession, receiver, custodian or any other party under any bankruptcy law, common law or equitable cause, then, to such extent, the Obligations or part thereof intended to be satisfied shall be revived and continue as if such payment or proceeds had not been received by Agent or such Lender.

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16.5. Indemnity. Each Borrower shall indemnify Agent, each Lender and each of their respective officers, directors, Affiliates, attorneys, employees and agents from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses and disbursements of any kind or nature whatsoever (including fees and disbursements of counsel) which may be imposed on, incurred by, or asserted against Agent or any Lender in any claim, litigation, proceeding or investigation instituted or conducted by any Governmental Body or instrumentality or any other Person with respect to any aspect of, or any transaction contemplated by, or referred to in, or any matter related to, this Agreement or the Other Documents, whether or not Agent or any Lender is a party thereto, except to the extent that any of the foregoing arises out of the willful misconduct or gross negligence of the party being indemnified (as determined by a court of competent jurisdiction in a final and non-appealable judgment). Without limiting the generality of the foregoing, this indemnity shall extend to any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses and disbursements of any kind or nature whatsoever (including reasonable fees and disbursements of counsel) asserted against or incurred by any of the indemnitees described above in this Section 16.5 by any Person under any Environmental Laws or similar laws by reason of any Borrower’s or any other Person’s failure to comply with laws applicable to solid or hazardous waste materials, including Hazardous Substances and Hazardous Waste, or other Toxic Substances. Additionally, if any taxes (excluding taxes imposed upon or measured solely by the net income of Agent and Lenders, but including any intangibles taxes, stamp tax, recording tax or franchise tax) shall be payable by Agent, Lenders or Borrowers on account of the execution or delivery of this Agreement, or the execution, delivery, issuance or recording of any of the Other Documents, or the creation or repayment of any of the Obligations hereunder, by reason of any Applicable Law now or hereafter in effect, Borrowers will pay (or will promptly reimburse Agent and Lenders for payment of) all such taxes, including interest and penalties thereon, and will indemnify and hold the indemnitees described above in this Section 16.5 harmless from and against all liability in connection therewith.

16.6. Notice. Any notice or request hereunder may be given to Borrowing Agent or any Borrower or to Agent or any Lender at their respective addresses set forth below or at such other address as may hereafter be specified in a notice designated as a notice of change of address under this Section. Any notice, request, demand, direction or other communication (for purposes of this Section 16.6 only, a “Notice”) to be given to or made upon any party hereto under any provision of this Loan Agreement shall be given or made by telephone or in writing (which includes by means of electronic transmission (i.e., “e-mail”) or facsimile transmission or by setting forth such Notice on a site on the World Wide Web (a “Website Posting”) if Notice of such Website Posting (including the information necessary to access such site) has previously been delivered to the applicable parties hereto by another means set forth in this Section 16.6) in accordance with this Section 16.6. Any such Notice must be delivered to the applicable parties hereto at the addresses and numbers set forth under their respective names on Section 16.6 or in accordance with any subsequent unrevoked Notice from any such party that is given in accordance with this Section 16.6. Any Notice shall be effective:

(a) In the case of hand-delivery, when delivered;

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(b) If given by mail, four days after such Notice is deposited with the United States Postal Service, with first-class postage prepaid, return receipt requested;

(c) In the case of a telephonic Notice, when a party is contacted by telephone, if delivery of such telephonic Notice is confirmed no later than the next Business Day by hand delivery, a facsimile or electronic transmission, a Website Posting or an overnight courier delivery of a confirmatory Notice (received at or before noon on such next Business Day);

(d) In the case of a facsimile transmission, when sent to the applicable party’s facsimile machine’s telephone number, if the party sending such Notice receives confirmation of the delivery thereof from its own facsimile machine;

(e) In the case of electronic transmission, when actually received;

(f) In the case of a Website Posting, upon delivery of a Notice of such posting (including the information necessary to access such site) by another means set forth in this Section 16.6; and

(g) If given by any other means (including by overnight courier), when actually received.

Any Lender giving a Notice to Borrowing Agent or any Borrower shall concurrently send a copy thereof to the Agent, and the Agent shall promptly notify the other Lenders of its receipt of such Notice.

(A)

If to Agent or PNC at:

PNC Bank, National Association

201 East Fifth Street, 2nd Floor

Mail Stop: B1-BM01-02-1

Cincinnati, Ohio 45202-4135

Attention:

Jeffrey Swartz

Telephone:

(513) 651-8472

Facsimile:

(513) 651-7078

with a copy to:

PNC Bank, National Association

PNC Agency Services

PNC Firstside Center

500 First Avenue, 4th Floor

Pittsburgh, Pennsylvania 15219

Attention:

Lisa Pierce

Telephone:

(412) 762-6442

Facsimile:

(412) 762-8672

110

with an additional copy to:

Frost Brown Todd LLC

201 East Fifth Street, Suite 2200

Cincinnati, Ohio 45202

Attention:

Michael J. O’Grady

Telephone:

(513) 651-6482

Facsimile:

(513) 651-6981

(B)

If to a Lender other than Agent, as specified on the signature pages hereof, with a copy to Agent;

(C)

If to Borrowing Agent or any Borrower:

Rocky Brands, Inc.

39 East Canal Street

Nelsonville, Ohio 45764

Attention:

James E. McDonald

Telephone:

(740) 753-9100, ext. 2543

Facsimile:

(740) 753-5555

with a copy to:

Porter, Wright, Morris & Arthur LLP

41 South High Street

Columbus, Ohio 43215

Attention:

Timothy E. Grady

Telephone:

(614) 227-2105

Facsimile:

(614) 227-2100

16.7. Survival. The obligations of Borrowers under Sections 2.2(f), 3.7, 3.8, 3.9, 4.19(h), and 16.5 and the obligations of Lenders under Section 14.7, shall survive termination of this Agreement and the Other Documents and payment in full of the Obligations.

16.8. Severability. If any part of this Agreement is contrary to, prohibited by, or deemed invalid under Applicable Laws, such provision shall be inapplicable and deemed omitted to the extent so contrary, prohibited or invalid, but the remainder hereof shall not be invalidated thereby and shall be given effect so far as possible.

111

16.9. Expenses. All reasonable costs and expenses including reasonable attorneys’ fees (including the allocated costs of in house counsel) and disbursements incurred by Agent on its behalf or on behalf of Lenders, or by any Lender on its own behalf: (a) in all efforts made to enforce payment of any Obligation or effect collection of any Collateral, or (b) in connection with the entering into, modification, amendment, administration and enforcement of this Agreement or any consents or waivers hereunder and all related agreements, documents and instruments, or (c) in instituting, maintaining, preserving, enforcing and foreclosing on Agent’s security interest in or Lien on any of the Collateral, or maintaining, preserving or enforcing any of Agent’s or any Lender’s rights hereunder and under all related agreements, documents and instruments, whether through judicial proceedings or otherwise, or (d) in defending or prosecuting any actions or proceedings arising out of or relating to Agent’s or any Lender’s transactions with any Borrower, Guarantor, or any of their respective Subsidiaries, or (e) in connection with any advice given to Agent or any Lender with respect to its rights and obligations under this Agreement and all related agreements, documents and instruments, may be charged to Borrowers’ Account and shall be part of the Obligations. Notwithstanding the foregoing, no Borrower shall be responsible for any legal fee of Agent’s U.S. counsel incurred to initially establish this Agreement and the Other Documents which exceeds $50,000 in the aggregate. Such limitation shall not apply to out-of-pocket expenses of U.S. counsel or legal fees or expenses of counsel located outside of the U.S. In addition, Agent may cause appraisals of the Real Property, Inventory and Equipment of Borrowers to be conducted from time to time at Borrowers’ sole cost. Agent’s right to conduct an Inventory appraisal shall be limited to one (1) such appraisal during any fiscal year. Inventory appraisals conducted in connection with the establishment of this Agreement, in connection with a Permitted Acquisition, or during the continuance of an Event of Default shall be charged to Borrowers and not be subject to the foregoing limitation.

