UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 29, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to ___________
Commission File Number 0-238001
LaCrosse Footwear, Inc.
(Exact name of Registrant as specified in its charter)
Wisconsin 39-1446816
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1319 St. Andrew Street, La Crosse, Wisconsin 54603
(Address of principal executive offices) (Zip Code)
(608) 782-3020
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common Stock, $.01 par value, outstanding as of August 1, 1996: 6,667,627
shares
<PAGE>
LaCrosse Footwear, Inc.
Form 10-Q Index
For Quarter Ended June 29, 1996
Page
PART I. Financial Information
Item 1. Condensed Consolidated Balance
Sheets 3-4
Condensed Consolidated Statements
of Income 5
Condensed Consolidated Statements
of Cash Flows 6
Notes to Condensed Consolidated
Financial Statements 7-9
Item 2. Management's Discussion and Analysis
of Financial Condition and
Results of Operations 10-14
PART II. Other Information
Item 4. Submission of Matters to a Vote of
Security Holders 15
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 17
Exhibit Index 18
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
June 29,
1996 December 31,
(unaudited) 1995
----------- ----------
CURRENT ASSETS
Cash and cash equivalents $1,445,710 $3,035,777
Accounts receivable, less allowances of
$1,350,986 and $813,260, respectively 21,432,680 15,562,585
Inventories (3) 42,043,383 26,006,620
Prepaid expenses 2,153,837 1,660,763
Deferred tax assets 1,972,000 1,621,000
----------- -----------
Total current assets 69,047,610 47,886,745
PROPERTY AND EQUIPMENT, net of
depreciation and amortization 12,965,044 11,848,366
INTANGIBLES (2) 15,642,768 13,761,938
OTHER ASSETS 1,319,770 1,364,970
----------- -----------
Total assets $98,975,192 $74,862,019
=========== ===========
The accompanying notes are an integral part of the financial statements.
<PAGE>
LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (cont'd)
June 29,
1996 December 31,
(unaudited) 1995
---------- ----------
CURRENT LIABILITIES
Current maturities of long-term obligations $1,760,300 $1,760,300
Borrowings under credit agreement 14,039,000 0
Accounts payable 4,717,395 4,812,107
Accrued expenses 6,460,081 5,644,358
Dividends payable 0 629,448
Income taxes payable 6,141 503,548
---------- ----------
Total current liabilities 26,982,917 13,349,761
ACCRUED POSTRETIREMENT BENEFIT COST 1,801,382 1,297,400
LONG-TERM OBLIGATIONS 15,675,323 4,893,912
DEFERRED COMPENSATION 1,483,384 2,042,277
---------- ----------
Total liabilities 45,943,006 21,583,350
---------- ----------
MINORITY INTEREST (2) 1,176,507 0
---------- ----------
REDEEMABLE PREFERRED STOCK 0 1,957,400
---------- ----------
COMMON SHAREHOLDERS' EQUITY
Common stock, par value $.01 per share 67,176 67,176
Additional paid-in capital 27,579,128 27,579,128
Retained earnings 24,653,125 24,118,715
Treasury stock (443,750) (443,750)
---------- ----------
Total common shareholders' equity 51,855,679 51,321,269
---------- ----------
Total liabilities and shareholders'
equity $98,975,192 $74,862,019
=========== ===========
The accompanying notes are an integral part of the financial statements.
<PAGE>
LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Three Months Ended Six Months Ended
June 29, July 1, June 29, July 1,
1996 1995 1996 1995
----------- ----------- ----------- -----------
Net sales (2) $23,054,257 $20,485,667 $45,185,228 $40,161,888
Cost of goods sold 16,947,172 15,430,804 33,271,105 30,015,195
----------- ----------- ----------- -----------
Gross profit 6,107,085 5,054,863 11,914,123 10,146,693
Selling and
administrative 5,455,740 4,665,726 10,708,403 9,723,674
----------- ----------- ----------- -----------
Operating income 651,345 389,137 1,205,720 423,019
Non-operating income
(expense)
Interest expense (407,413) (358,219) (587,598) (595,386)
Miscellaneous 91,196 142,657 203,786 260,655
----------- ----------- ----------- -----------
(316,217) (215,562) (383,812) (334,731)
Income before
income taxes 335,128 173,575 821,908 88,288
Provision for income
taxes 132,126 67,352 321,973 34,261
----------- ----------- ----------- -----------
Net income before
minority interest $203,002 $106,223 $499,935 $54,027
----------- ----------- ----------- -----------
Minority Interest
in net income
(loss) of
subsidiary (73,493) 0 (73,493) 0
----------- ----------- ----------- -----------
Net Income $276,495 $106,223 $573,428 $54,027
========= ========= ========= =========
Net income (loss)
available to
common shareholders $266,842 $76,862 $534,414 $(4,695)
========= ========= ========= =========
Earnings per common
and common
equivalent share $0.04 $0.01 $0.08 $0.00
========= ========= ========= =========
Weighted average
number of common and
common equivalent
shares outstanding 6,680,859 6,667,797 6,671,943 6,691,338
========= ========= ========= =========
Dividends declared
per preferred share $0.49 $1.50 $1.99 $3.00
========= ========= ========= =========
The accompanying notes are an integral part of the financial statements.
<PAGE>
LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Six Months Ended
June 29, July 1,
1996 1995
------------ ------------
Net cash used in operating activities $(10,703,789) ($12,499,716)
----------- -----------
Cash flows from investing activities
Purchase of property and equipment (1,853,652) (2,297,817)
Purchase of treasury stock 0 (443,750)
Purchase of intangibles (1,630,314) 0
Purchase of Rainfair, Inc., net
of cash acquired (10,846,861) 0
----------- -----------
Net cash used in investing activities (14,330,827) (2,741,567)
Cash flows from financing activities
Cash dividends paid (668,462) (663,308)
Proceeds from long-term borrowing 12,500,000 0
Principal payments on long-term (1,718,589) (2,400,000)
Proceeds from short-term borrowings 14,039,000 13,664,000
Purchase of redeemable preferred stock (1,957,400) 0
Contribution from minority interest 1,250,000 0
----------- -----------
Net cash provided by financing
activities 23,444,549 10,600,692
Decrease in cash and cash equivalents (1,590,067) (4,640,591)
Cash and cash equivalents:
Beginning 3,035,777 4,742,763
----------- -----------
Ending $1,445,710 $102,172
========== ===========
Supplemental information---cash
payments for:
Interest $439,528 $565,009
========== ===========
Income Taxes $844,157 $226,228
========== ===========
The accompanying notes are an integral part of the financial statements.
<PAGE>
LaCrosse Footwear, Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements
1. INTERIM FINANCIAL REPORTING
The Company reports its quarterly interim financial information based
on 13 week periods. In the opinion of management, the unaudited
condensed consolidated financial statements include all adjustments
(consisting only of normal recurring adjustments) considered
necessary for a fair presentation of financial position, results of
operations and cash flows in accordance with generally accepted
accounting principles.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. These
condensed consolidated financial statements should be read in
conjunction with the financial statements and the applicable notes
thereto that are included in the Company's Annual Report on Form 10-
K for the year ended December 31, 1995.
2. ACQUISITIONS
RED BALL INC.
On May 20, 1996, the Company acquired trade accounts receivable,
inventories, certain machinery and equipment and trademarks of Red
Ball, Inc. for a cash purchase price of approximately $5.0 million
which included $.3 million for equipment leased from a third party.
The Company anticipates spending an additional $.5 million in
relocating and staging the inventory and installing the equipment.
The total purchase price will be allocated to the accounts
receivable, inventory, fixed assets and trademarks. The Company used
short-term borrowings under its credit agreement to finance the
acquisition, which borrowings were subsequently replaced in part by
long-term debt. The Company's condensed consolidated statements of
income for the three months ended June 29, 1996 include interest
expense of approximately $30,000 and approximately $25,000 of
operating expenses related to Red Ball. Shipments of RED BALL/R/
products will commence during the third quarter of 1996.
In 1995, Red Ball had net sales of approximately $23.0 million which
included $3 to $4 million of closeouts. In February 1996, Red Ball,
Inc. filed for protection under Chapter 11 of the Bankruptcy Code.
The assets were purchased from Red Ball with the approval of the
Bankruptcy Court. Financial statements were not available for Red
Ball for 1995 because it was operated as a division of its parent
until the middle of 1995. LaCrosse management does not believe the
historical statements of Red Ball, Inc. would be relevant to the
future performance of this brand for the following reasons:
- LaCrosse will not operate either of the under-utilized
manufacturing facilities of Red Ball, Inc.
- LaCrosse will utilize office space in their La Crosse, Wisconsin
facility for sales, marketing and administrative personnel
versus expensive leased space in Louisville, Kentucky.
- LaCrosse will utilize its existing distribution organization
versus utilizing the Red Ball distribution organization.
- Only one person from the Red Ball organization will be employed
by LaCrosse.
The assets of Red Ball were purchased to give the Company a brand
name product to distribute at lower price points than the current
LACROSSE/R/ and DANNER/R/ brands and to distribute through channels
of distribution not utilized by LaCrosse or Danner.
It is currently anticipated that sales of RED BALL/R/ products will
be less than 5% of LaCrosse's net sales for 1996 with a minimal
impact on net income. It is anticipated that $.5 million to $1.0
million of additional working capital, primarily for inventory, will
be required to support the brand during 1996. In future years, as
sales grow, additional working capital will be needed if annual sales
of the brand exceed approximately $7 million. Major capital
expenditures are not anticipated. It is not anticipated this
acquisition will have any material impact on the liquidity of the
Company.
RAINFAIR, INC.
In May 1996, Craig Leipold, the former principal owner of Rainfair,
Inc., and the Company established a new corporation and each
purchased one-half of the new corporation's common stock, in each
case for $1,250,000, and LaCrosse also purchased all of the new
corporation's outstanding preferred stock for $500,000. On May 31,
1996, this 50% owned subsidiary of the Company purchased
substantially all of the assets of Rainfair, Inc. for approximately
$10.8 million in cash and approximately $1.5 million in liabilities
for an aggregate purchase price of approximately $12.3 million. The
name of the subsidiary was changed to Rainfair, Inc. in June 1996
after completing the asset purchase.
The Company loaned the 50% owned subsidiary approximately $8.0
million to fund the purchase price of the net assets of Rainfair,
Inc. which was not funded by the initial capital contributions. The
Company used long-term borrowings of approximately $9.5 million as
the source of funds to make its initial capital contribution and the
loan to the subsidiary.
The acquisition has been accounted for as a purchase. Accordingly,
the purchase price is being allocated to assets and liabilities based
on their estimated fair values as of the date of acquisition. The
approximately $.5 million of the purchase price in excess of the
estimated fair value of the net assets is being amortized on a
straight-line basis over a 15-year term. The Company's condensed
consolidated statements of income for the three months ended and six
months ended June 29, 1996 includes Rainfair's results of operations
since May 1, 1996. The following unaudited pro forma summary
represents the consolidated results of operations as if the
acquisition of Rainfair, Inc. had occurred at the beginning of the
periods presented and does not purport to be indicative of what would
have occurred had the acquisition been made as of those dates or of
results which may occur in the future:
Three Months Ended Six Months Ended
June 29, July 1, June 29, July 1,
1996 1995 1996 1995
-------- ------- ------- -------
Net Sales $24,762 $24,301 $51,335 $48,503
Net Income 340 70 653 26
Net Income Per Common Share $.05 $.00 $.09 $.00
3. INVENTORIES
Inventories are comprised of the following:
June 29, 1996 December 31, 1995
------------- -----------------
Raw Materials $ 7,219,918 $ 6,550,337
Work-in Process 1,847,546 2,199,777
Finished Goods 37,351,016 21,355,603
LIFO Reserve (4,375,097) (4,099,097)
----------- -----------
Total $42,043,383 $26,006,620
=========== ===========
ITEM 2
Management's Discussion and Analysis
of Financial Condition and Results of Operations
Results of Operations
The following table sets forth, for the periods indicated, selected
financial information derived from the Company's condensed consolidated
financial statements, expressed as a percentage of net sales. The
discussion that follows the table should be read in conjunction with the
condensed consolidated financial statements.
Percentage of Net Sales
Three Months Ended Six Months Ended
June 29, July 1, June 29, July 1,
1996 1995 1996 1995
-------- -------- -------- -------
Net Sales 100.0% 100.0% 100.0% 100.0%
Cost of Goods Sold 73.5 75.3 73.6 74.7
----- ----- ----- -----
Gross Profit 26.5 24.7 26.4 25.3
Selling and Administrative
Expenses 23.7 22.8 23.7 24.2
----- ----- ----- -----
Operating Income 2.8 1.9 2.7 1.1
The Company's business is seasonal with lower revenues historically being
generated during the first six months of the year. As a result, revenue
for the six-month period ending June 29, 1996 should not be considered to
be indicative of results to be reported for the balance of the fiscal
year.
Three Months Ended June 29, 1996 Compared to Three Months Ended July 1,
1995
Net Sales
Net sales for the three months ended June 29, 1996 increased $2,568,590,
or 12%, to $23,054,257 from $20,485,667 for the three months ended July 1,
1995. The growth in net sales was primarily due to consolidating $2.1
million of net sales of Rainfair, Inc. which was acquired in May 1996.
Initial shipments of the new LACROSSE/R/ leather work boot line introduced
in February 1996, and $.7 million of shipments under a government contract
received in the second half of 1995 accounted for the balance of the
increase. The Company implemented a price increase in January 1996 which
contributed approximately $400,000 to increased net sales for the second
quarter.
Gross Profit
Gross profit for the three months ended June 29, 1996 increased 21% to
$6,107,085, or 26.5% of net sales, from $5,054,863 or 24.7% of net sales
in the second quarter of 1995. The increase in gross profit as a
percentage of net sales was due to more favorable pricing on key raw
materials and productivity increases and cost reductions at the La Crosse,
Wisconsin factory. Partially offsetting these improvements was the $2.1
million of Rainfair sales added at a gross profit percentage of 20%, as a
result of lower factory utilization at Rainfair during the normally slow
summer season.
Selling and Administrative Expense
Selling and administrative expenses in the second quarter of 1996
increased 16.9%, to $5,455,740, or 23.7% of net sales, from $4,665,726, or
22.8% of net sales in the second quarter of 1995. The primary reason for
the increase in operating expenses was the addition of $556,275 of
operating expenses for the Rainfair business. A planned increase in
spending of $140,000 for marketing/advertising support for LaCrosse
products also contributed to the increase in spending. The addition of
Red Ball resulted in approximately $25,000 of additional operating
expenses during the second quarter of 1996.
Interest Expense
Interest expense for the three months ended June 29, 1996 increased 14% to
$407,413 or 1.8% of net sales, from $358,219 or 1.7% of net sales for the
three months ended July 1, 1995. The increased long-term debt of $12.5
million added during the quarter to finance the Red Ball and Rainfair
purchases accounted for the increase.
Income Tax Expense
The Company's effective income tax rate was 39.4% in the second quarter of
1996 compared to 38.8% in the second quarter of 1995.
Six months Ended June 29, 1996 Compared to Six Months Ended July 1, 1995
Net Sales
Net sales for the six months ended June 29, 1996 increased $5,023,340, or
12%, to $45,185,228 from $40,161,888 for the first six months of 1995.
Shipments of RAINFAIR/R/ products of $2.1 million, which were included in
1996 net sales due to inclusion of Rainfair results for May and June 1996,
accounted for a large portion of the increased sales. A $1.3 million
increase in shipments under a government contract received in the second
half of 1995 coupled with an increase in LACROSSE/R/ net sales to
retailers, reflecting an improvement in at-once orders in the first
quarter and an increase in industrial shipments of cold weather boots
during the first quarter, accounted for the balance of the increase.
Gross Profit
Gross profit for the six months ended June 29, 1996 increased 17% to
$11,914,123, or 26.4% of net sales, from $10,146,693 or 25.3% of net sales
in the first six months of 1995. The increase in gross profit was due to
the increase in net sales and the increase in the gross profit percentage.
The increase in gross profit as a percentage of net sales was primarily
due to more favorable pricing on key raw materials and productivity
increases and cost reductions at the La Crosse, Wisconsin factory.
Partially offsetting these improvements was the $2.1 million of Rainfair
sales added during the second quarter at a gross profit percentage of 20%.
Selling and Administrative Expenses
Selling and administrative expenses in the first half of 1996 increased
10%, to $10,708,403, or 23.7% of net sales, from $9,723,674, or 24.2% of
net sales the first half of 1995. The addition of the Rainfair business
in May 1996 accounted for $556,275 of the increase in operating expenses.
In addition, planned increases in marketing expenses for LACROSSE/R/
products and volume related increases in selling expenses were the primary
reason for the remaining increase in expenses.
Interest Expense
Interest expense in the first half of 1996 decreased 1% to $587,598 or
1.3% of net sales, from $595,386 or 1.5% of net sales for the first half
of 1995. A reduction in interest expense in the first quarter of 1996,
primarily as a result of reduced levels of inventory, was largely offset
by the interest expense on $12.5 million of long-term debt assumed during
the second quarter of 1996 to finance the Red Ball and Rainfair
acquisitions.
Miscellaneous
Miscellaneous income for the first half of 1996 decreased $56,869 to
$203,786 from $260,655 in the first half of 1995. A gain on an asset sale
in the first half of 1995, which did not recur in 1996, was the reason for
the decrease.
Income Tax Expense
The Company's effective income tax rate was 39.2% in the first half of
1996 compared to 38.8% in the first half of 1995.
Liquidity and Capital Resources
The Company has historically financed its operations with cash generated
from operations, long-term lending arrangements and short-term borrowings
under an unsecured credit agreement. The Company requires working capital
primarily to support fluctuating accounts receivable and inventory levels
caused by the Company's seasonal business cycle. The Company invests
excess cash balances in short-term investment grade securities or money
market investments.
On May 20, 1996, the Company purchased the trade accounts receivable,
inventories, certain machinery and equipment (including $.3 million of
equipment leased from a third party) and trademarks of Red Ball, Inc. for
approximately $5.0 million in cash.
On May 31, 1996, the Company invested $1.75 million in a 50% owned
subsidiary. This subsidiary then purchased substantially all of the
assets of Rainfair, Inc. for approximately $10.8 million in cash and the
assumption of approximately $1.5 million in liabilities. The Company
loaned the subsidiary approximately $8.0 million to fund the balance of
the purchase price.
In April 1996, the Company repurchased all of the outstanding redeemable
preferred stock of the Company for its face value of $1,957,400. The
Company's line of credit was utilized to fund this purchase.
