10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2011

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: 000-23800

LaCrosse Footwear, Inc.

(Exact name of registrant as specified in its charter)

Wisconsin	39-1446816
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

17634 NE Airport Way

Portland, Oregon

(Address of principal executive offices)

97230

(Zip code)

Registrant’s telephone number, including area code: (503) 262-0110

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class:	Name of each exchange on which registered:
Common Stock, $.01 par value per share	NASDAQ Global Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ¨    No  x

Indicate by check mark whether the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ¨    No  x

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 by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨	Smaller Reporting Company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

The aggregate market value of the voting and non-voting common equity held by nonaffiliates of the registrant computed by reference to the closing price of the Company’s common stock on the NASDAQ Global Market as of June 25, 2011, the last business day of the registrant’s most recently completed second fiscal quarter, was $70,820,171.

Number of shares of the registrant’s common stock outstanding at February 24, 2012: 6,508,562 shares.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the Company’s 2012 Annual Meeting of Shareholders have been incorporated by reference into Part III of this Form 10-K. The Proxy Statement is expected to be filed with the Commission within 120 days after December 31, 2011, the end of the Company’s fiscal year.

TABLE OF CONTENTS

		Page
	PART I
ITEM 1.	BUSINESS		1
ITEM 1A.	RISK FACTORS		7
ITEM 1B.	UNRESOLVED STAFF COMMENTS		14
ITEM 2.	PROPERTIES		15
ITEM 3.	LEGAL PROCEEDINGS		15
	PART II
ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES		16
ITEM 6.	SELECTED FINANCIAL DATA		18
ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		19
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		26
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA		26
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE		26
ITEM 9A.	CONTROLS AND PROCEDURES (Including Management’s Annual Report on Internal Control Over Financial Reporting)		26
ITEM 9B.	OTHER INFORMATION		29
	PART III
ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS OF THE REGISTRANT, AND CORPORATE GOVERNANCE		29
ITEM 11.	EXECUTIVE COMPENSATION		29
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS		30
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE		30
ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES		30
	PART IV
ITEM 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES		31
SIGNATURES			32
EXHIBIT INDEX			35
CONSOLIDATED FINANCIAL STATEMENTS			F-1 to F-23

Forward-Looking Statements

This Annual Report on Form 10-K, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7, contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. LaCrosse Footwear, Inc. (“LaCrosse” or the “Company”) may also make forward-looking statements in other reports filed with the Securities Exchange Commission (“SEC”), in materials delivered to stockholders and in press releases. In addition, the Company’s representatives may from time to time make oral forward-looking statements.

Forward-looking statements relate to future events and typically address the Company’s expected future business and financial performance. Words such as “plan,” “expect,” “aim,” “believe,” “project,” “target,” “anticipate,” “intend,” “estimate,” “will,” “should,” “could” and other terms of similar meaning typically identify such forward-looking statements. In particular, these include statements about the Company’s strategy for growth, demand, product development, future performance or results of current or anticipated products, interest rates, foreign exchange rates, future financial results, our relationships with customers and suppliers, our ability to find alternative suppliers, future business volumes with the U.S. government, expectations concerning the growth of international sales, future capital expenditures, future cash dividend policies, future pension plan contributions, the adequacy of our existing resources and anticipated cash flows from operations to satisfy our working capital needs. The Company assumes no obligation to update or revise any forward-looking statements.

Forward-looking statements are based on certain assumptions and expectations of future events and trends that are subject to risks and uncertainties. Actual future results and trends may differ materially from historical results or those reflected in any such forward-looking statements depending on a variety of factors. Discussion of these factors is incorporated by reference from Part I, Item 1A, “Risk Factors,” and should be considered an integral part of Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

PART I

Item 1. Business

Unless the context requires otherwise, references in this Annual Report to “we,” “us” or “our” refer collectively to LaCrosse Footwear, Inc. and its subsidiaries.

General

We are a leading developer and marketer of branded, premium and innovative footwear for work and outdoor users. Our trusted DANNER^® and LACROSSE^® brands are sold to a network of specialty retailers and distributors in North America, Europe and Asia. Work consumers include people in law enforcement, transportation, mining, oil and gas exploration and extraction, construction, government services and other occupations that require high-performance and protective footwear as a critical tool for the job. Outdoor consumers include people active in hunting, outdoor cross-training, hiking and other outdoor recreational activities.

Company History

We trace our roots back to 1897, with the founding of La Crosse Rubber Mills, a manufacturer of rubber and vinyl footwear. Located in La Crosse, Wisconsin, the original company was purchased from the founders in 1982 by George Schneider and the Schneider family. LaCrosse Footwear, Inc. was incorporated under the laws of Wisconsin on August 15, 1983. Shortly after incorporation we entered into an exclusive distribution agreement with a distributor in Japan and our relationship with that distributor continues today. In 1994, we

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expanded our brand portfolio through the acquisition of Danner Shoe Manufacturing, a premium maker of leather boots since 1932, located in Portland, Oregon. Danner developed a strong reputation among loggers, shipyard workers and outdoor enthusiasts.

In 2005, we opened our first international office in China to diversify our manufacturing capacity and ensure our high-quality standards are met. In 2006, we opened our Danner distribution center and corporate headquarters in Portland, Oregon. In 2008 LaCrosse Europe ApS was established in Copenhagen, Denmark, to acquire certain assets of our former European distributor and to strengthen LaCrosse’s direct sales and marketing support to customers in Europe. In 2009, we opened our Midwest distribution center for our LACROSSE^® brand in Indianapolis, Indiana.

In 2010, we opened our Danner factory and factory store in Portland, Oregon. Our Danner factory significantly increases our capacity to meet worldwide demand from our customers in the work, military, law enforcement, outdoor recreation, hunting and lifestyle markets who depend on our U.S.-manufactured DANNER^® footwear being crafted to the very highest standards and incorporating the rich heritage of the DANNER^® brand. Additionally, we maintain a state-of-the-art product development center in the factory to increase our focus on innovation and speed-to-market. Our factory store serves to showcase a broad range of products, features onsite master craftsmen in our recrafting operation, and highlights the Danner story.

Products – Brands and Markets

Our branded footwear product offerings for the work and outdoor markets include the following brands:

Danner

The DANNER^® brand is known for “crafting higher standards” in premium footwear, with rugged designs that exceed customer expectations for performance and quality, and with a classic outdoor heritage and authentic character. The brand represents the highest level of performance and features with a select line of high-quality, feature-driven footwear products at premium prices. Danner products consist of premium-quality work and outdoor boots with many features including our stitch-down manufacturing process, which provides outstanding support and built-in comfort. Danner was the first footwear manufacturer to include a waterproof, breathable GORE-TEX^® liner in its leather boots. Danner’s product offerings include product categories such as uniform, hunting, work, hiking and our new STUMPTOWN™ line of lifestyle footwear products.

LaCrosse

The LACROSSE^® brand builds products designed to enable the consumer to “dominate their ground” whether in work or recreation. Among our target consumers, the LACROSSE^® brand is known for high performance in the field and on the job. Designed for durability and reliability, LaCrosse boots are built to satisfy specific end-user requirements, such as being protective against water, extreme cold, chemicals and other harsh environments. LaCrosse’s product offerings include product categories such as hunting, work, cold weather and new lifestyle products.

Work and Outdoor Markets

In 2011, 2010 and 2009 sales into the work market represented 59%, 63%, and 63% of our total net sales, respectively, and sales to the outdoor market represented 41%, 37%, and 37% of our total net sales, respectively.

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Product Design and Development

Our product design and development concepts originate from our staff and through communication with our customers and suppliers. We consistently communicate with our customers to understand consumer demand and trends. Product concepts are based upon perceived consumer needs and include new technological developments in footwear and materials.

Consumers, sales representatives and suppliers all provide information to our marketing and product development personnel during the concept, development and testing of new products. Our marketing and product development personnel, at times in conjunction with design consultants, determine the final aesthetics of the product. Once a product design is approved for production, responsibility is shared with our third-party manufacturers or with our domestic manufacturing facility for pattern development and commercialization. Our presence in Portland, Oregon provides access to a broad talent pool of footwear design professionals.

