EXHIBIT 10.1
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of September
8, 2006, by and between LACROSSE FOOTWEAR, INC., a Wisconsin corporation
("Borrower"), and XXXXX FARGO BANK, NATIONAL ASSOCIATION ("Bank").
RECITALS
Borrower has requested that Bank extend or continue credit to Borrower as
described below, and Bank has agreed to provide such credit to Borrower on the
terms and conditions contained herein.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Bank and Borrower hereby agree as follows:
ARTICLE I
CREDIT TERMS
SECTION 1.1. LINE OF CREDIT.
(a) Line of Credit. Subject to the terms and conditions of this Agreement,
Bank hereby agrees to make advances to Borrower from time to time under a
revolving line of credit ("Line of Credit") up to and including June 30, 2009,
not to exceed (i) at any time (other than during each Reduction Period, as
defined below), the aggregate principal amount of Thirty Million Dollars
($30,000,000.00), and (ii) from and including each January 1 to and including
each May 31 (with each such period referred to as a "Reduction Period"), the
aggregate principal amount of Seventeen Million Five Hundred Thousand Dollars
($17,500,000.00), the proceeds of which shall be used to finance the working
capital requirements of Borrower and Xxxxxx, Inc., a Wisconsin corporation
("Subsidiary"). Borrower's obligation to repay advances under the Line of Credit
shall be evidenced by a promissory note dated as of September 8, 2006 in the
form attached hereto as Exhibit A ("Line of Credit Note"), all terms of which
are incorporated herein by this reference. Bank represents and warrants to
Borrower that Bank has not assigned, endorsed or transferred the promissory note
dated as of $30,000,000.00 dated as of October 1, 2005 (the "Prior Note") and
agrees that it shall not hereafter endorse, assign, endorse or transfer the
Prior Note.
(b) Letter of Credit Subfeature. As a subfeature under the Line of Credit,
Bank agrees from time to time during the term thereof to issue or cause an
affiliate to issue standby, sight commercial or usance commercial letters of
credit for the account of Borrower to finance the backing of imports and exports
(each, a "Letter of Credit" and collectively, "Letters of Credit"); provided
however, that the aggregate undrawn amount of all outstanding Letters of Credit
plus the face amount of all outstanding drafts created under usance commercial
Letter of Credit
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("Usance Drafts"), shall not at any time exceed Five Million Dollars
($5,000,000.00). The form and substance of each Letter of Credit shall be
subject to approval by Bank, in its sole discretion. No Letter of Credit shall
have an expiration date subsequent to the maturity date of the Line of Credit.
The undrawn amount of all Letters of Credit and the face amount of all
outstanding Usance Drafts shall be reserved under the Line of Credit and shall
not be available for borrowings thereunder. Each Letter of Credit shall be
subject to the additional terms and conditions of the Letter of Credit
agreements, applications and any related documents required by Bank in
connection with the issuance thereof. Each drawing paid under a Letter of Credit
shall be deemed an advance under the Line of Credit and shall be repaid by
Borrower in accordance with the terms and conditions of this Agreement
applicable to such advances; provided however, that if advances under the Line
of Credit are not available, for any reason, at the time any drawing is paid,
then Borrower shall immediately pay to Bank the full amount drawn, together with
interest thereon from the date such drawing is paid to the date such amount is
fully repaid by Borrower, at the variable Prime Rate-based rate of interest
applicable to advances under the Line of Credit. In such event Borrower agrees
that Bank, in its sole discretion, may debit any account maintained by Borrower
with Bank for the amount of any such drawing. Notwithstanding the foregoing,
usance commercial Letters of Credit shall contain such provisions and be issued
in such manner for such purpose as to satisfy Bank that any bankers' acceptance
created by Bank's acceptance of a draft thereunder shall be eligible for
discount by a Federal Reserve Bank, will not result in a liability of Bank
subject to reserve requirements under any law, regulation or administrative
order, and will not cause Bank to violate any lending limit imposed upon Bank by
any law, regulation or administrative order. Usance commercial Letters of Credit
shall provide for drafts thereunder with terms which do not exceed the lesser of
90 days or such other period of time as may be necessary for the acceptance
created thereunder to be eligible for discount and otherwise comply with this
Agreement; provided however, that no usance commercial Letter of Credit shall
provide for drafts with a term which ends subsequent to the maturity of the Line
of Credit The amount of each matured Usance Draft shall be deemed an advance
under the Line of Credit and shall be repaid by Borrower in accordance with the
terms and conditions of this Agreement applicable to such advances; provided
however, that if the Line of Credit is not available, for any reason whatsoever,
at the time any such acceptance matures, or if advances are not available under
the Line of Credit at such time due to any limitation on borrowings set forth
herein, then Borrower shall immediately pay to Bank the full amount of such
Usance Draft, together with interest thereon from the date such acceptance
matures and is honored by Bank to the date such amount is fully paid by
Borrower, at the variable Prime Rate-based rate of interest applicable to
advances under the Line of Credit. In such event, Borrower agrees that Bank, at
Bank's sole discretion, may debit Borrower's deposit account with Bank for the
amount of any such Usance Draft.
(c) Borrowing and Repayment. Borrower may from time to time during the term
of the Line of Credit borrow, partially or wholly repay its outstanding
borrowings, and reborrow, subject to all of the limitations, terms and
conditions contained herein or in the Line of Credit Note; provided however,
that the total outstanding borrowings, Letters of Credit and Usance Drafts under
the Line of Credit shall not at any time exceed the applicable maximum principal
amount available thereunder, as set forth in Section 1.1(a) above. The
provisions of the Line of Credit Note (as modified, replaced, renewed, or
restated from time to time) are incorporated by this reference herein.
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SECTION 1.2. INTEREST/FEES.
(a) Interest. The outstanding principal balance of the Line of Credit shall
bear interest at the rate(s) of interest set forth in the Line of Credit Note.
The amount of each draft paid by Bank under any Letter of Credit shall bear
interest from the date such draft is paid to the date such amount is fully
repaid by Borrower at the variable Prime Rate-based rate of interest applicable
to the Line of Credit.