On May 31, 1996, the Company renegotiated its unsecured credit agreement
with Firstar Bank Milwaukee, N.A. as the lead bank. Under the terms of
the revised agreement, the line of credit was increased to $62.5 million,
including a $12.5 million term loan, from the present maximum level of
$30.0 million. The term loan, which the Company took out in May, is due
December 31, 2001 and calls for quarterly payments of $.4 million
commencing in March 1998. At the Company's option, the interest rate on
the revolving portion of the loan is either the bank's prime rate or LIBOR
(for the applicable loan period) plus either .75% or 1.0% depending upon
the Company's leverage ratio. The Company currently qualifies for LIBOR
plus .75%. The rate for the term loan is .25% higher than for the
revolving loans. Under the revised agreement, the Company also has the
option to sell unrated commercial paper through Firstar Bank Milwaukee,
N.A. The credit agreement expires on May 31, 1999.
As of June 29, 1996, the Company had working capital of $42.1 million
compared to $34.5 million at December 31, 1995. The increase in working
capital is primarily the result of the working capital acquired in the Red
Ball and Rainfair transactions in May 1996 which was financed with long-
term debt. This increase in working capital was partially offset by the
repurchase of the redeemable preferred stock and the repayment of $1.7
million of long-term debt. Accounts receivable increased $5.9 million
from December 31, 1995 to June 29, 1996 due to the acquisition of
approximately $3.0 million of receivables in the Red Ball and Rainfair
acquisitions and the normal seasonal increase in receivables. Inventories
increased $16.0 million from December 31, 1995 to June 29, 1996 due to the
acquisition of approximately $10.0 million of inventories in the Red Ball
and Rainfair acquisitions and the normal seasonal increase in inventories.
Short-term borrowings under the credit agreement increased $14.0 million
from December 31, 1995 to June 29, 1996 due to usage of these borrowings
to fund the seasonal increase in accounts receivable and inventories, to
fund the repurchase of all of the Company's outstanding redeemable
preferred stock for $1.9 million and to fund the repayment of $1.7 million
of long-term debt on a scheduled payment date.
The $10.8 million increase in long-term obligations was primarily due to
the $12.5 million term loan entered into during the quarter, the proceeds
of which were used to fund the Red Ball and Rainfair purchases. This
increase was partially offset by a $1.7 million repayment of long-term
debt on a scheduled payment date.
Intangibles increased $1.9 million from December 31, 1995 to June 29, 1996
primarily due to the value assigned to the trademarks acquired in the Red
Ball acquisition and the excess of the purchase price over the estimated
fair value of the net assets acquired in connection with the Rainfair
acquisition. Accrued postretirement benefit cost increased $.5 million
from December 31, 1995 to June 29, 1996 primarily due to $.4 million of
benefit obligations assumed in the Rainfair acquisition. The $558,893
decrease in long-term deferred compensation was primarily a result of a
$600,000 payment to the Company's vice chairman (former president) in
January 1996 in accordance with the payment terms of his phantom stock
agreement. Payments in increments of $600,000 are required each January
until the obligation is paid in full.
As of the end of the second quarter of 1996, the Company had approximately
$33.0 million available under its credit agreement. The Company
anticipates that its current credit availability will be adequate to meet
the Company's cash flow requirements through 1997.
PART II - Other Information
ITEM 4 Submission of Matters to a Vote of Security Holders
The Company held its annual meeting of shareholders on May 17,
1996. At such meeting, Frank J. Uhler, Jr. and Richard A.
Rosenthal were elected as directors of the Company for terms to
expire at the 1999 annual meeting of shareholders and until
their successors are duly elected and qualified pursuant to the
following votes: Frank J. Uhler, Jr. - 6,193,190 shares voted
for, 187,421 shares withholding authority, 0 abstentions and 0
broker non-votes; Richard A. Rosenthal - 6,193,190 shares for,
187,421 shares withholding authority, 0 abstentions and 0 broker
non-votes. The other directors of the Company whose terms of
office continued after the 1996 annual meeting of shareholders
are as follows: terms expiring at the 1997 annual meeting -
Patrick K. Gantert, Virginia F. Schneider and Luke E. Sims;
terms expiring at the 1998 annual meeting - George W. Schneider
and Eric E. Merk, Sr.
ITEM 6 Exhibits and Reports on Form 8-K
(a) Exhibit Number Description
(2.1) Asset Purchase Agreement dated May 16, 1996,
by and among Rainco, Inc., LaCrosse
Footwear, Inc., Rainfair, Inc. and Craig L.
Leipold. [Incorporated by reference to
Exhibit (2.1) to LaCrosse Footwear, Inc.'s
Current Report on Form 8-K dated May 31,
1996 and filed June 14, 1996]
(2.2) Shareholders' Agreement dated as of May 31,
1996 by and between Craig L. Leipold,
LaCrosse Footwear, Inc. and Rainco, Inc.
[Incorporated by reference to Exhibit (2.2)
to LaCrosse Footwear, Inc.'s Current Report
on Form 8-K dated May 31, 1996 and filed
June 14, 1996]
(4.1) Credit Agreement, dated as of May 31, 1996,
by and among LaCrosse Footwear, Inc.,
Firstar Bank Milwaukee, N.A., The Northern
Trust Company, Harris Trust and Savings Bank
and Firstar Bank Milwaukee, N.A., as the
Agent for the Banks
(27) Financial Data Schedule
(b) Reports on Form 8-K.
On June 14, 1996, the Company filed a Current Report on
Form 8-K dated May 31, 1996 to reflect (under Item 2 of
Form 8-K) the acquisition of substantially all of the
assets of Rainfair, Inc. by a joint venture formed by the
Company and Craig L. Leipold, Chief Executive Officer and
principal shareholder of Rainfair. On August 5, 1996, the
Company filed an amendment on Form 8-K/A to the Company's
Current Report on Form 8-K dated May 31, 1996. The report,
as amended, included (under Item 7 of Form 8-K) the
following financial statements: Rainfair, Inc. -- Balance
Sheet as of April 30, 1996, Statement of Operations for the
year ended April 30, 1996, Statement of Stockholders'
Equity for the year ended April 30, 1996 and Statement of
Cash Flows for the year ended April 30, 1996; LaCrosse --
Pro Forma Condensed Consolidated Balance Sheet as of March
30, 1996 and Pro Forma Condensed Statements of Income for
the year ended December 31, 1995 and for the quarter ended
March 30, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LACROSSE FOOTWEAR, INC.
(Registrant)
Date: August 6, 1996 By:/s/ Patrick K. Gantert
Patrick K. Gantert
President and Chief Executive Officer
Date: August 6, 1996 By:/s/ Robert J. Sullivan
Robert J. Sullivan
Vice President-Finance and Administration
(Principal Financial Officer)
<PAGE>
LACROSSE FOOTWEAR, INC.
EXHIBIT INDEX TO QUARTERLY REPORT ON FORM 10-Q
for the Quarterly Period ended June 29, 1996
Exhibit
(2.1) Asset Purchase Agreement dated May 16, 1996, by and among
Rainco, Inc., LaCrosse Footwear, Inc., Rainfair, Inc. and
Craig L. Leipold [Incorporated by reference to Exhibit (2.1)
to LaCrosse Footwear, Inc.'s Current Report on Form 8-K dated
May 31, 1996 and filed June 14, 1996]
(2.2) Shareholders' Agreement dated as of May 31, 1996 by and
between Craig L. Leipold, LaCrosse Footwear, Inc. and Rainco,
Inc. [Incorporated by reference to Exhibit (2.2) to LaCrosse
Footwear, Inc.'s Current Report on Form 8-K dated May 31,
1996 and filed June 14, 1996]
(4.1) Credit Agreement, dated as of May 31, 1996, by and among
LaCrosse Footwear, Inc., Firstar Bank Milwaukee, N.A., The
Northern Trust Company, Harris Trust and Savings Bank and
Firstar Bank Milwaukee, N.A., as the Agent for the Banks
(27) Financial Data Schedule
Exhibit 4.1
CREDIT AGREEMENT
Dated as of May 31, 1996
FIRSTAR BANK MILWAUKEE, N.A.,
THE NORTHERN TRUST COMPANY
AND
HARRIS TRUST AND SAVINGS BANK
(collectively, "Lenders")
and
LACROSSE FOOTWEAR, INC.
("Borrower")
and
FIRSTAR BANK MILWAUKEE, N.A.,
as agent to Lenders
("Agent")
<PAGE>
TABLE OF CONTENTS
PAGE
SECTION 1 DEFINITIONS AND TERMS . . . . . . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Accounting and Financial Determinations . . . . . . . . . . 10
1.3 Interpretation . . . . . . . . . . . . . . . . . . . . . . 10
1.4 Other Terms . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2 AMOUNTS AND TERMS OF OBLIGATIONS . . . . . . . . . . . . 11
2.1 Revolving Loans . . . . . . . . . . . . . . . . . . . . . . 11
2.2 Letters of Credit . . . . . . . . . . . . . . . . . . . . . 12
2.3 Commercial Paper Transactions . . . . . . . . . . . . . . . 13
2.4 Interest After Event of Default . . . . . . . . . . . . . . 13
2.5 Loan Account . . . . . . . . . . . . . . . . . . . . . . . 13
2.6 Payment on Nonbusiness Days . . . . . . . . . . . . . . . . 14
2.7 Prepayments . . . . . . . . . . . . . . . . . . . . . . . . 14
2.8 Effect of Regulatory Change . . . . . . . . . . . . . . . . 14
2.9 No Obligation to Extend or Forbear . . . . . . . . . . . . 14
2.10 Term Loans . . . . . . . . . . . . . . . . . . . . . . . . 15
2.11 LIBOR Rate Restrictions . . . . . . . . . . . . . . . . . . 15
2.12 Funding Procedures . . . . . . . . . . . . . . . . . . . . 16
SECTION 3 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . 17
3.1 Organization, Qualification and Subsidiaries . . . . . . . 17
3.2 Financial Statements . . . . . . . . . . . . . . . . . . . 17
3.3 Authorization . . . . . . . . . . . . . . . . . . . . . . . 18
3.4 Absence of Conflicting Obligations . . . . . . . . . . . . 18
3.5 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.6 Absence of Litigation . . . . . . . . . . . . . . . . . . . 18
3.7 Accuracy of Information . . . . . . . . . . . . . . . . . . 19
3.8 Ownership of Property . . . . . . . . . . . . . . . . . . . 19
3.9 Federal Reserve Regulations . . . . . . . . . . . . . . . . 19
3.10 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.11 Investment Company Act . . . . . . . . . . . . . . . . . . 20
3.12 Foreign Assets Control Regulations . . . . . . . . . . . . 20
3.13 No Defaults . . . . . . . . . . . . . . . . . . . . . . . . 20
3.14 Environmental Laws . . . . . . . . . . . . . . . . . . . . 20
3.15 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4 CONDITIONS PRECEDENT TO OBLIGATIONS . . . . . . . . . . . 21
4.1 Initial Obligations . . . . . . . . . . . . . . . . . . . . 21
4.2 Subsequent Obligations . . . . . . . . . . . . . . . . . . 22
SECTION 5 AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . 22
5.1 Corporate Existence; Compliance With Laws; Maintenance of
Business; Taxes . . . . . . . . . . . . . . . . . . . . . . 22
5.2 Maintenance of Property; Insurance . . . . . . . . . . . . 23
5.3 Financial Statements . . . . . . . . . . . . . . . . . . . 23
5.4 Inspection of Property and Records . . . . . . . . . . . . 25
5.5 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . 25
5.6 Comply With, Pay and Discharge All Notes, Mortgages Deeds
of Trust and Leases . . . . . . . . . . . . . . . . . . . . 25
5.7 Environmental Compliance . . . . . . . . . . . . . . . . . 25
5.8 Fees and Costs . . . . . . . . . . . . . . . . . . . . . . 26
5.9 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 6 NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . 27
6.1 Sale of Assets, Consolidation, Merger, Etc . . . . . . . . 27
6.2 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . 28
6.3 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.4 Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.5 Loans, Investments . . . . . . . . . . . . . . . . . . . . 29
6.6 Compliance with ERISA . . . . . . . . . . . . . . . . . . . 29
6.7 Affiliates . . . . . . . . . . . . . . . . . . . . . . . . 30
6.8 Consolidated Tangible Net Worth . . . . . . . . . . . . . . 30
6.9 Leverage Ratio . . . . . . . . . . . . . . . . . . . . . . 30
6.10 Current Ratio . . . . . . . . . . . . . . . . . . . . . . . 30
6.11 Interest Coverage Ratio . . . . . . . . . . . . . . . . . . 30
SECTION 7 EVENTS OF DEFAULT; RIGHTS AND REMEDIES . . . . . . . . . 30
7.1 Events of Default Defined . . . . . . . . . . . . . . . . . 30
7.2 Remedies Upon Event of Default . . . . . . . . . . . . . . 32
SECTION 8 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 34
8.1 Assignability; Successors . . . . . . . . . . . . . . . . . 34
8.2 Survival . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.3 Governing Law . . . . . . . . . . . . . . . . . . . . . . . 34
8.4 Counterparts; Headings . . . . . . . . . . . . . . . . . . 34
8.5 Entire Agreement . . . . . . . . . . . . . . . . . . . . . 34
8.6 No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.8 Severability . . . . . . . . . . . . . . . . . . . . . . . 35
8.9 Further Assurances . . . . . . . . . . . . . . . . . . . . 36
8.10 Conflicts and Ambiguities . . . . . . . . . . . . . . . . . 36
8.11 Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.12 Submission to Jurisdiction . . . . . . . . . . . . . . . . 36
8.13 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . 36
8.14 Assignments; Participations . . . . . . . . . . . . . . . . 37
8.15 Materiality . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 9 RELATIONSHIP OF AGENT AND LENDERS . . . . . . . . . . . . 38
9.1 Appointment . . . . . . . . . . . . . . . . . . . . . . . . 38
9.2 Powers . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.3 Action on Instructions of Lender . . . . . . . . . . . . . 38
9.4 Amendments . . . . . . . . . . . . . . . . . . . . . . . . 39
9.5 Application of Payments . . . . . . . . . . . . . . . . . . 39
9.6 General Immunity . . . . . . . . . . . . . . . . . . . . . 40
9.7 No Responsibility for Loans, Recitals, Etc. . . . . . . . . 40
9.8 Employment of Agents and Counsel . . . . . . . . . . . . . 40
9.9 Reliance on Documents, Counsel . . . . . . . . . . . . . . 40
9.10 Inspections . . . . . . . . . . . . . . . . . . . . . . . . 41
9.11 Agent's Reimbursement and Indemnification . . . . . . . . . 41
9.12 Rights as a Lender . . . . . . . . . . . . . . . . . . . . 41
9.13 Lenders Credit Decision . . . . . . . . . . . . . . . . . . 41
9.14 Successor Agent . . . . . . . . . . . . . . . . . . . . . . 42
9.15 Noteholders . . . . . . . . . . . . . . . . . . . . . . . . 42
EXHIBITS
Exhibit A-1 - Revolving Credit Note from Borrower to Firstar
Exhibit A-2 - Revolving Credit Note from Borrower to Northern
Exhibit A-3 - Revolving Credit Note from Borrower to Harris
Exhibit B-1 - Term Note from Borrower to Firstar
Exhibit B-2 - Term Note from Borrower to Northern
Exhibit B-3 - Term Note from Borrower to Harris
SCHEDULES
Schedule 3.1 Subsidiaries
Schedule 3.5 Tax Disputes
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is made and entered into as of this 31st day
of May, 1996, by and among LaCrosse Footwear, Inc. ("Borrower"), a
Wisconsin corporation, which has its principal office at 1319 St. Andrew
Street, La Crosse, Wisconsin 54603, and Firstar Bank Milwaukee, N.A.
("Firstar"), a national banking association, which has its principal
office at 777 East Wisconsin Avenue, Milwaukee, Wisconsin 53202, The
Northern Trust Company ("Northern"), which has its principal office at 50
South LaSalle Street, Chicago, Illinois 60675 and Harris Trust and
Savings Bank ("Harris"), an Illinois banking corporation, which has its
principal office at 111 West Monroe Street, Chicago, Illinois 60603
(Firstar, Northern and Harris are individually referred to as a "Lender"
and collectively as "Lenders"), and Firstar as agent to Lenders ("Agent").
RECITALS
A. Firstar and Borrower entered into that certain Revolving Credit
Agreement dated as of October 7, 1994, as amended pursuant to that certain
First Amendment to Revolving Credit Agreement dated February 1, 1995 (the
"Original Credit Agreement").
B. Borrower has requested that Lenders extend to it a credit not
to exceed $50,000,000 in the form of Revolving Loans (including Letters
of Credit in an aggregate principal amount not to exceed $10,000,000) and
Term Loans in an aggregate principal amount not to exceed $12,500,000.
C. Lenders have agreed to extend credit to Borrower on all of the
terms and conditions contained in this Agreement. This Agreement shall,
in all respects, supersede the Original Credit Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
AGREEMENT
SECTION 1 DEFINITIONS AND TERMS
1.1 Definitions. As used in this Agreement, the following terms
have the following meanings:
"Affiliate" of a Person shall mean any (a) director, officer or
employee of the Person, or (b) Person directly or indirectly controlling
or controlled by, or under direct or indirect common control with,
another Person. A Person shall be deemed to control another Person for
the purposes of this definition if the controlling Person directly or
indirectly, either individually or together with (in the case of an
individual) his spouse, lineal descendants and ascendants and brothers or
sisters by blood or adoption or spouses of such descendants, ascendants,
brothers and sisters, owns ten percent or more of any class of voting
securities of the controlled Person or possesses, directly or indirectly,
the power to direct, or cause the direction of, the management or policies
of the second Person, whether through the ownership of voting securities,
common directors, trustees or officers, by contract or otherwise.
"Agreement" shall mean this Credit Agreement, as amended,
supplemented, modified or extended from time to time.
"Borrowing Date" shall have the meaning assigned in Section 2.1(c).
"Business Day" shall mean a day other than a Saturday or Sunday on
which banks are open for business in Milwaukee, Wisconsin and Chicago,
Illinois; provided, however, that for purposes of LIBOR Rate Loans, the
term "Business Day" shall mean only those days on which dealings in U.S.
dollar deposits are carried out by U.S. financial institutions in the
London interbank market.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Commercial Paper Transactions" shall mean transactions where
Firstar has agreed to accept requests from Borrower for the issuance of
Borrower's commercial paper through Firstar, pursuant to Section 2.3.
"Consolidated Indebtedness" at any date of determination shall mean
the total amount of all Indebtedness of Borrower and its Subsidiaries as
of the end of the month immediately preceding the date on which such
determination is made.