Customers, Sales, and Distribution Channels

We market our two brands, LACROSSE^® and DANNER^®, through four channels of distribution: (1) wholesale, (2) government, (3) direct, and (4) international.

Within the wholesale channel, the LACROSSE^® and DANNER^® brands are marketed primarily through our employee field and national accounts’ sales staff as well as certain independent distributors. Our wholesale channel includes sporting goods and outdoor retailers, general merchandise and independent shoe stores, wholesalers, and industrial distributors. Our wholesale customer base is diversified as to size and location of customers and markets served.

The government channel, which is exclusively served by the DANNER^® brand, provides performance footwear built to meet the demands and specific requirements for multiple branches of the U.S. military as well as federal, state, and other government agencies. Many of these products are manufactured in our ISO 9001 certified manufacturing facility located in Portland, Oregon. In addition to receiving direct orders for these products from the respective branches of the military, Danner military products are also available through retail and exchange stores on U.S. Marine Corps, U.S. Army, and U.S. Air Force bases, and on Danner’s website (www.danner.com).

Through the direct channel of distribution, we currently operate Internet websites for use by consumers and retailers. The primary purposes of the consumer-oriented websites are to provide product and company information and to sell products to consumers who choose to purchase directly from us. From a direct channel standpoint, we believe each brand is positioned uniquely in the online marketplace to capitalize on differences in end-user expectations for performance, price, and function.

The direct channel also includes our flagship Danner factory store in Portland, Oregon. The factory store sells first quality products, factory seconds, and slow-moving merchandise for both DANNER^® and LACROSSE^® brands. Our factory store serves to showcase a broad range of products, features onsite master craftsmen in our recrafting operation, and highlights Danner’s rich heritage and authentic character.

The structure of our international sales channel depends upon the specific region outside of the U.S. Our European operations are supported by our sales office, which manages employee and independent sales representative agencies across Europe. In Japan, we reach our consumers through our long-standing distributor, Danner Japan. The Canadian market is a part of our North American operations and is served by independent sales agencies. Finally, our Asia sales operations are supported by our Asia sourcing office, which is charged with managing our independent contract manufacturers.

No customer individually accounted for more than 10% of net sales for the year ended December 31, 2011.

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Advertising and Promotion

We create customized advertising and marketing materials and programs for each brand and distribution channel, which allow us to emphasize relevant product features that have special appeal to the applicable targeted consumer.

We advertise and promote our products through a variety of methods including sponsorships, targeted regional print, broadcast and out-of-home advertising, social media public relations, point-of-sale displays, catalogues and packaging, online promotion and co-promotion with dealers and suppliers. Our largest marketing investments include:

• Marketing development funds that we provide to help our retail customers market and sell Danner and LaCrosse products through advertising, local retail partner events and similar activities;

• Marketing material updates, website upgrades, campaign development and related advertising; and

• Visual merchandising, which focuses on all branded point-of-sale development and production.

We believe that as consumers understand the features and benefits of our products, they will be more likely to become loyal consumers. As such, we are committed to ensuring the benefits, features and advanced technologies of all our products are clearly articulated at our customers’ retail stores. We have established retail store education programs to train the sales associates of key retailers on our unique product attributes. We coordinate with retail store managers to improve product positioning and point-of-sale information displays.

Manufacturing and Sourcing

Manufacturing Overview

We source approximately two-thirds of the products we sell through a network of international contract manufacturers, primarily in Asia, with the remaining one-third manufactured domestically in our Portland, Oregon facility. In August 2010, we moved our Danner factory to a 59,000 square foot industrial building approximately one mile from our corporate headquarters. This facility enables us to meet domestic sourcing requirements applicable to our government customers while extending our great tradition of superior craftsmanship and significantly increasing our capacity to meet demand from customers in the work, military, law enforcement, outdoor recreation, hunting and Japanese markets who expect our U.S.-manufactured DANNER^® footwear to be crafted to the very highest standards. Furthermore, this state-of-the-art facility allows us to continue to be innovative with new footwear designs and production processes by expanding our overall capabilities and capacity. It also improves our operating efficiencies by incorporating lean manufacturing techniques to meet at-once demand.

Sourcing Overview

LaCrosse International, Inc. (“LaCrosse International”) is a wholly-owned subsidiary of the Company with an office in Zhongshan, China. LaCrosse International has three primary functions:

• Work with our contract manufacturers to maintain our standards for high-quality products;

• Locate and develop relationships with complementary sourcing alternatives; and

• Increase speed to market for new products.

We do not have any long-term contracts with our contract manufacturers, choosing instead to retain the flexibility to re-evaluate our sourcing and manufacturing base on an ongoing basis. Substantially all of our transactions with our foreign contract manufacturers are denominated in U.S. dollars. However, these U.S. dollar prices are impacted by foreign currency exchange rates and commodity prices. We regularly evaluate our vendors on the quality of their work, cost and ability to deliver on time.

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The raw materials used in production of our products are primarily leather and crude rubber. We have historically been able to recover increases in raw material costs as well as increases in direct labor costs through associated product price increases.

Both our contract manufacturers and our domestic manufacturing facility purchase GORE-TEX^® waterproof fabric directly from W.L. Gore and Associates (“Gore”), for both LaCrosse and Danner footwear. GORE-TEX^® is a registered trademark of Gore. Over 80% of Danner styles are lined with GORE-TEX^®. While we believe that our relationship with Gore is good, our contracts with Gore are terminable by either party upon 180 days written notice. In the event the relationship with Gore was to terminate, we have identified other sources of products with similar characteristics. However, we believe our sales performance could be negatively impacted in the short term based on Gore’s strength in our market for reliability, durability, and consumer performance.

Competition

The categories of the footwear markets in which we operate are highly competitive. We compete with numerous other manufacturers and distributors, many of whom have substantially greater financial, distribution and marketing resources than we do. Because we have a broad product line, our competition varies by product category. We believe that we maintain a competitive position through the strength of our brands, attention to quality, delivery of value, position as an innovator, record of delivering products on a timely basis, strong customer relationships, and, in some cases, the breadth of our product line.

Some of our competitors in leather footwear categories have strong brand name recognition in the markets they serve and are the major competitors of our DANNER^® and LACROSSE^® leather product lines. Domestically manufactured DANNER^® brand products are generally at a price disadvantage against lower-cost imported products. Danner focuses on the highest quality, premium price segment of the market in which product function, design, comfort, quality, continued technological improvements, brand awareness, and timeliness of product delivery are the overriding characteristics that consumers demand. By devoting attention to these factors, we believe the DANNER^® footwear line has maintained a strong competitive position in our markets.

Several rubber boot marketers with strong brand recognition in their respective markets are competitors of the LACROSSE^® brand. We occupy a favorable niche in the higher price segments of the work and outdoor rubber boot markets. Our history of supplying quality rubber boots, all of which are currently sourced from overseas suppliers, has provided a foundation to compete effectively. Other suppliers offer similar products, some at lower prices and quality levels, against which we must effectively compete. We believe that our superior quality products, innovation and design leadership, coupled with on-time delivery performance and customer support enables us to effectively compete in this market.

Employees

As of December 31, 2011, we had 390 employees located in the United States, 13 employees in China and 7 employees in Denmark. Substantially all employees are full time. Approximately 200 employees in our Portland, Oregon facilities are represented by the United Food & Commercial Workers Union (UFCW) under a collective bargaining agreement that expires on January 17, 2015.

Trademarks and Trade Names; Patents

We own United States federal registrations for several of our trademarks, including LACROSSE^®, DANNER^®, BURLY^®, the stylized Indianhead design that serves as our logo, ICE KING^®, ICEMAN^®, TERRA FORCE^®,

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HYPER-DRI^®, CAMOHIDE^TM, ACADIA^®, QUAD COMFORT^®, PRONGHORN^®, and TFX^®. We rely on common law trademark rights for all unregistered brands. We believe consumer recognition of our brands is important to our success in the marketplace. We defend our key trademarks and trade names against infringement to the fullest extent practicable under the law. Each federally registered trademark is renewable indefinitely if the trademark is still in use at the time of renewal.