(b) Computation and Payment. Interest shall be computed on the basis of a
360-day year, actual days elapsed. Interest shall be payable at the times and
place set forth in the Line of Credit Note or, as applicable, in the Letter of
Credit Agreement.
(c) Annual Fee. Borrower shall pay to Bank an annual non-refundable
commitment fee for the Line of Credit equal to Ten Thousand Dollars
($10,000.00).
Such fee shall be payable on each June 1 until Bank has no further commitments
to make Line of Credit Advances under the Loan Documents.
(e) Letter of Credit Fees. Borrower shall pay to Bank (i) fees upon the
issuance of each Letter of Credit equal to 1.75% of the face amount thereof, and
(ii) fees upon the payment or negotiation of each drawing under any Letter of
Credit and upon the occurrence of any other activity with respect to any Letter
of Credit (including without limitation, the transfer, amendment or cancellation
of any Letter of Credit) determined in accordance with Bank's standard fees and
charges then in effect for such activity.
(f) Acceptance Fees. For any bankers' acceptance created hereunder by
Bank's acceptance of a draft presented under a usance commercial Letter of
Credit, Borrower shall pay to Bank, in addition to such processing and other
fees as may be due to Bank in connection with such Letter of Credit, an
acceptance fee for each such acceptance, payable on the date it is created,
determined in accordance with Bank's standard fees and charges in effect at the
time such acceptance is created. Bank shall have no obligation to repay all or
any portion any acceptance fee in the event an acceptance is paid prior to
maturity, by acceleration or otherwise.
SECTION 1.3. COLLATERAL.
As security for all indebtedness of Borrower to Bank subject hereto,
Borrower shall grant, and shall cause Subsidiary to grant to Bank security
interests of first priority (subject to Permitted Encumbrances, as defined in
Section 5.8 below) in all Collateral (as defined in the Security Agreement and
Third Party Security Agreement attached hereto as Exhibits B and C, each, a
"Security Agreement").
Borrower shall reimburse Bank immediately upon demand for all reasonable
costs and expenses incurred by Bank in connection with any of the foregoing
security, including without limitation, filing and recording fees.
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Unless an Event of Default exists, Borrower and Subsidiary shall not be
obligated to perfect the Bank's security interest under the Security Agreement
by any means other than the filing and continuation in the states in the United
States in which they are formed of a UCC-1 financing statement covering the
Collateral (as the term is defined in the Security Agreements), except that:
(a) with respect to chattel paper or instruments, if the amount owing to
Borrower or Subsidiary thereunder exceeds $100,000.00, Borrower or Subsidiary
shall surrender possession thereof to the Bank; and
(b) with respect to raw materials and inventory of finished goods that are
in transit to the United States, Borrower or Subsidiary shall either put Bank in
possession of the documents of title to such in-transit inventory, or there
shall be a duly filed UCC-1 financing statement of record with respect to the
Borrower or Subsidiary, as relevant, covering the documents of title to such
in-transit inventory.
Upon the occurrence and during the continuance of an Event of Default,
Borrower and Subsidiary shall immediately execute, obtain from third parties,
deliver, file and record such documentation as Bank reasonably requires in order
to perfect the Bank's security interest in all Collateral.
Upon Borrower's or Subsidiary's request made in connection with sales or
transfers of equipment, fixtures or improvements permitted under Section 6(c) of
the Security Agreements, Bank shall release its security interest therein of
fact and record.
SECTION 1.4. TERMS
References in this Agreement to fiscal quarters and fiscal years are to
Borrower's fiscal quarters and fiscal years.
As used herein, "GAAP" means generally accepted accounting principles in effect
in the United States, consistently applied.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Borrower makes the following representations and warranties to Bank, which
representations and warranties shall survive the execution of this Agreement and
shall continue in full force and effect until the full and final payment, and
satisfaction and discharge, of all obligations of Borrower to Bank subject to
this Agreement.
SECTION 2.1. LEGAL STATUS. Borrower is a corporation, duly organized and
existing and in good standing under the laws of the State of Wisconsin, and is
qualified or licensed to do business (and is in good standing as a foreign
corporation, if applicable) in all
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jurisdictions in which such qualification or licensing is required or in which
the failure to so qualify or to be so licensed could have a material adverse
effect on Borrower.
SECTION 2.2. AUTHORIZATION AND VALIDITY. This Agreement and each promissory
note, contract, instrument and other document required hereby or at any time
hereafter delivered to Bank in connection herewith (collectively, the "Loan
Documents") have been duly authorized, and upon their execution and delivery in
accordance with the provisions hereof will constitute legal, valid and binding
agreements and obligations of Borrower or the party (other than Bank) which
executes the same, enforceable in accordance with their respective terms.
SECTION 2.3. NO VIOLATION. The execution, delivery and performance by
Borrower of each of the Loan Documents do not violate any provision of any law
or regulation, or contravene any provision of the Articles of Incorporation or
By-Laws of Borrower, or result in any breach of or default under any contract,
obligation, indenture or other instrument to which Borrower is a party or by
which Borrower may be bound.
SECTION 2.4. LITIGATION. Other than as set forth in Schedule 2.4 hereto,
there are no pending, or to the best of Borrower's knowledge material
threatened, actions, claims, investigations, suits or proceedings by or before
any governmental authority, arbitrator, court or administrative agency with
uninsured claim(s) in excess of $1,000,000.00, individually or, with respect to
the claims of any one claimant, in the aggregate, or which could reasonably
expected to have a material adverse effect on the operation of Borrower other
than those disclosed by Borrower to Bank in writing prior to the date hereof.
SECTION 2.5. CORRECTNESS OF FINANCIAL STATEMENT. The financial statement of
Borrower dated July 1, 2006, a true copy of which has been delivered by Borrower
to Bank prior to the date hereof, (a) is complete and correct and presents
fairly the financial condition of Borrower, (b) discloses all material
liabilities of Borrower that are required to be reflected or reserved against
under GAAP, whether liquidated or unliquidated, fixed or contingent, and (c) has
been prepared in accordance with GAAP, all subject to normal year-end audit
adjustments and the absence of footnotes. Since the date of such financial
statement there has been no material adverse change in the financial condition
of Borrower, nor has Borrower mortgaged, pledged, granted a security interest in
or otherwise encumbered any of its assets or properties except in favor of Bank,
Permitted Encumbrances, or as set forth in Schedule 2.5 hereto.