"Consolidated Net Income (Net Loss)" shall mean, for any period, the
net after-tax income (or net loss) of Borrower and its Subsidiaries on a
consolidated basis determined in accordance with GAAP, excluding the
after-tax effect of the sum of (a) any net earnings of any Subsidiary
which are unavailable for the payment of dividends by the Borrower, (b)
interest in any net earnings of Persons in which Borrower has an ownership
interest, other than Subsidiaries, not actually received by the Borrower,
(c) gains or losses arising from a write-up of assets subsequent to the
date hereof, (d) gains or losses arising from the acquisition of any
securities of Borrower or any Subsidiary, (e) gains or losses (net of any
tax effect) resulting from the sale of any investments or capital assets,
(f) amortization of any deferred credit arising from the acquisition of
any Person or in the property or assets of any Person, (g) earnings of any
Subsidiary prior to the date it became a Subsidiary, (h) earnings of any
Person acquired by Borrower or any Subsidiary through purchase, merger or
consolidation or otherwise for any period prior to the date of
acquisition, and (i) proceeds of any life insurance policies payable to
Borrower or any Subsidiary.
"Consolidated Tangible Assets" at any date of determination shall
mean the total amount of all assets of Borrower and its Subsidiaries as
of the end of the month immediately preceding the date on which such
determination is made, determined in accordance with GAAP, less all
Intangible Assets.
"Consolidated Tangible Net Worth" shall be determined on a
consolidated basis in accordance with GAAP and shall mean the excess, if
any, of all Consolidated Tangible Assets over all Consolidated
Indebtedness.
"Current Assets" shall mean all assets which would appear as current
assets on the consolidated balance sheet of Borrower and its Subsidiaries
under GAAP.
"Current Liabilities" shall mean all liabilities which would appear
as current liabilities on the consolidated balance sheet of Borrower and
its Subsidiaries under GAAP or which otherwise constitute Indebtedness of
Borrower or its Subsidiaries payable on demand or payable within one year
(including, without limitation, all outstanding Loans, customers' advances
and progress billings on contracts).
"Default" shall mean an Event of Default or an event which with the
giving of notice or the passage of time or both would constitute an Event
of Default.
"Employee Plan" shall mean any savings, profit sharing, or
retirement plan or any deferred compensation contract or other plan
maintained for employees of Borrower or its Subsidiaries and covered by
Title IV of ERISA, including, without limitation, any "multiemployer plan"
as defined in ERISA.
"Environmental Law" shall mean any local, state or federal law or
other statute, law, ordinance, rule, code, regulation, decree or order
governing, regulating or imposing liability or standards of conduct
concerning the use, treatment, generation, storage, disposal or other
handling or release of any Hazardous Substance.
"Environmental Liability" shall mean all liability arising under,
resulting from, or imposed by any Environmental Law.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and any successor statute, together with the regulations
and published interpretations thereunder, in each case as in effect from
time to time.
"Event of Default" shall have the meaning assigned in Section 7.1.
"GAAP" shall mean those generally accepted accounting principles and
practices which are recognized as such by the American Institute of
Certified Public Accountants acting through appropriate boards or
committees thereof and which are consistently applied for all periods so
as to properly reflect the financial condition, results of operations and
cash flows of a Person.
"Government Authority" shall mean any nation or government, any
state or other political subdivision thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions
of or pertaining to government, and any corporation or other entity owned
or controlled through stock or capital ownership or otherwise, by any of
the foregoing.
"Hazardous Substance" shall mean any pollutant, contaminant, waste or
toxic or hazardous chemicals, wastes or substances, including, without
limitation, asbestos, urea formaldehyde insulation, petroleum, PCB's, air
pollutants, water pollutants, and other substances defined as hazardous
substances or toxic substances in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C.
Section 9061 et seq., Hazardous Materials Transportation Act, 49 U.S.C.
Section 1802, the Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901 et seq., the Toxic Substance Control Act of 1976, as
amended, 15 U.S.C. Section 2601 et seq., the Solid Waste Disposal Act, 42
U.S.C. Section 3251 et seq., the Clean Air Act, 42 U.S.C. Section 1857
et seq., the Clean Water Act, 33 U.S.C. Section 1251 et seq, Chapter 144
of the Wisconsin Statutes, or any other statute, rule, regulation or order
of any Government Authority having jurisdiction over the control of such
wastes or substances, including without limitation the United States
Environmental Protection Agency, the United States Nuclear Regulatory
Agency, the State of Wisconsin and the LaCrosse County Department of
Health.
"Indebtedness" shall mean all liabilities or obligations of a Person
which would, in accordance with GAAP, be included on the liability portion
of a balance sheet, and shall include, without limitation, all: (a)
indebtedness for borrowed money; (b) indebtedness for the deferred
purchase price of property or services for which the Person is liable,
contingently or otherwise, as obligor, guarantor or otherwise; (c) any
commitment by which the Person assures a creditor against loss (other than
contingent reimbursement obligations with respect to letters of credit);
(d) obligations which are evidenced by notes, acceptances or other
instruments; (e) indebtedness guaranteed in any manner by the Person,
including without limitation guaranties in the form of an agreement to
repurchase or reimburse; (f) obligations under leases which are or should
be, in accordance with GAAP, recorded as capital leases for which
obligations the Person is liable, contingently or otherwise, as obligor,
guarantor or otherwise, or in respect of which obligations the Person
assures a creditor against loss; (g) any unfunded obligation of the Person
to an Employee Plan; and (h) all liabilities secured by any Lien on any
Property owned by the Person even though that Person has not assumed or
otherwise become liable for the payment thereof.
"Intangible Assets" shall mean: (a) any goodwill, patents,
trademarks, trade names, copyrights, operating rights, organizational or
developmental expenses, unamortized debt discount or expense, unamortized
deferred charges, and other assets properly classified as intangible
assets in accordance with GAAP; (b) any write-ups of assets not in
accordance with GAAP; (c) any treasury stock; and (d) all investments in
foreign Affiliates and unconsolidated domestic Affiliates.
"Letters of Credit" shall mean the face amount of all standby and
import letters of credit issued by Agent, for the ratable account of
Lenders, at the request of Borrower for its account pursuant to Section
2.2.
"Leverage Ratio" shall mean the ratio of Consolidated Indebtedness to
Consolidated Tangible Net Worth.
"LIBOR Index Rate" shall mean with respect to a LIBOR Rate Loan for
any Loan Period, the rate of interest per annum determined by Agent to
be the rate for the applicable Loan Period set forth in Federal Reserve
publication H.15(519) under the caption "Eurodollar Deposits" (London) for
the day two Business Days prior to the first day of the applicable Loan
Period. If such rate is not published in Federal Reserve publication
H.15(519) as of the calculation date for a Loan Period, then the
applicable LIBOR Rate shall be the average of the rates per annum (rounded
up to the next whole multiple of 1/100 of 1%) at which deposits for a
period of time equal or comparable to the applicable Loan Period in
immediately available funds in United States dollars are offered to Agent
two Business Days prior to the beginning of such Loan Period by at least
three major banks in the London interbank eurodollar market at or about
10:00 a.m. London time for delivery on the first day of such Loan Period.
"LIBOR Rate" shall mean the LIBOR Index Rate plus the LIBOR Spread in
effect at the beginning of the Loan Period.
"LIBOR Rate Loans" shall mean Revolving Loans and Term Loans for
which Borrower has selected the LIBOR Rate as the base rate of interest
under Sections 2.1 and 2.10.
"LIBOR Spread" shall mean an amount equal to either: (a) .75% per
annum, in the case of Revolving Loans, and 1.0% per annum, in the case of
Term Loans, if the Leverage Ratio is less than 1.00 to 1 as of the end of
Borrower's then most recently completed fiscal year; or (b) 1.00% per
annum, in the case of Revolving Loans, and 1.25% per annum, in the case of
Term Loans, if the Leverage Ratio is equal to or greater than 1.00 to 1 as
of the end of Borrower's then most recently completed fiscal year.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), deed of
trust, charge, preference, priority, security interest or other security
agreement or preferential arrangement of any kind or nature whatsoever
including, without limitation, any conditional sale or other title
retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing, and the filing of any financing
statement under the UCC or comparable law of any jurisdiction.
"Loan Account" shall mean an account on the books of Agent in which
Agent will record, pursuant to Section 2.4, Obligations and other
advances made by Lenders to Borrower, payments made upon such
Obligations and other advances, and other debits and credits pertaining to
the Obligations.
"Loan Period" shall mean with respect to each LIBOR Rate Loan, the
period commencing on the date of such LIBOR Rate Loan and ending on any
Business Day within a one-, two-, three-, four- or six-month period
following the date of such LIBOR Rate Loan as Borrower may elect in the
notice of borrowing under Section 2.1(c), provided that no Loan Period
shall extend beyond the Termination Date.
"Material Adverse Effect" shall mean: (a) a Default; (b) a material
adverse change in the business, prospects or condition (financial or
otherwise) of Borrower or in any of either entity's Property (c)any
material impairment of the right to carry on the business as now or
proposed to be conducted by Borrower or any of its Subsidiaries; or (d)
any material impairment of the ability of Borrower to perform its
obligations under this Agreement or the Related Documents.
"Material Subsidiary" shall mean, as at any time of determination
thereof, any Subsidiary (i) whose assets or liabilities constitute five
percent (5%) or more of the Borrower or (ii) whose net income constitutes
five percent (5%) or more of the Net Income of the Borrower, for the most
recently completed fiscal year.
"Maximum Available Commitment" shall mean an amount equal to the
excess (if any) of (a) the Revolving Loan Commitment less (b) the
aggregate unpaid principal amount outstanding of all Revolving Loans made
by Lenders plus the face amount of all outstanding Letters of Credit and
Commercial Paper Transactions.
"Maximum Credit" shall mean the extension by Lenders to Borrower of
aggregate obligations up to an amount not to exceed the Revolving Loan
Commitment plus the Term Loans; provided that each of Lenders' independent
obligations to extend credit is limited to the following amounts:
Lender Amount
Firstar $27,500,000
Northern $17,500,000
Harris $17,500,000
"Net Income" or "Net Loss" shall mean, for any period, the net after-
tax income (or net loss) of a Person on a consolidated basis determined in
accordance with GAAP, excluding the after-tax effect of the sum of (a) any
net earnings of any Subsidiary which are unavailable for the payment of
dividends, (b) interest in any net earnings of Persons in which a Person
has an ownership interest, other than Subsidiaries, not actually received,
(c) gains arising from a write-up of assets, (d) gains arising from the
acquisition of any securities of the Person or any Subsidiary, (e) gains
resulting from the sale of any investments or capital assets, (f)
amortization of any deferred credit arising from the acquisition of any
Person or in the property or assets of any Person, (g) earnings of any
Subsidiary prior to the date it became a Subsidiary, (h) earnings acquired
by the Person or any Subsidiary through purchase, merger or consolidation
or otherwise for any period prior to the date of acquisition, and (i)
proceeds of any life insurance policies payable to the Person or any
Subsidiary.
"Notes" shall mean the Revolving Credit Notes and the Term Notes,
and any note(s) or obligation(s) issued in substitution, replacement or
renewal thereof.
"Obligations" shall mean the Revolving Loans, the Term Loans, the
Letters of Credit, Commercial Paper Transactions and all other
Indebtedness of Borrower to Lenders and Agent under this Agreement and
the Related Documents.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA.
"Permitted Liens" shall have the meaning assigned in Section 6.3.
"Person" shall mean an individual, partnership, corporation, firm,
enterprise, business trust, joint stock company, trust, unincorporated
association, joint venture, Government Authority or other entity of
whatever nature.
"Prime Rate" shall mean the interest rate publicly announced by
Agent from time to time in Milwaukee, Wisconsin as its prime rate for
interest rate determinations, which is solely a reference rate and may be
at, above or below the rate or rates at which Agent lends to other
Persons. Any change in the Prime Rate shall become effective as of the
opening of business on the day on which such change is publicly announced
by Agent.
"Property" shall mean any interest in any kind of property or asset,
whether real, personal, mixed, tangible or intangible, wherever located,
and whether now owned or subsequently acquired or arising and in the
products, proceeds, additions and accessions thereof or thereto.
"Pro Rata" shall mean ratably among Firstar, Northern and Harris in
proportion to the ratio that their respective Maximum Credits bear to the
aggregate Maximum Credit.
"Rainfair Transaction" shall mean the purchase of substantially all
assets of Rainfair, Inc., on the date hereof, by Rainco, Inc., pursuant to
an Asset Purchase Agreement dated May 16, 1996 for a total purchase price
of approximately $10,500,000; the total investment in Rainco, Inc. by the
Borrower of approximately $9,250,000 consisting of:
(a) $1,250,000 for common stock;
(b) $500,000 for preferred stock; and
(c) $7,500,000 intercompany loan from the Borrower to Rainco, Inc.
"Red Ball Transaction" shall mean the purchase of assets of Red Ball,
Inc. by the Borrower, on May 21, 1996, for a purchase price of
approximately $5,850,000 pursuant to an Asset Purchase Agreement dated as
of April 26, 1996 among the Borrower, Red Ball, Inc. and Norcross
Footwear, Inc.
"Regulatory Change" shall mean the adoption or amendment, after the
date of this Agreement, of any federal or state law, regulation,
interpretation, direction, policy, guideline or court decision applicable
to a Lender or the London interbank eurodollar market which increases the
cost to a Lender of making or maintaining the Obligations or reduces the
rate of return to a Lender (by reduction of principal, interest or
otherwise) on the Obligations by subjecting such Lender to any tax, duty
or other charge with respect to the Obligations, imposing any reserve
requirement (except any reserve requirement reflected in the LIBOR Rate),
affecting the treatment of any Obligation for purposes of calculating the
appropriate amount of capital to be maintained by such Lender or any
Person controlling such Lender, or imposing on such Lender any other
condition affecting the Obligations.
"Related Documents" shall mean the Revolving Credit Notes, the Term
Notes, the Letters of Credit, and all other certificates, resolutions, or
other documents including, without limitation, those evidencing Commercial
Paper Transactions, required or contemplated hereunder.
"Required Lenders" shall mean Lenders whose Maximum Credits aggregate
66.7% of the aggregate Maximum Credits.
"Requirements of Law" shall mean as to any matter or Person, the
Certificate or Articles of Incorporation and Bylaws or other
organizational or governing documents of such Person, and any law
(including, without limitation, any Environmental Law), ordinance, treaty,
rule, regulation, order, decree, determination or other requirement having
the force of law relating to such matter or Person and, where applicable,
any interpretation thereof by any Government Authority and where the
failure to comply with any such requirement would have a Material Adverse
Effect.
"Revolving Credit Notes" shall mean the promissory notes from the
Borrower to Firstar, Northern and Harris in the form of Exhibits A-1, A-2
and A-3, respectively, evidencing the Revolving Loans, as amended,
supplemented, modified or extended from time to time.
"Revolving Loan Commitment" shall mean an aggregate principal amount
not to exceed $50,000,000, or such lesser amount to which the Revolving
Loan Commitment is reduced under Section 2.1(e).
"Subsidiary" shall mean as to any Person, a corporation of which
shares of stock having voting power (other than stock having such power
only by reason of the happening of a contingency that has not occurred)
sufficient to elect a majority of the board of directors or other managers
of such corporation are at the time owned, or the management of which is
otherwise controlled, directly, or indirectly through one or more
intermediaries, or both, by such Person.
"Term Notes" shall mean the promissory notes from Borrower to
Firstar, Northern and Harris in the form of Exhibits B-1, B-2 and B-3,
respectively, evidencing the Term Loans, as amended, supplemented,
modified or extended from time to time.
"Termination Date" shall mean (a) as to the Revolving Loans, May 31,
1999, and (b) as to the Term Loans, December 31, 2001, or such earlier
date on which the Obligations shall terminate as provided in Section 7.2.
"UCC" shall mean the Uniform Commercial Code of the State of
Wisconsin, as amended from time to time.
1.2 Accounting and Financial Determinations. Where the character
or amount of any asset or liability or item of income or expense is
required to be determined, or any accounting computation is required to be
made, for the purpose of this Agreement, such determination or calculation
shall be made on a consolidated basis so as to include Borrower and its
Subsidiaries, if any, in each such calculation and, to the extent
applicable and except as otherwise specified in this Agreement, shall be
made in accordance with GAAP; provided, however, that if any change in
GAAP from those applied in the preparation of the financial statements
referred to in Section 5.3 is occasioned by the promulgation of rules,
regulations, pronouncements and opinions by or required by the American
Institute of Certified Public Accountants (or its boards or committees or
successors thereto or agencies with similar functions), the initial
announcement of which change is made after the date hereof, results in a
change in the method of calculation of financial covenants, standards or
terms found in Section 6, the parties hereto agree to enter into good
faith negotiations in order to amend such provisions so as to reflect such
changes with the desired result that the criteria for evaluating
Borrower's financial condition shall be the same after such changes as if
such changes had not been made; and provided, further, that until such
time as the parties hereto agree upon such amendments, such financial
covenants, standards and terms shall be construed and calculated as
though no change had taken place. When used herein, the term "financial
statement" shall include balance sheets, statements of earnings,
statements of stockholders' equity, statements of cash flows and the notes
and schedules thereto, and each reference herein to a balance sheet or
other financial statement of Borrower shall be to a statement prepared on
a consolidated and consolidating basis, unless otherwise specified.
1.3 Interpretation. The words "hereof," "herein" and "hereunder"
and words of a similar import when used in this Agreement shall refer to
this Agreement as a whole and not to any particular provision of this
Agreement. Section, Schedule and Exhibit references (if any) contained in
this Agreement are references to sections, schedules and exhibits in or
to this Agreement unless otherwise specified. Any reference in any
Section or definition to any clause is, unless otherwise specified, to
such clause of such Section or definition.
1.4 Other Terms. Except as otherwise specifically provided, each
accounting term used herein shall have the meaning given to it under GAAP,
and all other terms contained in this Agreement (and which are not
otherwise specifically defined herein) shall have the meanings provided in
the UCC to the extent the same are used or defined therein unless the
context otherwise requires. Terms defined in other Sections of this
Agreement shall have the meanings set forth therein.
SECTION 2 AMOUNTS AND TERMS OF OBLIGATIONS
2.1 Revolving Loans.
(a) Prior to the Termination Date and so long as no Default
has occurred and is continuing, Lenders agree, severally and not
jointly, on the terms and conditions set forth in this Agreement to
extend to Borrower revolving credit loans (collectively, the
"Revolving Loans") from time to time in an amount not to exceed in
the aggregate at any one time outstanding the Revolving Loan
Commitment less the face amount of all outstanding Letters of Credit
and Commercial Paper Transactions. Subject to the terms of this
Agreement, Borrower may borrow, repay (in whole or in part) and
reborrow the Revolving Loans prior to the Termination Date. The
Revolving Loans made by Lenders shall be evidenced by the Revolving
Credit Notes.