Pursuant to our agreements with Gore, we are permitted to use the GORE-TEX^® mark to designate our footwear styles lined with GORE-TEX^® waterproof fabric.

We also own several United States patents related to our footwear and have other technologies that are patent-pending at this time. Our portfolio of issued patents currently extends as far as 2027.

We apply to register the DANNER^® and LACROSSE^® trademarks in all jurisdictions where we do a significant volume of business. We apply to register other trademarks, and to register patents, in foreign jurisdictions where we determine that such registration would provide us with significant current and future value.

Seasonality

Sales have historically been higher during the second half of the year primarily due to greater consumer demand for our outdoor product offerings during the fall and winter months. Accordingly, the amount of our fixed operating expenses represents a larger percentage of our net sales in the first two quarters than in the last two quarters of each year. We expect this seasonality to continue in the coming periods.

We place orders for products sourced from overseas suppliers during the first quarter with anticipated deliveries starting late in the second quarter. As a result, our inventories generally peak early in the third quarter, and then trend down to the end of the year.

Factors other than seasonality could have a significant impact on our sales backlog. Our order backlog may experience cancellations or delays by our customers. Accordingly, our backlog at any point in time may not be indicative of future results.

The timing of receipt of large military contracts has historically caused fluctuations in our quarterly revenue patterns. During periods in which we receive fewer military contract sales, our fixed operating expenses will represent a larger percentage of net sales.

Foreign Operations and Sales Outside of the United States

As previously noted, we maintain offices in China and Denmark to support our contract manufacturers across Asia, our independent distributor network in Asia, and our European sales staff. We also conduct sales activities outside the U.S. through our largest distributor, Danner Japan, and through other sales agencies, distributors, and specialty retailers. We have recently received Chinese government approval for the establishment of a Wholly Foreign Owned Enterprise (“WFOE”) in China. This legal entity structure expands the scope of operations conducted by our Asia office staff from exclusively supporting our contract manufacturers to also allow activities related to developing and managing new distribution channel partners across China. Sales in jurisdictions outside the United States accounted for approximately 7%, 6%, and 5% of our net sales in 2011, 2010, and 2009, respectively. See Note 10 to our consolidated financial statements included in this report for information on our net sales by geographic region.

The net book value of fixed assets located outside of the U.S. totaled $1.2 million, $0.7 million, and $0.5 million at December 31, 2011, 2010, and 2009, respectively. Such assets consist primarily of manufacturing assets, office equipment and software.

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Environmental Matters

We are subject to environmental laws and regulations concerning emissions to the air, discharges to waterways and the generation, handling, storage, transportation, treatment and disposal of waste materials. Such laws and regulations are constantly evolving and it is difficult to accurately assess the effect they will have on our operations in the future.

Compliance with federal, state and local requirements regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, have not had, nor are they anticipated to have in the future, a material effect on our capital expenditures, earnings or competitive position.

Executive Officers of the Registrant

The following table lists the names, ages and titles of our executive officers. All executive officers serve at the discretion of our Board of Directors.

Name	Age	Position
Joseph P. Schneider	52	President, Chief Executive Officer and Director
David P. Carlson	56	Executive Vice President, Chief Financial Officer, and Secretary
Nina Palludan	46	Senior Vice President of Operations
C. Kirk Layton	56	Vice President of Finance and Assistant Secretary
Craig P. Cohen	45	Vice President of North American Wholesale Sales
Gregory S. Inman	47	Vice President of Administration

Where You Can Find More Information

We file annual reports, quarterly reports, current reports, proxy statements and other information with the SEC under the Securities Exchange Act of 1934 as amended (“Exchange Act”). Copies of our reports, proxy statements and other information filed with the SEC are available for inspection at the offices of the SEC’s Public Reference Room, 100 F Street NE, Washington, D.C. 20549 during official business days between the hours of 10 a.m. to 3 p.m. EST. The SEC may be contacted at 1-800-SEC-0330 for further information. The SEC maintains an Internet site at www.sec.gov where SEC filings can be obtained. We also make available on our corporate website at www.lacrossefootwearinc.com, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after they are filed electronically with the SEC. The information found on our website is not part of this Form 10-K. Our investor relations department can also be contacted for such reports at (800) 654-3517.

Item 1A. Risk Factors

Special Note Regarding Forward-Looking Statements and Analyst Reports

The risk factors included here are not exhaustive. Other sections of this report may include additional factors which could adversely affect our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time and it is not possible for management to predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results.

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Investors should also be aware that while we do, from time to time, communicate with securities analysts, it is against our policy to disclose to them any material non-public information or other confidential commercial information. Accordingly, investors should not assume we agree with any statement or report issued by any analyst irrespective of the content of the statement or report. Furthermore, we have a policy against issuing or confirming financial forecasts or projections issued by others. Thus, to the extent that reports issued by securities analysts contain any projections, forecasts or opinions, such reports are not the responsibility of management.

Sales to the U.S. Government, which in recent years have represented a significant portion of our net sales, declined in 2011 and may continue to decline as a result of government policies regarding troop deployments. Also, we may not be able to fill these orders when they are received due to manufacturing facility constraints. Additionally, we may continue to experience significant fluctuations in our quarterly revenue performance due to the timing of orders and requested shipment dates for U.S. government contract orders.

Our ability to continue to generate sales growth in the government channel is dependent upon a wide range of factors, some of which are outside of our ability to control. Such factors include the current U.S. government’s policies regarding troop deployments in various global regions requiring our specialized footwear, the potential for reductions in the U.S. budget, our ability to meet aggressive delivery schedules, and increased competition from other footwear suppliers who may compete more effectively on the basis of price. A withdrawal of military forces from areas of conflict could result in decreased sales, particularly for troops deployed in Afghanistan, from which combat troops are scheduled to be withdrawn by the end of 2014. Additionally, a substantial portion of our U.S. government sales must be produced by our domestic manufacturing facility. We may experience disruptions in manufacturing and shipping products to our customers. Any such delay or disruption would adversely affect our results of operations. Being unable to fill orders on a timely basis could cause us to lose future orders from these sources and other customers in the work, law enforcement, Japanese and other markets who depend on our U.S.-manufactured Danner footwear being crafted to the very highest standards and being delivered on schedule. Given that government orders can be sporadic, we may incur fixed costs associated with this operation even if the orders do not support such levels of fixed costs. If government orders continue to decline, or if we are unable to fill orders, it would have a negative impact on our earnings and results of operations.

For all of our distribution channels, including domestic retailers, a deterioration in the general business environment and lack of growth in consumer spending due to unfavorable economic and consumer credit conditions could create an environment of increasing price discounts which would negatively impact our revenues, gross profit and earnings.

Our success in generating sales of our products to consumers depends upon a number of factors, including economic factors impacting disposable consumer income. These economic factors include considerations such as employment levels, general business conditions, consumer confidence, prevailing interest rates and changes in tax laws. In addition, spending patterns of consumers may be affected by changes in the amount or severity of inclement weather, the acceptability of U.S. brands in international markets and the growth or decline of global footwear markets.

Reduced levels of consumer spending may negatively impact our wholesale partners, which would impact their financial operations and their access to capital to fund growth, which increases and concentrates our credit risk.

A contraction in consumer spending and tightening of credit markets creates an unfavorable business environment for our wholesale partners, especially those who use debt to finance their inventory purchases and other operating capital requirements. If our wholesale partners are unable to obtain financing for their inventory purchases and to fund their operations, it could result in delayed payment or non-payment of amounts owed to us and/or a reduction in the number of sales we make to such wholesale partners, either of which could have a material adverse effect on our results of operations.

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Changes in the price or availability of raw materials and labor in the global market, as well as currency fluctuation and other risks associated with international operations could disrupt our operations and adversely affect our financial results, particularly our gross margins.

Raw materials and component parts are purchased by us and our third-party manufacturers from various suppliers to be used in the manufacturing of our products. Changes in relationships with suppliers or increases in the costs of purchased raw materials or component parts could result in manufacturing interruptions, delays or inefficiencies and could affect our ability to successfully market our products. These occurrences would negatively affect our business, product gross margins and results of operations.

