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 September 27, 1997
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 November 1, 1997:
6,667,727 shares
<PAGE>
LaCrosse Footwear, Inc.
Form 10-Q Index
For Quarter Ended September 27, 1997
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 10-13
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
Exhibit Index 16
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1. Financial Statements
LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
Sept 27, December 31,
1997 1996
(unaudited)
CURRENT ASSETS
Cash and cash equivalents $290,419 $6,716,183
Accounts receivable, less allowances of
$1,496,951 and $1,507,302,
respectively 46,450,450 20,705,000
Inventories (2) 42,074,727 31,549,091
Prepaid expenses 2,220,394 1,999,464
Deferred tax assets 1,219,600 2,016,600
---------- ----------
Total current assets 92,255,590 62,986,338
PROPERTY AND EQUIPMENT, net of
depreciation and amortization 13,137,916 12,629,634
INTANGIBLES (3) 15,384,017 15,388,011
OTHER ASSETS 1,438,928 1,282,036
----------- ----------
Total assets $122,216,451 $92,286,019
=========== ==========
The accompanying notes are an integral part of the financial statements.
<PAGE>
LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (cont'd)
Sept 27, December 31,
1997 1996
(unaudited)
CURRENT LIABILITIES
Current maturities of long-term
obligations $2,547,006 $1,850,666
Borrowings under credit agreement 28,650,000 0
Accounts payable 4,850,935 5,754,793
Accrued expenses 7,888,451 6,770,456
Dividends payable 0 733,439
Income taxes payable 555,473 1,066,352
---------- ----------
Total current liabilities 44,491,865 16,175,706
ACCRUED POSTRETIREMENT BENEFIT COST 1,490,400 1,390,400
LONG-TERM OBLIGATIONS 13,479,888 16,002,200
DEFERRED COMPENSATION 1,425,723 1,589,162
---------- ----------
Total liabilities 60,887,876 35,157,468
---------- ----------
MINORITY INTEREST 1,374,971 1,193,304
---------- ----------
COMMON SHAREHOLDERS' EQUITY
Common stock, par value $.01 per share 67,176 67,176
Additional paid-in capital 27,579,147 27,579,128
Retained earnings 32,750,144 28,732,693
Treasury stock (442,863) (443,750)
---------- ----------
Total common shareholders'
equity 59,953,604 55,935,247
----------- -----------
Total liabilities and
shareholders' equity $122,216,451 $92,286,019
=========== ==========
The accompanying notes are an integral part of the financial statements
<PAGE>
LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 27, September 28, September 27, September 28,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Net sales (3) $41,884,450 $35,713,687 $103,003,126 $80,898,915
Cost of goods sold 29,462,251 25,398,449 74,643,212 58,669,554
---------- ---------- ---------- ----------
Gross profit 12,422,199 10,315,238 28,359,914 22,229,361
---------- ---------- ---------- ----------
Selling and administrative expenses 7,269,995 6,350,308 20,541,615 17,058,711
---------- ---------- ---------- ----------
Operating income 5,152,204 3,964,930 7,818,299 5,170,650
Non-operating income (expense)
Interest expense (597,206) (552,904) (1,369,241) (1,140,502)
Miscellaneous 268,436 43,717 493,890 247,503
---------- ---------- ---------- ----------
(328,770) (509,187) (875,351) (892,999)
Income before income taxes 4,823,434 3,455,743 6,942,948 4,277,651
Provision for income taxes 1,886,457 1,361,564 2,717,310 1,683,537
---------- ---------- ---------- ----------
Net income before
minority interest $2,936,977 $2,094,179 $4,225,638 $2,594,114
---------- ---------- ---------- ----------
Minority Interest in net
income (loss) of subsidiary 3,493 (30,244) 208,188 (103,737)
---------- ---------- ---------- ----------
Net income $2,933,484 $2,124,423 $4,017,450 $2,697,851
========== ========== ========== ==========
Net income available to
common shareholders $2,933,484 $2,124,423 $4,017,450 $2,658,837
Earnings per common and
common equivalent share $0.44 $0.32 $0.60 $0.40
====== ====== ====== ======
Weighted average number
of common and common
