Exhibit 10.19

 

  SECURITY AGREEMENT WELLS FARGO   EQUIPMENT

 

1. GRANT OF SECURITY INTEREST. For valuable consideration, the undersigned
LaCrosse Footwear, Inc., or any of them (“Debtor”), hereby grants and transfers
to WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”) a security interest in all
goods, tools, machinery, furnishings, furniture and other equipment, now or at
any time hereafter, and prior to the termination hereof, owned or acquired by
Debtor, wherever located, whether in the possession of Debtor or any other
person and whether located on Debtor’s property or elsewhere, and all
improvements, replacements, accessions and additions thereto and embedded
software included therein (collectively called “Collateral”), together with
whatever is receivable or received when any of the Collateral or proceeds
thereof are sold, leased, collected, exchanged or otherwise disposed of, whether
such disposition is voluntary or involuntary, including without limitation,
(a) all accounts, contract rights, chattel paper (whether electronic or
tangible), instruments, promissory notes, documents, general intangibles,
payment intangibles and other rights to payment of every kind now or at any time
hereafter arising from any such sale, lease, collection, exchange or other
disposition of any of the foregoing, (b) all rights to payment, including
returned premiums, with respect to any insurance relating to any of the
foregoing, and (c) all rights to payment with respect to any claim or cause of
action affecting or relating to any of the foregoing (hereinafter called
“Proceeds”).

2. OBLIGATIONS SECURED. The obligations secured hereby are the payment and
performance of: (a) all present and future Indebtedness of Debtor to Bank;
(b) all obligations of Debtor and rights of Bank under this Agreement; and
(c) all present and future obligations of Debtor to Bank of other kinds. The
word “Indebtedness” is used herein in its most comprehensive sense and includes
any and all advances, debts, obligations and liabilities of Debtor, or any of
them, heretofore, now or hereafter made, incurred or created, whether voluntary
or involuntary and however arising, whether due or not due, absolute or
contingent, liquidated or unliquidated, determined or undetermined, including
under any swap, derivative, foreign exchange, hedge, deposit, treasury
management or other similar transaction or arrangement, and whether Debtor may
be liable individually or jointly, or whether recovery upon such Indebtedness
may be or hereafter becomes unenforceable.

3. TERMINATION. This Agreement will terminate upon the performance of all
obligations of Debtor to Bank under the Third Amended and Restated Credit
Agreement of even date herewith between Debtor and Bank, as amended, renewed or
restated from time to time (the “Credit Agreement”), including without
limitation, the payment of all Indebtedness of Debtor to Bank, and the
termination of all commitments of Bank to extend credit to Debtor under the
Credit Agreement, existing at the time Bank receives written notice from Debtor
of the termination of this Agreement.

4. OBLIGATIONS OF BANK. Bank has no obligation to make any loans hereunder. Any
money received by Bank in respect of the Collateral may be deposited, at Bank’s
option, into a non-interest bearing account over which Debtor shall have no
control, and the same shall, for all purposes, be deemed Collateral hereunder,
subject, however, to the terms of the Credit Agreement regarding the use of
insurance proceeds, and the right of Debtor to retain and use proceeds of the
sale of inventory in the ordinary course of business when an Event of Default
does not exist.

5. REPRESENTATIONS AND WARRANTIES. Debtor represents and warrants to Bank that:
(a) Debtor’s legal name is exactly as set forth on the first page of this
Agreement, and all of Debtor’s organizational documents or agreements delivered
to Bank are complete and accurate in every respect; (b) Debtor is the owner and
has possession or control of the Collateral and Proceeds, except security
deposits (and interest thereon), goods in transit or that are temporarily in the
possession of repairmen, product testing services, or potential buyers or
vendors as samples, or goods in storage in the ordinary course of business or
Proceeds used in the ordinary course of business; (c) Debtor has the exclusive
right to grant a security interest in the Collateral and Proceeds; (d) all
Collateral and Proceeds are genuine, free from liens, adverse claims, setoffs,
default, prepayment, defenses and conditions precedent of any kind or character,
except the lien created hereby, or Permitted Encumbrances, as defined in the
Credit Agreement, or as otherwise agreed to by Bank, or heretofore disclosed by
Debtor to Bank, in writing; (e) all statements contained herein are true and
complete in all material respects; and (f) no financing statement covering any
of the Collateral or Proceeds, and naming any secured party other than Bank, is
on file in any public office.