SECTION 2.6. INCOME TAX RETURNS. Borrower has no knowledge of any pending
assessments or adjustments of its income tax payable with respect to any year.
SECTION 2.7. NO SUBORDINATION. There is no agreement, indenture, contract
or instrument to which Borrower is a party or by which Borrower may be bound
that requires the subordination in right of payment of any of Borrower's
obligations subject to this Agreement to any other obligation of Borrower.
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SECTION 2.8. PERMITS, FRANCHISES. Borrower possesses, and will hereafter
possess, all permits, consents, approvals, franchises and licenses required and
rights to all trademarks, trade names, patents, and fictitious names, if any,
necessary to enable it to conduct the business in which it is now engaged in
compliance with applicable law, except to the extent that non-compliance with
the foregoing could not be reasonably expected to have a material adverse effect
of Borrower's consolidated operations or financial condition.
SECTION 2.9. ERISA. Borrower is in compliance in all material respects with
all applicable provisions of the Employee Retirement Income Security Act of
1974, as amended or recodified from time to time ("ERISA"), and all provisions
of any defined employee pension benefit plan (as defined in ERISA) maintained or
contributed to by Borrower (each, a "Plan"). No Reportable Event as defined in
ERISA has occurred and is continuing with respect to any Plan. Borrower has met
its minimum funding requirements under ERISA with respect to each Plan. Each
Plan will be able to fulfill its benefit obligations as they come due in
accordance with applicable provisions of the Plan.
SECTION 2.10. OTHER OBLIGATIONS. Borrower is not in material default on any
obligation for borrowed money or any purchase money obligation in excess of
$500,000.00 or any other material lease, commitment, contract, instrument or
obligation.
SECTION 2.11. ENVIRONMENTAL MATTERS. Except as disclosed in Schedule 2.11
hereto, (a) Borrower is in compliance in all material respects with all
applicable federal or state environmental, hazardous waste, health and safety
statutes, and any rules or regulations adopted pursuant thereto, which govern or
affect any of Borrower's operations and/or properties, including without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, the Superfund Amendments and Reauthorization Act of 1986, the
Federal Resource Conservation and Recovery Act of 1976, and the Federal Toxic
Substances Control Act, as any of the same may be amended, modified or
supplemented from time to time, which, if not complied with, could reasonably be
expected to have a material adverse effect on Borrower, (b) none of the
operations of Borrower is the subject of any federal or state investigation
evaluating whether any remedial action involving a material expenditure is
needed to respond to a release of any toxic or hazardous waste or substance into
the environment and (c) Borrower has no material contingent liability in
connection with any release of any toxic or hazardous waste or substance into
the environment. As used herein, the term "material" or "material adverse
effect" means an expenditure or liability of $1,000,000.00 or greater,
SECTION 2.12. SUBSIDIARY. Subsidiary and Lacrosse International, Inc. are
the only entities in existence as of the date hereof in which Borrower owns all
or a majority or a controlling share of the equity interests.
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ARTICLE III
CONDITIONS
SECTION 3.1. CONDITIONS OF INITIAL EXTENSION OF CREDIT. The obligation of
Bank to extend any credit contemplated by this Agreement is subject to the
fulfillment to Bank's satisfaction of all of the following conditions:
(a) Approval of Bank Counsel. Bank's counsel shall be satisfied that the
Loan Documents have been duly authorized, executed and delivered, Borrower
exists and Bank's security interests have been perfected with the priorities
required under the Loan Documents.
(b) Documentation. Bank shall have received a fully executed copy of this
Agreement and, in form and substance satisfactory to Bank, each of the
following:
(i) Line of Credit Note.
(ii) Corporate Resolution: Borrowing.
(iii) Resolution from Subsidiary.
(iv) Certificates of Incumbency.
(v) Continuing Security Agreement.
(vi) Third Party Security Agreement.
(vii) Agreement and Acknowledgment of Security Interest (5).
(viii) UCC-1 Financing Statement.
(c) Financial Condition. There shall have been no material adverse change,
as determined by Bank, in the financial condition or business of Borrower, nor
any material decline, as determined by Bank, in the market value of any
collateral required hereunder or a substantial or material portion of the assets
of Borrower.
(d) Insurance. Borrower shall have delivered to Bank evidence of insurance
coverage on all Borrower's and Subsidiary's property, in form, substance,
amounts, covering risks and issued by companies reasonably satisfactory to Bank,
and as to insurance covering Collateral, with loss payable endorsements in favor
of Bank and Borrower, as their interests may appear. Bank agrees that as of the
date hereof, Borrower's and Subsidiary's insurance coverage is satisfactory to
Bank.
SECTION 3.2. CONDITIONS OF EACH EXTENSION OF CREDIT. The obligation of Bank
to make each extension of credit requested by Borrower hereunder shall be
subject to the fulfillment to Bank's satisfaction of each of the following
conditions:
(a) Compliance. The representations and warranties contained herein and in
each of the other Loan Documents shall be true in all material respects on and
as of the date of the signing of this Agreement and on the date of each
extension of credit by Bank pursuant hereto, with the same effect as though such
representations and warranties had been made on and as of each such
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date, and on each such date, no Event of Default as defined herein, and no
condition, event or act which with the giving of notice or the passage of time
or both would constitute such an Event of Default, shall have occurred and be
continuing or shall exist.
(b) Letters of Credit. Bank shall have received a Letter of Credit
Agreement in form and content acceptable to Bank prior to the issuance of any
Letter of Credit.
ARTICLE IV
AFFIRMATIVE COVENANTS
Borrower covenants that so long as Bank remains committed to extend credit
to Borrower pursuant hereto, or any liabilities (whether direct or contingent,
liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents
remain outstanding, and until payment in full of all obligations of Borrower
subject hereto, Borrower shall (and, with respect to Sections 4.2, 4.4, 4.5, 4.6
and 4.7, shall cause Subsidiary to), unless Bank otherwise consents in writing:
SECTION 4.1. PUNCTUAL PAYMENTS. Punctually pay all principal, interest,
fees or other liabilities due under any of the Loan Documents at the times and
place and in the manner specified therein, and immediately upon demand by Bank,
the amount by which the outstanding principal balance of any credit subject
hereto at any time exceeds any limitation on borrowings applicable thereto.