equivalent shares outstanding 6,729,727 6,677,277 6,712,736 6,672,843
========== ========== ========== ==========
Dividends declared per
preferred share $0.00 $0.00 $0.00 $1.99
===== ===== ===== =====
</TABLE>
The accompanying notes are an integral part of the financial statement
<PAGE>
LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Nine Months Ended
September 27, September 28,
1997 1996
Net cash used in operating activities ($22,445,450) ($16,305,446)
----------- -----------
Cash flows from investing activities
Purchase of property and equipment (2,397,358) (2,190,263)
Purchase of intangibles 0 (1,630,314)
Purchase of Rainfair, Inc., net of
cash acquired 0 (10,846,861)
Purchase of Pro-Trak Corporation, net
of cash acquired (7,294,073) 0
Security deposit (450,000) 0
Other 16,624 0
----------- -----------
Net cash used in investing activities (10,124,807) (14,667,438)
Cash flows from financing activities
Cash dividends paid (733,439) (668,462)
Proceeds from long-term borrowing 0 12,497,849
Principal payments on long-term
borrowings (1,746,453) (1,718,589)
Proceeds from short-term borrowings 28,650,000 19,505,000
Purchase of redeemable preferred
stock 0 (1,957,400)
Contribution from minority interest 0 1,250,000
Other (25,615) 0
---------- ----------
Net cash provided by financing
activities 26,144,493 28,908,398
Decrease in cash and cash equivalents (6,425,764) (2,064,486)
Cash and cash equivalents:
Beginning 6,716,183 3,035,777
---------- ----------
Ending $290,419 $971,291
========== ==========
Supplemental information--cash payments
for:
Interest $1,056,581 $887,009
========== ==========
Income taxes $1,781,290 $1,408,545
========== ==========
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, 1996.
2. INVENTORIES
Inventories are comprised of the following:
September 27, 1997 December 31, 1996
Raw Materials $8,423,353 $7,727,042
Work-in Process 3,379,117 2,580,870
Finished Goods 34,080,386 24,974,308
LIFO Reserve (3,808,129) (3,733,129)
----------- -----------
Total $42,074,727 $31,549,091
=========== ===========
3. ACQUISTIONS
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 the Company 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 was accounted for as a purchase. Accordingly, the
purchase price was allocated to assets and liabilities based on their
estimated fair values as of the date of acquisition. The
approximately $.7 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 and nine
months ended September 27, 1997 include Rainfair's results of
operations. 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:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 27, September 28, September 27, September 28,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Net Sales $41,884 $35,714 $103,003 $87,049
Net Income 2,933 2,124 4,017 2,777
Net Income Per
Common Share $.44 $.32 $.60 $.41
</TABLE>
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 spent an additional $.5 million in relocating and staging
the inventory and installing the equipment. The total purchase price
was 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. Shipments of RED
BALL/R/ products commenced 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. Management does not believe the historical
statements of Red Ball, Inc. are relevant to the future performance
of this brand.
PRO-TRAK CORPORATION
On July 2, 1997, the Company acquired all of the outstanding shares
of capital stock of Pro-Trak Corporation, the company that owns and
operates under the Lake of the Woods tradename. The purchase price,
including the assumption of liabilities, was approximately $7.3
million. The total purchase price, including liabilities assumed,
will be allocated to the cash, accounts receivable, inventory,
prepaid expenses, fixed assets and goodwill.
Pro-Trak Corporation is a Wisconsin corporation with its headquarters
in Prentice, Wisconsin. Pro-Trak Corporation sources product from
its 100% owned subsidiary in Virginia and several offshore sources.