16.10. Injunctive Relief. Each Borrower recognizes that, in the event any Borrower fails to perform, observe or discharge any of its obligations or liabilities under this Agreement, or threatens to fail to perform, observe or discharge such obligations or liabilities, any remedy at law may prove to be inadequate relief to Lenders; therefore, Agent, if Agent so requests, shall be entitled to temporary and permanent injunctive relief in any such case without the necessity of proving that actual damages are not an adequate remedy.

16.11. Consequential Damages. Neither Agent nor any Lender, nor any agent or attorney for any of them, shall be liable to any Borrower or any Guarantor (or any Affiliate of any such Person) for indirect, punitive, exemplary or consequential damages arising from any breach of contract, tort or other wrong relating to the establishment, administration or collection of the Obligations or as a result of any transaction contemplated under this Agreement or any Other Document.

16.12. Captions. The captions at various places in this Agreement are intended for convenience only and do not constitute and shall not be interpreted as part of this Agreement.

16.13. Counterparts; Facsimile Signatures. This Agreement may be executed in any number of and by different parties hereto on separate counterparts, all of which, when so executed, shall be deemed an original, but all such counterparts 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.

16.14. Construction. The parties acknowledge that each party and its counsel have reviewed this Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any amendments, schedules or exhibits thereto.

112

16.15. Confidentiality; Sharing Information. Agent, each Lender and each Transferee shall hold all non-public information obtained by Agent, such Lender or such Transferee pursuant to the requirements of this Agreement in accordance with Agent’s, such Lender’s and such Transferee’s customary procedures for handling confidential information of this nature; provided, however, Agent, each Lender and each Transferee may disclose such confidential information (a) to its examiners, Affiliates, outside auditors, counsel and other professional advisors, (b) to Agent, any Lender or to any prospective Transferees, and (c) as required or requested by any Governmental Body or representative thereof or pursuant to legal process; provided, further that (i) unless specifically prohibited by Applicable Law, Agent, each Lender and each Transferee shall use its reasonable best efforts prior to disclosure thereof, to notify the applicable Borrower of the applicable request for disclosure of such non-public information (A) by a Governmental Body or representative thereof (other than any such request in connection with an examination of the financial condition of a Lender or a Transferee by such Governmental Body) or (B) pursuant to legal process and (ii) in no event shall Agent, any Lender or any Transferee be obligated to return any materials furnished by any Borrower other than those documents and instruments in possession of Agent or any Lender in order to perfect its Lien on the Collateral once the Obligations have been paid in full and this Agreement has been terminated. Each Borrower acknowledges that from time to time financial advisory, investment banking and other services may be offered or provided to such Borrower or one or more of its Affiliates (in connection with this Agreement or otherwise) by any Lender or by one or more Subsidiaries or Affiliates of such Lender and each Borrower hereby authorizes each Lender to share any information delivered to such Lender by such Borrower and its Subsidiaries pursuant to this Agreement, or in connection with the decision of such Lender to enter into this Agreement, to any such Subsidiary or Affiliate of such Lender, it being understood that any such Subsidiary or Affiliate of any Lender receiving such information shall be bound by the provisions of this Section 16.15 as if it were a Lender hereunder. Such authorization shall survive the repayment of the other Obligations and the termination of this Agreement.

16.16. Publicity. Each Borrower and each Lender hereby authorizes Agent, with the prior approval of Borrowing Agent, to make appropriate announcements of the financial arrangement entered into among Borrowers, Agent and Lenders, including announcements which are commonly known as tombstones, in such publications and to such selected parties as Agent shall in its sole and absolute discretion deem appropriate.

16.17. Certifications From Banks and Participants; US PATRIOT Act. Each Lender or assignee or participant of a Lender that is not incorporated under the Laws of the United States of America or a state thereof (and is not excepted from the certification requirement contained in Section 313 of the USA PATRIOT Act and the applicable regulations because it is both (i) an affiliate of a depository institution or foreign bank that maintains a physical presence in the United States or foreign country, and (ii) subject to supervision by a banking authority regulating such affiliated depository institution or foreign bank) shall deliver to the Agent the certification, or, if applicable, recertification, certifying that such Lender is not a “shell” and certifying to other matters as required by Section 313 of the USA PATRIOT Act and the applicable regulations: (1) within 10 days after the Closing Date, and (2) as such other times as are required under the USA PATRIOT Act.

16.18. Language. The parties have requested that this Agreement and the Other Documents be drawn up in the English language. Les parties ont requis que cette convention ainsi que tous les documents qui y sont envisagés ou qui s'y rapportent soient rédigés en langue anglaise.

113

16.19. Judgment Currency. If for the purpose of obtaining judgment in any court it is necessary to convert an amount due hereunder in the currency in which it is due (the "Original Currency") into another currency (the "Second Currency"), the rate of exchange applied shall be that at which, in accordance with normal banking procedures, Agent could purchase in the foreign exchange market, the Original Currency with the Second Currency on the date two (2) Business Days preceding that on which judgment is given. Each Borrower agrees that its obligation in respect of any Original Currency due from it hereunder shall, notwithstanding any judgment or payment in such other currency, be discharged only to the extent that, on the Business Day following the date Agent receives payment of any sum so adjudged to be due hereunder in the Second Currency, Agent may, in accordance with normal banking procedures, purchase, in the foreign exchange market, the Original Currency with the amount of the Second Currency so paid; and if the amount of the Original Currency so purchased or could have been so purchased is less than the amount originally due in the Original Currency, each Borrower agrees as a separate obligation and notwithstanding any such payment or judgment to indemnify Agent and the Lenders against such loss.

[Signature Pages Follow]

114

Each of the parties has signed this Revolving Credit, Guaranty, and Security Agreement as of the day and year first above written.

	Borrowers:

	Rocky Brands, Inc.,
	Lifestyle Footwear, Inc.,
	Rocky Brands Wholesale LLC,
	Lehigh Outfitters, LLC,
	Rocky Brands International, LLC,
	Rocky Canada, Inc.

	By:	/s/ James E. McDonald
		James E. McDonald
		Executive Vice President and Chief Financial Officer of each Borrower

115

Signature Page to Revolving Credit, Guaranty, and Security Agreement

	PNC Bank, National Association
	as Agent and Lender

	By:	/s/ Gerald R. Kirpes
		Gerald R. Kirpes
		Senior Vice President


	Address:

	PNC Bank, National Association
	201 East Fifth Street, 2nd Floor
	Mail Stop: B1-BM01-02-1
	Cincinnati, Ohio 45202-4135
	Attention:	Jeffrey Swartz
	Telephone:	(513) 651-8472
	Facsimile:	(513) 651-7078

	Commitment Percentage: 100%

116

EXHIBIT 1.2

PNC Business Credit Revolving Credit, Term Loan and Security Agreement

Borrowing Base Certificate

Borrowers: Rocky Brands, Inc.						Certificate #
Lehigh Outfitters, LLC						Period Ended	__/__/__
Lifestyle Footwear, Inc.
Rocky Brands Wholesale, LLC
Rocky Brands International, LLC
Rocky Canada, Inc.