Our product costs are subject to risks associated with foreign currency fluctuations (particularly with respect to the Chinese Renminbi), rubber price increases, oil price increases, higher foreign labor costs and other variable costs associated with our operations including trade laws, duties and taxes, and other product sourcing costs. If we are unable to increase our selling prices to offset such cost increases, our revenues and earnings would be negatively impacted.

If petroleum costs were to increase, we may be required to pay significantly higher freight costs, as we rely on transport companies to deliver our products from abroad to our distribution centers, and in some cases directly to our customers. Increased petroleum costs also affect our manufacturing costs. Foreign currency fluctuations and increased labor costs abroad would be problematic given our dependence on manufacturing in Asia and distribution through our European subsidiary. Our profit margins may decrease if foreign currency rates fluctuate unfavorably, or the cost of prices of petroleum or foreign labor increases and we are unable to pass those costs on to our customers.

Failures in our information management systems would present significant business and financial risks.

Our information systems are used across our supply chain and within the operations of each of our sales channels, from product development to distribution and sales, and are used as a method of communication between employees, with our subsidiaries and liaison offices overseas, as well as with our customers. We also rely on our information systems to analyze our business, develop demand plans and forecast operating results. Relating to data security for our customers, business partners, and ourselves we strive to comply with all applicable standards, laws, and best practices for data storage and access, including, but not limited to, perimeter security, data segregation, virus detection, and intrusion vulnerabilities. Any interruption of critical business information systems could have a material adverse effect on our financial condition and results of operations.

Our primary enterprise resource planning system is highly customized to our business. We may experience difficulties as we transition to new systems planned for 2013. Difficulties in implementing our new information systems or significant system failures could disrupt our operations and have a material adverse effect on our financial condition and results of operations.

We are dependent on a few key raw materials suppliers for outsoles and leather, which presents overall risks in our supply base.

Interruptions in the supply of raw materials or increased costs for such raw materials could negatively impact the operations of our domestic manufacturing facility as well as our international manufacturing partners. Raw materials supply constraints or price increases could negatively impact our customer relationships, our ability to fill current and future orders and our results of operations.

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Our European subsidiary, LaCrosse Europe ApS, increases our exposure to risks associated with foreign operations and the outsourcing of our European distribution center.

Foreign operations through our European subsidiary increases our exposure to risks associated with foreign currency transactions and compliance with foreign laws. Also, our distribution center for Europe is owned and managed by an independent third party, which increases our risks associated with inventory management and timely and accurate customer shipments. Any negative outcome related to these risks would have an adverse impact on our results of operations.

Our profitability is significantly dependent upon future effective tax rates for federal, state and international taxing jurisdictions.

Tax rates on corporations could be increased in future periods. Higher effective federal, state and international tax rates would lower our earnings performance and restrict our ability to invest in various areas of our business. Future changes to rates of taxation in areas outside of the U.S. could also negatively impact our future earnings performance.

We conduct a significant portion of our manufacturing activities outside the U.S. and a portion of our net sales occurs outside the U.S.; therefore, we are subject to the risks of international commerce. Also, any adverse political conditions or governmental actions, including the imposition of duties and quotas, internally within China (where the majority of our third-party manufacturers are concentrated) or externally with NAFTA countries and the European Union could disrupt our supply of product to customers.

We use third-party manufacturers located in foreign countries, primarily in Asia, to manufacture the majority of our products, including all of our LACROSSE^® branded products. Foreign manufacturing and sales activities are subject to numerous risks, including the following:

• delays associated with the manufacture, transportation and delivery of foreign-sourced products;

• tariffs, import and export controls and other non-tariff barriers such as quotas and local content rules;

• delays in the transportation and delivery of goods due to increased security concerns, labor disputes at various ports or other events;

• foreign currency fluctuations (particularly with respect to the Chinese Renminbi), a risk which we do not currently seek to mitigate through hedging transactions;

• restrictions on the transfer of funds;

• changing economic conditions;

• restrictions, due to privacy laws, on the handling and transfer of consumer and other personal information;

• changes in governmental policies and regulations;

• political unrest, terrorism or war, any of which can interrupt commerce;

• work slowdowns, stoppages, strikes, expropriation or nationalization affecting our manufacturing partners;

• difficulties in managing foreign operations effectively and efficiently from the U.S.;

• difficulties in understanding and complying with local laws, regulations and customs in foreign jurisdictions;

• limited capital of foreign distributors and the possibility that such distributors may terminate their operations or their relationships with us; and

• concentration of credit risk, currency, and political risks associated with international distributors.

Additionally, although net sales outside of the U.S. do not constitute a significant portion of our revenues, we expect our international sales will grow in the coming years. Our ability to continue to do business in

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international markets is subject to risks associated with international sales operations, as noted above, as well as the difficulties associated with promoting products in emerging markets. We are also subject to additional risk as some of our foreign distributors may not have adequate capital to continue operations over the long term. Our sales growth may be adversely affected if our relationships with those distributors were to deteriorate and we were unable to engage suitable alternatives in a timely manner.

Furthermore, many of our imported products are subject to duties, tariffs or quotas that affect the cost and quantity of various types of goods imported into NAFTA or European Union countries and into our other sales markets. The countries in which our products are produced or sold may adjust or impose new quotas, duties, tariffs or other restrictions, any of which could have a material adverse effect on us.

Because we depend on third-party manufacturers, we face challenges in maintaining a timely supply of goods to meet sales demand, and we may experience delay or interruptions in our supply chain. Any shortfall or delay in the supply of our products may decrease our sales and have an adverse impact on our customer relationships.

Third-party manufacturers located primarily in Asia produce approximately two-thirds of our footwear products. We depend on these manufacturers’ ability to finance the production of goods ordered and to maintain adequate manufacturing capacity. We do not exert direct control over the third-party manufacturers, so we may be unable to obtain timely delivery of acceptable products.

Due to various potential factors outside of our control, one or more of our third-party manufacturers may be unable to continue meeting our production requirements. Also, some of our third-party manufacturers have manufacturing arrangements with companies that are much larger than we are and whose production needs are much greater than ours. As a result, such manufacturers may choose to devote additional resources to the production of products other than ours if their capacity is limited.

In addition, we do not have long-term supply contracts with these third-party manufacturers, and any of them could unilaterally terminate their relationship with us at any time or seek to increase the prices they charge us. As a result, we are not assured of an uninterrupted supply of products of an acceptable quality and price from our third-party manufacturers. We may be unable to offset any interruption or decrease in supply of our products by increasing production in our company-operated manufacturing facility due to capacity constraints, and we may be unable to substitute suitable alternative third-party manufacturers in a timely manner or at acceptable prices. Any disruption in the supply of products from our third-party manufacturers may harm our business and could result in a loss of sales and an increase in production costs, which would adversely affect our results of operations.

Our business is substantially affected by weather conditions, and sustained periods of warm and/or dry weather can negatively impact our sales. Additionally, such weather conditions may negatively impact our inventory levels and subsequent period sales.

We sell our products into two primary markets, work and outdoor. For the year ended December 31, 2011, 41% of our annual revenues were to the outdoor market. This market category is highly seasonal and weather dependent. Sales of these products are largely dependent on the timing and severity of weather in the different regions of North America, Europe, and Asia. During sustained periods of warm and/or dry weather conditions, certain key categories in the outdoor market may be negatively impacted, including hunting, hiking and cold weather products, as consumers postpone purchases of our products pending the resumption of more conducive weather patterns. Additionally, given our advance ordering timelines, such reduced demand during normal outdoor market seasons may also negatively impact our inventory levels and subsequent period profits as such excess inventories are sold.

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If we do not accurately forecast consumer demand, we may have excess inventory to liquidate or have greater difficulty filling our customers’ orders, either of which could adversely affect our business.

The footwear industry is subject to cyclical variations and declines in performance, as well as fashion risks and rapid changes in consumer preferences, the effects of weather, general economic conditions and other factors affecting demand. Furthermore, the footwear industry has relatively long lead times for the design and manufacture of products. Consequently, we must commit to production based on our forecasts of consumer demand.