 

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6. COVENANTS OF DEBTOR.

6.1 Debtor agrees in general: (a) to pay Indebtedness secured hereby when due;
(b) to indemnify Bank against all losses, claims, demands, liabilities and
expenses of every kind caused by property subject hereto, except to the extent
caused by Bank after taking possession or control thereof; (c) to permit Bank to
exercise its powers; (d) to execute and deliver such documents as Bank deems
necessary to create, perfect and continue the security interests contemplated
hereby; (e) not to change its name, and as applicable, its chief executive
office, its principal residence or the jurisdiction in which it is organized
and/or registered without giving Bank prior written notice thereof; (f) not to
change the places where Debtor keeps any Collateral (except security deposits
(and interest thereon), goods in transit, goods that are temporarily in the
possession of repairmen, product testing services, or potential buyers or
vendors as samples, or goods in storage in the ordinary course of business) or
Debtor’s records concerning the Collateral and Proceeds without giving Bank
prior written notice of the address to which Debtor is moving same; and (g) to
cooperate with Bank in perfecting all security interests granted herein as
required in the Credit Agreement and in obtaining such agreements from third
parties as Bank deems necessary, proper or convenient in connection with the
preservation, perfection or enforcement of any of its rights hereunder.

6.2 Debtor agrees with regard to the Collateral and Proceeds, unless Bank agrees
otherwise in writing: (a) that Bank is authorized to file financing statements
in the name of Debtor to perfect Bank’s security interest in Collateral and
Proceeds; (b) where applicable, to insure the tangible moveable Collateral
(other than warehouse receipts, bills of sale, bills of lading and other
documents, instruments, and money) with Bank named as a loss payee as its
interest may appear, in form, substance and amounts, under agreements, against
risks and liabilities, and with insurance companies satisfactory to Bank; (c) to
operate the Collateral in accordance with all applicable statutes, rules and
regulations relating to the use and control thereof, and not to use the
Collateral for any unlawful purpose or in any way that would void any insurance
required to be carried in connection therewith; (d) not to permit any security
interest in or lien on the Collateral or Proceeds, including without limitation,
liens arising from repairs to or storage of the Collateral, except in favor of
Bank or as set forth in the Credit Agreement, or Permitted Encumbrances; (e) to
pay when due all license fees, registration fees and other charges in connection
with any Collateral; (f) not to remove the Collateral (other than goods in
transit, goods that are temporarily in the possession of repairmen, product
testing services, or potential buyers or vendors as samples, or goods in storage
in the ordinary course of business) from Debtor’s premises, except (A) for
deliveries to buyers in the ordinary course of Debtor’s business, and deliveries
of damaged, obsolete, surplus or worn-out property, and (B) Collateral which
consists of mobile goods as defined in the Oregon Uniform Commercial Code, in
which case Debtor agrees not to remove or permit the removal of such Collateral
from its state of domicile for a period in excess of thirty (30) calendar days
from Debtor’s premises except in the ordinary course of Debtor’s business;
(g) not to sell, hypothecate or otherwise dispose of, nor permit the transfer by
operation of law of, any of the Collateral or Proceeds or any interest therein,
except sales of inventory to buyers in the ordinary course of Debtor’s business,
sales of damaged, obsolete, surplus, or worn-out property, or as otherwise
permitted herein or in the Credit Agreement; (h) not to rent, lease or charter
the Collateral; (i) to permit Bank to inspect the Collateral at any time; (j) to
keep, in accordance with generally accepted accounting principles, complete and
accurate records regarding all Collateral and Proceeds, and to permit Bank to
inspect the same and make copies thereof at any reasonable time; (k) if
requested by Bank during the continuance of an Event of Default, to receive and
use reasonable diligence to collect Proceeds, in trust and as the property of
Bank, and to immediately endorse as appropriate and deliver such Proceeds to
Bank daily in the exact form in which they are received together with a
collection report in form satisfactory to Bank; (l) not to commingle Proceeds or
collections thereunder with other property; (m) to give only normal allowances
and credits and to advise Bank thereof immediately in writing if they affect any
Collateral or Proceeds in any material respect; (n) in the event Bank elects to
receive payments of Proceeds hereunder during the continuance of an Event of
Default, to pay all expenses incurred by Bank in connection therewith, including
expenses of accounting, correspondence, collection efforts, reporting to account
or contract debtors, filing, recording, record keeping and expenses incidental
thereto; (o) to provide any service and do any other acts which may be necessary
to maintain, preserve and protect all Collateral and, as appropriate and
applicable, to keep the Collateral in good and saleable condition and repair, to
deal with the Collateral in accordance with the standards and practices adhered
to generally by owners of like property, including with respect to defective and
returned products (which may be repaired or disposed of in any lawful manner);
and to keep all Collateral and Proceeds free and clear of all defenses, rights
of offset and counterclaims, subject to offsets in the ordinary course of
business for defective inventory; and (p) from time to time, when requested by
Bank, to prepare and deliver to Bank a schedule of all Collateral and Proceeds.