To induce PNC Bank, N. A. ("Agent") to make a loan advance pursuant to the Revolving Credit, Guaranty and Security Agreement
dated as of October 20, 2010, as well as amendments between the undersigned and Lender, we hereby certify as of the above date, the following:



			From	To
Accounts Receivable	1	Previous Certificate AR Balance	__/__/__			$ -
	2	Gross Sales Since Last Certificate	__/__/__	__/__/__	+	$ -
	3	Collections Since Last Certificate	__/__/__	__/__/__	-	$ -
	4	Credits Since Last Certificate	__/__/__	__/__/__	-	$ -
	5	Other Adjustments	__/__/__	__/__/__	+/-	$ -
	6	Total AR Now Being Certified to Bank				$ -
	7	Ineligible AR Per Attached		__/__/__	-	$ -
	7.5	Government receivables included in ineligible				$ -
	8	Net Eligible AR				$ -
	9	AR Availability	__%				$ -

	c

Inventory	10	Gross Inventory As Of		__/__/__		$ -
	11	Ineligible Inventory		__/__/__	-	$ -
	12	Net Eligible Inventory				$ -
	13	Inventory Availability:	Various Adv Rates - See Inventory Report detail attached				$ -
	14	Inventory Sub Limit				$ -
	15	Suppressed Inventory Availability					$ -
	16	Adjusted Inventory Availability					$ -



	17	Gross Combined Availability					$ -
	18	Availability Block					$ -
	19	Adjusted Availability Before Line Limit					$ -
	20	Revolver Limit				$ -
	21	Supressed Line Availability					$ -
	22	Net Loan Value					$ -



Loans & Advances	23	Revolver Loan Balance Per Previous Certificate					$ -
	24	Net AR Collections Since Last Certificate			-		$ -
	25	Non-AR Collections Since Last Certificate			-		$ -
	26	Advance Requested			+		$ -
	27	Misc. Loan Adjustment			+/-		$ -
	28	New Loan Balance					$ -
	29	Reserves for Letters of Credit, BA's & Other			+		$ -
	30	Rent Reserves					$ -
	31	Royalty Reserve			+		$ -
	32	Revolver Loans & Reserves					$ -
	33	Loan Availability					$ -
	34	Remaining Revolver Availability				$ -

The undersigned hereby certifies that the above representations are true and correct and subject to all conditions of the Loan and Security Agreement.
We also represent that to the best of our knowledge, there does not exist a condition which may precipitate a default under the terms of
the Loan and Security Agreement or any amendment thereto.



			Authorized Signature, Title				Date



			Name of Authorized Signer


For Bank Use Only



			Date of Advance				Amount

Exhibit 2.1(a)

REVOLVING CREDIT NOTE

$70,000,000

Dated as of: October 20, 2010

This Revolving Credit Note is executed and delivered under and pursuant to the terms of that certain Revolving Credit, Guaranty, and Security Agreement dated as of the date hereof (as amended, restated, supplemented or modified from time to time, the “Credit Agreement”) by and among Rocky Brands, Inc., an Ohio corporation (“Parent”), Lehigh Outfitters, LLC, a Delaware limited liability company (“Lehigh”), Lifestyle Footwear, Inc., a Delaware corporation (“Lifestyle”), Rocky Brands Wholesale LLC, a Delaware limited liability company (“Rocky Wholesale”), Rocky Brands International, LLC, an Ohio limited liability company (“Rocky International”), and Rocky Canada, Inc., a corporation formed under the federal laws of Canada (“Rocky Canada”) (Parent, Lehigh, Lifestyle, Rocky Wholesale, Rocky International, and Rocky Canada, collectively, the “Borrowers” and individually a “Borrower”), the financial institutions which are now or which hereafter become a party thereto (collectively, the “Lenders” and individually a “Lender”) and PNC Bank, National Association (“PNC”), as agent for Lenders (PNC, in such capacity, the “Agent”). Capitalized terms not otherwise defined herein shall have the meanings provided in the Credit Agreement.

FOR VALUE RECEIVED, each Borrower hereby promises to pay to the order of PNC, at the office of Agent located at PNC Bank Center, Two Tower Center, 8th Floor, East Brunswick, New Jersey 08816 or at such other place as Agent may from time to time designate to Borrower in writing:

(i) the principal sum of SEVENTY MILLION Dollars ($70,000,000) or, if different, from such amount, the unpaid principal balance of PNC’s Commitment Percentage of the Revolving Advances as may be due and owing under the Credit Agreement, payable in accordance with the provisions of the Credit Agreement, subject to acceleration upon the occurrence of an Event of Default under the Credit Agreement or earlier termination of the Credit Agreement pursuant to the terms thereof; and

(ii) interest on the principal amount of this Note from time to time outstanding until such principal amount is paid in full at the applicable Revolving Interest Rate in accordance with the provisions of the Credit Agreement. In no event, however, shall interest exceed the maximum interest rate permitted by law. Upon and after the occurrence of an Event of Default, and during the continuation thereof, interest shall be payable at the Default Rate in accordance with the Credit Agreement.

This Note is one of the Revolving Credit Notes referred to in the Credit Agreement and is secured, inter alia, by the liens granted pursuant to the Credit Agreement and the Other Documents, is entitled to the benefits of the Credit Agreement and the Other Documents and is subject to all of the agreements, terms and conditions therein contained.

This Note is subject to mandatory prepayment and may be voluntarily prepaid, in whole or in part, on the terms and conditions set forth in the Credit Agreement.

If an Event of Default under Section 10.7 of the Credit Agreement shall occur, then this Note shall immediately become due and payable, without notice, together with reasonable attorneys’ fees if the collection hereof is placed in the hands of an attorney to obtain or enforce payment hereof. If any other Event of Default shall occur under the Credit Agreement or any of the Loan Documents, which is not cured within any applicable grace period, then this Note may, as provided in the Credit Agreement, be declared to be immediately due and payable, without notice, together with reasonable attorneys’ fees, if the collection hereof is placed in the hands of an attorney to obtain or enforce payment hereof.

This Note shall be construed and enforced in accordance with the laws of the State of Ohio.

Each Borrower expressly waives any presentment, demand, protest, notice of protest, or notice of any kind except as expressly provided in the Credit Agreement.

SIGNATURE PAGE FOLLOWS

SIGNATURE PAGE TO REVOLVING CREDIT NOTE

	Rocky Brands, Inc.
	Lifestyle Footwear, Inc.
	Rocky Brands Wholesale LLC
	Lehigh Outfitters, LLC
	Rocky Brands International, LLC
	Rocky Canada, Inc.

	By:
		James E. McDonald
		Executive Vice President and
		Chief Financial Officer of each Borrower

Exhibit 4.15(j)