SECTION 4.2. ACCOUNTING RECORDS. Maintain adequate books and records in
accordance with GAAP, and permit any representative of Bank, at any reasonable
time, to inspect, audit and examine such books and records, to make copies of
the same, and to inspect the properties of Borrower and/or Subsidiary.
SECTION 4.3. FINANCIAL STATEMENTS. Provide to Bank all of the following, in
form and detail satisfactory to Bank:
(a) not later than 90 days after and as of the end of each fiscal year, an
audited financial statement of Borrower, prepared by a certified public
accountant acceptable to Bank, to include balance sheet and income statement;
(b) not later than 45 days after and as of the end of each fiscal quarter,
a financial statement of Borrower, prepared by Borrower, to include balance
sheet and income statement;
(c) contemporaneously with each annual and quarterly financial statement of
Borrower required hereby, a certificate of the president or chief financial
officer of Borrower that (a) said financial statements are accurate fairly
present in all material respects the financial conditions, results of operations
and cash flows of Borrower (and in the case of financial statements presented
for the first, second and third fiscal quarters of the Borrower, subject to
subject to normal year-end audit adjustments and the absence of footnotes) and
(b) to the knowledge of such officer there exists no Event of Default nor any
condition, act or event which with the giving of notice or the passage of time
or both would constitute an Event of Default;
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(d) concurrently with the annual reports provided to Lender under Section
4.3(a), a copy of the Borrower's Securities and Exchange Commission 10-K filing
covering the same fiscal year, and concurrently with the quarterly reports
provided to Lender under Section 4.3(b), a copy of the Borrower's Securities and
Exchange Commission 10-Q filing covering the same fiscal quarter;
(e) from time to time such other information as Bank may reasonably
request.
SECTION 4.4. COMPLIANCE. Preserve and maintain all licenses, permits,
governmental approvals, rights, privileges and franchises necessary for the
conduct of its and Subsidiary's business; and comply with the provisions of all
documents pursuant to which Borrower is organized and/or which govern Borrower's
and Subsidiary's continued existence and with the requirements of all laws,
rules, regulations and orders of any governmental authority applicable to
Borrower, Subsidiary and/or their business, except to the extent that
non-compliance with the foregoing could not be reasonably expected to have a
material adverse effect of Borrower's consolidated operations or financial
condition.
SECTION 4.5. INSURANCE. Maintain and keep in force insurance of the types
and in amounts customarily carried in lines of business similar to that of
Borrower and Subsidiary, including but not limited to fire, extended coverage,
public liability, flood, cargo, property damage and workers' compensation, with
all such insurance carried with companies and in amounts reasonably satisfactory
to Bank, and deliver to Bank from time to time at Bank's request schedules
setting forth all insurance then in effect. Notwithstanding any provision to the
contrary herein or in any other Loan Document, Borrower and Subsidiary may use
insurance proceeds paid by reason of damage to or destruction of Collateral or
for liabilities to repair or replace such Collateral or to discharge covered
liabilities (if no Event of Default then exists), (for which purpose Bank will
promptly execute the necessary pay orders or will release insurance proceeds)
provided, that any such proceeds not so used within 30 days after receipt
thereof by Borrower or Subsidiary shall be applied to reduce the outstanding
principal balance of the Line of Credit.
SECTION 4.6. FACILITIES. Keep all properties useful or necessary to
Borrower's or Subsidiary's business in good repair and condition, and from time
to time make necessary repairs, renewals and replacements thereto so that such
properties shall be fully and efficiently preserved and maintained, except to
the extent that non-compliance with the foregoing could not be reasonably
expected to have a material adverse effect of Borrower's consolidated operations
or financial condition.
SECTION 4.7. TAXES AND OTHER LIABILITIES. Pay and discharge when due any
and all indebtedness, obligations, assessments and taxes, both real or personal,
including without limitation federal and state income taxes and state and local
property taxes and assessments, except such (a) as Borrower or Subsidiary may in
good faith contest or as to which a bona fide dispute may arise, and (b) for
which Borrower or Subsidiary has made provision, in accordance with GAAP, for
eventual payment thereof in the event Borrower is obligated to make such
payment.
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SECTION 4.8. LITIGATION. Promptly give notice in writing to Bank of any
litigation pending or threatened against Borrower or Subsidiary with a claim(s)
in excess of an aggregate of $1,000,000.00.
SECTION 4.9. FINANCIAL CONDITION. Maintain Borrower's consolidated
financial condition as follows using GAAP (except to the extent modified by the
definitions herein):
(a) Tangible Net Worth not less than $35,000,000.00 determined as of the
end of each fiscal quarter, with "Tangible Net Worth" defined as the aggregate
of total stockholders' equity plus Subordinated Debt less any intangible assets,
and with "Subordinated Debt" defined as indebtedness subordinated in right of
payment to Borrower's indebtedness to Bank pursuant to subordination agreements
satisfactory to Bank.
(b) Total Liabilities divided by Tangible Net Worth not greater than 1.25
to 1.0 determined as of the end of each first fiscal quarter, 1.50 to 1.0
determined as of the end of each second fiscal quarter, 1.75 to 1.0 determined
as of the end of each third fiscal quarter and 1.50 to 1.0 determined as of the
end of each fiscal year, with "Total Liabilities" defined as the aggregate of
current and non-current liabilities less Subordinated Debt, and with "Tangible
Net Worth" as defined above. Borrower will not change its fiscal year.
(c) Net income after taxes not less than $1.00 on a trailing four-quarter
basis, determined as of each fiscal quarter end.
(d) Current Ratio not less than 1.75 to 1.0, determined as of the end of
each fiscal quarter end, with "Current Ratio" defined as the ratio of current
assets to total current liabilities, and with current liabilities hereby deemed
to include, without limitation, the then outstanding principal amount of all
liabilities, contingent or liquidated, under the Line of Credit.