If we overestimate demand for our products, we may be forced to liquidate excess inventories at a discount to customers, resulting in markdowns and lower gross margins. Conversely, if we underestimate consumer demand, we could have inventory shortages, which can result in lost potential sales, delays in shipments to customers, strains on our relationships with customers and diminished brand loyalty. A decline in demand for our products, or any failure on our part to satisfy increased demand for our products, could adversely affect our business and results of operations.

Labor disruptions or disruptions due to natural disasters or casualty losses at one of our distribution facilities, our domestic manufacturing facility, or our third-party manufacturers could have a material adverse effect on our operations.

Some of our employees at our Danner distribution facility, manufacturing facility and factory store are organized in a labor union, the United Food and Commercial Workers Union. While we have recently renegotiated our contract with the union, our inability to renew, on favorable terms, the collective bargaining agreement between us and the union that represents our employees, or any strike, work stoppage or other labor disruption could impair our ability to adequately supply our customers and could have an adverse effect on our results of operations.

In addition, any natural disaster or other serious disruption at one of our facilities, including our distribution facility in Indianapolis, Indiana, and third-party manufacturers due to fire, earthquake, tornadoes, flood, terrorist attack or any other natural or manmade cause could damage a portion of our inventory or impair our ability to use our warehouse for our products. Any of these occurrences could impair our ability to adequately supply our customers and could have an adverse effect on our results of operations.

Our financial success may be limited by the strength of our relationships with our wholesale customers and by the success of such wholesale customers.

Our financial success is significantly related to the willingness of our wholesale customers to continue to carry our products and to the success of such customers in selling our products. We do not have long-term contracts with any of our wholesale customers. Sales to our wholesale customers are increasingly on an order-by-order basis and are subject to rights of cancellation and rescheduling by the customer. If we cannot fill our wholesale customers’ orders in a timely manner, the sales of our products and our relationships with those customers may suffer, and this could have a material adverse effect on our sales and ability to grow our product line.

If any of our major wholesale customers experience a significant downturn in its business or fails to remain committed to our products or brands, these customers may reduce or discontinue purchases from us in the future. In addition, we extend credit to our customers based on an evaluation of each customer’s financial condition. If a significant customer to whom we have extended credit experiences financial difficulties our bad debt expense may increase relative to revenues in the future, which would adversely impact our net income and cash flow.

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We face significant competition and if we are unable to compete effectively, sales of our products may decline and our business could be harmed.

The segments of the footwear industry in which we compete are highly competitive. Some of our competitors have products with similar characteristics, such as design and materials, with some of our products. In addition, access to offshore manufacturing is also making it easier for new companies to enter the markets in which we compete.

The footwear industry includes footwear manufacturers, fashion-oriented footwear marketers, vertically integrated specialty stores and retailers of private label products. Our principal competitive differentiators include product design, product performance, quality, brand image, marketing and promotion, customer support and service, the ability to meet delivery commitments to retailers, and others. Certain of our competitors have significantly greater financial resources and stronger brand recognition than we have. Additionally, they have greater distribution capabilities and a broader market presence in retail outlets, or have their own retail outlets. If we fail to compete successfully in the future, our sales and profits may decline and our financial condition may deteriorate.

We may be unable to anticipate changing consumer preferences and demands and to develop new products to meet those preferences and demands on a timely basis.

The footwear industry is subject to rapid changes in consumer preferences. Our success depends in large part on our ability to continuously develop, market and deliver innovative and functional products that are competitive with other brands in our market. In addition, we must design and manufacture products that appeal to many consumer markets at a range of price points. While we continually update our product line with new and innovative products, our products may not continue to be popular and new products we introduce may not achieve adequate consumer acceptance for us to recover development, manufacturing, marketing and other costs. Our failure to anticipate, identify and react to shifts in consumer preferences and maintain a strong brand image could adversely affect our sales and results of operations.

Our failure or inability to protect our intellectual property could significantly harm our competitive position and reduce future revenues.

Protecting our intellectual property is an important factor in maintaining our brand and our competitive position in the footwear industry. If we do not or are unable to adequately protect our intellectual property, our sales and profitability could be adversely affected. We currently hold a number of patents and trademarks and have patent and trademark applications pending. However, our efforts to protect our proprietary rights may be inadequate and applicable laws provide only limited protection. We have a number of licensing agreements, both for product, camouflage patterns and trademarks, which are significant to our business. If we are unable to renew the agreements, and suitable replacements are not available in a timely manner, our revenues could be negatively impacted.

We depend on a limited number of suppliers for key production materials, and any disruption in the supply of such materials could interrupt product manufacturing and increase product costs.

We depend on a limited number of sources for the primary materials used to make our footwear. For example, we (and our suppliers) purchase GORE-TEX^® waterproof fabric directly from W.L. Gore and Associates (“Gore”), for both our LaCrosse and Danner footwear. Over 80% of Danner styles are GORE-TEX^® lined.

While we consider our relationship with Gore to be good, the agreements with Gore are terminable by either party upon 180 days written notice. If Gore were to terminate our agreements, the time required to obtain substitute materials could interrupt our production cycle. Additionally, consumers may be unwilling to accept any such replacement material. Any termination or delay in our supply of GORE-TEX^® waterproof fabric or

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the loss of our ability to use the GORE-TEX^® mark in association with our products, or in the procurement of any other key product component, could result in lost potential sales, delays in shipments to customers, strained relationships with customers and diminished brand loyalty.

In order to be successful, we must retain and motivate key employees, and the failure to do so could have an adverse impact on our business.

Our future success will depend in part on the continued service of key personnel. Our future success will also depend on our ability to attract and retain key managers, product development engineers, sales and marketing staff, and others. We face competition for such individuals throughout the footwear and work and outdoor products industries. Not being able to attract or retain these employees could have a material adverse effect on our financial performance.

If we fail to comply with the covenants contained in our credit facility, we may be unable to maintain the availability of our financing arrangements, and repayment obligations on any outstanding indebtedness may be accelerated.

Our revolving credit facility contains financial and operating covenants with which we must comply. Our continued compliance with these covenants is dependent on our financial results, which are subject to fluctuation as described elsewhere in these risk factors. If we fail to comply with the covenants in the future or if our lender does not agree to waive any future non-compliance, we may be unable to borrow funds and any outstanding indebtedness could become immediately due and payable, which could harm our business. At December 31, 2011 we had outstanding borrowings of $16.9 million under this credit facility.

Our articles of incorporation, bylaws and Wisconsin corporate law each contain provisions that could delay, defer or prevent a change in control of our company or changes in our management.

Among other things, these provisions:

• classify our board of directors so that only some of our directors are elected each year;

• do not permit cumulative voting in the election of directors, which would otherwise allow less than a majority of stockholders to elect director candidates; and

• establish advance notice and other procedural requirements for submitting nominations for election to the board of directors and for proposing matters that can be acted upon by stockholders at a meeting.

These provisions could discourage proxy contests and make it more difficult for our stockholders to elect directors and take other corporate actions, which may prevent a change of control and/or changes in our management that a stockholder might consider favorable. In addition, Subchapter XI of the Wisconsin Business Corporation Law includes provisions that may discourage, delay, or prevent a change in control. Any delay or prevention of a change of control or change in management that stockholders might otherwise consider to be favorable could cause the market price of our common stock to decline.

Item 1B. Unresolved Staff Comments

None.

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Item 2. Properties

The following table sets forth information, as of December 31, 2011, relating to our principal facilities.

	PROPERTIES
Location	Owned or Leased	Approximate Floor Area in  Square Feet		Principal Uses
Portland, OR	Leased (1)		145,000	Principal sales, marketing and executive offices and distribution facility
Indianapolis, IN	Leased (2)		380,000	Distribution facility
Zhongshan, China	Leased (3)		1,400	Office space
Copenhagen, Denmark	Leased (4)		2,300	Office space
Portland, OR	Leased (5)		59,000	Manufacturing operations
Portland, OR	Leased (6)		12,600	Factory store
Zhongshan, China	Leased (7)		2,000	Office space

(1) The lease term on the Single Tenant Industrial Lease is 120 months from August 1, 2006 and the lease provides for potential term extensions of up to 60 months after the original term.