SECURITY AGREEMENT AND ASSIGNMENT OF GOVERNMENT

CONTRACT UNDER ASSIGNMENT OF CLAIMS ACT OF 1940 AS AMENDED

FOR A VALUABLE CONSIDERATION Rocky Brands, Inc., a corporation organized under the laws of the State of Ohio (the “Assignor”) hereby assigns to PNC Bank, National Association, as agent for the Lenders under the Revolving Credit, Guaranty, and Security Agreement by and among Assignor, and the Borrowers and Lenders thereunder, dated as of October 20, 2010 (as amended, restated or modified from time to time, the “Credit Agreement”) whose address is 201 East Fifth Street, 2nd Floor, Mail Stop: B1-BM01-02-1, Cincinnati, Ohio 45202-4135, Attention: Jeffrey Swartz, on behalf of itself, and its successors and assigns (collectively referred to herein as the “Assignee”), as assignee, all of the Collateral described below, to secure the payment and performance of (collectively, the “Obligations”): any and all loans, advances, debts, liabilities, obligations, covenants and duties owing by any Borrower to Lenders or Assignee or to any other direct or indirect subsidiary or affiliate of Assignee or any Lender of any kind or nature, present or future (including any interest or other amounts accruing thereon after maturity, or after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding relating to any Borrower, whether or not a claim for post-filing or post-petition interest or other amounts is allowed in such proceeding), whether or not evidenced by any note, guaranty or other instrument, whether arising under any agreement, instrument or document, (including the Credit Agreement and the Other Documents) whether or not for the payment of money, whether arising by reason of an extension of credit, opening of a letter of credit, loan, equipment lease or guarantee, under any interest or currency swap, future, option or other similar agreement, or in any other manner, whether arising out of overdrafts or deposit or other accounts or electronic funds transfers (whether through automated clearing houses or otherwise) or out of the Assignee’s or any Lenders non-receipt of or inability to collect funds or otherwise not being made whole in connection with depository transfer check or other similar arrangements, whether direct or indirect (including those acquired by assignment or participation), absolute or contingent, joint or several, due or to become due, now existing or hereafter arising, contractual or tortious, liquidated or unliquidated, regardless of how such indebtedness or liabilities arise or by what agreement or instrument they may be evidenced or whether evidenced by any agreement or instrument, including, but not limited to, any and all of any Borrower’s Indebtedness and/or liabilities under the Credit Agreement, the Other Documents or under any other agreement between Assignee or Lenders and any Borrower and any amendments, extensions, renewals or increases and all costs and expenses of Assignee and any Lender incurred in the documentation, negotiation, modification, enforcement, collection or otherwise in connection with any of the foregoing, including but not limited to reasonable attorneys’ fees and expenses and all obligations of any Borrower to Assignee or Lenders to perform acts or refrain from taking any action.

Capitalized terms used in this Assignment and not defined herein shall have the meanings set forth in the Credit Agreement. This Assignment is an “Other Document” as such term is defined in the Credit Agreement.

As used in this Assignment, the term “Collateral” means all moneys and claims for money due or to become due to the Assignor from the United States of America (the “Government”), under or arising out of the contract between the Assignor and the Government, dated July 2, 2009, and designated as General Services Administration Blanket Purchase Agreement, BPA No.: GS-07F-BROCB, together with any amendments and supplements thereto (the “Contract”). The Assignee has or may hereafter, at its option, from time to time enter into various loan, credit or banking transactions with the Assignor for various sums to finance the Assignor’s performance of the Contract.

The Assignor specifically authorizes and directs the Government to make all payments due under the Contract directly to the Assignee and irrevocably appoints the Assignee as it attorney-in-fact to demand, receive, receipt and give acquittance for such amounts which may be or become due or payable or remain unpaid at any time to the Assignor by the Government under and pursuant to the Contract, to endorse any checks, drafts or other orders for the payment of money payable to the Assignor, and, in its discretion, to file any claims or take any action or proceeding, either in its own name or in the name of the Assignor or otherwise, which the Assignee may deem to be necessary or advisable. It is expressly understood and agreed, however, that the Assignee shall not be required or obligated in any manner to make any demand or to make any inquiry as to the nature or the sufficiency of any payment received by it or to present or file any claims or take any other action to collect or enforce the payment or any amounts which may have been assigned to it or to which it may be entitled.

As and from the date of this Assignment, Assignor hereby agrees that it shall: (a) take all reasonable steps to provide for payment by the Government of all amounts payable under the Contract directly to Assignee, including, without limitation: (i) executing and delivering the Notice of Assignment to the applicable Government contracting officer; and (ii) returning a fully-executed Notice of Assignment to Assignee; (b) take all reasonable steps to perform, observe and permit the exercise and enforcement of the rights of Assignee pursuant to this Assignment; (c) notify Assignee promptly in writing of any breach of this Assignment or the Contract or of non-compliance with any term, condition or covenant contained in this Assignment or the Contract or any other instrument, document or agreement executed in connection herewith; (d) promptly cure or cause to be cured, any defects in the execution and/or delivery of this Assignment or any of the other agreements, instruments or documents executed pursuant hereto or any defects in the validity or enforceability of this Assignment or any other instrument or agreement in connection herewith, and at its own expense, execute and deliver or cause to be executed or delivered, all such instruments, agreements and other documents as Assignee may reasonably require; and (e) to the extent any amount payable under the Contract is paid by the Government to Assignor, hold such amount in trust for Assignee and immediately pay such amount to Assignee or as Assignee may direct. Until such time as such amount is provided to Assignee, it shall not be co-mingled with funds of Assignor.

The Assignor represents and warrants to the Assignee that there is no provision of the Contract which states that the Contract or Assignor’s interest therein is not assignable, and that it has not transferred or assigned the Contract or any right or interest in it and has acquired the release of any encumbrances on the Contract or right or interest in it, and the Assignor agrees that at any time and from time to time, upon the Assignee’s written request, the Assignor will execute and deliver such instruments and documents and do such other acts and things as the Assignee may request in order to further effect the purpose of this Assignment. The Assignor covenants and agrees with the Assignee that it will perform all of the terms of the Contract.

This Assignment has been delivered and accepted at and will be deemed to have been made in Ohio and will be interpreted and the rights and liabilities of the parties hereto determined in accordance with the laws of the State of Ohio, without regard to conflicts of law principles. Assignor hereby irrevocably agrees and submits to the exclusive jurisdiction of any state or federal court located within Ohio, or, at the option of Assignee in its sole discretion, of any state or federal court(s) located within any other county, state or jurisdiction in which Assignee at any time or from time to time chooses in its sole discretion to bring an action or otherwise exercise a right or remedy, and Assignor waives any objection based on forum non conveniens and any objection to venue of any such action or proceeding.

Executed as of the 20th day of October, 2010.

Witnesses:		Assignor:

		Rocky Brands, Inc.


		By:
		James E. McDonald
		Executive Vice President and
		Chief Financial Officer

STATE OF OHIO

)

ss.

COUNTY OF ___________

)

On this ___ day of October, 2010, acknowledged before me by James E. McDonald, the duly authorized Executive Vice President and Chief Financial Officer of Rocky Brands, Inc., an Ohio corporation, who executed the foregoing instrument on behalf of said corporation.


		Notary Public

NOTICE OF ASSIGNMENT

To:
		Date:

Re:

BPA No.: GS-07F-BROCB

Made by the United States of America


Department


Division

with	Rocky Brands, Inc.
(Name of Contractor

39 East Canal Street

Nelsonville, Ohio 45764
(Address of Contractor)




dated

PLEASE TAKE NOTICE that the moneys due or to become due under the contract described above have been assigned to the undersigned pursuant to the provisions of the Assignment of Claims Act of 1940, as amended, 31 U.S.C. 3727, 41 U.S.C. 15.

A true copy of the instrument of assignment is attached to this notice.

All payments due or to become due under such contract should be made to the assignee.

Please return to the undersigned one enclosed copy of this notice with appropriate notations showing the date and hour of receipt and duly signed by the person acknowledging receipt on behalf of the addressee.

	Very truly yours,

	PNC Bank, National Association, as Agent

	By:


	Its:


	(Name Printed)

Receipt is hereby acknowledged of this notice and a copy of the instrument of assignment.

These were received at _____________ a.m./p.m. on ___________________.



(Signature)
On behalf of

Exhibit 8.1(i)

FINANCIAL CONDITION CERTIFICATE

The undersigned hereby certifies on behalf of Rocky Brands, Inc., a corporation organized under the laws of the State of Ohio, Lehigh Outfitters, LLC, a Delaware limited liability company, Lifestyle Footwear, Inc., a Delaware corporation, Rocky Brands Wholesale LLC, a Delaware limited liability company, Rocky Brands International, LLC, an Ohio limited liability company, and Rocky Canada, Inc., a corporation formed under the federal laws of Canada, in my capacity as an officer of each of the foregoing (each, a “Borrower” and collectively, the “Borrowers”), and not in my individual capacity, to PNC Bank, National Association, as agent for Lenders (the “Agent”) under the Revolving Credit, Guaranty, and Security Agreement among Agent, and the Borrowers and Lenders thereunder dated as of the date hereof (as amended, restated or modified from time to time, the “Credit Agreement”) that:

1. I am the duly elected, qualified and acting authorized officer of each Borrower.

2. I am familiar with the business and financial affairs of the Borrowers, including, without limiting the generality of the foregoing, the matters hereinafter described.