(b) From the date of the first Revolving Loan and until all
Revolving Loans are paid in full, Borrower shall pay all accrued and
unpaid interest on the Revolving Loans on the first day of each
month. Prior to an Event of Default, interest shall accrue on the
aggregate unpaid principal amount from time to time outstanding under
the Revolving Credit Notes at a rate per annum equal to (i) the
applicable LIBOR Rate on each LIBOR Rate Loan, and (ii) the Prime
Rate on all Revolving Loans which are not LIBOR Rate Loans. Interest
shall be computed and adjusted daily based on the actual number of
days elapsed in a year of 360 days. All outstanding unpaid principal
and accrued interest on the Revolving Loans shall be due and payable
on the Termination Date for Revolving Loans.
(c) Borrower may obtain Revolving Loans by making a request
therefor to Agent, orally or in writing (and upon receipt of such
request, Agent shall promptly communicate such request to the
Lenders). Such request shall specify a Business Day prior to the
Termination Date for Revolving Loans on which such Revolving Loans
are to be made (the "Borrowing Date"), shall be received by Agent by
2:00 p.m. (Milwaukee time) two Business Days before the Borrowing
Date in the case of LIBOR Rate Loans or otherwise by 2:00 p.m.
(Milwaukee time) of the Borrowing Date, and shall specify the amount
of the Revolving Loans requested, whether the Revolving Loans are to
be LIBOR Rate Loans and, if so, the requested Loan Period; provided,
however, that, if Agent shall so request, Agent shall receive from
Borrower a written confirmation in form acceptable to Agent
confirming Borrower's Revolving Loan request within three days after
any oral request for a Revolving Loan, and Lenders' obligations to
make further Revolving Loans hereunder shall be suspended until such
confirmation has been received by Agent. In the event of any
inconsistency between the telephonic notice and the written
confirmation thereof, (if requested by Agent) the telephonic notice
shall control. Borrower shall be obligated to repay all Revolving
Loans notwithstanding the failure of Agent to receive written
confirmation (if requested by Agent), and notwithstanding the fact
that the person requesting the Revolving Loan was not in fact
authorized to do so. No Revolving Loan request shall be modified,
altered or amended without the prior written consent of Agent. Each
Revolving Loan shall be in the principal amount of the lesser of (i)
$100,000 or a multiple thereof or (ii) the Maximum Available
Commitment; provided, however, that Borrower may not request LIBOR
Rate Loans in an amount less than $500,000 (and additional increments
of $100,000) per request. Upon fulfillment of the conditions
specified in Section 4.2, Agent shall promptly deposit the amount of
such Revolving Loan in the general deposit account of Borrower
maintained at Agent.
(d) So long as no Default has occurred and is continuing, a
Revolving Loan which is not a LIBOR Rate Loan may be converted into a
LIBOR Rate Loan of at least $500,000 (and additional increments of
$100,000) by notice from Borrower to Agent meeting the requirements
of, Section 2.1(c). At the end of each respective Loan Period, LIBOR
Rate Loans shall become Revolving Loans which are not LIBOR Rate
Loans unless and until Borrower converts such Loans to LIBOR Rate
Loans.
(e) Borrower may, upon one Business Day's prior written notice
to Agent, permanently reduce the aggregate amount of the Revolving
Loan Commitment, such reduction which shall reduce each Lender's
Maximum Credit ratably; provided that no such reduction shall reduce
the aggregate amount of the Revolving Loan Commitment to an amount
less than the aggregate unpaid principal balance of the Revolving
Credit Notes on the effective date of such reduction. Each reduction
in the Revolving Loan Commitment shall be in a minimum amount of
$1,000,000 or a multiple thereof.
2.2 Letters of Credit. Prior to the Termination Date for Revolving
Loans and so long as no Default has occurred and is continuing, Agent,
for the ratable account of the Lenders, may from time to time, in its sole
and absolute discretion, issue Letters of Credit requested by Borrower.
Borrower shall execute and deliver to Agent standard forms of agreements
used by Agent for irrevocable or standby documentary Letters of Credit
evidencing Borrower's contingent obligation to Lenders. All outstanding
Letters of Credit shall expire not later than the earlier of one year from
the date of issuance or the Termination Date for Revolving Loans. In no
event shall the aggregate face amount of outstanding Letters of Credit
exceed $10,000,000. Drafts drawn upon Letters of Credit shall be treated
as Revolving Loans and shall bear interest at the rate of interest payable
upon the Revolving Loans which are not LIBOR Rate Loans. Agent shall
promptly notify each Lender upon the issuance of a Letter of Credit and if
a draw is made under a Letter of Credit.
2.3 Commercial Paper Transactions. Prior to the Termination Date
for Revolving Loans and so long as no Default has occurred and is
continuing, Firstar, for its own account, may from time to time, in its
sole and absolute discretion, accept requests from Borrower to issue
Borrower's commercial paper through Firstar; provided, however, that (a)
the aggregate face amount of all commercial paper issued through
Firstar outstanding at any time shall not exceed $20,000,000, and (b) no
commercial paper issued through Firstar shall be outstanding on or after
the Termination Date for Revolving Loans. Draws upon Firstar with
respect to commercial paper issued through Firstar hereunder shall be
treated as Revolving Loans and shall bear interest at the rate of interest
payable upon the Revolving Loans which are not LIBOR Rate Loans.
2.4 Interest After Event of Default. After an Event of Default,
each of the Obligations shall bear interest at the rate of 2% per annum in
excess of the applicable rates set forth herein; provided, that in the
case of a LIBOR Rate Loan the maturity of which is accelerated, such LIBOR
Rate Loan shall bear interest for the remainder of the applicable Loan
Period at a rate equal to 2% plus the higher, as of the date of
acceleration, of the rate on the LIBOR Rate Loans or the rate on the
Revolving Loans and Term Loans which are not LIBOR Rate Loans. In no
event shall the interest rate under the Notes exceed the highest rate
permitted by law.
2.5 Loan Account. Agent will enter as a debit to the Loan Account
the aggregate principal amount of each Obligation as disbursed or issued
from time to time by Agent, for the ratable account of Lenders. Agent
shall also record in the Loan Account, in accordance with Agent's
customary accounting practices: accrued interest and all other charges,
expenses and other items properly chargeable to Borrower hereunder or
under the Related Documents; all payments made by Borrower with respect to
the Obligations, if any; and all other appropriate debits and credits.
The debit balance of the Loan Account shall reflect the amount of the
Obligations and other appropriate charges hereunder. Not more frequently
than once each month, Agent shall render a statement of account of the
Loan Account (including a statement of the outstanding principal balance,
Loan Period and applicable LIBOR Rate for each LIBOR Rate Loan), which
statement shall be considered correct and accepted by Borrower and
conclusively binding upon Borrower unless it notifies Agent to the
contrary within 30 days of the mailing of such statement by Agent to
Borrower; provided, however, that the failure of Agent to record any of
the foregoing items in the Loan Account shall not limit or otherwise
affect Borrower's obligation to repay the Obligations.
2.6 Payment on Nonbusiness Days. Whenever any payment to be made
hereunder or under the Related Documents shall be stated to be due on a
day that is not a Business Day, such payment may be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest on the Notes.
2.7 Prepayments.
(a) Optional Prepayments. Borrower may at its option, at any
time with respect to Revolving Loans and Term Loans that are not
LIBOR Rate Loans and upon two days' prior written notice to Agent
with respect to Revolving Loans and Term Loans that are LIBOR Rate
Loans, prepay the Obligations, in whole or in part. Partial
prepayments shall be in the principal amount of $50,000 (and
additional increments of $10,000) or a multiple thereof, together
with accrued interest to the date of prepayment on the amount
prepaid. There shall be no prepayment premium or penalty except as
provided in Section 2.11(b).
(b) Mandatory Prepayment. At any time that the aggregate
principal amount of Revolving Loans outstanding and the face amount
of Letters of Credit and Commercial Paper Transactions outstanding
hereunder exceeds the Revolving Loan Commitment, Borrower shall
immediately pay to the Agent, for the ratable account of Lenders, the
amount of such excess in immediately available funds, together with
interest accrued on the amount of the payment.
2.8 Effect of Regulatory Change. In the event of a Regulatory
Change deemed by Agent in good faith to be material, Borrower shall pay
to Agent, for the ratable account of Lenders (within ten days after
notice by Agent to Borrower of such Regulatory Change) such amounts as
Agent deems reasonably necessary to compensate Lenders for the increase
in the cost of making or maintaining the Obligations or the reduction in
the rate of return to Lenders on the Obligations resulting from the
Regulatory Change. If Agent requests such a payment, Agent shall
provide Borrower with a certificate setting forth the computation of loss,
cost, expense, or premium giving rise to the request for payment. Agent
agrees that it shall only enforce this clause to the extent it enforces
clauses of similar import against other borrowers of similar standing.
2.9 No Obligation to Extend or Forbear. Borrower acknowledges and
agrees that Agent and Lenders (a) upon execution hereof, has no duty or
obligation of any kind to, and have made no representations of any kind
or nature that Lenders will, extend credit or any other kind of financial
accommodations to Borrower after the Termination Date, or forbear at any
time from the exercise of any of its rights or remedies under this
Agreement, the Related Documents and applicable law, and (b) may at any
time, in their sole and absolute discretion, exercise whatever rights and
remedies Agent or Lenders may have under this Agreement, the Related
Documents and applicable law. All Obligations shall be due in full on the
applicable Termination Date without further demand.
2.10 Term Loans.
(a) On the date hereof, Lenders agree, severally and not
jointly, to extend to Borrower term loans (collectively, the "Term
Loans") and such Term Loans shall be subject to all of the terms of this
Agreement. The Term Loans made by the Lenders pursuant hereto shall be
evidenced by each Lender's respective Term Note. Amounts paid or prepaid
on the Term Loans may not be reborrowed.
(b) Borrower shall pay all accrued and unpaid interest on the
Term Loans on the last Business Day of each month. Prior to an Event of
Default, interest shall accrue on the aggregate unpaid principal amount
from time to time outstanding under the Term Notes at a rate per annum
equal to (i) the applicable LIBOR Rate on each LIBOR Rate Loan, and (ii)
the Prime Rate on all Term Loans which are not LIBOR Rate Loans. Interest
shall be computed and adjusted daily based on the actual number of days
elapsed in a year of 360 days. Borrower shall pay principal outstanding
under the Term Notes in sixteen (16) equal quarterly installments of
$400,000, each payable commencing on the last Business Day of March, 1998
and on the last Business Day of each consecutive quarter thereafter and a
final payment of the balance of all unpaid principal and accrued interest
on the Termination Date for the Term Loans.
(c) So long as no Default has occurred and is continuing, a
Term Loan which is not a LIBOR Rate Loan may be converted into a LIBOR
Rate Loan of at least $500,000 (and additional increments of $100,000) by
written notice from Borrower to Agent and received by Agent by 2:00 p.m.
(Milwaukee time) two Business Days before the requested borrowing date
(such date which shall be prior to the Termination Date for Term Loans);
such notice which shall specify the amount of the Term Loans to be
converted and the requested Loan Period. No Term Loan conversion request
shall be modified, altered or amended without the prior written consent of
Agent.
2.11 LIBOR Rate Restrictions.
(a) Agent may require any LIBOR Rate Loans to be repaid prior
to the Termination Date for Revolving Loans and may refuse to make
LIBOR Rate Loans in the event Agent determines that (i) maintenance
of the LIBOR Rate Loans would violate any applicable Requirements of
Law, (ii) the interest rates on LIBOR Rate Loans do not accurately
reflect the cost of making such Loans, or (iii) deposits in the
amount of any LIBOR Rate Loan are not available to a Lender in the
London interbank market.
(b) In the event any Lender shall incur any loss, cost, expense
or premium (including, without limitation, any loss of profit or
loss, cost, expense or premium incurred by reason of the liquidation
or reemployment of deposits or other funds acquired or contracted to
be acquired by any such Lender to fund or maintain LIBOR Rate Loans
or the relending or reinvesting of such deposits or other funds or
amounts paid or prepaid to such Lender), as a result of:
(i) any payment of any LIBOR Rate Loans on a date other
than the last day of the then applicable Loan Period for any
reason, whether before or after Default, and whether or not such
payment is required by any provisions of this Agreement; or
(ii) any failure by Borrower to create, borrow, continue
or effect by conversion any LIBOR Rate Loans on the date
specified in a notice given pursuant to this Agreement;
then upon the demand of such Lender, Borrower shall pay to such
Lender such amount as will reimburse such Lender for such loss, cost,
expense or premium. If a Lender requests such a reimbursement it
shall provide Borrower with a certificate setting forth the
computation of the loss, cost, expense or premium giving rise to the
request for reimbursement in reasonable detail.
2.12 Funding Procedures. Unless Borrower or a Lender, as the
case may be, notifies Agent prior to the date on which it is scheduled to
make payment to Agent, of (i) in the case of a Lender, the proceeds of a
Revolving Loan, Term Loan, draw under a Letter of Credit or Commercial
Paper Transaction as required hereunder or (ii) in the case of Borrower, a
payment of principal, interest, fees or charges to Agent for the account
of each Lender, that it does not intend to make such payment, Agent may
assume that such payment has been made. Agent may, but shall not be
obligated to, make the amount of such payment available to the intended
recipient in reliance upon such assumption. If a Lender or Borrower, as
the case may be, has not in fact made such payment to Agent, the recipient
of such payment shall, on demand by Agent, repay to Agent the amount so
made available by Agent until the date Agent recovers such amount at a
rate per annum equal to (a) in the case of payment by a Lender, the
federal funds rate for each of the first three Business Days after the
date of funding (as determined by Agent) and thereafter at the interest
rate applicable to the relevant Obligation, or (b) in the case of payment
by Borrower, the interest rate applicable to the relevant Obligation. A
statement of Agent submitted to the Company or any Lender with respect to
any amounts owing under this Section 2.12 shall be conclusive, in the
absence of manifest error. The failure of a Lender to make its Pro Rata
share of any Revolving Loan, Term Loan or loan respecting a draw under a
Letter of Credit or Commercial Paper Transaction as required hereunder
shall not relieve each other Lender of its obligation to lend its Pro Rata
share of such Revolving Loan, Term Loan, Letter of Credit or Commercial
Paper Transaction, hereunder, and in no event shall such other Lenders or
Agent be liable in any way whatsoever to Borrower for such failure of the
other Lenders to make any Revolving Loan, Term Loan or loan respecting a
Letter of Credit or Commercial Paper Transaction hereunder.
SECTION 3 REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Agreement and make and
incur the Obligations as herein provided, Borrower hereby represents and
warrants to Lenders as follows (any matter or item identified in any
Schedule to or writing contemporaneously with this Agreement shall be
deemed to have been disclosed for all purposes and all subsections under
this Section 3):
3.1 Organization, Qualification and Subsidiaries. Borrower and each
of its Subsidiaries is a corporation duly organized and validly existing
under the laws of the State of Wisconsin. Borrower has the corporate power
and authority and all necessary licenses, permits and franchises to borrow
hereunder and to own its assets and conduct its business as presently
conducted. Borrower and each of its Subsidiaries is duly licensed or
qualified to do business and is in good standing in all jurisdictions
where it is required to be qualified and where the failure to be so
qualified would have a Material Adverse Effect. All of the issued and
outstanding capital stock of Borrower and each of its Subsidiaries has
been validly issued and is fully paid and non-assessable, except as
provided in Section 180.0622(2)(b) of the Wisconsin Statutes. Except as
set forth on Schedule 3.1, (a) Borrower has no Subsidiaries, and (b)
Borrower does not own, directly or indirectly, more than 1% of the total
outstanding shares of any class of capital stock of any other Person.
3.2 Financial Statements.
(a) Borrower's year-end audited financial statements for its
fiscal years ended December 31, 1995 and December 31, 1994, audited
by McGladrey & Pullen, and the financial statements prepared by
Borrower for the three-month period ended March 31, 1996 are accurate
and complete and were prepared in accordance with GAAP (except that
the interim financial statements are subject to normal year-end audit
adjustments) consistently applied throughout the applicable periods,
and present fairly the financial condition of Borrower as of such
dates and the results of its operations and cash flows for the
periods then ended. The balance sheets and footnotes thereto show
all known liabilities, direct or contingent, of Borrower and its
Subsidiaries as of the respective dates thereof in accordance with
GAAP. There has been no Material Adverse Effect since the date of
the latest of such statements. Borrower's fiscal year begins on
January 1.
(b) The financial forecasts prepared by Borrower for the fiscal
year ending December 31, 1996 and furnished to Lenders by Borrower
are based on information and assumptions that are accurate and
reasonable as of the date hereof.
3.3 Authorization. The making, execution, delivery and performance
of this Agreement and the Related Documents by Borrower have each been
duly authorized by all necessary corporate action. The valid execution,
delivery and performance of this Agreement, the Related Documents and the
transactions contemplated hereby and thereby, are not and will not be
subject to any material approval, consent or authorization of any
Government Authority. This Agreement and the Related Documents are the
valid and binding obligations of Borrower enforceable against Borrower in
accordance with their respective terms.
3.4 Absence of Conflicting Obligations. The making, execution,
delivery and performance of this Agreement and the Related Documents and
compliance with their respective terms do not violate or constitute a
material default, breach or violation under any Requirements of Law or any
material covenant, indenture, deed, lease, contract, agreement, mortgage,
deed of trust, note or instrument to which Borrower is a party or by which
it is bound.
3.5 Taxes. Borrower has filed all federal, state, foreign and
local tax returns which were required to be filed, except those returns
for which the due date has been validly extended. Borrower has paid or
made provisions for the payment of all taxes, assessments, fees and other
governmental charges owed, and no tax deficiencies have been proposed,
threatened or assessed against Borrower which would have a Material
Adverse Effect except as contemporaneously disclosed in writing to
Lenders. The federal income tax liability of Borrower has been finally
determined by the Internal Revenue Service and satisfied for all taxable
years up to and including the taxable year ended December 31, 1993 and
there is no pending or, to the best of Borrower's knowledge, threatened
tax controversy or dispute as of the date hereof which would have a
Material Adverse Effect except as disclosed in Schedule 3.5.
3.6 Absence of Litigation. Except as contemporaneously disclosed
in writing to Lenders, there is no pending or, to the knowledge of
Borrower, threatened litigation or administrative proceeding at law or in
equity which would, if adversely determined, result in a Material Adverse
Effect. To the best of Borrower's knowledge there is no threatened
litigation or administrative proceeding likely to have Material Adverse
Effect.