(2) In June 2008, we signed a Single Tenant Industrial Lease for 124 months beginning March 1, 2009.

(3) The lease for this facility expires February 2012.

(4) The lease for this facility expires September 2013.

(5) The lease has an initial term of 64 months, and includes provision for three successive extension terms of five years each. The initial term of the lease commenced on May 1, 2010.

(6) The lease has an initial term of 64 months and includes provision for three successive extension terms of five years each. The initial term of the lease commenced on March 1, 2010.

(7) On December 1, 2011, we signed a lease to move our China office space to a new facility in Zhongshan. The lease has an initial term of 51 months starting December 1, 2011 and includes provision to renew the lease under the same terms when it expires.

Item 3. Legal Proceedings

From time to time, we become involved in ordinary, routine or regulatory legal proceedings incidental to our business. When a loss is deemed probable to occur and the amount of such loss can be reasonably estimated, a liability is recorded in our financial statements.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Price Range of Common Stock

Our common stock is publicly traded on the NASDAQ Global Market under the ticker symbol BOOT. On February 24, 2012, the closing sale price of our common stock was $13.00 per share, as reported on the NASDAQ Global Market. The table below shows the high and low sales prices per share of our common stock as reported by the NASDAQ Global Market:

	2011				2010
	High		Low		High		Low
First Quarter	$	18.92	$	15.09	$	17.42	$	12.38
Second Quarter	$	19.00	$	12.82	$	21.00	$	14.95
Third Quarter	$	14.80	$	11.55	$	19.32	$	11.50
Fourth Quarter	$	13.43	$	12.00	$	17.25	$	13.52

As of February 24, 2012, there were 194 shareholders of record and 1,856 beneficial owners of our common stock.

Dividends

In 2009, we paid quarterly dividends of $0.8 million, or $0.125 per common share, totaling $3.2 million.

During the first quarter of 2010, we paid a special dividend and a quarterly dividend totaling $7.2 million or $1.125 per common share. Subsequently, quarterly dividends totaling $2.4 million, in the amount of $0.125 per common share, were paid in the second, third and fourth quarters, respectively.

In 2011, we paid quarterly dividends of $0.8 million, or $0.125 per common share, totaling $3.3 million.

On February 2, 2012, we announced a first quarter cash dividend of twelve and one-half cents ($0.125) per share of common stock. This first quarter dividend will be paid on March 18, 2012 to shareholders of record as of the close of business on February 22, 2012. The total cash payment for this dividend will be approximately $0.8 million.

The Board of Directors, while not declaring future dividends, currently intends to continue its policy of declaring and paying quarterly dividends of twelve and one-half cents ($0.125) per share of common stock. However, future dividend policies and dividend payments, if any, will depend upon our earnings and financial condition, our need for funds for other projects, any limitations on payments of dividends in our current or future debt agreements and other factors.

Sales of Unregistered Securities

None.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

None.

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Equity Compensation Plan Information

The information required by this item with respect to our equity compensation plans is contained in Part III, Item 11 of this Annual Report on Form 10-K.

Market Price of the Registrant’s Common Equity

The following graph compares on a cumulative basis changes since December 31, 2006, in (a) the total shareholder return on our common stock with (b) the total return on the NASDAQ Global Market Index and (c) the total return on the Morningstar Textile-Apparel Footwear/Accessories Industry Group Index (the “Morningstar Group Index”). Such changes have been measured by dividing (a) the sum of (i) the amount of dividends for the measurement period, assuming dividend reinvestment, and (ii) the difference between the price per share at the end of and the beginning of the measurement period, by (b) the price per share at the beginning of the measurement period. The graph assumes $100 was invested on December 31, 2006 in LaCrosse Footwear, Inc. common stock, the NASDAQ Global Market Index and the Morningstar Group Index.

	12/31/2006		12/31/2007		12/31/2008		12/31/2009		12/31/2010		12/31/2011
LaCrosse Footwear	$	100	$	134	$	105	$	112	$	162	$	129
NASDAQ Market Index	$	100	$	111	$	66	$	97	$	114	$	113
Morningstar Group Index	$	100	$	107	$	72	$	102	$	138	$	148

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Item 6. Selected Financial Data

Selected Income Statement Data

Year Ended December 31	2011		2010		2009		2008		2007
(dollars in thousands, except per share data)
Net sales	$	131,321	$	150,542	$	139,152	$	127,956	$	118,179
Operating income	$	5,535	$	11,430	$	8,585	$	10,120	$	10,983
Net income	$	3,000	$	6,881	$	5,510	$	6,167	$	7,300
Net income per common share
Basic	$	0.46	$	1.07	$	0.87	$	0.99	$	1.20
Diluted	$	0.45	$	1.04	$	0.86	$	0.96	$	1.15
Weighted average common shares outstanding
Basic		6,499		6,429		6,303		6,215		6,087
Diluted		6,639		6,590		6,375		6,417		6,357

Selected Balance Sheet Data

Year Ended December 31	2011		2010		2009		2008		2007
(dollars in thousands, except per share data)
Cash and cash equivalents	$	774	$	4,274	$	17,739	$	13,683	$	15,385
Inventories	$	48,648	$	40,071	$	27,031	$	28,618	$	27,131
Total assets	$	102,435	$	97,270	$	88,585	$	84,565	$	83,547
Long-term debt, including current maturities	$	138	$	263		—		—	$	394
Shareholders’ equity	$	63,128	$	64,448	$	65,595	$	61,412	$	65,985
Dividends paid	$	3,251	$	9,621	$	3,154	$	9,322	$	914
Dividends paid per common share	$	0.50	$	1.50	$	0.50	$	1.50	$	0.15
Inventory turns		1.8		2.7		3.1		2.8		2.9
Fourth quarter days sales outstanding		47		39		46		57		62

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

Our mission is to maximize the work and outdoor experience for our consumers. To achieve this, we design, develop, manufacture and market premium-quality, high-performance footwear, supported by compelling marketing and superior customer service. Our trusted DANNER^® and LACROSSE^® brands are sold through four channels of distribution: (1) wholesale, (2) government, (3) direct and (4) international. We focus on two types of consumers for our footwear lines: work and outdoor. Work consumers include people in military services, law enforcement, transportation, mining, oil and gas exploration and extraction, construction and other occupations that require high-performance and protective footwear as a critical tool for the job. Outdoor consumers include people active in hunting, outdoor cross-training, hiking and other outdoor recreational activities as well as individuals buying our products in support of an urban lifestyle.

Weather, especially in the fall and winter, has been, and will likely continue to be, a significant contributing factor impacting our financial performance. Our sales are typically higher in the second half of the year due to stronger demand for our cold and wet weather outdoor product offerings. We augment these offerings by infusing innovative technology into all product categories with the intent to create additional demand in all four quarters of the year.

Our sales performance continues to be driven by the success of our new product lines, our ability to meet at-once demand, and our ability to diversify and strengthen our portfolio of sales channels. We also continually evaluate our portfolio of product offerings to ensure we are providing innovative and high-performance products to the marketplace. As a part of this evaluation process, during 2010 we decided to discontinue our offerings in the apparel business, which represented approximately $4.8 million of net sales in 2010.

We have experienced, and may continue to experience significant fluctuations in our quarterly revenue performance due to the timing and volume of orders for U.S. government contract purchases. Future U.S. government sales are dependent upon a wide range of factors, some of which are outside of our control, including the U.S. government’s policies regarding troop deployments in global regions requiring our specialized footwear, our ability to meet aggressive delivery schedules and increased competition from other footwear suppliers. Given the variability associated with timing and size of U.S. government contract orders, we are designing our operating model to improve profitability with or without such future military contracts.

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RESULTS OF OPERATIONS

Financial Summary – 2011 versus 2010

The following table sets forth selected financial information derived from our consolidated financial statements. The discussion that follows the table should be read in conjunction with the consolidated financial statements.