3. This Certificate is made and delivered to Agent for the purpose of inducing Lenders to advance monies and extend credit and other financial accommodations to the Borrowers pursuant to the Credit Agreement and the other loan documents (together with the Credit Agreement, the “Loan Documents”). All capitalized terms used herein which are not defined shall have the meanings given to them in the Credit Agreement.

4. I have reviewed the following and am familiar with the process pursuant to which they were generated:

Consolidated balance sheets of the Borrowers and such other Persons described therein as of December 31, 2009, for the period ended on such date (the “Financial Statements”), accompanied by reports thereon containing opinions without qualification by independent public accountants.

5. The Financial Statements fairly present in all material respects the assets, liabilities, and net worth of the Borrowers as of the date of the Financial Statements.

6. Immediately following the execution of the Loan Documents, the Borrowers are Solvent.

Dated as of October 20, 2010.

	By:
		James E. McDonald

		Executive Vice President and Chief Financial Officer of each Borrower

Exhibit 16.3

COMMITMENT TRANSFER SUPPLEMENT, dated as of _____________, 20__, among PNC Bank, National Association (the “Transferor Lender”), __________ (“Purchasing Lender”), and PNC Bank, National Association, as agent for the Lenders under the Revolving Credit, Guaranty, and Security Agreement described below (in such capacity, the “Agent”).

WITNESSETH

WHEREAS, this Commitment Transfer Supplement is being executed and delivered in accordance with Section 16.3 of that certain Revolving Credit, Guaranty, and Security Agreement dated as of October 20, 2010 among by and among Rocky Brands, Inc., an Ohio corporation (“Parent”), Lehigh Outfitters, LLC, a Delaware limited liability company (“Lehigh”), Lifestyle Footwear, Inc., a Delaware corporation (“Lifestyle”), Rocky Brands Wholesale LLC, a Delaware limited liability company (“Rocky Wholesale”), Rocky Brands International, LLC, an Ohio limited liability company (“Rocky International”), and Rocky Canada, Inc., a corporation formed under the federal laws of Canada (“Rocky Canada”) (Parent, Lehigh, Lifestyle, Rocky Wholesale, Rocky International, and Rocky Canada, collectively, the “Borrowers” and individually a “Borrower”), the financial institutions which are now or which hereafter become a party thereto (collectively, the “Lenders” and individually a “Lender”) and PNC Bank, National Association (“PNC”), as Agent (as same has been or may be amended, supplemented or otherwise modified in accordance with the terms thereof, the “Credit Agreement”);

WHEREAS, Purchasing Lender wishes to become a Lender party to the Credit Agreement; and

WHEREAS, the Transferor Lender is selling and assigning to Purchasing Lender rights, obligations and commitments under the Credit Agreement;

NOW, THEREFORE, the parties hereto hereby agree as follows:

1. All capitalized terms used herein that are not defined shall have the meanings given to them in the Credit Agreement.

2. Upon receipt by the Agent of four counterparts of this Commitment Transfer Supplement, to each of which is attached a fully completed Schedule I, and each of which has been executed by the Transferor Lender and Agent, Agent will transmit to Transferor Lender and Purchasing Lender a Transfer Effective Notice, substantially in the form of Schedule II to this Commitment Transfer Supplement (a “Transfer Effective Notice”). Such Transfer Effective Notice shall set forth, inter alia, the date on which the transfer effected by this Commitment Transfer Supplement shall become effective (the “Transfer Effective Date”), which date unless otherwise noted therein, shall not be earlier than the first Business Day following the date such Transfer Effective Notice is received. From and after the Transfer Effective Date, Purchasing Lender shall be a Lender party to the Credit Agreement for all purposes thereof.

3. At or before 12:00 Noon (Eastern time) on the Transfer Effective Date Purchasing Lender shall pay to Transferor Lender, in immediately available funds, an amount equal to the purchase price, as agreed between Transferor Lender and such Purchasing Lender (the “Purchase Price”), of the portion of the Advances being purchased by such Purchasing Lender (such Purchasing Lender’s “Purchased Percentage”) of the outstanding Advances and other amounts owing to the Transferor Lender under the Credit Agreement, and the Note(s). Effective upon receipt by Transferor Lender of the Purchase Price from a Purchasing Lender, Transferor Lender hereby irrevocably sells, assigns and transfers to such Purchasing Lender, without recourse, representation or warranty, and Purchasing Lender hereby irrevocably purchases, takes and assumes from Transferor Lender, such Purchasing Lender’s Purchased Percentage of the Advances and other amounts owing to the Transferor Lender under the Credit Agreement and the Note(s) together with all instruments, documents and collateral security pertaining thereto.

4. Transferor Lender has made arrangements with Purchasing Lender with respect to (i) the portion, if any, to be paid, and the date or dates for payment, by Transferor Lender to such Purchasing Lender of any fees heretofore received by Transferor Lender pursuant to the Credit Agreement prior to the Transfer Effective Date and (ii) the portion, if any, to be paid, and the date or dates of payment, by such Purchasing Lender to Transferor Lender of fees or interest received by such Purchasing Lender pursuant to the Credit Agreement from and after the Transfer Effective Date.

5. (a) All principal payments that would otherwise be payable from and after the Transfer Effective Date to or for the account of Transferor Lender pursuant to the Credit Agreement and the Note(s) shall, instead, be payable to or for the account of Transferor Lender and Purchasing Lender, as the case may be, in accordance with their respective interests as reflected in this Commitment Transfer Supplement.

(b) All interest, fees and other amounts that would otherwise accrue for the account of Transferor Lender from and after the Transfer Effective Date pursuant to the Credit Agreement and the Note(s) shall, instead, accrue for the account of, and be payable to, Transferor Lender and Purchasing Lender, as the case may be, in accordance with their respective interests as reflected in this Commitment Transfer Supplement. In the event that any amount of interest, fees or other amounts accruing prior to the Transfer Effective Date was included in the Purchase Price paid by any Purchasing Lender, Transferor Lender and Purchasing Lender will make appropriate arrangements for payment by Transferor Lender to such Purchasing Lender of such amount upon receipt thereof from Borrowers.

6. Concurrently with the execution and delivery hereof, Transferor Lender will provide to Purchasing Lender conformed copies of the Credit Agreement and all related documents delivered to Transferor Lender.

7. Each of the parties to this Commitment Transfer Supplement agrees that at any time, and from time to time, upon the written request of any other party, it will execute and deliver such further documents and do such further acts and things as such other party may reasonably request in order to effect the purposes of this Commitment Transfer Supplement.

8. By executing and delivering this Commitment Transfer Supplement, Transferor Lender and Purchasing Lender confirm to and agree with each other, Agent and Lenders as follows: (i) other than the representation and warranty that it is the legal and beneficial owner of the interest being assigned hereby free and clear of any security interests, liens or adverse claim, Transferor Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made by Borrowers in or in connection with the Credit Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement, the Note(s) or any other instrument or document furnished pursuant thereto; (ii) Transferor Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of Borrowers or the performance or observance by Borrowers of any of their Obligations under the Credit Agreement, the Note(s) or any other instrument or document furnished pursuant hereto; (iii) Purchasing Lender confirms that it has received a copy of the Credit Agreement, together with copies of such financial statements and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Commitment Transfer Supplement; (iv) Purchasing Lender will, independently and without reliance upon Agent, Transferor Lender or any other Lenders and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; (v) Purchasing Lender appoints and authorizes Agent to take such action as agent on its behalf and to exercise such powers under the Credit Agreement as are delegated to the Agent by the terms thereof; (vi) Purchasing Lender agrees that it will perform all of its respective obligations as set forth in the Credit Agreement to be performed by each as a Lender; and (vii) Purchasing Lender represents and warrants to Transferor Lender, Lenders, Agent, and Borrowers that it is either (x) entitled to the benefits of an income tax treaty with the United States of America that provides for an exemption from the United States withholding tax on interest and other payments made by Borrowers under the Credit Agreement and Other Documents or (y) is engaged in trade or business within the United States of America.