Pro-Trak Corporation reported sales volume of approximately $8.2
million in 1996. The Company anticipates consolidating Pro-Trak's
sales, marketing and distribution functions over the next several
months.
Lake of the Woods is a designer, manufacturer and marketer of branded
leather footwear for both the outdoor and occupational segments of
the market. The LAKE OF THE WOODS/R/ product line includes a full
range of sporting, hiking and work boots including the recently
announced CYBER-SYSTEM/R/ (which is designed to provide maximum inner
space comfort in the work boot line) and the CYBER-PAC/R/ high
performance insulation package in sporting boots.
The Company does not anticipate this acquisition will have a material
impact on 1997 results.
4. EARNINGS PER SHARE
The FASB has issued Statement No. 128, Earnings per Share, which
supersedes APB Opinion No. 15. Statement No. 128 requires the
presentation of earnings per share by all entities that have common
stock or potential common stock outstanding, such as options and
convertible securities, that trade in a public market. Those
entities that have only common stock outstanding are required to
present basic earnings per share amounts. All other entities are
required to present basic and diluted per share amounts. Diluted per
share amounts assume the conversion, exercise or issuance of all
potential common stock instruments unless the effect is to reduce a
loss or increase the income per common share from continuing
operations. All entities required to present per share amounts must
initially apply Statement No. 128 for annual and interim periods
ending after December 15, 1997. Earlier application is not
permitted.
If the Company had applied Statement No. 128 in the accompanying
condensed consolidated financial statements, both the basic earnings
per share and the diluted earnings per share would have been the same
as the earnings per common and common equivalent share which was
reported.
<PAGE>
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.
<TABLE>
<CAPTION>
Percentage of Net Sales
Three Months Ended Nine Months Ended
September 27, September 28, September 27, September 28,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Net Sales 100.0% 100.0% 100.0% 100.0%
Cost of Goods Sold 70.3 71.1 72.5 72.5
---- ---- ---- ----
Gross Profit 29.7 28.9 27.5 27.5
Selling and
Administrative
Expenses 17.4 17.8 19.9 21.1
---- ---- ---- ----
Operating
Income 12.3 11.1 7.6 6.4
</TABLE>
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 nine-month period ending September 27, 1997 should not be
considered to be indicative of results to be reported for the balance of
the fiscal year.
Three Months Ended September 27, 1997 Compared to Three Months Ended
September 28, 1996
Net Sales
Net sales for the three months ended September 27, 1997 increased
$6,170,763, or 17%, to $41,884,450 from $35,713,687 for the three months
ended September 28, 1996. The growth in net sales was primarily due to
the contribution of $2.8 million in net sales by the LAKE OF THE WOODS/R/
brand which was acquired in July 1997 and an increase in net sales of the
RED BALL/R/ brand of $2.1 million over last year. DANNER/R/ sales
increased approximately $.9 million over last year. The increase in
LACROSSE/R/ product sales of approximately 2% during the quarter was
largely offset by reduced sales in the rainwear market due to generally
mild weather conditions across most of the country.
Gross Profit
Gross profit for the three months ended September 27, 1997 increased 20%
to $12,422,199, or 29.7% of net sales, from $10,315,238 or 28.9% of net
sales in the third quarter of 1996. More favorable pricing on key raw
materials and higher production levels at the Company's La Crosse,
Wisconsin plant were the primary contributions to the improved margin
percentage.
Selling and Administrative Expenses
Selling and administrative expenses in the third quarter of 1997 increased
14%, to $7,269,995, or 17.4% of net sales, from $6,350,308, or 17.8% of
net sales in the third quarter of 1996. The increase in operating
expenses was primarily a result of the additional expenses incurred to
support the LAKE OF THE WOODS/R/ product line and the volume related
variable expenses incurred as a result of increased sales. Operating
expenses decreased as a percentage of net sales primarily due to the sales
growth contributed by the RED BALL/R/ and LAKE OF THE WOODS/R/ products
which resulted in leveraging fixed operating expenses.