SECTION 4.10. NOTICE TO BANK. Promptly (but in no event more than five (5)
days after the occurrence of each such event or matter) give written notice to
Bank in reasonable detail of: (a) the occurrence of any Event of Default, or any
condition, event or act which with the giving of notice or the passage of time
or both would constitute an Event of Default; (b) any change in the name or the
organizational structure of Borrower; (c) the occurrence and nature of any
Reportable Event or Prohibited Transaction, each as defined in ERISA, or any
funding deficiency with respect to any Plan; or (d) any termination or
cancellation of any insurance policy which Borrower is required to maintain, or
any uninsured or partially uninsured loss of or damage to property in the amount
of $1,000,000.00 or more.
SECTION 4.11. NEW SUBSIDIARY. Promptly notify Bank in the event that the
assets or revenues of Lacrosse International, Inc. ("New Subsidiary") represent
5% or more of Borrower's consolidated assets or consolidated revenues,
respectively, following which all affirmative and negative covenants and Events
of Default which at such time apply to Subsidiary shall be also made applicable
to New Subsidiary, on terms reasonably acceptable to Bank and Borrower.
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ARTICLE V
NEGATIVE COVENANTS
Borrower further covenants that so long as Bank remains committed to extend
credit to Borrower pursuant hereto, or any liabilities (whether direct or
contingent, liquidated or unliquidated) of Borrower to Bank under any of the
Loan Documents remain outstanding, and until payment in full of all obligations
of Borrower subject hereto, Borrower will not (and will not cause or permit
Subsidiary to) without Bank's prior written consent:
SECTION 5.1. USE OF FUNDS. Use any of the proceeds of any credit extended
hereunder except for the purposes stated in Article I hereof.
SECTION 5.2. DIVIDENDS, DISTRIBUTIONS. Declare or pay any dividend or
distribution either in cash, stock or any other property on Borrower's stock now
or hereafter outstanding, nor redeem, retire, repurchase or otherwise acquire
any shares of any class of Borrower's stock now or hereafter outstanding in
excess of an aggregate of One Million Five Hundred Thousand Dollars
($1,500,000.00) in any fiscal year.
SECTION 5.3. CAPITAL EXPENDITURES. Make any additional investment in fixed
assets in any fiscal year in excess of an aggregate of $5,000,000.00.
SECTION 5.4. OTHER INDEBTEDNESS. Create, incur, assume or permit to exist
any indebtedness or liabilities resulting from borrowings, loans or advances,
whether secured or unsecured, matured or unmatured, liquidated or unliquidated,
joint or several, except (a) the liabilities of Borrower and Subsidiary to Bank,
(b) purchase money indebtedness incurred and liens therefor in connection with
the purchase of equipment (including leases required to be capitalized under
GAAP) and/or real estate for an aggregate purchase price not to exceed
$1,000,000.00 in any fiscal year, (c) any other liabilities of Borrower existing
as of, and disclosed to Bank prior to, the date hereof, and (d) liabilities
secured by Permitted Encumbrances.
SECTION 5.5. MERGER, CONSOLIDATION, TRANSFER OF ASSETS. Merge into or
consolidate with any other entity other than (a) the merger of Subsidiary into
Borrower, and (b) Permitted Transactions (as defined below); make any
substantial change in the nature of Borrower's business as conducted as of the
date hereof; acquire all or substantially all of the assets of any other entity
other than Permitted Transactions; nor sell, lease, transfer or otherwise
dispose of all or a substantial or material portion of Borrower's assets except
(w) in the ordinary course of its business, (y) the sale of bad or doubtful
accounts (provided that all net proceeds of such sales are promptly applied to
reduce the outstanding principal balance of the Line of Credit) or (z) as
permitted in the Security Agreements executed by Borrower and Subsidiary.
"Permitted Transactions" means (i) mergers with other entities whose businesses
are substantially similar to that of Borrower's or Subsidiary's so long as
Borrower or Subsidiary is the surviving entity, (ii) the acquisition by Borrower
or Subsidiary of all or substantially all of the assets of other entities or
divisions thereof, (iii) the acquisition by Borrower or Subsidiary of not less
than 50.1% of the
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outstanding ownership interests in other entities, and, with respect to all of
the foregoing, the aggregate consideration paid or payable (in whatever form,
including, cash notes, stock in Borrower or Subsidiary or other property) by
Borrower and Subsidiary in any fiscal year does not exceed $5,000,000.00. At the
time of the sales described in Section 5.5(a)(y) above Bank shall release in
fact and of record all of its security in the assets being sold.
SECTION 5.6. GUARANTIES. Guarantee or become liable in any way as surety,
endorser (other than as endorser of negotiable instruments for deposit or
collection in the ordinary course of business), accommodation endorser or
otherwise for, nor pledge or hypothecate any assets of Borrower or Subsidiary as
security for, any liabilities or obligations of any other person or entity,
except any of the foregoing in favor of Bank.
SECTION 5.7. LOANS, ADVANCES, INVESTMENTS. Make any loans or advances to or
investments in any person or entity, except any of the foregoing existing as of,
and disclosed to Bank prior to, the date hereof, and additional loans or
advances to employees or officers of Borrower or Subsidiary, or to Subsidiary in
the ordinary course of business in amounts not to exceed an aggregate of
$1,000,000.00 outstanding at any time, and additional investments consisting of
Permitted Transactions and investments made in accordance with Borrower's
Investment Policy in effect as of the date hereof, a copy of which has been
delivered to Bank. In the event that as a result of a Permitted Transaction
Borrower or Subsidiary acquire or form a new subsidiary, such subsidiary shall
be deemed to be included in the definition of Subsidiary as used in this
Agreement, provided, however, that the assets of such new subsidiary shall not
be included in the Borrowing Base unless and until (a) such assets are otherwise
eligible as determined in accordance of the terms of the Borrowing Base, (b)
Bank has performed a collateral audit, at Borrower's expense, in form and
content acceptable to Bank, and (c) Bank is granted a first priority perfected
security interest in such assets pursuant to a Third Party Security Agreement
substantially similar to that executed by Subsidiary.