6.3 Except as specifically set forth in writing by Bank and the effect of leases
and applicable law that convey fixtures or improvements to landlords, Debtor
shall not sell or transfer equipment, provided, however, that Debtor may sell or
transfer damaged, obsolete, worn-out, and surplus equipment Collateral with an
aggregate book value not to exceed $500,000.00 in each of Debtor’s fiscal years.

 

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7. POWERS OF BANK. Debtor appoints Bank its true attorney-in-fact to perform any
of the following powers, which are coupled with an interest, are irrevocable
until termination of this Agreement and may be exercised from time to time by
Bank’s officers and employees, or any of them, if Debtor is in default: (a) to
perform any obligation of Debtor hereunder in Debtor’s name or otherwise; (b) to
give notice to account debtors or others of Bank’s rights in the Collateral and
Proceeds, to enforce or forebear from enforcing the same and make extension or
modification agreements with respect thereto; (c) to release persons liable on
Proceeds and to give receipts and acquittances and compromise disputes in
connection therewith; (d) to release or substitute security; (e) to resort to
security in any order; (f) to prepare, execute, file, record or deliver notes,
assignments, schedules, designation statements, financing statements,
continuation statements, termination statements, statements of assignment,
applications for registration or like papers to perfect, preserve or release
Bank’s interest in the Collateral and Proceeds; (g) to receive, open and read
mail addressed to Debtor, and promptly deliver the originals thereof (or, if the
mail consists of Collateral or Proceeds, copies) to Debtor; (h) to take cash,
instruments for the payment of money and other property to which Bank is
entitled; (i) to verify facts concerning the Collateral and Proceeds by inquiry
of obligors thereon, or otherwise, in its own name or a fictitious name; (j) to
endorse, collect, deliver and receive payment under instruments for the payment
of money constituting or relating to Proceeds; (k) to prepare, adjust, execute,
deliver and receive payment under insurance claims, and to collect and receive
payment of and endorse any instrument in payment of loss or returned premiums or
any other insurance refund or return, and to apply such amounts received by
Bank, at Bank’s sole option, toward repayment of the Indebtedness secured hereby
or replacement of the Collateral; (l) to exercise all rights, powers and
remedies which Debtor would have, but for this Agreement, with respect to all
Collateral and Proceeds subject hereto; (m) to enter onto Debtor’s premises in
inspecting the Collateral; (n) to do all acts and things and execute all
documents in the name of Debtor or otherwise, deemed by Bank as necessary,
proper and convenient in connection with the preservation, perfection or
enforcement of its rights hereunder; and (o) to make withdrawals from and to
close deposit accounts or other accounts with any financial institution,
wherever located, into which Proceeds may have been deposited, and to apply
funds so withdrawn to payment of the Indebtedness secured hereby.

8. PAYMENT OF PREMIUMS, TAXES, CHARGES, LIENS AND ASSESSMENTS. Debtor agrees to
pay or secure by bond (or contest in good faith, provided adequate reserves are
made therefor and no enforcement proceedings against any Collateral has been
instituted that are not stayed or dismissed within sixty days thereafter), prior
to delinquency, all insurance premiums, taxes, charges, liens and assessments
against the Collateral and Proceeds, and upon the failure of Debtor to do so,
Bank at its option may pay any of them and shall be the sole judge of the
legality or validity thereof and the amount necessary to discharge the same. Any
such payments made by Bank shall be obligations of Debtor to Bank, due and
payable immediately upon demand, together with interest at the rate set forth in
Section 15 of this Agreement, and shall be secured by the Collateral and
Proceeds, subject to all terms and conditions of this Agreement.