9. Schedule I hereto sets forth the revised Commitment Percentages of Transferor Lender and the Commitment Percentage of Purchasing Lender as well as administrative information with respect to Purchasing Lender.

10. This Commitment Transfer Supplement shall be governed by, and construed in accordance with, the laws of the State of Ohio.

[SIGNATURES TO FOLLOW ON SEPARATE PAGE]

IN WITNESS WHEREOF, the parties hereto have caused this Commitment Transfer Supplement to be executed by their respective duly authorized officers on the date set forth above.

	PNC BANK, NATIONAL ASSOCIATION
	as Transferor Lender

	By:
	Print Name:
	Title:


	as Purchasing Lender

	By:
	Name:
	Title:

	PNC BANK, NATIONAL ASSOCIATION
	as Agent

	By:
	Print Name:
	Title:

Signature Page to Commitment Transfer Supplement

SCHEDULE I TO COMMITMENT TRANSFER SUPPLEMENT

LIST OF OFFICES, ADDRESSES FOR NOTICES AND COMMITMENT AMOUNTS

PNC Bank, National Association	Revised Commitment Amount Revised Commitment Percentage	$ %





_______________	Commitment Amount Revolving Percentage	$ %
Addresses for Notices for _______________ _______________ _______________ Attention: _______ Telephone: Telecopier: cc: Borrowing Agent

SCHEDULE II TO COMMITMENT TRANSFER SUPPLEMENT

[Form of Transfer Effective Notice]

To: , as Transferor Lender and , as Purchasing Lender:

The undersigned, as Agent under the Revolving Credit, Guaranty, and Security Agreement dated as of October 20, 2010 among Rocky Brands, Inc., an Ohio corporation (“Parent”), Lehigh Outfitters, LLC, a Delaware limited liability company (“Lehigh”), Lifestyle Footwear, Inc., a Delaware corporation (“Lifestyle”), Rocky Brands Wholesale LLC, a Delaware limited liability company (“Rocky Wholesale”), Rocky Brands International, LLC, an Ohio limited liability company (“Rocky International”), and Rocky Canada, Inc., a corporation formed under the federal laws of Canada (“Rocky Canada”) (Parent, Lehigh, Lifestyle, Rocky Wholesale, Rocky International, and Rocky Canada, collectively, the “Borrowers” and individually a “Borrower”), the financial institutions which are now or which hereafter become a party thereto (collectively, the “Lenders” and individually a “Lender”) and PNC Bank, National Association (“PNC”), as Agent (as same has been or may be amended, supplemented or otherwise modified in accordance with the terms thereof, the “Credit Agreement”), acknowledges receipt of four (4) executed counterparts of a completed Commitment Transfer Supplement in the form attached hereto. [Note: Attach copy of Commitment Transfer Supplement.] Terms defined in such Commitment Transfer Supplement are used herein as therein defined.

Pursuant to such Commitment Transfer Supplement, you are advised that the Transfer Effective Date will be [Insert date of Transfer Effective Notice].

	PNC BANK, NATIONAL ASSOCIATION,
	as Agent

	By:
	Print Name:
	Title:

ACCEPTED FOR RECORDATION IN REGISTER:

cc: Borrowing Agent

Transfer Effective Notice

To: PNC Bank, National Association, as Transferor Lender and ______________, as Purchasing Lender:

Pursuant to such Commitment Transfer Supplement, you are advised that the Transfer Effective Date will be ____________.

	PNC BANK, NATIONAL ASSOCIATION,
	as Agent

	By:
	Print Name:
	Title:

ACCEPTED FOR RECORDATION IN REGISTER:

SCHEDULES TO REVOLVING CREDIT, GUARANTY AND SECURITY AGREEMENT

Dated as of October 20, 2010

Introduction:

For purposes of this introduction, the term “Schedules” shall include the following:

SCHEDULE 1.2(a)	-	Permitted Encumbrances

SCHEDULE 4.5	-	Real Property, Equipment, Books and Records, and Inventory Locations

SCHEDULE 4.11	-	Insurance

SCHEDULE 4.15 (c)	-	Chief Executive Offices and Location of Books and Records

SCHEDULE 4.15 (h)	-	Deposit and Investment Accounts

SCHEDULE 4.15 (j)	-	Government Contracts

SCHEDULE 5.1	-	Consents

SCHEDULE 5.2(a)	-	States of Qualification and Good Standing

SCHEDULE 5.2 (b)	-	Equity Interests; Subsidiaries

SCHEDULE 5.4	-	Federal Tax Identification Number

SCHEDULE 5.5(a)	-	Financial Projections

SCHEDULE 5.6	-	Prior Names

SCHEDULE 5.7	-	OSHA and Environmental Compliance

SCHEDULE 5.8(d)	-	ERISA Plans

SCHEDULE 5.9	-	Intellectual Property, Source Code Escrow Agreements

SCHEDULE 5.10	-	Licenses and Permits

SCHEDULE 5.12	-	Material Contracts

SCHEDULE 5.14	-	Labor Disputes

I	DEFINITIONS		1
	1.1.	Accounting Terms	1
	1.2.	General Terms	1
	1.3.	Uniform Commercial Code Terms	34
	1.4.	Certain Matters of Construction	35

II	ADVANCES, PAYMENTS		35
	2.1.	Revolving Advances	35
	2.2.	Procedure for Revolving Advances Borrowing	36
	2.3.	Disbursement of Advance Proceeds	39
	2.4.	Amortizing Tranche of Formula Amount	39
	2.5.	Maximum Advances	39
	2.6.	Repayment of Advances	39
	2.7.	Repayment of Excess Advances	40
	2.8.	Statement of Account	40
	2.9.	Letters of Credit	40
	2.10.	Issuance of Letters of Credit	40
	2.11.	Requirements For Issuance of Letters of Credit	41
	2.12.	Disbursements, Reimbursement	42
	2.13.	Repayment of Participation Advances	43
	2.14.	Documentation	43
	2.15.	Determination to Honor Drawing Request	43
	2.16.	Nature of Participation and Reimbursement Obligations	44
	2.17.	Indemnity	45
	2.18.	Liability for Acts and Omissions	45
	2.19.	Cash Collateral	47
	2.20.	Additional Payments	47
	2.21.	Manner of Borrowing and Payment	47
	2.22.	Mandatory Prepayments	49
	2.23.	Use of Proceeds	49
	2.24.	Defaulting Lender	49
	2.25.	Increase of the Maximum Revolving Advance Amount	50
	2.26.	Reduction of the Maximum Revolving Advance Amount	51

III	INTEREST AND FEES		52
	3.1.	Interest	52
	3.2.	Letter of Credit Fees	52
	3.3.	Facility Fee	53
	3.4.	Fee Letter	53
	3.5.	Computation of Interest and Fees	53
	3.6.	Maximum Charges	54
	3.7.	Increased Costs	54
	3.8.	Basis For Determining Interest Rate Inadequate or Unfair	55
	3.9.	Capital Adequacy	56
	3.10.	Gross Up for Taxes	56

Quarterly Liquidity	Applicable Margins for Eurodollar Rate Loans	Applicable Margins for Domestic Rate Loans