SECTION 5.8. PLEDGE OF ASSETS. Mortgage, pledge, grant or permit to exist a
security interest in, or lien upon, all or any portion of Borrower's assets now
owned or hereafter acquired, except (i) any of the foregoing in favor of Bank or
disclosed in Schedule 5.8 hereto, (ii) purchase money liens in equipment and
real estate, as applicable, purchased with the proceeds of the indebtedness or
leased as described in Section 5.4(b), and (iii) Permitted Encumbrances. The
term "Permitted Encumbrances" is defined as any of the following as to which no
enforcement, collection, execution, levy or foreclosure proceeding shall have
been commenced, or that are contested in good faith and for which adequate
reserves are maintained: (a) liens for taxes, assessments and governmental
charges or levies; (b) materialmen's, mechanics', carriers', landlords',
laborers' stevedores' and repairmen's liens that exist or arise in the ordinary
course of business; (c) warehousemen's liens incurred by third parties for
temporary storage that is not arranged by Borrower or Subsidiary for goods while
in transit in the ordinary course of business; (d) maritime liens that attach to
the relevant property as cargo as a matter of law if the cargo is insured
against such liens under insurance that has a deductible clause not exceeding
$10,000 per occurrence; (e) purchase money security interest and leases required
to be capitalized under GAAP; (f) easements, rights of way and other
encumbrances on title to real property that do not render title to the property
encumbered thereby unmarketable or materially and adversely affect the use of
such property for its present purpose; (g) encumbrances against fixtures that
are not
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granted by Borrower or Subsidiary; (h) possession of or interests in security
deposits (including interest earned thereon) held by or for the benefit of
lessors under leases (including capital leases) of real property or equipment;
(i) the effect of provisions in leases and applicable law that give preference
to Borrower's or Subsidiary's landlords over proceeds of government takings and
condemnations; and (j) provisions of leases and applicable law that convey or
commit to the conveyance to landlords of fixtures and improvements to leased
premises.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.1. The occurrence of any of the following shall constitute an
"Event of Default" under this Agreement:
(a) Borrower shall fail to pay when due any principal, interest, fees or
other amounts payable under any of the Loan Documents.
(b) Any financial statement or certificate furnished to Bank in connection
with, or any representation or warranty made by Borrower or any other party
under this Agreement or any other Loan Document shall prove to be incorrect,
false or misleading in any material respect when furnished or made.
(c) Any default in the performance of or compliance with any obligation,
agreement or other provision contained herein or in any other Loan Document
(other than those referred to in subsections (a) and (b) above), and with
respect to any such default which by its nature can be cured, such default shall
continue unremedied for a period of twenty (20) days from its occurrence.
(d) Any default in the payment or performance of any obligation, or any
defined event of default, under the terms of any contract or instrument (other
than any of the Loan Documents) pursuant to which Borrower, Subsidiary or any
guarantor hereunder (with each such guarantor referred to herein as a "Third
Party Obligor") has incurred any debt or other liability to any person or
entity, including Bank and with respect to any such default which by its nature
can be cured, such default shall continue unremedied for a period of twenty (20)
days from its occurrence, and, if such debt or liability is owed to a party
other than Bank, the amount thereof exceeds $1,000,000.00, and either, such debt
or liability is then due and payable in full, or the holder of such debt or
liability is entitled, by reason of such default, to declare the same due and
payable in full. As of the date hereof, there are no Third Party Obligors.
(e) The filing of a judgment lien against Borrower, Subsidiary or any Third
Party Obligor; or the recording of any abstract of judgment against Borrower,
Subsidiary or any Third Party Obligor in any county in which Borrower,
Subsidiary or such Third Party Obligor has an interest in real property; or the
service of a notice of levy and/or of a writ of attachment or execution, or
other like process, against the assets of Borrower, Subsidiary or any Third
Party Obligor; or the entry of a judgment against Borrower, Subsidiary or any
Third Party Obligor; and with respect to each of the foregoing, the uninsured
amount in dispute exceeds $1,000,000.00
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and the filing, recording, service, or proceeding in question is not stayed,
dismissed, or released (as applicable) or security is not posted in a manner and
amount reasonably satisfactory to Bank or the applicable court within 60 days
after its occurrence.
(f) Borrower or any Third Party Obligor shall become insolvent, or shall
suffer or consent to or apply for the appointment of a receiver, trustee,
custodian or liquidator of itself or any of its property, or shall generally
fail to pay its debts as they become due, or shall make a general assignment for
the benefit of creditors; Borrower or any Third Party Obligor shall file a
voluntary petition in bankruptcy, or seeking reorganization, in order to effect
a plan or other arrangement with creditors or any other relief under the
Bankruptcy Reform Act, Title 11 of the United States Code, as amended or
recodified from time to time ("Bankruptcy Code"), or under any state or federal
law granting relief to debtors, whether now or hereafter in effect; or any
involuntary petition or proceeding pursuant to the Bankruptcy Code or any other
applicable state or federal law relating to bankruptcy, reorganization or other
relief for debtors is filed or commenced against Borrower, Subsidiary or any
Third Party Obligor (and the same is not dismissed within 60 days after its
commencement, or Borrower, Subsidiary or any Third Party Obligor shall file an
answer admitting the jurisdiction of the court and the material allegations of
any such involuntary petition; or Borrower, Subsidiary or any Third Party
Obligor shall be adjudicated a bankrupt, or an order for relief shall be entered
against Borrower, Subsidiary or any Third Party Obligor by any court of
competent jurisdiction under the Bankruptcy Code or any other applicable state
or federal law relating to bankruptcy, reorganization or other relief for
debtors.
(g) There shall exist or occur any material event or condition which Bank,
in its commercially reasonable discretion, believes impairs, or is substantially
likely to impair, the prospect of payment or performance by Borrower of its
obligations under any of the Loan Documents and the same is not remedied within
20 days after written notice from Bank to Borrower.
(h) The dissolution or liquidation of any of Borrower, Subsidiary or Third
Party Obligor which is a corporation, partnership, joint venture or other type
of entity; or Borrower, Subsidiary or any such Third Party Obligor, or any of
their directors, stockholders or members, shall take action seeking to effect
the dissolution or liquidation of such Borrower, Subsidiary or Third Party
Obligor and such action is not dismissed or abandoned within 60 days after its
commencement.