9. EVENTS OF DEFAULT. The occurrence of any of the following shall constitute an
“Event of Default” under this Agreement: (a) any default in the payment or
performance of any obligation, or any defined event of default, under (i) any
contract or instrument evidencing any Indebtedness secured hereby, or (ii) any
other agreement between Debtor and Bank, including without limitation any loan
agreement, relating to or executed in connection with any Indebtedness secured
hereby; (b) any representation or warranty made by Debtor herein shall prove to
be incorrect, false or misleading in any material respect when made; (c) Debtor
shall fail to observe or perform any obligation or agreement contained herein;
(d) any material impairment of the rights of Bank in any Collateral or Proceeds
or any attachment or like levy on any property of Debtor; and (e) Bank, in good
faith, believes that $2,000,000.00 or more of the Collateral and/or Proceeds to
be in danger of misuse, dissipation, commingling, loss, theft, damage or
destruction, or otherwise in jeopardy or unsatisfactory in character or value.
As used in this Section 9, “material impairment” means having an adverse effect
of at least $2,000,000.00.

10. REMEDIES. Upon the occurrence of any Event of Default, Bank shall have the
right to declare immediately due and payable all or any Indebtedness secured
hereby and to terminate any commitments to make loans or otherwise extend credit
to Debtor. Bank shall have all other rights, powers, privileges and remedies
granted to a secured party upon default under the Oregon Uniform Commercial Code
or otherwise provided by law, including without limitation, the right (a) to
contact all persons obligated to Debtor on any Collateral or Proceeds and to
instruct such persons to deliver all Collateral and/or Proceeds directly to
Bank, and (b) to sell, lease, license or otherwise dispose of any or all
Collateral. All rights, powers, privileges and remedies of Bank shall be
cumulative. No delay,

 

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failure or discontinuance of Bank in exercising any right, power, privilege or
remedy hereunder shall affect or operate as a waiver of such right, power,
privilege or remedy; nor shall any single or partial exercise of any such right,
power, privilege or remedy preclude, waive or otherwise affect any other or
further exercise thereof or the exercise of any other right, power, privilege or
remedy. Any waiver, permit, consent or approval of any kind by Bank of any
default hereunder, or any such waiver of any provisions or conditions hereof,
must be in writing and shall be effective only to the extent set forth in
writing. It is agreed that public or private sales or other dispositions, for
cash or on credit, to a wholesaler or retailer or investor, or user of property
of the types subject to this Agreement, or public auctions, are all commercially
reasonable since differences in the prices generally realized in the different
kinds of dispositions are ordinarily offset by the differences in the costs and
credit risks of such dispositions.

While an Event of Default exists: (a) Debtor will deliver to Bank from time to
time, as requested by Bank, current lists of all Collateral and Proceeds;
(b) Debtor will not dispose of any Collateral or Proceeds except on terms
approved by Bank or that fulfill contracts of sale previously entered into in
the ordinary course of business; (c) at Bank’s request, Debtor will assemble and
deliver all Collateral and Proceeds, and books and records pertaining thereto,
to Bank at a reasonably convenient place designated by Bank; and (d) Bank may,
without notice to Debtor, enter onto Debtor’s premises and take possession of
the Collateral. Debtor further agrees that Bank shall have no obligation to
process or prepare any Collateral for sale or other disposition.

11. DISPOSITION OF COLLATERAL AND PROCEEDS; TRANSFER OF INDEBTEDNESS. In
disposing of Collateral hereunder, Bank may disclaim all warranties of title,
possession, quiet enjoyment and the like. Any proceeds of any disposition of any
Collateral or Proceeds, or any part thereof, may be applied by Bank to the
payment of expenses incurred by Bank in connection with the foregoing, including
reasonable attorneys’ fees, and the balance of such proceeds may be applied by
Bank toward the payment of the Indebtedness secured hereby in such order of
application as Bank may from time to time elect. Upon the transfer of all or any
part of the Indebtedness secured hereby (which shall be subject to the terms of
the Credit Agreement), Bank may transfer all or any part of the Collateral or
Proceeds and shall be fully discharged thereafter from all liability and
responsibility with respect to any of the foregoing so transferred, and the
transferee shall be vested with all rights and powers of Bank hereunder with
respect to any of the foregoing so transferred; but with respect to any
Collateral or Proceeds not so transferred Bank shall retain all rights, powers,
privileges and remedies herein given.