($ in millions)	2011			2010			$ Change			% Change
Net Sales	$	131.3		$	150.5		($	19.2	)		(13	%)
Gross Profit	$	51.2		$	59.1		($	7.9	)		(13	%)
Gross Margin %		39.0	%		39.3	%		—			(30 bps	)
Selling and Administrative Expenses	$	45.7		$	47.7		($	2.0	)		(4	%)
% of Net Sales		34.8	%		31.7	%		—			310 bps
Non-Operating Expense, Net	($	0.7	)	($	0.2	)	($	0.5	)		201	%
Income Before Income Taxes	$	4.8		$	11.2		($	6.4	)		(57	%)
Income Tax Provision	$	1.8		$	4.3		($	2.5	)		(58	%)
Net Income	$	3.0		$	6.9		($	3.9	)		(56	%)

Consolidated Net Sales: Consolidated net sales for 2011 decreased 13%, to $131.3 million, from $150.5 million in 2010. Sales to the work market were $76.9 million for the full year of 2011, down 19% from $94.7 million in 2010. The decline in work market sales is primarily due to decreased sales to the U.S. government and associated suppliers and our exit of the commodity apparel business, partially offset by growth in the other areas of the work market. Excluding the contract military and the work apparel sales, work sales in 2011 increased 13% compared to 2010. Sales to the outdoor market for 2011 were $54.5 million, down 2% from $55.8 million in 2010. The decrease in outdoor sales is driven by a difficult retail market for our outdoor rubber products due primarily to unfavorable weather conditions.

Gross Margin: Gross margin for 2011 was 39.0% of consolidated net sales, compared to 39.3% in 2010. The year-over-year decrease in gross margin is primarily the result of domestic manufacturing inefficiencies related to production mix and volumes (60 basis points) and increased closeouts and other items (160 basis points) partially offset by changes in our channel sales mix (190 basis points).

Selling and Administrative Expenses: Selling and administrative expenses in 2011 decreased $2.0 million, or 4%, to $45.7 million from $47.7 million in 2010. Selling and administrative expenses as a percent of net sales increased to 34.8% in 2011 from 31.7% in 2010. The decrease in selling and administrative expenses primarily relates to lower incentive compensation expenses ($2.5 million), the net settlement of a legal proceeding ($0.6 million), which was partially offset by investments in product development and other items ($1.1 million).

Non-operating Expense, Net: The increase in 2011 of non-operating expense is primarily the result of increased interest expense, which resulted from an increase in short-term borrowings in 2011 compared to 2010.

Income Taxes: We recognized income tax expense at an effective rate of 37.7% in 2011 compared to an effective tax rate of 38.5% in 2010. The lower effective rate for 2011 was primarily due to the impact of increased research and experimentation credits in 2011.

Net Income: For 2011, net income was $3.0 million or $0.45 per diluted share, down 56% from $6.9 million or $1.04 per diluted share in 2010. The net income decrease of $3.9 million is attributable to the sales, gross profit, expense and tax rate changes discussed above.

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Financial Summary – 2010 versus 2009

The following table sets forth selected financial information derived from our consolidated financial statements. The discussion that follows the table should be read in conjunction with the consolidated financial statements.

($ in millions)	2010			2009			$ Change		% Change
Net Sales	$	150.5		$	139.2		$	11.3		8	%
Gross Profit	$	59.1		$	54.1		$	5.0		9	%
Gross Margin %		39.3	%		38.9	%		—		40 bps
Selling and Administrative Expenses	$	47.7		$	45.5		$	2.2		5	%
% of Net Sales		31.7	%		32.7	%		—		(100 bps	)
Non-Operating Expense, net	($	0.2	)	($	0.4	)	$	0.2		36	%
Income Before Income Taxes	$	11.2		$	8.2		$	3.0		36	%
Income Tax Provision	$	4.3		$	2.7		$	1.6		60	%
Net Income	$	6.9		$	5.5		$	1.4		25	%

Consolidated Net Sales: Consolidated net sales for 2010 increased 8%, to $150.5 million, from $139.2 million in 2009. Sales to the work market were $94.7 million for the full year of 2010, up 7% from $88.2 million in 2009. The growth in work sales reflects continued expansion into various areas of the U.S. government and growth in sales of occupational footwear to the wholesale market. Sales to the outdoor market for 2010 were $55.8 million, up 9% from $51.0 million in 2009. The growth in outdoor sales reflects a rebounding retail environment and several successful product introductions.

Gross Margin: Gross margin for 2010 was 39.3% of consolidated net sales, compared to 38.9% in 2009. The year-over-year increase in gross margin is primarily the result of a reduction of closeout sales (100 basis points) partially offset by Portland factory relocation costs (20 basis points), changes in our channel sales mix (20 basis points) and other items (20 basis points).

Selling and Administrative Expenses: Selling and administrative expenses in 2010 increased $2.2 million, or 5%, to $47.7 million from $45.5 million in 2009. Selling and administrative expenses as a percent of net sales decreased to 31.7% in 2010 from 32.7% in 2009. The increase in selling and administrative expenses primarily relates to investments in our Portland factory and factory store ($0.9 million), investments in marketing and product development ($2.2 million) and other items ($1.4 million). These items were partially offset by lower costs in our Midwest distribution center ($1.2 million) and our sales organizations in the U.S. and Europe ($1.1 million).

Non-operating Expense, Net: The decrease in non-operating expense is primarily the result of asset disposal costs during 2009.

Income Taxes: We recognized income tax expense at an effective rate of 38.5% in 2010 compared to an effective tax rate of 32.9% in 2009. The higher effective rate for 2010 was primarily due to non-recurring benefits in 2009, including a reduction in our reserve for uncertain tax positions as a result of the completion of an Internal Revenue Service examination.

Net Income: For 2010, net income was $6.9 million or $1.04 per diluted share, up 25% from $5.5 million or $0.86 per diluted share in 2009. The net income increase of $1.4 million is attributable to the sales, gross profit, expense and tax rate changes discussed above.

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LIQUIDITY AND CAPITAL RESOURCES

We have historically funded working capital requirements and capital expenditures with cash generated from operations and borrowings under a revolving line of credit agreement or other long-term lending arrangements. We require working capital to support fluctuating accounts receivable and inventory levels caused by our seasonal business cycle. Working capital requirements are generally the lowest in the first quarter and the highest during the third quarter.

On December 22, 2011, we entered into a 3-year extension of our previous line of credit agreement with Wells Fargo Bank, N.A, which expires May 1, 2015, unless renewed. Amounts borrowed under the agreement are secured by substantially all of our assets. The maximum aggregate principal amount of borrowings allowed from January 1 to May 31 is $22.5 million and from June 1 to December 31, the total available is $35 million. The credit agreement provides for an interest rate of LIBOR plus 1.75% and an annual commitment fee of 0.2% on the unused balance. The line of credit agreement contains financial covenants as well as restrictions on annual dividends and capital expenditures. There are no borrowing base limitations under the credit agreement. The Company is in compliance with all covenants as of December 31, 2011. At December 31, 2011 we had a $16.9 million outstanding balance on the line of credit, with $18.1 million of remaining availability. We had no outstanding balances due at December 31, 2010. The increase in our line of credit balance as of December 31, 2011 relates to higher inventory levels as compared to the same period in 2010, driven by increased finished goods to fulfill future at-once demand.

In May 2010, we received a loan of $0.3 million from the State of Oregon to finance equipment purchases at our Danner factory, which began operating in the third quarter of 2010. The State of Oregon will forgive all, or a portion of the loan, along with all interest accruing on any portion of the loan forgiven upon meeting employment criteria at the Danner factory. The employment criteria require us to maintain a certain number of employees at the Danner factory over a consecutive eight quarter period beginning July 1, 2010 and ending no later than September 30, 2014. At that time the remaining loan balance that has not been forgiven will bear interest at 5.0% per annum and will mature on October 31, 2014. As we meet the specified employment criteria at the Danner factory during a given period a corresponding portion of the loan is reclassified to deferred revenue and amortized over the life of the equipment purchased with the loan.