3.7 Accuracy of Information. All information, certificates or
statements given by Borrower to Lenders under this Agreement and the
Related Documents were accurate, true and complete in all material
respects when given, continue to be accurate, true and complete as of the
date hereof, and do not contain any untrue statement or omission of a
material fact necessary to make the statements herein or therein not
misleading. There is no fact known to Borrower which is not set forth in
this Agreement, the Related Documents or other documents, certificates or
statements furnished to Lenders by or on behalf of Borrower in connection
with the transactions contemplated hereby and which will cause a Material
Adverse Effect.
3.8 Ownership of Property. Borrower has good and marketable title
to all of its Property, including without limitation the Property
reflected in the balance sheets referred to in Section 3.2. There are no
Liens of any nature on any of Borrower's Property except Permitted Liens.
All Property useful or necessary in Borrower's business, whether leased or
owned, is in good condition, repair (ordinary wear and tear excepted) and
working order and, to the best of Borrower's knowledge conforms to all
applicable Requirements of Law. Borrower owns (or is licensed to use) and
possesses all such material patents, trademarks, trade names, service
marks, copyrights and rights with respect to the foregoing as are
reasonably necessary for the conduct of the business of Borrower as now
conducted and proposed to be conducted without, individually or in the
aggregate, any material infringement upon rights of other Persons.
3.9 Federal Reserve Regulations. Borrower will not, directly or
indirectly use any proceeds of the Obligations to: (a) purchase or carry
any "margin stock" within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System (12 C.F.R. 221, as amended); (b)
extend credit to other Persons for any such purpose or refund indebtedness
originally incurred for any such purpose; or (c) otherwise take or permit
any action which would involve a violation of Section 7 of the Securities
Exchange Act of 1934, as amended, or any regulation of the Board of
Governors of the Federal Reserve System.
3.10 ERISA. Borrower and anyone under common control with Borrower
under Section 4001(b) of ERISA is in compliance in all material respects
with the applicable provisions of ERISA and: (a) no "prohibited
transaction" as defined in Section 406 of ERISA or Section 4975 of the
Code has occurred; (b) no "reportable event" as defined in Section 4043 of
ERISA has occurred; (c) no "accumulated funding deficiency" as defined in
Section 302 of ERISA (whether or not waived) has occurred; (d) there are
no unfunded vested liabilities of any Employee Plan administered by
Borrower or its Subsidiaries; and (e) Borrower and its Subsidiaries or the
plan sponsor has timely filed all returns and reports required to be filed
for each Employee Plan.
3.11 Investment Company Act. Borrower is not (a) an "investment
company" or a company "controlled by an investment company" within the
meaning of the Investment Borrower Act of 1940, as amended, or (b) a
"holding company" or a "subsidiary" of a "holding company" or an
"affiliate of a "holding company" or a "subsidiary" of a "holding
company" within the meaning of the Public Utility Holding Borrower Act of
1935, as amended.
3.12 Foreign Assets Control Regulations. None of the transactions
contemplated by this Agreement will result in a violation of any of the
foreign assets control regulations of the United States Treasury
Department, 31 C.F.R., Subtitle B, Chapter V, as amended, or any ruling
issued thereunder or any enabling legislation or Presidential Executive
Order granting authority therefor, nor will the proceeds of the Loans be
used by Borrower in a manner that would violate any of the foregoing.
3.13 No Defaults. Neither Borrower nor any Subsidiary is in default
under or in violation of (a) any Requirements of Law, (b) any covenant,
indenture, deed, lease, agreement, mortgage, deed of trust, note or other
instrument to which Borrower or any Subsidiary is a party or by which
Borrower or any Subsidiary is bound, or to which any Property of either
Borrower or any Subsidiary is subject, or (c) any Indebtedness; or if any
default or violation under Sections 3.13(a), (b) or (c) exists, it is an
immaterial default or violation and the failure to cure such default or
violation would not result in a Material Adverse Effect.
3.14 Environmental Laws. Except as contemporaneously disclosed in
writing to Lenders on the date hereof, the business of Borrower and each
of its Subsidiaries has been operated in full compliance with all
Environmental Laws and neither Borrower nor any Subsidiary is subject to
any Environmental Liability relating to the conduct of its business or the
ownership of its Property that would result in a Material Adverse Effect
and no facts or circumstances exist which could give rise to such
Environmental Liabilities that would result in a Material Adverse Effect .
No notice has been served on Borrower or any Subsidiary claiming any
violation of Environmental Laws, asserting Environmental Liability or
demanding payment or contribution for Environmental Liability or violation
of Environmental Laws.
3.15 Labor Matters. There are no labor disputes between Borrower or
any Subsidiary and any of its employees which individually or in the
aggregate, if resolved in a manner adverse to Borrower or a Subsidiary,
would result in a Material Adverse Effect.
SECTION 4 CONDITIONS PRECEDENT TO OBLIGATIONS
4.1 Initial Obligations. In addition to the terms and conditions
otherwise contained herein, the obligation of Lenders to make or incur
any Revolving Loans, Term Loans, or to incur obligations for Letters of
Credit or Commercial Paper Transactions is conditioned on Lenders' each
receiving, and Borrower covenants and agrees to deliver, prior to or on
the date of Lenders' first extension of credit, each of the following
items in form, detail and content satisfactory to Lenders:
(a) the executed Revolving Credit Notes;
(b) the executed Term Notes;
(c) a certificate of the secretary or an assistant secretary of
Borrower certifying (i) an attached complete and correct copy of its
bylaws; (ii) an attached complete and correct copy of resolutions
duly adopted by its board of directors which have not been amended
since their adoption and remain in full force and effect, authorizing
the execution, delivery and performance of this Agreement and the
Related Documents to which it is a party; (iii) that its articles of
incorporation have not been amended since the date of the last date
of amendment thereto indicated on the certificate of the secretary of
state; and (iv) as to the incumbency and specimen signature of each
officer executing this Agreement and all other Related Documents to
which it is a party, and including a certification by another officer
as to the incumbency and signature of the secretary or assistant
secretary executing the certificate;
(d) the opinion of counsel for Borrower in form and content
satisfactory to Agent;
(e) certificates of status for Borrower and certified copies of
the Articles of Incorporation for Borrower, all issued by the Office
of the Secretary of State of incorporation within 30 days of the date
hereof;
(f) evidence that there are no Liens of record on the Property
of Borrower other than Permitted Liens (including UCC information
searches in the names of Borrower of the filing records in the
offices of the Wisconsin Secretary of State and the LaCrosse County,
Register of Deeds);
(g) the facility fee under Section 5.8(a); and
(h) such additional supporting documents and materials as
Lenders may request.
4.2 Subsequent Obligations. In addition to the terms and
conditions otherwise contained herein, the obligation of Lenders to make
or incur subsequent Revolving Loans or to incur subsequent obligations for
Letters of Credit or Commercial Paper Transactions is subject to the
satisfaction, on the date of making or incurring each such Obligation, of
the following conditions:
(a) All of the representations, warranties and acknowledgments
of Borrower contained in this Agreement and the Related Documents
shall be true and accurate in all material respects as if made on
such date, and each request by Borrower for credit shall constitute
an affirmation by Borrower that such representations, warranties and
acknowledgements are then true and accurate in all material respects;
(b) There shall not exist on such date any Default and no
Default shall occur as the result of the making or incurring of such
Obligation;
(c) The amount of any Revolving Loan requested or the face
amount of any Letter of Credit or Commercial Paper Transaction
requested shall not exceed the Maximum Available Commitment;
(d) If requested by Agent, Agent shall have received executed
loan requests for all Revolving Loans previously requested by
Borrower and the matters certified therein and herein shall have been
true, correct and complete on the date thereof and shall continue to
be true and correct on the date of the requested Revolving Loans,
Letters of Credit, or Commercial Paper Transactions; and
(e) Each of the Related Documents shall remain in full force
and effect.
SECTION 5 AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, from and after the date of
this Agreement and until the Termination Date and the entire amount of
all Obligations to Lenders are paid in full, it shall (and it shall cause
its Subsidiaries to):
5.1 Corporate Existence; Compliance With Laws; Maintenance of
Business; Taxes. (a) Except to the extent permitted by Section 6.1(c),
maintain its corporate existence, all material, licenses, permits, rights
and franchises; (b) comply in all material respects with all Requirements
of Law; (c) conduct its business substantially as now conducted; (d) pay
before the same become delinquent and before penalties accrue thereon, all
taxes, assessments and other government charges against it and its
Property, and all other liabilities except to the extent and so long as
the same are being contested in good faith by appropriate proceedings,
with adequate reserves having been provided.
5.2 Maintenance of Property; Insurance.
(a) Keep all Property useful and necessary in its business,
whether leased or owned, in good condition, repair and working order
(ordinary wear and tear excepted) and from time to time make or cause
to be made all needed and proper repairs, renewals, replacements,
additions and improvements so that the business carried on in
connection therewith may be properly and advantageously conducted at
all times.
(b) Maintain with good, reputable and financially sound
insurance underwriters insurance of such nature and in such amounts
as is customarily maintained by companies engaged in the same or
similar business and such other insurance as may be required by law
or as may be reasonably required in writing by Agent. Borrower
shall furnish copies of all such insurance policies or a certificate
evidencing that Borrower has complied with the requirements of this
paragraph at the request of Agent and shall provide such other
evidence of insurance as may be reasonably requested by Agent.
Within 90 days after the end of each fiscal year, Borrower shall
deliver to Agent a schedule showing all insurance policies in force
as of the end of such year, signed by an authorized officer of
Borrower.
5.3 Financial Statements. Maintain a standard and modern system of
accounting in accordance with sound accounting practice, and furnish to
Lenders such information respecting the business, assets and financial
condition of Borrower and its Subsidiaries as any Lender may reasonably
request and, without request furnish to Lenders, or, in the case of
Subsidiaries, cause its Subsidiaries to furnish to Lenders:
(a) as soon as available, and in any event within 45 days
after the end of each of the first three quarters of Borrower's
fiscal year, the Company's Form 10-Q (prepared on a consolidated
basis) as of the end of each such quarter and a comparison of actual
cash flow, income and capital expenditures with amounts budgeted for
such period, all in reasonable detail and certified as true, correct
and complete, subject to review and normal year-end adjustments, by
the chief financial officer of Borrower;
(b) as soon as available, and in any event within 90 days
after the close of each fiscal year, a copy of the Company's Form
10-K (prepared on a consolidated and consolidating basis, provided
that if the Form 10-K is not prepared on a consolidating basis, the
Borrower shall furnish to each Lender, together with the Form 10-K,
all financial information contained in the Form 10-K on a
consolidating basis), which Form 10-K shall be accompanied by (i) the
unqualified opinion of independent certified public accountants of
recognized standing selected by the Borrower and acceptable to the
Agent to the effect that the statements present fairly, in all
material respects, the financial position of Borrower as of the end
of such year and the results of its operations and its cash flows for
the year then ended in conformity with GAAP; (ii) a letter of such
accountants stating that their review of the financial covenants
disclosed no Default or that their review disclosed a Default and
specifying the same and the action taken or proposed to be taken
with respect thereto; and (iii) any supplementary comments and
reports submitted by such accountants to Borrower including the
management letter, if any;
(c) as soon as available, and in any event within 45 days
after the close of each fiscal year, a budget of income and expenses
prepared by Borrower for the current fiscal year, based on
information and assumptions that are accurate and reasonable as of
the date hereof;
(d) together with the financial statements described in Section
5.3(a) and (b), the certificate of the president or chief financial
officer of Borrower to the effect that (i) a review of the activities
of Borrower during such period has been made under his supervision to
determine whether Borrower has observed, performed and fulfilled the
covenants set forth in Sections 6.8, 6.9, 6.10 and 6.11, and (ii) no
Default has occurred with respect to said covenants (or if such
Default has occurred, specifying the nature thereof and the period of
existence thereof and the steps, if any, being undertaken to correct
the same); and
(e) promptly upon learning of the occurrence of any of the
following, written notice thereof, describing the same and the steps
being taken with respect thereto: (i) the occurrence of any Default
or Event of Default, (ii) the institution of, or any materially
adverse determination or development in, any litigation, arbitration
proceeding or governmental proceeding involving claims against, or
potential liability of, Borrower in excess of $250,000, (iii) the
occurrence of a "reportable event" under, or the institution of steps
by Borrower to withdraw from, or the institution of any steps to
terminate, any Employee Plan as to which Borrower may have liability,
(iv) the commencement of any dispute which might lead to the
modification, transfer, revocation, suspension or termination of this
Agreement or any Related Document, or (v) any event which would have
a Material Adverse Effect.
All financial statements referred to herein shall be complete and correct
in all material respects and shall be prepared in reasonable detail and
on a consolidated and consolidating basis in accordance with GAAP, applied
consistently throughout all accounting periods.
5.4 Inspection of Property and Records. At any reasonable time
following reasonable notice, as often as may be reasonably desired and so
long as an Event of Default has occurred and is continuing, at Borrower's
expense, permit representatives of each Lender to visit its Property,
examine its books and records and discuss its affairs, finances and
accounts with its officers and independent certified public accountants
(who shall be instructed by Borrower to make available to Lenders or their
agents the work papers of such accountants) and Borrower shall facilitate
such inspection and examination.
5.5 Use of Proceeds. Use the entire proceeds of the Obligations as
follows: (a) the Revolving Loans shall be used for general corporate
purposes of Borrower and its Subsidiaries only, provided that $20,000,000
of the Revolving Loans may be used for Commercial Paper Transactions and
$10,000,000 of the Revolving Loans may be used for Letters of Credit, and
(b) the Term Loans shall be used to finance the Rainfair Transaction and
the Red Ball Transaction.
5.6 Comply With, Pay and Discharge All Notes, Mortgages Deeds of
Trust and Leases. Comply with, pay and discharge all existing notes,
mortgages, deeds of trust, leases, indentures and any other contractual
arrangements to which Borrower is a party (including, without limitation,
all Indebtedness) in accordance with the respective terms of such
instruments so as to prevent any default thereunder unless Borrower, is
contesting such default in good faith, and adequate reserves have been
provided therefor.
5.7 Environmental Compliance.
(a) Maintain at all times all material permits, licenses and
other authorizations required under Environmental Laws, and comply in
all material respects with all material terms and conditions of the
required material permits, licenses and authorizations and all other
limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in the
Environmental Laws and provide Lenders at such times as Lenders shall
request completed environmental questionnaires or such other
information regarding environmental matters that Agent shall
reasonably request.
(b) Notify Agent promptly upon obtaining knowledge that (i)
any property previously or presently owned or operated is the subject
of any environmental investigation by any Government Authority having
jurisdiction over the enforcement of Environmental Laws, (ii)
Borrower has been or may be named as a responsible party subject to
Environmental Liability, or (iii) Borrower obtains knowledge of any
Hazardous Substance located on any Property except in compliance with
all Requirements of Law.
5.8 Fees and Costs.
(a) Pay Agent, for the ratable account of Lenders, on the date
hereof, an origination fee for the Term Loans in the amount of
$15,625. Pay Agent, for the ratable account of Lenders, a facility
fee in consideration for the Revolving Loan Commitment made hereunder
in an amount equal to $50,000 per year, payable on the date hereof
and on the first and second anniversary of said date, all such
amounts which shall be deemed earned upon payment thereof.
(b) Pay Agent for, its own account, all additional costs
including, without limitation, wire transfer or other charges
pertaining to the transfer of funds and other operating charges
pertaining to bank services.
(c) Pay to Agent, for its own account, its standard
administrative fees for Letters of Credit, and pay Agent, for the
account of each of the Lenders, each such Lender's standard issuance
fees for Letters of Credit, all such fees which may be adjusted from
time to time in Agent's and Lenders', as the case may be, sole and
absolute discretion.
(d) Pay immediately upon receipt of an invoice the reasonable
fees and expenses incurred by the Agent in connection with any
inspection pursuant to Section 5.4, including, without limitation,
travel and administration expenses incurred by representatives of
Agent.
(e) Pay immediately upon receipt of an invoice all reasonable
fees and expenses incurred by Agent for, its own account, with
respect to this Agreement, the Related Documents and the Obligations,
and any amendments thereof and supplements thereto, including,
without limitation, the reasonable fees of in-house and outside
counsel in connection with the preparation and negotiation of this
Agreement and the Related Documents (which shall not exceed $6,000
plus disbursements with respect to such negotiation and preparation),
and all amendments thereto, and any waivers of the terms and
provisions thereof and the consummation of the transactions
contemplated herein.
(f) Pay immediately upon receipt of an invoice all reasonable
fees and expenses incurred by Agent and each Lender with respect to
protection or enforcement of each Lender's rights under this
Agreement and the Related Documents and with respect to the
Obligations and all costs and expenses which may be incurred by each
Lender with respect to a Default as provided in Section 7.2(d).
5.9 Indemnity. Indemnify Agent and each Lender and their
respective employees, officers, directors, shareholders, agents,
attorneys, successors and assigns against any and all losses, claims,
damages, liabilities, obligations, penalties, actions, judgments, suits,
costs and expenses of any kind or nature whatsoever, including without
limitation reasonable attorneys' fees and expenses, incurred by them
arising out of, in any way connected with, or as a result of any violation
of Environmental Laws by Borrower or any of its Property as well as any
cost or expense incurred in remedying such condition. The foregoing
indemnity shall survive the Termination Date, the consummation of the
transactions contemplated by this Agreement, the repayment of the
Obligations and the invalidity or unenforceability of any term or
provision of this Agreement or of the Related Documents and shall remain
in effect regardless of any investigation made by or on behalf of a Lender
or Borrower and the content or accuracy of any representation or warranty
made under this Agreement.
SECTION 6 NEGATIVE COVENANTS
Borrower covenants and agrees that, from and after the date of this
Agreement and until the Termination Date for the Revolving Loans and the
Term Loans and until all Obligations to Lenders are paid in full, neither
Borrower nor any Subsidiary shall directly or indirectly:
6.1 Sale of Assets, Consolidation, Merger, Etc. (a) In any fiscal
year of Borrower, sell, lease, transfer or otherwise dispose of Property,
whether in one or in a series of transactions, having an aggregate value
(at the greater of book or fair market value) in excess of 10% of
Consolidated Tangible Assets as of the end of Borrower's fiscal year
preceding such disposition, except for sales of inventory in the ordinary
course of business and for transactions in which all or substantially all
of Borrower's proceeds are used to replace assets similar to those
transferred; (b) directly or indirectly, sell or transfer any Property,
real or personal, used or useful in its business, and thereafter lease
such property or other property which it intends to use for substantially
the same purposes; or (c) consolidate or merge with or into any other
Person except for a merger or consolidation of a Subsidiary with another
Subsidiary or a Subsidiary with Borrower in which Borrower is the
surviving entity.