SECTION 6.2. REMEDIES. Upon the occurrence of any Event of Default: (a) all
indebtedness of Borrower under each of the Loan Documents, any term thereof to
the contrary notwithstanding, shall at Bank's option and without notice become
immediately due and payable without presentment, demand, protest or notice of
dishonor, all of which are hereby expressly waived by each Borrower; (b) the
obligation, if any, of Bank to extend any further credit under any of the Loan
Documents shall immediately cease and terminate; and (c) Bank shall have all
rights, powers and remedies available under each of the Loan Documents, or
accorded by law, including without limitation the right to resort to any or all
security for any credit subject hereto and to exercise any or all of the rights
of a beneficiary or secured party pursuant to applicable law. All rights, powers
and remedies of Bank may be exercised at any time by Bank and from
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time to time after the occurrence of an Event of Default, are cumulative and not
exclusive, and shall be in addition to any other rights, powers or remedies
provided by law or equity.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. NO WAIVER. No delay, failure or discontinuance of Bank in
exercising any right, power or remedy under any of the Loan Documents shall
affect or operate as a waiver of such right, power or remedy; nor shall any
single or partial exercise of any such right, power or remedy preclude, waive or
otherwise affect any other or further exercise thereof or the exercise of any
other right, power or remedy. Any waiver, permit, consent or approval of any
kind by Bank of any breach of or default under any of the Loan Documents must be
in writing and shall be effective only to the extent set forth in such writing.
SECTION 7.2. NOTICES. All notices, requests and demands which any party is
required or may desire to give to any other party under any provision of this
Agreement or the Loan Documents must be in writing delivered to each party at
the following address:
BORROWER: LACROSSE FOOTWEAR, INC.
00000 XX Xxxxxxx Xxx
Xxxxxxxx, XX 00000
Attention: Chief Financial Officer or President
BANK: XXXXX FARGO BANK, NATIONAL ASSOCIATION
Portland Regional Commercial Banking Xxxxxx
0000 X.X. Xxxxx Xxxxxx
XXX X0000-000
Xxxxxxxx XX, 00000
Attention: Xxxxx X. Xxxxxxx Vice-President
or to such other address as any party may designate by written notice to all
other parties. Each such notice, request and demand shall be deemed given or
made as follows: (a) if sent by hand delivery, upon delivery; (b) if sent by
mail, upon the earlier of the date of receipt or three (3) days after deposit in
the U.S. mail, first class and postage prepaid; and (c) if sent by telecopy,
upon receipt.
SECTION 7.3. COSTS, EXPENSES AND ATTORNEYS' FEES. Borrower shall pay to
Bank immediately upon demand the full amount of all commercially reasonable
payments, advances, costs and expenses, including reasonable attorneys' fees (to
include outside counsel fees and all customary allocated costs of Bank's
in-house counsel), expended or incurred by Bank in connection with the
negotiation and preparation of this Agreement and the other Loan Documents, and
the preparation of any amendments and waivers hereto and thereto, and
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including out of pocket expenses incurred in the Bank's continued administration
of the Loan Documents. The non-prevailing party shall pay to the prevailing
party immediately upon demand the full amount of all payments, advances,
charges, costs and expenses, including reasonable attorneys' fees (to include
outside counsel fees and all allocated costs of in-house counsel), expended or
incurred by the non-prevailing party in connection with (a) the enforcement of
Bank's rights and/or the collection of any amounts which become due to Bank
under any of the Loan Documents, and (b) the prosecution or defense of any
action in any way related to any of the Loan Documents, including without
limitation, any action for declaratory relief, whether incurred at the trial or
appellate level, in an arbitration proceeding or otherwise, and including any of
the foregoing incurred in connection with any bankruptcy proceeding (including
without limitation, any adversary proceeding, contested matter or motion brought
by Bank or any other person) relating to any Borrower or Subsidiary.
SECTION 7.4. SUCCESSORS, ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the heirs, executors, administrators, legal
representatives, successors and assigns of the parties; provided however, that
Borrower may not assign or transfer its interest hereunder without Bank's prior
written consent. Bank reserves the right to sell, assign, transfer, negotiate or
grant participations in all or any part of, or any interest in, Bank's rights
and benefits under each of the Loan Documents, subject to Bank providing 30 days
prior written notice to Borrower, except in the event of an assignment by reason
of a merger of Bank. In connection therewith, Bank may disclose all documents
and information which Bank now has or may hereafter acquire relating to any
credit subject hereto, Borrower or its business, or any collateral required
hereunder, subject to a confidentiality agreement reasonably acceptable to Bank
and Borrower.
SECTION 7.5. ENTIRE AGREEMENT; AMENDMENT. This Agreement and the other Loan
Documents constitute the entire agreement between Borrower and Bank with respect
to each credit subject hereto and supersede all prior negotiations,
communications, discussions and correspondence concerning the subject matter
hereof. This Agreement may be amended or modified only in writing signed by each
party hereto. This Agreement amends and restates in its entirety the Credit
Agreement dated of April 15, 2004. All references to a Credit Agreement in any
of the other Loan Documents shall be deemed to mean and refer to this Agreement.
SECTION 7.6. NO THIRD PARTY BENEFICIARIES. This Agreement is made and
entered into for the sole protection and benefit of the parties hereto and their
respective permitted successors and assigns, and no other person or entity shall
be a third party beneficiary of, or have any direct or indirect cause of action
or claim in connection with, this Agreement or any other of the Loan Documents
to which it is not a party.
SECTION 7.7. TIME. Time is of the essence of each and every provision of
this Agreement and each other of the Loan Documents.
SECTION 7.8. SEVERABILITY OF PROVISIONS. If any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or any remaining provisions of this
Agreement.
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SECTION 7.9. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed to be an
original, and all of which when taken together shall constitute one and the same
Agreement.
SECTION 7.10. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Oregon.
SECTION 7.11. ARBITRATION.