12. STATUTE OF LIMITATIONS. Until all Indebtedness secured hereby shall have
been paid in full and all commitments by Bank to extend credit to Debtor have
been terminated, the power of sale or other disposition and all other rights,
powers, privileges and remedies granted to Bank hereunder shall continue to
exist and may be exercised by Bank at any time and from time to time
irrespective of the fact that the Indebtedness or any part thereof may have
become barred by any statute of limitations, or that the personal liability of
Debtor may have ceased, unless such liability shall have ceased due to the
payment in full of all Indebtedness secured hereunder.

13. MISCELLANEOUS. Debtor hereby waives any right to require Bank to (i) proceed
against Debtor or any other person, (ii) marshal assets or proceed against or
exhaust any security from Debtor or any other person, (iii) perform any
obligation of Debtor with respect to any Collateral or Proceeds, and (d) make
any presentment or demand, or give any notice of nonpayment or nonperformance,
protest, notice of protest or notice of dishonor hereunder or in connection with
any Collateral or Proceeds. After the occurrence and during the existence of an
Event of Default, Debtor further waives any right to direct the application of
payments or security for any Indebtedness of Debtor or indebtedness of customers
of Debtor.

14. NOTICES. All notices, requests and demands required under this Agreement
must be in writing, addressed to Bank at the address specified in any other loan
documents entered into between Debtor and Bank and to Debtor at the address of
its chief executive office (or principal residence, if applicable) specified
below or to such other address as any party may designate by written notice to
each other party, and shall be deemed to have been given or made as follows:
(a) if personally delivered, upon delivery; (b) if sent by mail, upon the
earlier of the date of receipt or 3 days after deposit in the U. S. mail, first
class and postage prepaid; and (c) if sent by telecopy, upon receipt.

15. COSTS, EXPENSES AND ATTORNEYS’ FEES. Debtor shall pay to Bank 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 Bank’s in-house counsel), expended or incurred by
Bank in connection with (a) the perfection and preservation of the Collateral or
Bank’s interest therein, and (b) the realization, enforcement and exercise of
any right, power, privilege or remedy conferred by this Agreement, whether
incurred at the trial or appellate level, in an arbitration proceeding or
otherwise, and including any of the foregoing incurred in

 

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connection with any bankruptcy proceeding (including without limitation, any
adversary proceeding, contested matter or motion brought by Bank or any other
person) relating to Debtor or in any way affecting any of the Collateral or
Bank’s ability to exercise any of its rights or remedies with respect thereto.
All of the foregoing shall be paid by Debtor with interest from the date of
demand until paid in full at a rate per annum equal to the greater of ten
percent (10%) or Bank’s Prime Rate in effect from time to time.

16. SUCCESSORS; ASSIGNS; AMENDMENT. This Agreement shall be binding upon and
inure to the benefit of the heirs, executors, administrators, legal
representatives, successors and assigns of the parties, and may be amended or
modified only in writing signed by Bank and Debtor.

17. SEVERABILITY OF PROVISIONS. If any provision of this Agreement shall be held
to 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.

18. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Oregon.

19. DEFINED TERMS. Terms used in this Agreement which are defined in the Credit
Agreement or the Line of Credit Note shall have the same meaning herein that
they are given therein.

Debtor warrants that Debtor is an organization registered under the laws of
Wisconsin.

Debtor warrants that its chief executive office (or principal residence, if
applicable) is located at the following address: 17634 NE Airport Way, Portland,
OR 97230

Debtor warrants that the Collateral (except goods in transit) is located or
domiciled at the following additional addresses: 12021 NE Airport Way, Suite B,
Portland OR 97220; 18201 NE Portal Way, Portland, OR 97230; 5312 NE 148th
Avenue, Portland, OR 97230-3438; 5352 Performance Way, Whitestown, IN 46075; and
17634 NE Airport Way, Portland, OR 97230. Debtor sells inventory in the ordinary
course of business to LaCrosse Denmark, which stores it at Niels Ebbesens Vej 19
DK-1911 Frederiksberg, Denmark or at Scan Global Logistics, True Mollevej 1,8381
Tilst, Denmark, or in transit, and which ships inventory under customary sale
and shipping terms to its customers, and to vendors as samples, and which
disposes of defective or out of date inventory in the ordinary course of
business.

IN WITNESS WHEREOF, this Agreement has been duly executed as of December 22,
2011.

 

LaCrosse Footwear, Inc. By:  

/s/ David P. Carlson

  David P. Carlson, Executive Vice President/Chief Financial Officer By:  

/s/ Joseph P. Schneider

  Joseph P. Schneider, President/Chief Executive Officer

 

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