Interest Expense
Interest expense for the three months ended September 27, 1997 increased
8% to $597,206 or 1.4% of net sales, from $552,904 or 1.5% of net sales
for the three months ended September 28, 1996. Higher average borrowings,
primarily as a result of the Pro-Trak acquisition on July 2, 1997, was the
primary reason for the increase in interest expense.
Income Tax Expense
The Company's effective income tax rate was 39.1% in the third quarter of
1997 compared to 39.4% in the third quarter of 1996.
Net Income
Primarily as a result of the increased net sales, the net income for the
third quarter of 1997 increased to $2,933,484 from $2,124,423 in the third
quarter of 1996.
Nine Months Ended September 27, 1997 Compared to Nine Months Ended
September 28, 1996
Net Sales
Net sales for the nine months ended September 27, 1997 increased
$22,104,211, or 27%, to $103,003,126 from $80,898,915 for the first nine
months of 1996. The inclusion of net sales of RAINFAIR/R/ and RED BALL/R/
products, both of which were acquired during the second quarter of 1996,
accounted for $14.8 million of increased net sales. Rainfair's sales
during the first nine-months of 1997 were impacted by $2.8 million of
shipments on a spring order to a major national account. The net sales of
the LAKE OF THE WOODS/R/ product line, which was acquired in July 1997,
accounted for $2.8 million of the increase in net sales. The balance of
the increase was due to increased shipments of LACROSSE/R/ and DANNER/R/
products during the second and third quarters, primarily as a result of
the increase in advance orders.
Gross Profit
Gross profit for the nine months ended September 27, 1997 increased 28% to
$28,359,914, or 27.5% of net sales, from $22,229,361 or 27.5% of net sales
in the first nine months of 1996. The increase in gross profit was
primarily due to the increase in net sales.
Selling and Administrative Expenses
Selling and administrative expenses in the first nine months of 1997
increased 20%, to $20,541,615, or 19.9% of net sales, from $17,058,711, or
21.1% of net sales in the first nine months of 1996. The increase in
operating expenses was primarily the result of including the Rainfair
business for all of 1997 versus five months during the first nine months
of 1996 and the volume related variable expenses associated with the
increased net sales. Operating expenses decreased as a percentage of net
sales primarily as the result of the Company's ability to leverage the
LaCrosse operating expenses with the additional LACROSSE/R/ product net
sales and the volume contributed by the RED BALL/R/ and LAKE OF THE
WOODS/R/ product sales.
Interest Expense
Interest expense for the first nine months of 1997 increased 20% to
$1,369,241 or 1.3% of net sales, from $1,140,502 or 1.4% of net sales for
the first nine months of 1996. An increase in debt to finance the
Rainfair and Pro-Trak acquisitions and the acquisition of certain assets
of Red Ball, Inc. was the primary reason for the increase in interest
expense during the first nine months of 1997.
Income Tax Expense
The Company's effective income tax rate was 39.1% in the first nine months
of 1997 compared to 39.3% in the first nine months of 1996.
Net Income
As a result of the increased net sales and lower operating expenses as a
percent of net sales, net income for the first nine months of 1997
increased to $4,017,450 from $2,697,851 in the first nine months of 1996.
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 revolving 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.
Net cash used in operating activities was $22.7 million in the first nine
months of 1997 compared to $16.3 million in the first nine months of 1996.
Higher receivable and inventory levels to support the increase in sales
was the primary reason for the increase in cash used in operating
activities.
Net cash used in investing activities was $9.8 million in the first nine
months of 1997, down approximately $4.9 million from the $14.7 million
used in investing activities the first nine months of 1997. The 1996
investing activities included $12.5 million related to the Rainfair, Inc.
and Red Ball, Inc. acquisitions while 1997 included $7.3 million related
to the Pro-Trak acquisition.