≥ $17,500,000	1.50 %	- 0.25 %

< $17,500,000 but ≥ $10,000,000	1.75 %	0 %

< $10,000,000	2.00 %	0.25 %

Secured Party	Collateral
GE Capital Business Asset Funding Corporation	Real Estate, fixtures and other property in connection with real properties in Athens County and Hocking County, Ohio, including without limitation that collateral further described in Financing Statement number AP0207801 filed with the Ohio Secretary of State, Financing Statement number 200000000069/200000000508 filed with the Hocking County, Ohio Recorder, Financing Statement numbers 20000000000-1/20000000000-2 and 20000000000-3 /20000000000-8 filed with the Athens County, Recorder, and in certain Open-End Mortgages, Security Agreements, Assignments of Rents and Leases and Fixture Filings in Hocking and Athens Counties.
GMAC Business Credit LLC, as Agent	All business assets pursuant to Ohio UCC File No. OH00085290266 (to be released pursuant to payoff letter)
Laminar Direct Capital L.P., as Agent	All business assets pursuant to Ohio UCC File No. OH00115607115 (to be released pursuant to payoff letter)
Worthern Industries	Leased glue machines
W.L. Gore	Leased centrifugal testers ES & FS, seam sealers, boot dryers
Xerox Capital Services LLC	DC242 (2); WCP265; W5150 (3); W5135 (2), W5665 (2), W5655 (3)
Dell Financial Services, L.P.	Computer equipment and peripherals financed pursuant to a certain revolving credit account, insurance and other proceeds
Androscoggin Savings Bank and Pamco Machine Company, Inc.	Toe laster and proceeds

Pitney Bowes Credit Corporation	Leased equipment further described in Financing Statement number 1995001177 filed in Broome County, NY
Bank of America	Cash Collateral to secure Bank of America letters of credit in favor of Gelco Corporation and Pacific Employers Insurance Company
Crown Credit	Leased equipment (forklifts and batteries) pursuant to Ohio UCC File No. OH00135740666
USM	High Speed Stitcher, Heel Laster
Bank of America	Lien on Cash Collateral Account

Secured Party	Collateral
GMAC Business Credit LLC, as Agent	All business assets pursuant to Delaware UCC File No. 5003316 8 (to be released pursuant to payoff letter)
Laminar Direct Capital L.P., as Agent	All business assets pursuant to Delaware UCC File No. 2007 1977528 (to be released pursuant to payoff letter)

	3.11.	Withholding Tax Exemption	56
	3.12.	FATCA	57

IV	COLLATERAL: GENERAL TERMS		57
	4.1.	Security Interest in the Collateral	57
	4.2.	Perfection of Security Interest	58
	4.3.	Disposition of Property	58
	4.4.	Preservation of Collateral	59
	4.5.	Ownership of Collateral	59
	4.6.	Defense of Agent’s and Lenders’ Interests	60
	4.7.	Books and Records	60
	4.8.	Reserved	60
	4.9.	Compliance with Laws	61
	4.10.	Inspection of Premises	61
	4.11.	Insurance	61
	4.12.	Failure to Pay Insurance	62
	4.13.	Payment of Taxes	62
	4.14.	Payment of Leasehold Obligations	63
	4.15.	Receivables	63
	4.16.	Inventory	67
	4.17.	Maintenance of Equipment	67
	4.18.	Exculpation of Liability	68
	4.19.	Environmental Matters	68
	4.20.	Financing Statements	70

V	REPRESENTATIONS AND WARRANTIES		70
	5.1.	Authority	70
	5.2.	Formation, Qualification, Equity Interests, Subsidiaries	70
	5.3.	Survival of Representations and Warranties	71
	5.4.	Tax Returns	71
	5.5.	Financial Statements	71
	5.6.	Entity Names	72
	5.7.	O.S.H.A. and Environmental Compliance	72
	5.8.	Solvency; No Litigation, Violation, Indebtedness or Default	72
	5.9.	Patents, Trademarks, Copyrights and Licenses	73
	5.10.	Licenses and Permits	73
	5.11.	Default of Indebtedness	74
	5.12.	No Default	74
	5.13.	No Burdensome Restrictions	74
	5.14.	No Labor Disputes	74
	5.15.	Margin Regulations	74
	5.16.	Investment Company Act	74
	5.17.	Disclosure	74
	5.18.	Reserved	74
	5.19.	Conflicting Agreements	75
	5.20.	Application of Certain Laws and Regulations	75
	5.21.	Business and Property of Borrowers	75
	5.22.	Section 20 Subsidiaries	75

	5.23.	Anti-Terrorism Laws	75
	5.24.	Trading with the Enemy	76
	5.25.	Reserved	76
	5.26.	Withholdings and Remittances	76

VI	AFFIRMATIVE COVENANTS		76
	6.1.	Payment of Fees	76
	6.2.	Conduct of Business and Maintenance of Existence and Assets	77
	6.3.	Reserved	77
	6.4.	Government Receivables	77
	6.5.	Fixed Charge Coverage Ratio	77
	6.6.	Execution of Supplemental Instruments	77
	6.7.	Payment of Indebtedness	77
	6.8.	Standards of Financial Statements	78
	6.9.	Reserved	78

VII	NEGATIVE COVENANTS		78
	7.1.	Merger, Consolidation, Acquisition and Sale of Assets	78
	7.2.	Creation of Liens	78
	7.3.	Guarantees	78
	7.4.	Investments	78
	7.5.	Loans	79
	7.6.	Reserved	79
	7.7.	Dividends	79
	7.8.	Indebtedness	79
	7.9.	Nature of Business	80
	7.10.	Transactions with Affiliates	80
	7.11.	Reserved	80
	7.12.	Subsidiaries	80
	7.13.	Fiscal Year and Accounting Changes	80
	7.14.	Pledge of Credit	80
	7.15.	Amendment of Articles of Incorporation, By-Laws, Certificate of Formation, Operating Agreement; Change of Name	80
	7.16.	Compliance with ERISA	81
	7.17.	Prepayment of Indebtedness	81
	7.18.	Anti-Terrorism Laws	81
	7.19.	Membership/Partnership Interests	81
	7.20.	Trading with the Enemy Act	81

VIII	CONDITIONS PRECEDENT		81
	8.1.	Conditions to Initial Advances	81
	8.2.	Conditions to Each Advance	84

IX	INFORMATION AS TO BORROWERS		85
	9.1.	Disclosure of Material Matters	85
	9.2.	Schedules	85
	9.3.	Environmental Reports	86
	9.4.	Litigation	86
	9.5.	Material Occurrences	86

	9.6.	Government Receivables	86
	9.7.	Annual Financial Statements	86
	9.8.	Reserved	87
	9.9.	Monthly Financial Statements	87
	9.10.	Other Reports	87
	9.11.	Additional Information	87
	9.12.	Projected Operating Budget	87
	9.13.	Variances From Operating Budget	88
	9.14.	Notice of Suits, Adverse Events	88
	9.15.	ERISA Notices and Requests	88
	9.16.	Additional Documents	89
	9.17.	Cash Reporting; Liquidity Calculation	89

X	EVENTS OF DEFAULT		89
	10.1.	Nonpayment	89
	10.2.	Breach of Representation	89
	10.3.	Financial Information	89
	10.4.	Judicial Actions	90
	10.5.	Noncompliance	90
	10.6.	Judgments	90
	10.7.	Bankruptcy	90
	10.8.	Inability to Pay	90
	10.9.	Reserved	90
	10.10.	Lien Priority	90
	10.11.	Cross Default	91
	10.12.	Breach of Guaranty	91
	10.13.	Change of Control	91
	10.14.	Invalidity	91
	10.15.	Licenses	91
	10.16.	Seizures	91
	10.17.	Operations	92