6.2 Indebtedness. Issue, create, incur, assume or otherwise become
liable with respect to (or agree to issue, create, incur, assume or
otherwise become liable with respect to), or permit to remain outstanding,
any Indebtedness except: (a) the Obligations; (b) Indebtedness disclosed
on Borrower's most recent financial statements described in Section
3.2(a), provided that such Indebtedness shall not be renewed, extended or
increased; (c) Indebtedness which has been subordinated to Lenders in form
and substance satisfactory to Lenders; (d) Indebtedness between Borrower
and any wholly-owned Subsidiary of Borrower; (e) trade payables, accruals
or other similar liabilities, other than for money borrowed, incurred or
arising in the ordinary course of business; and (f) Indebtedness to the
extent secured by Permitted Liens.
6.3 Liens. Create or permit to be created or allow to exist any
Lien upon or interest in any Property except Permitted Liens. For
purposes herein, Permitted Liens shall mean: (a) Liens for taxes,
assessments, or governmental charges, carriers', warehousemen's,
repairmen's, mechanics', materialmen's and other like Liens, which are
either not delinquent or are being contested in good faith by appropriate
proceedings which will prevent foreclosure of such Liens, and against
which adequate cash reserves have been provided; (b) easements,
restrictions, minor title irregularities and similar matters which have no
material adverse effect upon the ownership and use of the affected
Property; (c) Liens or deposits in connection with worker's compensation,
unemployment insurance, social security or other insurance or to secure
customs duties, public or statutory obligations in lieu of surety, stay or
appeal bonds, or to secure performance of contracts or bids, other than
contracts for the payment of money borrowed, or deposits required by law
as a condition to the transaction of business or other Liens or deposits
of a like nature made in the ordinary course of business; (d) Liens
securing Indebtedness described in Section 6.2(c), provided that the
aggregate Indebtedness secured thereby shall not exceed 5% of Consolidated
Tangible Assets; and (e) Liens evidenced by conditional sales, purchase
money mortgages or other title retention agreements on machinery or
equipment (acquired in the ordinary course of business and otherwise
permitted to be acquired hereunder) which are created at the time of the
acquisition of such property solely for the purposes of securing the
Indebtedness incurred to finance the cost of such property, provided no
such Lien shall extend to any property other than the property so acquired
and identifiable proceeds and provided that the Indebtedness secured
thereby shall not exceed 5% of Consolidated Tangible Assets.
6.4 Guaranty. Guaranty or otherwise in any way become or be
responsible for obligations of any other Person in excess of $200,000 for
any one Person or $400,000 in the aggregate at any time outstanding,
whether by an agreement to purchase the indebtedness of any other Person,
or agreement for the furnishing of funds to any other Person through the
purchase of goods, supplies or services (or by way of stock purchase,
capital contribution advanced or loaned) for the purpose of paying or
discharging the Indebtedness of any Person, or otherwise, except for the
endorsement of negotiable instruments by Borrower for deposit or
collection or similar transactions in the ordinary course of business.
6.5 Loans, Investments. Make or commit to make advances, loans,
extensions of credit or capital contributions to, or purchases of any
stock, bonds, notes, debentures or other securities of, or make any other
investment in, any Person except: (a) to the extent the making of any such
loan or investment by Borrower would not cause Borrower to violate Section
6.8; (b) accounts, chattel paper, and notes receivable created by Borrower
in the ordinary course of business; (c) advances in the ordinary course of
business to suppliers, employees and officers of Borrower consistent with
past practices in an aggregate amount at any time outstanding of not more
than $200,000 to any one individual or $400,000 in the aggregate; (d)
investments in bank certificates of deposit (but only with banks having a
recognized Thompson's BankWatch rating of BC or better), open market
commercial paper maturing within one year having the highest rating of
either Standard & Poors Corporation or Moody's Investors Services, Inc.,
U.S. Treasury Bills subject to repurchase agreements and short-term
obligations issued or guaranteed by the U.S. Government or any agency
thereof, and non-rated commercial paper issued
by or through Lender; (e) investments in open-end diversified
investment companies of recognized financial standing
investing solely in short-term money market instruments consisting of
securities issued or guaranteed by the United States government, its
agencies or instrumentalities, or municipalities, time deposits and
certificates of deposit issued by domestic banks or London branches of
domestic banks, bankers acceptances, repurchase agreements, high grade
commercial paper and the like; (f) Eurodollar certificates of deposit in a
financial institution of recognized standing with a rating by Thompson's
BankWatch of BC or better; (g) stock or other securities of a Subsidiary
or of a corporation which is or, immediately after such investment, will
be a Subsidiary; (h) loans or advances to Subsidiaries constituting
general obligations of such Subsidiaries, provided such obligations shall
not be subordinated to any other obligations or such Subsidiaries; and (i)
purchases of or investments in bonds or other obligations issued by a
municipality. Nothing in this Section 6.5 shall be deemed to prohibit
Borrower from owning assets used in the ordinary course of its business,
including without limitation current assets arising in the ordinary course
of its business.
6.6 Compliance with ERISA. (a) Terminate any Employee Plan so as
to result in any material liability to PBGC; (b) engage in any "prohibited
transaction" (as defined in Section 4975 of the Code) involving any
Employee Plan which would result in a material liability for an excise tax
or civil penalty in connection therewith; or (c) incur or suffer to exist
any material "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, involving any condition, which presents
a risk of incurring a material liability to PBGC by reason of termination
of any such Employee Plan.
6.7 Affiliates. Permit any transaction with any Affiliate, except
on terms not less favorable to Borrower than would be usual and customary
in similar transactions with Persons who are not Affiliates.
6.8 Consolidated Tangible Net Worth. Permit the sum of Consolidated
Tangible Net Worth plus the goodwill resulting from the Red Ball
Transaction and the Rainfair Transaction at any time to be less than the
sum of (a) $34,000,000 plus, on a cumulative basis (b) 50% of Borrower's
Consolidated Net Income (only if positive) for each fiscal year ending
December 31, 1996 and thereafter.
6.9 Leverage Ratio. Permit Borrower's Leverage Ratio to be greater
than: (a) 1.5 to 1 as of the end of any fiscal year; and (b) 2.5 to 1 at
any other time during the 1996 and 1997 fiscal years and 2.25 to 1 at any
other time during each fiscal year thereafter.
6.10 Current Ratio. Permit the ratio of Current Assets to Current
Liabilities to be less than 1.4 to 1 at any time.
6.11 Interest Coverage Ratio. Permit the ratio of Net Income plus
interest expense and depreciation expense to the interest on the
Obligations to be less than 1.50 to 1, for any fiscal quarter, calculated
on a four-quarter rolling basis .
SECTION 7 EVENTS OF DEFAULT; RIGHTS AND REMEDIES
7.1 Events of Default Defined. The occurrence of any one or more of
the following shall constitute an "Event of Default":
(a) Borrower shall (i) fail to make any payment of interest on
the Notes when due, which failure shall remain uncured for a period
of five days, or (ii) fail to pay any principal on the Notes or any
other Indebtedness to any of the Lenders when and as the same shall
become due and payable, whether upon demand, at maturity, by
acceleration or otherwise;
(b) Borrower shall fail to observe or perform any of the
covenants, agreements or conditions contained in Sections 2.7(b),
5.1(a), 5.1(d), 6.1, 6.2, 6.3, 6.4, 6.8, 6.9, 6.10 and 6.11;
(c) Borrower shall fail to observe or perform any of the other
covenants, agreements or conditions contained in this Agreement or
the Related Documents and such failure shall continue for thirty days
after written notice to the Company;
(d) any representation or warranty made by Borrower herein or
in any Related Document, or in any certificate, document or
financial statement delivered to Agent or Lenders pursuant hereto or
thereto shall prove to have been incorrect in any material respect as
of the time when made or given;
(e) a final judgment (or judgments) shall be entered against
Borrower which singularly or when added to any other outstanding
final judgment (or judgments) against Borrower exceeds the aggregate
amount of $250,000, and such judgment (or judgments) shall remain
outstanding and unsatisfied, unbonded or unstayed after thirty days
from the date of entry thereof;
(f) Borrower or any of its Material Subsidiaries shall become
insolvent or take or fail to take any action which constitutes an
admission of inability to pay its debts as they mature, make an
assignment for the benefit of creditors, file a petition in
bankruptcy, petition or apply to any tribunal for the appointment of
a custodian, receiver or any trustee for it or a substantial part of
its respective assets, or shall commence any proceeding under any
bankruptcy, reorganization, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction,
whether now or hereafter in effect;
(g) there shall be filed against Borrower or any of its
Material Subsidiaries a petition in bankruptcy, a petition for
appointment of a custodian, receiver or any trustee for it or a
substantial part of its respective assets in which an order for
relief is entered or which remains undismissed for a period of thirty
days or more; or Borrower, any of its Material Subsidiaries or by any
act or omission shall indicate its consent to, approval of or
acquiescence in any such petition, application or proceeding or order
for relief or the appointment of a custodian, receiver or any trustee
for it or any substantial part of any of its properties, or shall
suffer any such custodianship, receivership or trusteeship to
continue undischarged for a period of ninety days or more;
(h) Borroweror any of its Material Subsidiaries, shall default
(as principal or guarantor or otherwise) either in the payment of the
principal of or interest on any of its Indebtedness for borrowed
money (other than that owed to Lenders) aggregating $200,000 or
more, or shall default with respect to any of the provisions of any
evidence of such Indebtedness or any agreement under which such
evidence of Indebtedness may have been issued, and such default shall
continue for more than any period of grace specified in such
instrument, unless Borrower or the Material Subsidiary as the case
may be, is contesting such default in good faith and Agent agrees,
in its sole discretion, that Borrower or the Material Subsidiary as
the case may be, is so contesting such default;
(i) any Government Authority having jurisdiction over the
enforcement of Environmental Laws or any geotechnical engineer or
environmental consultant hired by Borrower shall determine that the
potential uninsured liability of Borrower for damages caused by the
discharge of any Hazardous Substance, including liability for real
property damage or remedial action related thereto or liability for
personal injury claims, exceeds $250,000 and Borrower is unable to
provide for such liability in a manner reasonably acceptable to
Agent;
(j) this Agreement or any of the Related Documents shall at any
time cease to be in full force and effect, or Borrower shall contest
or deny any liability or obligation under, or attempt to revoke or
terminate, this Agreement or any Related Document; and
(k) any event of default occurs under that certain Note
Purchase Agreement dated as of June 18, 1990 between LaCrosse
Footwear, Inc. (n/k/a LaCrosse Products, Inc.) and Teacher's
Insurance and Annuity Association of America, as amended.
7.2 Remedies Upon Event of Default.
(a) Upon the occurrence of an Event of Default specified in
clauses (f) or (g) of Section 7.1, then, without presentment, notice,
demand or action of any kind by Agent or Lenders, all of which are
hereby waived: (i) the Revolving Loan Commitment and the obligations
of Lenders to make or incur any Obligations shall automatically and
immediately terminate; and (ii) the entire amount of unpaid principal
of and accrued and unpaid interest on the Notes, the face amount of
all outstanding Letters of Credit, the face amount of all outstanding
Commercial Paper Transactions, and all other Obligations shall become
automatically accelerated and immediately due and payable.
(b) Upon the occurrence of an Event of Default specified in
clauses (a), (b), (c), (d), (e), (h), (i), (j) or (k) of Section 7.1,
Agent may, without presentment, notice, demand or action of any kind,
all of which are hereby waived: (i) immediately terminate the
Revolving Loan Commitment and Lenders' obligations to make or incur
any Obligations, and the same shall immediately terminate; and (ii)
declare the entire amount of the unpaid principal of and accrued and
unpaid interest on the Notes, the face amount of all outstanding
Letters of Credit, the face amount of all outstanding Commercial
Paper Transactions, and all other Obligations immediately
accelerated, due and payable.
(c) If Letters of Credit or Commercial Paper Transactions are
outstanding upon acceleration under Section 7.2(a) or 7.2(b),
Borrower shall immediately deposit with Agent an amount equal to the
undrawn face amount of all outstanding Letters of Credit and the
undrawn face amount of all Commercial Paper Transactions to pay all
amounts which may thereafter be drawn under the Letters of Credit and
Commercial Paper Transactions.
(d) In addition to the foregoing remedies upon the occurrence
of an Event of Default and termination of the Revolving Loan
Commitment, Lenders shall have all of the rights and remedies
provided to Lenders by the Related Documents, at law or in equity,
and no remedy herein conferred upon Lenders is intended to be
exclusive of any other remedy and each and every such remedy shall be
cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by
statute or otherwise. In the event of any Default or Event of
Default, Borrower shall pay all costs and expenses which may be
incurred by Agent or Lenders with respect thereto, including
reasonable attorneys' fees, and all such sums shall be and become a
part of the Indebtedness of Borrower to Lenders. In addition to
and not in lieu of any other right or remedy Lenders might have,
Agent and Lenders at any time and from time to time at their
election may (but shall not be required to) do or perform or comply
with or cause to be done or performed or complied with anything which
Borrower may be required to do or comply with and Borrower shall
reimburse Agent or Lenders upon demand for any cost or expense which
Agent or Lenders may incur in such respect, together with interest
thereon at the rate equal to the rate payable on the Term Loans
following an Event of Default from the date of such demand until
paid. No failure or delay on the part of Lenders in exercising any
right or remedy hereunder shall operate as a waiver thereof nor shall
any single or partial exercise of any right hereunder preclude other
or further exercise thereof or the exercise of any other right or
remedy.
SECTION 8 MISCELLANEOUS
8.1 Assignability; Successors. Borrower's rights and liabilities
under this Agreement are not assignable in whole or in part without the
prior written consent of Agent. The provisions of this Agreement shall
inure to the benefit of and be binding upon the successors and assigns of
the parties hereto.
8.2 Survival. All agreements and representations and warranties
made herein and in the Related Documents shall survive the execution and
delivery of this Agreement and the Related Documents and the making of the
Obligations.
8.3 Governing Law. This Agreement and the Related Documents shall
be governed by the laws of the State of Wisconsin.
8.4 Counterparts; Headings. This Agreement may be executed in
several counterparts, each of which shall be deemed an original, but such
counterparts shall together constitute but one and the same agreement.
The section headings in this Agreement are inserted for convenience of
reference only and shall not constitute a part hereof.
8.5 Entire Agreement. This Agreement, the Exhibits and Schedules
attached hereto, and the Related Documents contain the entire
understanding of the parties with respect to the subject matter hereof,
and supersede all other understandings, oral or written, with respect to
the subject matter hereof. No statement or writing subsequent to the date
hereof purporting to modify, alter or amend any portion hereof, including
Borrower's obligation to pay the amount due hereunder (whether at
maturity, by reason of acceleration or otherwise), shall be effective
unless consented to in a writing, which makes specific reference to this
Agreement, and which has been signed by the party against which
enforcement thereof is sought. Any amendment, modification, waiver or
consent shall be effective only in the specific instance and for the
specific purpose for which given.
8.6 No Waiver. Any action or inaction by Agent or Lenders, taken
in the absence of the satisfaction of any condition imposed upon Borrower
by this Agreement or the Related Documents, including those imposed by
Section 4.1 of this Agreement, shall not be deemed to constitute a waiver
of any such condition by Agent or Lenders.
8.7 Notices. All communications or notices required or permitted
by this Agreement shall be in writing and shall be deemed to have been
given or made when delivered in hand, deposited in the mail, or sent by
facsimile. Communications or notices shall be delivered personally or by
certified or registered mail, postage prepaid, or by facsimile and
addressed as follows, unless and until either of such parties notifies the
other in accordance with this section of a change of address:
if to the Borrower: LaCrosse Footwear, Inc.
1319 St. Andrew Street
La Crosse, WI 54603
Attn: Mr. Patrick K. Gantert
President
FAX (608) 782-3025
with a copy to: Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, WI 53202
Attn: Mr. Luke E. Sims
FAX (414) 297-4900
if to Firstar or Agent: Firstar Bank Milwaukee, N.A.
777 East Wisconsin Avenue
Milwaukee, WI 53202
Attn: Mr. Randy D. Olver
Vice President
FAX (414) 765-5062
if to Northern: The Northern Trust Company
50 South LaSalle Street
Chicago, IL 60675
Attn: Mr. Daniel R. Hintzen
Vice President
FAX (312) 444-7028
if to Harris: Harris Trust and Savings Bank
111 West Monroe Street
Chicago, IL 60603
Attn: Mr. Andrew K. Peterson
Vice President
FAX (312) 461-2591
with copies to: Michael, Best & Friedrich
100 East Wisconsin, Suite 3300
Milwaukee, WI 53202-4108
Attn: Mr. Jonathan D. Kron
FAX (414) 277-0656
8.8 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
8.9 Further Assurances. Borrower agrees to do such further acts and
things, and to execute and deliver such additional conveyances,
assignments, agreements and instruments, as Agent may at any time
request in connection with the administration or enforcement of this
Agreement or the Related Documents or in order better to assure and
confirm unto Lenders their rights, powers and remedies hereunder.
8.10 Conflicts and Ambiguities. In the event of any ambiguity or
conflict as between the terms of this Agreement, the Related Documents or
any other document executed and delivered pursuant to this Agreement, the
terms of this Agreement shall control.
8.11 Setoff. As additional security for payment of Borrower's
obligations hereunder, Borrower grants to Agent, for the benefit of
Lenders a security interest in and lien on any credit balance or other
money now or hereafter owed it by each Lender. In addition, Borrower
agrees that Agent or each Lender may, at any time after the occurrence of
an Event of Default, without prior notice or demand, set off against any
such credit balance or other money all or any part of Borrower's
obligations hereunder. Agent or Lenders, as the case may be, shall
promptly provide notice to Borrower of all such setoffs effected by any
such party.
8.12 Submission to Jurisdiction. Agent or Lenders may enforce any
claim arising out of this Agreement or the Related Documents in any state
or federal court having subject matter jurisdiction and located in
Milwaukee, Wisconsin. For the purpose of any action or proceeding
instituted with respect to any such claim, Borrower hereby irrevocably
submits to the jurisdiction of such courts. Borrower irrevocably consents
to the service of process out of said courts by mailing a copy thereof, by
registered mail, postage prepaid, to Borrower and agrees that such
service, to the fullest extent permitted by law, (a) shall be deemed in
every respect effective service of process upon it in any such suit,
action or proceeding, and (b) shall be taken and held to be valid personal
service upon personal delivery to it. Nothing herein contained shall
affect the right of Agent or Lenders to serve process in any other manner
permitted by law or preclude Agent or Lenders from bringing an action or
proceeding in respect hereof in any other country, state or place having
jurisdiction over such action. Borrower hereby irrevocably waives, to
the fullest extent permitted by law, any objection which it may have or
hereafter have to the laying of the venue of any such suit, action or
proceeding brought in any court located in Milwaukee, Wisconsin and any
claim that any such suit, action or proceeding brought in such a court has
been brought in an inconvenient forum.