Net cash provided by financing activities was $26.1 million during the
first nine months of 1997, down $2.8 million from the $28.9 million
provided by financing activities the nine months of 1996. In the first
nine months of 1997, the Company invested approximately $7.0 million in
acquisitions, which was approximately $5.0 million less than the amount
invested in the first nine months of 1996. This reduction in acquisitions
resulted in reduced bank borrowings which was the primary reason for the
decrease in cash provided by financing activities.
The Company and Craig Leipold each own 50% of the common shares of
Rainfair, Inc., a Company subsidiary. The Company and Leipold recently
reached an agreement wherein the Company will purchase all of Leipold's
shares in December 1997 for approximately $2.4 million. The Company
intends to utilize short-term borrowings under the revolving credit
agreement to finance this transaction.
<PAGE>
PART II Other Information
ITEM 6 Exhibits and Reports on Form 8-K
(a) Exhibit Number Description
(10.1) Amendment Agreement, dated as of August 23,
1997, by and between LaCrosse Footwear,
Inc., Rainfair, Inc., and Craig Leipold
(27) Financial Data Schedule (EDGAR version
only)
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the quarter
ended September 27, 1997
<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: November 10, 1997 By: /s/ Patrick K. Gantert
Patrick K. Gantert
President and Chief Executive
Officer
Date: November 10, 1997 By: /s/ Robert J. Sullivan
Robert J. Sullivan
Vice President-Finance and
Administration And Chief
Financial Officer (Principal
Financial Officer)
<PAGE>
LACROSSE FOOTWEAR, INC.
EXHIBIT INDEX TO QUARTERLY REPORT ON FORM 10-Q
For the Quarterly Period ended September 27, 1997
Exhibit
(10.1) Amendment Agreement, dated as of August 23, 1997, by
and between LaCrosse Footwear, Inc., Rainfair, Inc.
and Craig Leipold.
(27) Financial Data Schedule (EDGAR) version only)
AMENDMENT AGREEMENT
THIS AMENDMENT AGREEMENT, dated as of August 23, 1997, by and
between LaCrosse Footwear, Inc., a Wisconsin corporation ("LaCrosse"),
Rainfair, Inc., a Wisconsin corporation formerly known as Rainco, Inc.
("Company"), and Craig L. Leipold, an individual resident of Wisconsin
("Leipold").
W I T N E S S E T H:
WHEREAS, Leipold currently owns 1,250 shares of the Company's
Class B Common Stock;
WHEREAS, LaCrosse, the Company and Leipold are parties to that
certain Shareholders' Agreement, dated as of May 31, 1996 ("Shareholders'
Agreement");
WHEREAS, the Company and Leipold Holding Company are parties to
that certain Sublease, dated as of May 31, 1996, as amended ("Sublease").
WHEREAS, LaCrosse, the Company and Leipold are parties to that
certain Employment Agreement, dated as of May 31, 1996 ("Employment
Agreement");
WHEREAS, pursuant to such Employment Agreement, the Company has
granted stock options to Leipold pursuant to separate Stock Option
Agreements, dated as of May 31, 1996, and May 31, 1997, respectively
(individually a "Stock Option Agreement" and collectively the "Stock
Option Agreements");
WHEREAS, the Shareholders' Agreement, the Employment Agreement,
the Sublease and the Stock Option Agreements are individually referred to
herein as a "Prior Agreement" and collectively as the "Prior Agreements";
and
WHEREAS, any capitalized term used in this Amendment Agreement
without definition shall have the meaning given it in the Shareholders'
Agreement or such other Prior Agreement.