XI	LENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT		92
	11.1.	Rights and Remedies	92
	11.2.	Agent’s Discretion	93
	11.3.	Setoff	94
	11.4.	Appointment of Receiver	94
	11.5.	Rights and Remedies not Exclusive	95
	11.6.	Allocation of Payments After Event of Default	95

XII	WAIVERS AND JUDICIAL PROCEEDINGS		96
	12.1.	Waiver of Notice	96
	12.2.	Delay	96
	12.3.	Jury Waiver	97

XIII	EFFECTIVE DATE AND TERMINATION		97
	13.1.	Term	97
	13.2.	Termination	97

XIV	REGARDING AGENT		98
	14.1.	Appointment	98
	14.2.	Nature of Duties	98
	14.3.	Lack of Reliance on Agent and Resignation	99
	14.4.	Certain Rights of Agent	99
	14.5.	Reliance	99
	14.6.	Notice of Default	100
	14.7.	Indemnification	100
	14.8.	Agent in its Individual Capacity	100
	14.9.	Delivery of Documents	100
	14.10.	Borrowers’ Undertaking to Agent	100
	14.11.	No Reliance on Agent’s Customer Identification Program	101
	14.12.	Other Agreements	101
	14.13.	Delegation	101

XV	BORROWING AGENCY		101
	15.1.	Borrowing Agency Provisions	101
	15.2.	Waiver of Subrogation	102
	15.3.	Cross Guaranty	102
	15.4.	Subordination	103
	15.5.	No Disposition	103

XVI	MISCELLANEOUS		103
	16.1.	Governing Law	103
	16.2.	Entire Understanding	104
	16.3.	Successors and Assigns; Participations; New Lenders	106
	16.4.	Application of Payments	108
	16.5.	Indemnity	109
	16.6.	Notice	109
	16.7.	Survival	111
	16.8.	Severability	111
	16.9.	Expenses	112
	16.10.	Injunctive Relief	112
	16.11.	Consequential Damages	112
	16.12.	Captions	112
	16.13.	Counterparts; Facsimile Signatures	112
	16.14.	Construction	112
	16.15.	Confidentiality; Sharing Information	113
	16.16.	Publicity	113
	16.17.	Certifications From Banks and Participants; US PATRIOT Act	113
	16.18.	Language	113
	16.19.	Judgment Currency	114

Exhibits

Exhibit 1.2		Borrowing Base Certificate
Exhibit 2.1(a)		Revolving Credit Note
Exhibit 4.15(j)		US Assignment
Exhibit 8.1(i)		Financial Condition Certificate
Exhibit 16.3		Commitment Transfer Supplement

Schedules

Schedule 1.2(a)		Permitted Encumbrances
Schedule 4.5		Property, Equipment, Books & Records, and Inventory Locations
Schedule 4.11		Insurance
Schedule 4.15(c)		Chief Executive Offices
Schedule 4.15(h)		Deposit and Investment Accounts
Schedule 4.15(j)		Government Contracts
Schedule 5.1		Consents
Schedule 5.2(a)		States of Qualification and Good Standing
Schedule 5.2(b)		Equity Interests; Subsidiaries
Schedule 5.4		Federal Tax Identification Number
Schedule 5.5(a)		Financial Projections
Schedule 5.6		Prior Names
Schedule 5.7		OSHA and Environmental Compliance
Schedule 5.8(d)		ERISA Plans
Schedule 5.9		Intellectual Property, Source Code Escrow Agreements
Schedule 5.10		Licenses and Permits
Schedule 5.12		Material Contracts
Schedule 5.14		Labor Disputes
Schedule 7.3		Guarantees
Schedule 7.8		Existing Indebtedness

Secured Party	Collateral
Navistar Leasing Company Hardco Leasing Company, Inc.	Various leased motor vehicles
Key Equipment Finance	Various leased motor vehicles (In process of purchasing these vehicles)
Xerox	W5632, W5665, W5150
GMAC Business Credit LLC, as Agent	All business assets pursuant to Delaware UCC File No. 5003297 0 (to be released pursuant to payoff letter)
GMAC Business Credit LLC, as Agent	All business assets pursuant to Delaware UCC File No. 5003302 8 (to be released pursuant to payoff letter)
GMAC Business Credit LLC, as Agent	All business assets pursuant to Delaware UCC File No. 5003305 1 (to be released pursuant to payoff letter)
Laminar Direct Capital L.P., as Agent	All business assets pursuant to Delaware UCC File No. 2007 1978104 (to be released pursuant to payoff letter)

Secured Party	Collateral
DeLage Landen Financial Services, Inc.	Leased equipment

Comerica Bank
P.O. Box 75000
Detroit, MI 48275-8149

Name on Account:	Rocky Brands, Inc.
Type of Account:	Comerica Operation Account
Account Number:

Name on Account:	Rocky Brands, Inc.
Type of Account:	Comerica Controlled Disbursement Account
Account Number:

Name on Account:	Rocky Brands, Inc.
Type of Account:	Comerica Cash Collateral Account
Account Number:

Name on Account:	Rocky Brands Retail LLC/Rocky Brands Wholesale LLC
Type of Account:	Comerica Controlled Disbursement Account
Account Number:

Name on Account:	Rocky Brands, Inc.
Type of Account:	Comerica Merchant Account
Account Number:

First National Bank
11 Public Square
Nelsonville, OH 45764

Name on Account:	Rocky Brands, Inc.
Type of Account:	FNB Operating Account
Account Number:

Name on Account:	Rocky Brands, Inc.
Type of Account:	FNB Credit Card Account
Account Number:

Name on Account:	Rocky Brands, Inc. Payroll
Type of Account:	FNB Payroll Account
Account Number:

Bank of America
Name on Account:	Rocky Brands, Inc.
Type of Account:	(Security for Letters of Credit)

Banco Popular
P.O. Box 362708
San Juan, Puerto Rico 00936-2708

Name on Account:	Lifestyle Footwear Inc.
Type of Account:	General Account
Account Number:

Name on Account:	Lifestyle Footwear Inc.
Type of Account:	Payroll Account
Account Number:

Comerica Bank Canada (RBC)
315 Front St W-3rd Flr
Toronto, Ontario, Canada M5V 3A4

Name on Account:	Rocky Canada, Inc.
Type of Account:	Operating/Lockbox
Account Number:

Mellon Bank
Mellon Client Service Center
Room 154-1320
500 Ross Street
Pittsburgh, PA 15262-0001

Name on Account:	Rocky Brands Retail LLC
Type of Account:	Lockbox
Account Number:

Name of Subsidiary/Jurisdiction of Organization/Charter Number	Amount of Equity Interest	Percentage of Equity Interest

Lifestyle Footwear, Inc., a Delaware corporation, Charter Number 2109896	2,000 shares of common stock		100	%

Rocky Brands Wholesale LLC, a Delaware limited liability company, Charter Number 3182983	100 Class A Common Units		100	%

Lehigh Outfitters, LLC, a Delaware limited liability company, Charter Number 3182836	100 Class A Common Units		100	%

Rocky Brands International, LLC, an Ohio limited liability company, Charter Number 1776364	Ownership interests are not certificated		100	%

Five Star Enterprises Ltd., a Cayman Islands corporation, Charter Number 26239	5,000 common shares		100	%

Rocky Canada, Inc., an Ontario corporation, Ontario Corporation No. 1580946	100 common shares		100	%

EJ Asia Limited, a Hong Kong corporation (Inactive, in process of dissolution)	9,999 ordinary shares		99.99	%

CURRENT NAME		PREVIOUS NAMES After December 31, 2006

Rocky Brands, Inc.		None

Lifestyle Footwear, Inc.		None

Rocky Brands Wholesale LLC		None

Lehigh Outfitters, LLC		Rocky Brands Retail LLC

Rocky Brands International, LLC		None

Rocky Canada, Inc.		None