8.13 WAIVER OF JURY TRIAL. EACH PARTY HERETO EXPRESSLY (a)
ACKNOWLEDGES THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL RIGHT,
BUT THAT THIS RIGHT MAY BE WAIVED: (b) HEREBY KNOWINGLY, VOLUNTARILY AND
WITHOUT COERCION, WAIVES ALL RIGHTS TO A TRIAL BY JURY OF ALL DISPUTES
ARISING OUT OF OR IN RELATION TO THIS AGREEMENT OR ANY RELATED DOCUMENT
TO WHICH IT IS A PARTY, OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR
AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION
THEREWITH OR ARISING FROM ANY RELATIONSHIP EXISTING IN CONNECTION WITH
THIS AGREEMENT OR ANY RELATED DOCUMENT, AND AGREES THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY; (c)
ACKNOWLEDGES THAT THE WAIVER OF THE RIGHT TO TRIAL BY JURY IS NOT
EFFECTIVE UNLESS SUCH WAIVER IS IN A WRITTEN INSTRUMENT SIGNED BY THE
PARTY WAIVING SUCH RIGHT; (d) ACKNOWLEDGES THAT IT HAS BEEN GIVEN THE
OPPORTUNITY TO CONSULT WITH COUNSEL AND OTHER ADVISORS OF ITS CHOICE, AND
AFTER CONSULTING WITH SUCH COUNSEL AND ADVISORS, KNOWINGLY, VOLUNTARILY
AND WITHOUT DURESS, COERCION, UNLAWFUL RESTRAINT, INTIMIDATION OR
COMPULSION, ENTERS INTO THIS AGREEMENT, BASED UPON SUCH ADVICE AND COUNSEL
AND IN THE EXERCISE OF ITS BUSINESS JUDGMENT; (e) ACKNOWLEDGES AND AGREES
THAT THIS AGREEMENT HAS BEEN ENTERED INTO IN EXCHANGE FOR GOOD AND
VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH ARE
ACKNOWLEDGED; AND (f) ACKNOWLEDGES AND AGREES THAT IT HAS CAREFULLY AND
COMPLETELY READ ALL OF THE TERMS AND PROVISIONS OF THIS AGREEMENT.
BORROWER ACKNOWLEDGES AND AGREES THAT IT IS NOT RELYING ON THE OPINION OR
ADVICE OF AGENT OR LENDERS OR ANY OF THEIR AGENTS OR REPRESENTATIVES IN
ENTERING INTO THIS AGREEMENT.
8.14 Assignments; Participations. Each Lender may at any time sell,
assign or transfer to one or more banks or other entities (other than a
competitor of Borrower) ("Participants") interests in any Revolving Loan
or Term Loan owing to such Lender, any Note held by any such Lender, any
commitment of any such Lender or any other interest of such Lender or
Obligation hereunder. Borrower authorizes each Lender to disclose to any
Participant and any such prospective Participant any and all financial
information in such Lender's possession concerning Borrower, its
Affiliates and its Subsidiaries which has been delivered to any such
Lender by or on behalf of Borrower pursuant to this Agreement or which has
been delivered to any such Lender by or on behalf of Borrower in
connection with such Lender's credit evaluation of Borrower, its
Affiliates and its Subsidiaries prior to becoming a party to this
Agreement. Borrower agrees that if amounts outstanding under this
Agreement or the Notes are due and unpaid, or shall have been declared to
be or shall have become due and payable upon the occurrence of any Event
of Default each Participant shall be deemed to have the right of setoff in
respect of its participating interest in amounts owing under this
Agreement or any Note to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement or any Note.
8.15 Materiality. Each and every agreement, representation,
warranty, acknowledgment, affirmation, covenant, provision, and
undertaking contained in this Agreement or the Related Documents shall be
deemed to be independently material and relied upon by each of the
parties.
SECTION 9 RELATIONSHIP OF AGENT AND LENDERS
9.1 Appointment. Firstar is hereby appointed Agent hereunder
and under the Related Documents, and each Lender irrevocably authorizes
Agent to act as the agent of such Lender. Agent agrees to act as such
upon the express conditions contained in this Section 9. Agent shall not
have a fiduciary relationship in respect of any Lender by reason of this
Agreement or the Related Documents.
9.2 Powers. Agent shall have and may exercise such powers
hereunder as are specifically delegated to Agent by the terms hereof,
together with such powers as are reasonably incidental thereto. Agent
shall have no implied duties to any Lender, or any obligation to any
Lender to take any action hereunder except any action specifically
provided by this Agreement to be taken by Agent.
9.3 Action on Instructions of Lenders.
(a) Agent shall in all cases be fully protected in acting,
or in refraining from acting, hereunder or under the Related
Documents in accordance with written instructions signed by the
Required Lenders, and such instructions and any action taken or
failure to act pursuant thereto shall be binding on each Lender and
on all holders of Revolving Credit Notes, Term Notes and all other
Obligations. Agent may at any time request instructions from the
Required Lenders with respect to any action or approval that, by the
terms of this Agreement, Agent is permitted or required to take or to
grant, and if such instructions are requested, Agent shall be
absolutely entitled to refrain from taking any action or to withhold
any approval and shall not be under any liability whatsoever to any
Person for refraining from any action or withholding any approval
under this Agreement until it shall have received such instructions
by the Required Lenders; provided, however, that Agent shall not in
any event be required to comply with any instructions given it by
the Required Lenders if Agent determines that such compliance would
expose it to a material personal liability or is contrary to law or
to the terms of this Agreement or the Related Documents, but each
Lender shall in all events indemnify Agent from any action taken by
it in accordance with the instructions of the Required Lenders. No
Lender shall have any right of action whatsoever against Agent as a
result of Agent acting or refraining from acting hereunder or under
the Related Documents in accordance with instructions by the Required
Lenders.
(b) Without limiting the foregoing, Agent shall not be
required to take any action with respect to any Default except in
accordance with Section 9.2 and this Section. Agent shall be
entitled to assume that no Default has occurred and is continuing
unless Agent has actual knowledge of such facts or has received
notice from a Lender in writing that such Lender considers that a
Default has occurred and is continuing, and which specifies the
nature thereof. In the event that Agent shall acquire actual
knowledge of any Default, Agent shall promptly notify (either orally
or in writing) each Lender, and Borrower of such Default. If directed
by the Required Lenders, Agent shall make demand under the Revolving
Credit Notes, the Term Notes, the Letters of Credit, Commercial Paper
Transactions and all other Obligations and take such action and
assert such rights as are contemplated under this Agreement and the
Related Documents.
9.4 Amendments. The Required Lenders (or Agent with the
consent in writing of the Required Lenders) and Borrower may enter into
agreements supplemental hereto for the purpose of adding or modifying any
provisions of this Agreement or the Related Documents or changing in any
manner the rights of the Lenders or Borrower hereunder or waiving any
Default hereunder provided that; (i) no amendment or waiver pursuant to
this Section 9.4 shall (A) increase the Maximum Commitment of any Lender
without the consent of such Lender or (B) reduce the amount of or postpone
any fixed date for payment of any principal of or interest on any of the
Obligations or of any fee payable hereunder without the consent of each
Lender; and (ii) no amendment or waiver pursuant to this Section 9.4
shall, unless signed by each Lender, change any provision of Section 9 or
the definition of Required Lenders, or affect the number of Lenders
required to take any action under this Agreement or the Related Documents.
No amendment of any provision of this Agreement relating to Agent shall be
effective without the prior written consent of Agent.
9.5 Application of Payments. All payments of principal and
interest with respect to the Obligations shall be made to Agent in
immediately available funds for the ratable account of the Lenders. Agent
shall promptly distribute to each Lender, Pro Rata, the amount of (a)
principal and interest received by Agent, (b) each Lender's Pro Rata share
of any fees, expenses or charges collected by Agent, and (c) all amounts
received by Agent upon realization from the Property. Any payment in good
funds to Agent for the account of a Lender hereunder shall constitute a
payment by Borrower to such Lender of the amounts so paid to Agent, and
any Obligations or portions thereof so paid shall not be considered
outstanding for any purpose after the date of such payment in good funds
to Agent. Notwithstanding the foregoing, for purposes of clause (c)
above, the parties acknowledge that all amounts received by Agent upon
realization of the Property shall be applied Pro Rata. All payments or
prepayments of principal and interest shall be made Pro Rata. In the
event any Lender shall receive from Borrower or any other source any
payment of, on account of, any of the Obligations (whether pursuant to the
exercise of any right of setoff, banker's lien, realization upon any
security held for or appropriated to such obligation, counterclaim or
otherwise) other than as provided above, then such Lender shall
immediately purchase, without recourse and for cash, an interest in the
obligations of the same nature held by the other Lender so that each
Lender shall thereafter have a percentage interest in all of such
obligations equal to the percentage interest which such Lender held in the
relevant Obligations immediately before such payment; provided, if any
payment so received shall be recovered in whole or in part from such
purchasing Lender, the purchase shall be rescinded and the purchase price
restored to the extent of such recovery, but without interest. Borrower
specifically acknowledges and consents to the preceding sentence.
9.6 General Immunity. Neither Agent nor any of its directors,
officers, agents or employees shall be liable to any Lender for any
action taken or omitted to be taken by it or them hereunder or in
connection herewith except for its or their own gross negligence or
willful misconduct.
9.7 No Responsibility for Loans, Recitals, Etc. Agent shall
not be responsible to the Lenders for any recitals, reports, statements,
warranties or representations herein or in any Related Document or be
bound to ascertain or inquire as to the truth or accuracy of the
statements or reports of Borrower or any of its Subsidiaries with regard
to the performance or observance of any of the terms of this Agreement.
9.8 Employment of Agents and Counsel. Agent may execute any of
its duties as Agent hereunder and under the Related Documents by or
through employees, agents, and attorneys-in-fact and shall not be liable
to either Lender for the default or misconduct of any such employees,
agents or attorneys-in-fact selected by it with reasonable care, except as
to money or securities received by it or its authorized agents. Agent
shall be entitled to advice of counsel concerning all matters pertaining
to the agency hereby created and its duties hereunder and under the
Related Documents.
9.9 Reliance on Documents, Counsel. Agent shall be entitled
to rely upon any Revolving Credit Notes, Term Notes, request for a Letter
of Credit or Commercial Paper Transactions, notice, consent, certificate,
affidavit, letter, telegram, statement, paper or document believed by it
to be genuine and correct and to have been signed or sent by the proper
Person or Persons, and, in respect to legal matters, upon the opinion of
counsel selected by Agent, which counsel may be employees of Agent.
9.10 Inspections. At the request of the Required Lenders from
time to time, Agent shall conduct its customary review of Borrower's
financial and collateral records and the Property in accordance with
Section 5.4. To assist each Lender in its own investigation of Borrower
and the Property, each Lender may send representatives to accompany
Agent's personnel on such inspections.
9.11 Agent's Reimbursement and Indemnification. Each Lender
agrees to reimburse and indemnify Agent Pro Rata (i) for any amounts not
reimbursed by Borrower for which Agent (as Agent and not as a Lender under
this Agreement) is entitled to reimbursement by Borrower under this
Agreement or the Related Documents, (ii) for any other expenses incurred
by Agent on behalf of Lender, in connection with the preparation,
execution, delivery, administration and enforcement (including collection
or disposition of Property) of this Agreement or the Related Documents and
(iii) for any liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
and nature whatsoever which may be imposed on, incurred by or asserted
against Agent in any way relating to or arising out of this Agreement or
the Related Documents or the transactions contemplated hereby or the
enforcement (including collection or disposition of Property) of any of
the terms hereof or of any such other documents, provided that no Lender
shall be liable for any of the foregoing to the extent they arise from the
gross negligence or willful misconduct of Agent.
9.12 Rights as a Lender. Firstar shall have the same rights
and powers hereunder as any Lender the same as though it were not Agent,
and the term "Lender" shall, unless the context otherwise indicates,
include Agent in its individual capacity. Firstar may accept deposits
from, lend money to, and generally engage in any kind of banking or trust
business with Borrower or any Subsidiary as if it were not Agent. Each
Lender acknowledges that the other Lenders may continue to accept deposits
from, lend money to, and generally engage in any kind of banking or trust
business with Borrower or any Subsidiary independent of the Obligations,
this Agreement or the Related Documents; provided, however, that
Borrower's or any Subsidiary's obligations to each Lender from such
independent banking activities shall not be secured by the Property.
Notwithstanding the foregoing or Section 9.5, any fees or other income
received by any Lender directly from such independent banking activities
are not to be shared with any other Lender or Agent.
9.13 Lenders Credit Decision. Each Lender acknowledges that it
has, independently and without reliance upon Agent or any other Lender and
based on the financial statements prepared by Borrower and such other
documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement and the other
Related Documents. Each Lender also acknowledges that it will,
independently and without reliance upon Agent or any other Lender 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 this Agreement and the Related Documents.
9.14 Successor Agent. Agent may resign at any time by giving
written notice thereof to the Lenders and Borrower, and Agent may be
removed at any time with or without cause by written notice received by
Agent from the Required Lenders. Upon any such resignation or removal,
the Required Lenders shall have the right to appoint, on behalf of
Borrower and the Lenders, a successor Agent, which shall be subject to the
consent of the Borrower, such consent which shall not be unreasonably
withheld. If no successor Agent shall have been so appointed by the
Required Lenders and shall have accepted such appointment within thirty
days after the retiring Agent's giving notice of resignation, then the
retiring Agent may appoint, on behalf of Borrower and each Lender, a
successor Agent. Such successor Agent shall be a commercial bank having
capital and retained earnings of at least $25,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent,
such successor Agent shall thereupon succeed to and become vested with all
the rights, powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations
hereunder arising after the date of retirement. After any retiring
Agent's resignation hereunder as Agent, the provisions of this Section 9
shall continue in effect for its benefit in respect of any actions taken
or omitted to be taken by it while it was acting as Agent hereunder and
under the Related Documents.
9.15 Noteholders. Agent may treat the payee of any Revolving
Credit Note or Term Note, Letter of Credit or Commercial Paper Transaction
as the holder thereof until written notice of transfer shall have been
filed with Agent, signed by such payee and in form satisfactory to Agent.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first above written.
LACROSSE FOOTWEAR, INC.
By: /s/ Patrick K. Gantert
Patrick K. Gantert,
President
FIRSTAR BANK MILWAUKEE, N.A.
By: /s/ Randy D. Olver
Randy D. Olver,
Vice President
THE NORTHERN TRUST COMPANY
By: /s/ Daniel R. Hintzen
Daniel R. Hintzen,
Vice President
HARRIS TRUST AND SAVINGS BANK
By: /s/ Catherine C. Ciolebe
Catherine C. Ciolebe,
Vice President
FIRSTAR BANK MILWAUKEE, N.A.,
as Agent
By: /s/ Randy D. Olver
Randy D. Olver,
Vice President
<PAGE>
EXHIBIT A-1
REVOLVING CREDIT NOTE
$22,000,000 Milwaukee, Wisconsin
May 31, 1996
FOR VALUE RECEIVED, LaCrosse Footwear, Inc., a Wisconsin corporation
("Borrower"), promises to pay to the order of Firstar Bank Milwaukee,
N.A., a national banking association ("Bank"), at Agent's principal office
in Milwaukee, Wisconsin, or such other place as Agent may designate, in
lawful money of the United States and in immediately available funds, the
principal sum of Twenty-Two Million Dollars ($22,000,000), or the
aggregate principal amount of all advances made to Borrower by Bank under
Section 2.1 of the Credit Agreement (the "Loans") executed by Borrower,
Bank, for itself and as agent, The Northern Trust Company, and Harris
Trust and Savings Bank, an Illinois banking corporation, of even date
herewith (the "Loan Agreement"), together with interest from the date
hereof on the principal balance outstanding at the rate and in the manner
set forth in the Loan Agreement. Subject to the provisions in the Loan
Agreement with respect to acceleration, prepayment, or loan limitations,
all unpaid principal with respect to the Loans, together with all accrued
interest shall be due and payable in full on the Termination Date.
All advances made by Bank to Borrower pursuant to Section 2.1 of the
Loan Agreement shall be evidenced by this Note. This Note is entitled to
the benefits of the Loan Agreement, together with all future amendments,
modifications, waivers, supplements and replacements thereof, to which
Loan Agreement reference is made for a statement of the terms and
provisions under which this Note may be paid prior to its due date or by
which this Note may be accelerated. Capitalized terms not otherwise
defined herein shall have the meanings assigned to them in the Loan
Agreement.
If any payment required under this Note is not paid when due
(including the expiration of the applicable grace period) or upon the
occurrence of any other Event of Default under the Loan Agreement (other
than an Event of Default specified in Sections 7.1(f) or (g) of the Loan
Agreement, whereupon the entire aggregate principal amount outstanding
under this Note and all accrued interest thereon shall automatically
become due and payable), Bank may, as provided in the Loan Agreement, and
without notice to Borrower or any other entity directly, indirectly,
jointly, or contingently liable for the amounts due under this Note,
declare the entire aggregate principal amount outstanding under this Note
and all accrued interest thereon immediately due and payable. Bank's
failure to accelerate the aggregate principal amount outstanding under
this Note shall not constitute a waiver of the right to exercise such
option at a subsequent point in time or in the event of any subsequent
Event of Default.
Presentment, notice of dishonor and protest are hereby waived by
Borrower and any endorsers of this Note. Without (i) affecting the
obligation of Borrower to pay the outstanding principal balance of this
Note and to observe the covenants of Borrower contained in this Note and
the other Related Documents, (ii) giving notice to or obtaining the
consent of Borrower or the successors or assigns of Borrower, and (iii)
incurring any liability on the part of Bank, Bank may, from time to time
and at its option, but only to the extent permitted under the Loan
Agreement: (a) extend the time for payment of the amounts outstanding or
due under this Note; (b) reduce the payments thereon; (c) release anyone
liable for any of the amounts outstanding or due under this Note; (d)
accept a renewal of this Note; (e) modify the terms and time of payment of
the amounts outstanding or due under this Note; (f) join in any extension
or subordination agreement; (g) take or release any security given
herefor; or, (h) agree in writing with Borrower to modify the rate of
interest of this Note.