NOW, THEREFORE, in consideration of the mutual promises set
forth herein, the parties, intending to be legally bound, hereby agree as
follows:
1. Exercise of Option; Shareholders' Agreement.
The parties agree that LaCrosse is entitled to exercise
immediately and does hereby exercise the Option to purchase the 1,250
shares ("Shares") of Class B Common Stock held by Leipold for an aggregate
cash purchase price of Two Million Three Hundred Sixty-Four Thousand Five
Hundred Sixty-Seven Dollars ($2,364,567) ("Purchase Price"). The Closing
for the sale and purchase of the Shares pursuant to the exercise of the
Option shall take place on December 1, 1997 ("Closing Date"), in
accordance with the procedures outlined in Section 5(f) of the
Shareholders' Agreement except that the Purchase Price shall be paid by
wire transfer to an account designated by Leipold in writing. At the time
of the Closing, the Shareholders' Agreement shall terminate and no longer
be effective for any purpose.
2. Resignations of Directors.
Concurrently with the Closing, Leipold and Christian Steinmetz
shall resign as directors of the Company.
3. Prior Agreements Continue in Full Force and Effect.
Except as expressly provided herein, all of the Prior Agreements
(other than the Shareholders' Agreement which is dealt with as provided in
Paragraph 1 above) shall continue in full force and effect. Without
limiting the generality of the foregoing, the Employment Agreement, the
Sublease and the Stock Option Agreements shall continue in full force and
effect.
4. Release.
Each of the parties hereto, on his/its behalf and on behalf of
his/its respective heirs, successors, assigns, personal representatives
and agents (individually a "Releasing Party" and collectively "Releasing
Parties"), does hereby:
a. Absolutely and unconditionally release, remise and forever
discharge the other parties hereto, each of its subsidiaries, and
each of their respective heirs, personal representatives,
shareholders, directors, officers, agents, representatives,
successors and assigns (individually a "Released Party" and
collectively the "Released Parties"), from and against any and all
claims, demands, rights and liabilities of any nature and kind
whatsoever which any Releasing Party may have as of the date hereof
against any Released Party related to the performance, non-
performance or termination of the Shareholders' Agreement. All
claims, demands, rights and liabilities which a Releasing Party has
against any Released Party, whether known or unknown, foreseen or
unforeseen, absolute or contingent, are hereby extinguished.
b. Covenant and agree not to sue, institute any action or
proceeding whatsoever (legal, equitable or otherwise) against, or
threaten to sue or to institute any action or proceeding against, any
Released Party with respect to any claim, demand, right or liability
released in Paragraph 4(a) above.
5. Indemnification.
Each of Leipold, on the one hand, and each of LaCrosse and the
Company, on the other hand, covenants and agrees to hold the other and
each Released Party harmless from and against any loss, cost, damage or
expense (including, without limitation, reasonable attorneys' fees) in
connection with any breach of this Amendment Agreement.
6. Miscellaneous.
Except for the Prior Agreements, this instrument embodies the
entire agreement between the parties hereto with respect to the subject
matter of this Amendment Agreement, and there have been and are no
agreements, representations or warranties between the parties hereto other
than those set forth or provided for herein. This Amendment Agreement may
not be amended, modified or supplemented other than in a writing signed by
all parties hereto. This Amendment Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of
which together shall constitute but one and the same instrument. The
headings in the Amendment Agreement are inserted for convenience only and
shall not constitute a part of this Amendment Agreement. The parties
agree that if any provision of this Amendment Agreement shall under any
circumstances be deemed invalid or inoperative, this Amendment Agreement
shall be construed with the invalid or inoperative provision deleted, and
the rights and obligations of the parties shall be construed and enforced
accordingly. This Amendment Agreement shall be governed by and construed
in accordance with the internal law of the State of Wisconsin.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment Agreement to be duly executed as of the day and year first above
written.
/s/ Craig L. Leipold (SEAL)
Craig L. Leipold
LaCROSSE FOOTWEAR, INC. ("LaCrosse")
By: /s/ Patrick K. Gantert
Patrick K. Gantert, President
RAINFAIR, INC. (the "Company")
By: /s/ Craig L. Leipold
Craig L. Leipold, President
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<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
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