(a) Arbitration. The parties hereto agree, upon demand by any party, to
submit to binding arbitration all claims, disputes and controversies between or
among them, whether in tort, contract or otherwise arising out of or relating to
in any way (i) the loan and related Loan Documents which are the subject of this
Agreement and its negotiation, execution, collateralization, administration,
repayment, modification, extension, substitution, formation, inducement,
enforcement, default or termination; or (ii) requests by Borrower for additional
credit.
(b) Governing Rules. Any arbitration proceeding will (i) proceed in a
location in Oregon selected by the American Arbitration Association ("AAA");
(ii) be governed by the Federal Arbitration Act (Title 9 of the United States
Code), notwithstanding any conflicting choice of law provision in any of the
documents between the parties; and (iii) be conducted by the AAA, or such other
administrator as the parties shall mutually agree upon, in accordance with the
AAA's commercial dispute resolution procedures, unless the claim or counterclaim
is at least $1,000,000.00 exclusive of claimed interest, arbitration fees and
costs in which case the arbitration shall be conducted in accordance with the
AAA's optional procedures for large, complex commercial disputes (the commercial
dispute resolution procedures or the optional procedures for large, complex
commercial disputes to be referred to, as applicable, as the "Rules"). If there
is any inconsistency between the terms hereof and the Rules, the terms and
procedures set forth herein shall control. Any party who fails or refuses to
submit to arbitration following a demand by any other party shall bear all costs
and expenses incurred by such other party in compelling arbitration of any
dispute. Nothing contained herein shall be deemed to be a waiver by any party
that is a bank of the protections afforded to it under 12 U.S.C. Section 91 or
any similar applicable state law.
(c) No Waiver of Provisional Remedies, Self-Help and Foreclosure. The
arbitration requirement does not limit the right of any party to (i) foreclose
against real or personal property collateral; (ii) exercise self-help remedies
relating to collateral or proceeds of collateral such as setoff or repossession;
or (iii) obtain provisional or ancillary remedies such as replevin, injunctive
relief, attachment or the appointment of a receiver, before during or after the
pendency of any arbitration proceeding. This exclusion does not constitute a
waiver of the right or obligation of any party to submit any dispute to
arbitration or reference hereunder, including those arising from the exercise of
the actions detailed in sections (i), (ii) and (iii) of this paragraph.
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(d) Arbitrator Qualifications and Powers. Any arbitration proceeding in
which the amount in controversy is $5,000,000.00 or less will be decided by a
single arbitrator selected according to the Rules, and who shall not render an
award of greater than $5,000,000.00. Any dispute in which the amount in
controversy exceeds $5,000,000.00 shall be decided by majority vote of a panel
of three arbitrators; provided however, that all three arbitrators must actively
participate in all hearings and deliberations. The arbitrator will be a neutral
attorney licensed in the State of Oregon or a neutral retired judge of the state
or federal judiciary of Oregon, in either case with a minimum of ten years
experience in the substantive law applicable to the subject matter of the
dispute to be arbitrated. The arbitrator will determine whether or not an issue
is arbitratable and will give effect to the statutes of limitation in
determining any claim. In any arbitration proceeding the arbitrator will decide
(by documents only or with a hearing at the arbitrator's discretion) any
pre-hearing motions which are similar to motions to dismiss for failure to state
a claim or motions for summary adjudication. The arbitrator shall resolve all
disputes in accordance with the substantive law of Oregon and may grant any
remedy or relief that a court of such state could order or grant within the
scope hereof and such ancillary relief as is necessary to make effective any
award. The arbitrator shall also have the power to award recovery of all costs
and fees, to impose sanctions and to take such other action as the arbitrator
deems necessary to the same extent a judge could pursuant to the Federal Rules
of Civil Procedure, the Oregon Rules of Civil Procedure or other applicable law.
Judgment upon the award rendered by the arbitrator may be entered in any court
having jurisdiction. The institution and maintenance of an action for judicial
relief or pursuit of a provisional or ancillary remedy shall not constitute a
waiver of the right of any party, including the plaintiff, to submit the
controversy or claim to arbitration if any other party contests such action for
judicial relief.
(e) Discovery. In any arbitration proceeding discovery will be permitted in
accordance with the Rules. All discovery shall be expressly limited to matters
directly relevant to the dispute being arbitrated and must be completed no later
than 20 days before the hearing date and within 180 days of the filing of the
dispute with the AAA. All requests for an extension of the discovery periods, or
any discovery disputes, will be subject to final determination by the arbitrator
upon a showing that the request for discovery is essential for the party's
presentation and that no alternative means for obtaining information is
available.
(f) Class Proceedings and Consolidations. The resolution of any dispute
arising pursuant to the terms of this Agreement shall be determined by a
separate arbitration proceeding and such dispute shall not be consolidated with
other disputes or included in any class proceeding except for consolidations
with other disputes between the parties hereto arising out of or relating to
this Agreement, the other Loan Documents or the matters described in Section
7.11(a)(i) or (ii).
(g) Payment Of Arbitration Costs And Fees. The arbitrator shall award all
costs and expenses of the arbitration proceeding.
(h) Miscellaneous. To the maximum extent practicable, the AAA, the
arbitrators and the parties shall take all action required to conclude any
arbitration proceeding within 180 days of the filing of the dispute with the
AAA. No arbitrator or other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of information by
a
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party required in the ordinary course of its business or by applicable law or
regulation. If more than one agreement for arbitration by or between the parties
potentially applies to a dispute, the arbitration provision most directly
related to the Loan Documents or the subject matter of the dispute shall
control. This arbitration provision shall survive termination, amendment or
expiration of any of the Loan Documents or any relationship between the parties.
UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY BANK AFTER
OCTOBER 3, 1989 CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT FOR
PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER'S
RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY BANK TO BE
ENFORCEABLE.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first written above.
LACROSSE FOOTWEAR, INC. XXXXX FARGO BANK, NATIONAL ASSOCIATION
By: /s/ Xxxxxx X. Xxxxxxxxx By: /s/ Xxxxx X. Xxxxxxx
--------------------------------- ------------------------------------
Xxxxxx X. Xxxxxxxxx Xxxxx X. Xxxxxxx
President/Chief Executive Officer Relationship Manager
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------
Xxxxx X. Xxxxxxx
Executive Vice President/Chief
Financial Officer
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