If any payment required under this Note is not paid when due
(including the expiration of the applicable grace period), Borrower and
any endorsers of this Note promise to pay all costs of collection incurred
by Bank, including, without limitation, all attorneys' fees incurred by
Bank, whether or not an action is filed to enforce this Note.
This Note may not be modified or amended, except by an agreement in
writing signed by the party against whom enforcement is sought. This Note
shall be construed in accordance with, and governed by, the internal laws
of Wisconsin.
IN WITNESS WHEREOF, Borrower has executed this Note as of the date
first above written.
LACROSSE FOOTWEAR, INC.
By: _____________________
Patrick K. Gantert,
President
<PAGE>
EXHIBIT A-2
REVOLVING CREDIT NOTE
$14,000,000 Milwaukee, Wisconsin
May 31, 1996
FOR VALUE RECEIVED, LaCrosse Footwear, Inc., a Wisconsin corporation
("Borrower"), promises to pay to the order of The Northern Trust Company,
("Bank"), at Agent's principal office in Milwaukee, Wisconsin, or such
other place as Agent may designate, in lawful money of the United States
and in immediately available funds, the principal sum of Fourteen Million
Dollars ($14,000,000), or the aggregate principal amount of all advances
made to Borrower by Bank under Section 2.1 of the Credit Agreement (the
"Loans") executed by Borrower, Bank, Firstar Bank Milwaukee, N.A., a
national banking association, for itself and as agent, and Harris Trust
and Savings Bank, an Illinois banking corporation, of even date herewith
(the "Loan Agreement"), together with interest from the date hereof on the
principal balance outstanding at the rate and in the manner set forth in
the Loan Agreement. Subject to the provisions in the Loan Agreement with
respect to acceleration, prepayment, or loan limitations, all unpaid
principal with respect to the Loans, together with all accrued interest
shall be due and payable in full on the Termination Date.
All advances made by Bank to Borrower pursuant to Section 2.1 of the
Loan Agreement shall be evidenced by this Note. This Note is entitled to
the benefits of the Loan Agreement, together with all future amendments,
modifications, waivers, supplements and replacements thereof, to which
Loan Agreement reference is made for a statement of the terms and
provisions under which this Note may be paid prior to its due date or by
which this Note may be accelerated. Capitalized terms not otherwise
defined herein shall have the meanings assigned to them in the Loan
Agreement.
If any payment required under this Note is not paid when due
(including the expiration of the applicable grace period) or upon the
occurrence of any other Event of Default under the Loan Agreement (other
than an Event of Default specified in Sections 7.1(f) or (g) of the Loan
Agreement, whereupon the entire aggregate principal amount outstanding
under this Note and all accrued interest thereon shall automatically
become due and payable), Bank may, as provided in the Loan Agreement, and
without notice to Borrower or any other entity directly, indirectly,
jointly, or contingently liable for the amounts due under this Note,
declare the entire aggregate principal amount outstanding under this Note
and all accrued interest thereon immediately due and payable. Bank's
failure to accelerate the aggregate principal amount outstanding under
this Note shall not constitute a waiver of the right to exercise such
option at a subsequent point in time or in the event of any subsequent
Event of Default.
Presentment, notice of dishonor and protest are hereby waived by
Borrower and any endorsers of this Note. Without (i) affecting the
obligation of Borrower to pay the outstanding principal balance of this
Note and to observe the covenants of Borrower contained in this Note and
the other Related Documents, (ii) giving notice to or obtaining the
consent of Borrower or the successors or assigns of Borrower and (iii)
incurring any liability on the part of Bank, Bank may, from time to time
and at its option, but only to the extent permitted under the Loan
Agreement: (a) extend the time for payment of the amounts outstanding or
due under this Note; (b) reduce the payments thereon; (c) release anyone
liable for any of the amounts outstanding or due under this Note; (d)
accept a renewal of this Note; (e) modify the terms and time of payment of
the amounts outstanding or due under this Note; (f) join in any extension
or subordination agreement; (g) take or release any security given
herefor; or, (h) agree in writing with Borrower to modify the rate of
interest of this Note.
If any payment required under this Note is not paid when due
(including the expiration of the applicable grace period), Borrower and
any endorsers of this Note promise to pay all costs of collection incurred
by Bank, including, without limitation, all attorneys' fees incurred by
Bank, whether or not an action is filed to enforce this Note.
This Note may not be modified or amended, except by an agreement in
writing signed by the party against whom enforcement is sought. This Note
shall be construed in accordance with, and governed by, the internal laws
of Wisconsin.
IN WITNESS WHEREOF, Borrower has executed this Note as of the date
first above written.
LACROSSE FOOTWEAR, INC.
By: _____________________
Patrick K. Gantert,
President
<PAGE>
EXHIBIT A-3
REVOLVING CREDIT NOTE
$14,000,000 Milwaukee, Wisconsin
May 31, 1996
FOR VALUE RECEIVED, LaCrosse Footwear, Inc., a Wisconsin corporation
("Borrower"), promises to pay to the order of Harris Trust and Savings
Bank, an Illinois banking corporation ("Bank"), at Agent's principal
office in Milwaukee, Wisconsin, or such other place as Agent may
designate, in lawful money of the United States and in immediately
available funds, the principal sum of Fourteen Million Dollars
($14,000,000), or the aggregate principal amount of all advances made to
Borrower by Bank under Section 2.1 of the Credit Agreement (the "Loans")
executed by Borrower, Bank, Firstar Bank Milwaukee, N.A., a national
banking association, for itself and as agent, and The Northern Trust
Company, of even date herewith (the "Loan Agreement"), together with
interest from the date hereof on the principal balance outstanding at the
rate and in the manner set forth in the Loan Agreement. Subject to the
provisions in the Loan Agreement with respect to acceleration, prepayment,
or loan limitations, all unpaid principal with respect to the Loans,
together with all accrued interest shall be due and payable in full on the
Termination Date.
All advances made by Bank to Borrower pursuant to Section 2.1 of the
Loan Agreement shall be evidenced by this Note. This Note is entitled to
the benefits of the Loan Agreement, together with all future amendments,
modifications, waivers, supplements and replacements thereof, to which
Loan Agreement reference is made for a statement of the terms and
provisions under which this Note may be paid prior to its due date or by
which this Note may be accelerated. Capitalized terms not otherwise
defined herein shall have the meanings assigned to them in the Loan
Agreement.
If any payment required under this Note is not paid when due
(including the expiration of the applicable grace period) or upon the
occurrence of any other Event of Default under the Loan Agreement (other
than an Event of Default specified in Sections 7.1(f) or (g) of the Loan
Agreement, whereupon the entire aggregate principal amount outstanding
under this Note and all accrued interest thereon shall automatically
become due and payable), Bank may, as provided in the Loan Agreement, and
without notice to Borrower or any other entity directly, indirectly,
jointly, or contingently liable for the amounts due under this Note,
declare the entire aggregate principal amount outstanding under this Note
and all accrued interest thereon immediately due and payable. Bank's
failure to accelerate the aggregate principal amount outstanding under
this Note shall not constitute a waiver of the right to exercise such
option at a subsequent point in time or in the event of any subsequent
Event of Default.
Presentment, notice of dishonor and protest are hereby waived by
Borrower and any endorsers of this Note. Without (i) affecting the
obligation of Borrower to pay the outstanding principal balance of this
Note and to observe the covenants of Borrower contained in this Note and
the other Related Documents, (ii) giving notice to or obtaining the
consent of Borrower or the successors or assigns of Borrower and (iii)
incurring any liability on the part of Bank, Bank may, from time to time
and at its option, but only to the extent permitted under the Loan
Agreement: (a) extend the time for payment of the amounts outstanding or
due under this Note; (b) reduce the payments thereon; (c) release anyone
liable for any of the amounts outstanding or due under this Note; (d)
accept a renewal of this Note; (e) modify the terms and time of payment of
the amounts outstanding or due under this Note; (f) join in any extension
or subordination agreement; (g) take or release any security given
herefor; or, (h) agree in writing with Borrower to modify the rate of
interest of this Note.
If any payment required under this Note is not paid when due
(including the expiration of the applicable grace period), Borrower and
any endorsers of this Note promise to pay all costs of collection incurred
by Bank, including, without limitation, all attorneys' fees incurred by
Bank, whether or not an action is filed to enforce this Note.
This Note may not be modified or amended, except by an agreement in
writing signed by the party against whom enforcement is sought. This Note
shall be construed in accordance with, and governed by, the internal laws
of Wisconsin.
IN WITNESS WHEREOF, Borrower has executed this Note as of the date
first above written.
LACROSSE FOOTWEAR, INC.
By: _____________________
Patrick J. Gantert,
President
<PAGE>
EXHIBIT B-1
TERM NOTE
$5,500,000 Milwaukee, Wisconsin
May 31, 1996
FOR VALUE RECEIVED, LaCrosse Footwear, Inc. a Wisconsin corporation
(the "Borrower"), promises to pay to the order of Firstar Bank Milwaukee,
N.A., a national banking association (the "Bank") at its main office in
Milwaukee, Wisconsin or at such other place as the holder hereof may from
time to time in writing designate, in lawful money of the United States of
America, the principal sum of Five Million Five Hundred Thousand Dollars
($5,500,000.00), pursuant to Section 2.10 of the Credit Agreement by and
among the Borrower, the Bank, for itself and as agent, The Northern Trust
Company, and Harris Trust and Savings Bank, an Illinois banking
corporation, dated as of the date hereof (the "Loan Agreement"), together
with accrued interest and all other costs, charges and fees due
thereunder.
The undersigned further promises to pay interest on the unpaid
principal amount of this Note as is outstanding under the Loan Agreement,
payable at such rates and at such times, as provided in the Loan
Agreement. In addition to the payments required under Section 2.10, and
subject to the provisions of the Loan Agreement with respect to
acceleration, prepayment or loan limitations, all unpaid principal with
respect to this Note, together with accrued interest and all other costs,
charges and fees, shall be due and payable in full on the Termination Date
for this Note.
This Note evidences indebtedness incurred under, and is entitled to
the benefits of, the Loan Agreement, together with all future amendments,
modifications, waivers, supplements and replacements thereof, to which
Loan Agreement reference is made for a statement of the terms and
provisions under which this Note may be paid prior to its due date or its
due date accelerated.
The Borrower hereby agrees to pay all costs of collection, including
reasonable attorneys' fees and legal expenses in the event this Note is
not paid when due.
This Note is issued in and shall be governed by the laws of the State
of Wisconsin.
No delay or omission on the part of the holder in exercising any
right hereunder shall operate as a waiver of such right or of any other
remedy under this Note. A waiver on any one occasion shall not be
construed as a waiver of any such right or remedy on a future occasion.
All makers, endorsers, sureties, guarantors and other accommodation
parties hereby waive presentment for payment, protest and notice of
nonpayment and consent, without affecting their liability hereunder, to
any and all extensions, renewals, substitutions and alterations of any of
the terms of this Note and to the release of or failure by the Bank to
exercise any rights against any party liable for or any property securing
payment thereof.
LACROSSE FOOTWEAR, INC.
By:________________________________
Patrick K. Gantert,
President
<PAGE>
EXHIBIT B-2
TERM NOTE
$3,500,000 Milwaukee, Wisconsin
May 31, 1996
FOR VALUE RECEIVED, LaCrosse Footwear, Inc. a Wisconsin corporation
(the "Borrower"), promises to pay to the order of The Northern Trust
Company, (the "Bank") at its main office in Chicago, Illinois or at such
other place as the holder hereof may from time to time in writing
designate, in lawful money of the United States of America, the principal
sum of Three Million Five Hundred Thousand Dollars ($3,500,000.00),
pursuant to Section 2.10 of the Credit Agreement by and among the
Borrower, the Bank, Firstar Bank Milwaukee, N.A., a national banking
association, for itself and as agent, and Harris Trust and Savings Bank,
an Illinois banking corporation, dated as of the date hereof (the "Loan
Agreement"), together with accrued interest and all other costs, charges
and fees due thereunder.
The undersigned further promises to pay interest on the unpaid
principal amount of this Note as is outstanding under the Loan Agreement,
payable at such rates and at such times, as provided in the Loan
Agreement. In addition to the payments required under Section 2.10, and
subject to the provisions of the Loan Agreement with respect to
acceleration, prepayment or loan limitations, all unpaid principal with
respect to this Note, together with accrued interest and all other costs,
charges and fees, shall be due and payable in full on the Termination Date
for this Note.
This Note evidences indebtedness incurred under, and is entitled to
the benefits of, the Loan Agreement, together with all future amendments,
modifications, waivers, supplements and replacements thereof, to which
Loan Agreement reference is made for a statement of the terms and
provisions under which this Note may be paid prior to its due date or its
due date accelerated.
The Borrower hereby agrees to pay all costs of collection, including
reasonable attorneys' fees and legal expenses in the event this Note is
not paid when due.
This Note is issued in and shall be governed by the laws of the State
of Wisconsin.
No delay or omission on the part of the holder in exercising any
right hereunder shall operate as a waiver of such right or of any other
remedy under this Note. A waiver on any one occasion shall not be
construed as a waiver of any such right or remedy on a future occasion.
All makers, endorsers, sureties, guarantors and other accommodation
parties hereby waive presentment for payment, protest and notice of
nonpayment and consent, without affecting their liability hereunder, to
any and all extensions, renewals, substitutions and alterations of any of
the terms of this Note and to the release of or failure by the Bank to
exercise any rights against any party liable for or any property securing
payment thereof.
LACROSSE FOOTWEAR, INC.
By:________________________________
Patrick K. Gantert,
President
<PAGE>
EXHIBIT B-3
TERM NOTE
$3,500,000 Milwaukee, Wisconsin
May 31, 1996
FOR VALUE RECEIVED, LaCrosse Footwear, Inc. a Wisconsin corporation
(the "Borrower"), promises to pay to the order of Harris Trust and Savings
Bank, an Illinois banking corporation (the "Bank") at its main office in
Chicago, Illinois or at such other place as the holder hereof may from
time to time in writing designate, in lawful money of the United States of
America, the principal sum of Three Million Five Hundred Thousand Dollars
($3,500,000.00), pursuant to Section 2.10 of the Credit Agreement by and
among the Borrower, the Bank, Firstar Bank Milwaukee, N.A., a national
banking association, for itself and as agent, and The Northern Trust
Company, dated as of the date hereof (the "Loan Agreement"), together with
accrued interest and all other costs, charges and fees due thereunder.
The undersigned further promises to pay interest on the unpaid
principal amount of this Note as is outstanding under the Loan Agreement,
payable at such rates and at such times, as provided in the Loan
Agreement. In addition to the payments required under Section 2.10, and
subject to the provisions of the Loan Agreement with respect to
acceleration, prepayment or loan limitations, all unpaid principal with
respect to this Note, together with accrued interest and all other costs,
charges and fees, shall be due and payable in full on the Termination Date
for this Note.
This Note evidences indebtedness incurred under, and is entitled to
the benefits of, the Loan Agreement, together with all future amendments,
modifications, waivers, supplements and replacements thereof, to which
Loan Agreement reference is made for a statement of the terms and
provisions under which this Note may be paid prior to its due date or its
due date accelerated.
The Borrower hereby agrees to pay all costs of collection, including
reasonable attorneys' fees and legal expenses in the event this Note is
not paid when due.
This Note is issued in and shall be governed by the laws of the State
of Wisconsin.
No delay or omission on the part of the holder in exercising any
right hereunder shall operate as a waiver of such right or of any other
remedy under this Note. A waiver on any one occasion shall not be
construed as a waiver of any such right or remedy on a future occasion.
All makers, endorsers, sureties, guarantors and other accommodation
parties hereby waive presentment for payment, protest and notice of
nonpayment and consent, without affecting their liability hereunder, to
any and all extensions, renewals, substitutions and alterations of any of
the terms of this Note and to the release of or failure by the Bank to
exercise any rights against any party liable for or any property securing
payment thereof.
LACROSSE FOOTWEAR, INC.
By:________________________________
Patrick K. Gantert,
President
<PAGE>
SCHEDULE 3.1
SUBSIDIARIES AND STOCK OPTIONS
NAME OF STATE OF OWNERSHIP OF
SUBSIDIARY INCORPORATION SHARES
Danner Shoe Wisconsin 100% by LaCrosse
Manufacturing, Co. Footwear, Inc.
Clintonville Products, Wisconsin 100% by LaCrosse
Inc. Footwear, Inc.
Hillsboro Footwear, Inc. Wisconsin 100% by LaCrosse Footwear, Inc.
Rainco, Inc. (to be Wisconsin 50% by LaCrosse
known as Rainfair, Inc. Footwear, Inc.
<PAGE>
SCHEDULE 3.5
TAX DISPUTES
In November 1993, the Borrower, in order to preserve its legal
rights, instituted litigation against the United States in the United
States Court of Federal Claims ("USFC") seeking a refund of amounts
previously paid to the Internal Revenue Service ("IRS") relating to the
Borrower's treatment of its LIFO inventory stemming from the Borrower's
1982 leveraged buyout. If the U.S. Government prevails in this
litigation, the IRS has indicated an intention to assess the Borrower for
additional tax, penalties, interest and other amounts for prior periods as
a result of recalculating the Borrower's LIFO inventory reserve. The
Borrower is not currently in a position to predict the outcome of the
USCFC litigation. However, a recent decision of the USCFC in another case
(Kohler Co. vs. United States, Case No. 94-628T, November 3, 1995)
supports the principal positions taken by the IRS and the U.S. Government
in the USCFC litigation. The Borrower believes that its total current
exposure to the IRS with respect to this matter is not material to the
Company's financial position or results of operations.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF LACROSSE FOOTWEAR,
INC. AS OF AND FOR THE PERIOD ENDED JUNE 29, 1996 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-29-1996
<CASH> 1,445,710
<SECURITIES> 0
<RECEIVABLES> 22,783,666
<ALLOWANCES> 492,112
<INVENTORY> 42,043,383
<CURRENT-ASSETS> 69,047,610
<PP&E> 29,324,741
<DEPRECIATION> 16,359,697
<TOTAL-ASSETS> 98,975,192
<CURRENT-LIABILITIES> 26,982,917
<BONDS> 15,675,323
0
0
<COMMON> 67,176
<OTHER-SE> 51,788,503
<TOTAL-LIABILITY-AND-EQUITY> 98,975,192
<SALES> 45,107,228
<TOTAL-REVENUES> 45,185,228
<CGS> 33,271,105
<TOTAL-COSTS> 10,573,221
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 135,182
<INTEREST-EXPENSE> 587,598
<INCOME-PRETAX> 821,908
<INCOME-TAX> 321,973
<INCOME-CONTINUING> 573,428
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 573,428
<EPS-PRIMARY> 0.08
<EPS-DILUTED> 0.08
</TABLE>