Consolidated Statements of Cash Flows

Net cash used in operating activities was $13.8 million in 2011, compared to net cash provided of $5.1 million for 2010. The decline in cash provided by operating activities was primarily related to a reduction in accounts payable and accrued expenses. The decrease in accounts payable and accrued expenses is primarily related to the timing of payments to our third-party manufacturers for inventory and lower incentive compensation accruals in 2011 compared to 2010.

Net cash used in investing activities, which is primarily related to capital expenditures, was $4.0 million in 2011 compared to $10.6 million in 2010. Capital expenditures were greater in 2010 than in 2011 due to investments made in our factory facility and factory store during 2010. During 2012, we expect total capital expenditures to be approximately $5.0 to $5.5 million.

Net cash provided by financing activities was $14.2 million in 2011 compared to net cash used of $7.9 million in 2010. Cash provided by financing activities in 2011 was primarily attributable to short-term borrowings of $16.9 million on our line of credit, which were used mainly to fund increases in our inventory during 2011 and $0.6 million received from the exercise of stock options partially offset by cash dividends paid of $3.3 million. Cash used in financing activities in 2010 was primarily attributable to cash dividends of $9.6 million, which included a one-time, special dividend of $1.00 per share, partially offset by cash received from the exercise of stock options.

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On February 2, 2012, we announced a first quarter cash dividend of twelve and one-half cents ($0.125) per share of common stock. This dividend will be paid on March 18, 2012 to shareholders of record on February 22, 2012 and amount to approximately $0.8 million.

At December 31, 2011 and 2010, our pension plan had accumulated benefit obligations in excess of the respective plan assets of $7.0 million and $4.1 million, respectively. This obligation in excess of plan assets and accrued liabilities resulted in a cumulative reduction of equity, net of tax, of $5.6 million and $3.3 million as of December 31, 2011 and 2010, respectively. We expect to contribute $1.0 million to the pension plan in 2012.

We believe that our existing resources, our commercial line of credit and our anticipated cash flows from operations will be sufficient to satisfy our working capital needs for the foreseeable future.

OFF BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS

We do not have any off-balance sheet financing arrangements, other than operating leases, purchase commitments and pension contributions that are disclosed in the contractual obligations table below and in our consolidated financial statements, nor do we have any transactions, arrangements or other relationships with any special purpose entities established by us, at our direction or for our benefit.

A summary of our contractual cash obligations at December 31, 2011 is as follows:

(In Thousands)	Payments due by period
Contractual Obligations	Total		2012		2013		2014		2015		2016		Thereafter
Operating leases	$	15,914	$	2,641	$	2,652	$	2,713	$	2,642	$	1,795	$	3,471
Product purchase obligations (1)		10,557		10,557		—		—		—		—		—
Pension (2)		1,023		1,023		—		—		—		—		—

See Part I, Item 2 – Properties for a description of our leased facilities.

(1) From time to time, we enter into purchase commitments with our suppliers and third-party manufacturers under customary purchase order terms. Any significant losses implicit in these contracts would be recognized in accordance with generally accepted accounting principles. At December 31, 2011, no such losses existed.

(2) Pension obligations reflect only anticipated pension contributions for 2012. Required contributions are calculated on an annual basis and required funding beyond 2012 has not yet been determined.

We also have a commercial line of credit as described below, which is more fully described under the caption “Liquidity and Capital Resources”:

Other Commercial Commitment	Maximum  Amount Committed		Outstanding at 12/31/11		Date of Expiration
Line of credit	$	35.0 million	$	16.9 million	May 1, 2015

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CRITICAL ACCOUNTING ESTIMATES

Our significant accounting policies and estimates are summarized in our annual consolidated financial statements. Some of our accounting policies require management to exercise significant judgment in selecting the appropriate assumptions for calculating financial estimates. Such judgments are subject to an inherent degree of uncertainty. These judgments are based on our historical experience, known trends in our industry, terms of existing contracts and other information from outside sources, as appropriate.

Revenue Recognition, Allowances for Doubtful Accounts, Cash Discounts and Non-Defective Returns: Ownership of our products transfers to the customer when the product is delivered to a third-party carrier at one of our distribution facilities or upon receipt at our customers’ designated facilities depending upon the applicable terms of the customer order. Significant judgment is required when determining the allowances for doubtful accounts, cash discounts, and non-defective returns, each of which reduces the amount of accounts receivable and operating income reported in the accompanying consolidated financial statements.

Our historical experience of write-offs of uncollectible accounts has been insignificant. In addition to an allowance for doubtful accounts, we maintain allowances for anticipated cash discounts to be taken by customers and for non-defective returns. Cash discounts are provided under customer service programs and are estimated based on available programs and historical usage rates. Reserves for non-defective returns are estimated based on historical rates of return.

Allowance for Slow-Moving Inventory: Provision for potentially slow-moving or excess inventories is based on our analysis of inventory levels, future sales forecasts, and current estimated market values. Actual customer requirements and market values in any future periods are inherently uncertain and thus may differ from our estimates.

Product Warranty: We provide a limited warranty for the replacement of defective products for a specified time period after sale. We estimate the costs that may be incurred under our limited warranty and record a liability in the amount of such anticipated costs at the time product revenue is recognized. Factors that affect our warranty liability include sales experience along with historical and anticipated future rates of warranty claims. We also utilize information received from customers to assist in determining the appropriate warranty accrual levels.

Valuation of Long-Lived and Intangible Assets: As a matter of policy, we review our major assets for impairment at least annually, and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Our major long-lived and intangible assets are goodwill and property and equipment. We depreciate our property and equipment over their estimated useful lives. In assessing the recoverability of our goodwill, we have analyzed our market capitalization together with assumptions regarding estimated future cash flows and other factors to determine the fair value of goodwill. If these estimates or their related assumptions change in the future, we may be required to record impairment charges for these assets not previously recorded.

Please refer to the “Risk Factors” in Part I, Item 1A in this Annual Report on Form 10-K for a discussion of factors that may have an effect on our ability to attain future levels of product sales and cash flows.

Pension and Other Postretirement Benefit Plans: The determination of our obligation and expense for pension and other postretirement benefits is dependent on our selection of certain assumptions used by actuaries in calculating such amounts. Those assumptions are described in Note 8, “Compensation and Benefit Agreements” to our annual consolidated financial statements and include, among others, the 4.0% discount rate and the 8.0% expected long-term rate of return on plan assets. Actual results that differ from our assumptions are accumulated and amortized over future periods and therefore, generally affect our recognized expense and recorded obligation in future periods. While we believe our assumptions are appropriate, significant differences

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in our actual experience or material changes in our assumptions may affect our pension and other postretirement obligations, our future expense and shareholders’ equity. See “Quantitative and Qualitative Disclosures About Market Risk” in Item 7A in this Annual Report on Form 10-K for further sensitivity analysis regarding our estimated pension obligation.

Deferred Tax Asset Valuation Allowance: Our deferred taxes are reduced by a valuation allowance when, in our opinion, we believe that it is more likely than not that some portion or all of the deferred tax assets will not be realized. We have recorded a valuation allowance related to the State of Wisconsin net operating loss (“NOL”) carryforwards, as realization of NOL carryforwards is dependent upon having taxable income in Wisconsin in future periods. The remaining balance of the deferred taxes after such valuation allowance represents the portion of Wisconsin NOL carryforwards which management believes is more likely than not to be realized.

Share-Based Compensation: We estimate the fair value of share-based awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as an expense in our consolidated statements of income on a straight-line basis over the requisite service period for each separately vesting portion of the award. Because share-based compensation expense is based on awards that are ultimately expected to vest, share-based compensation expense is reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

To calculate the share-based compensation expense, we use the Black-Scholes option-pricing model. Our determination of fair value of option-based awards on the date of grant is impacted by our stock price as well as assumptions regarding certain highly subjective variables. These variables include, but are not limited to, our expected stock price volatility over the term of the awards, the anticipated risk-free interest rate, anticipated future dividend yields and the expected life of the options. The anticipated risk-free interest rate is based on a treasury instrument whose term is consistent with the expected life of the stock options granted. The expected volatility, life of options and dividend yield are based on historical experience.

Recently Issued Accounting Pronouncements

In May 2011, the FASB issued an accounting standards update (ASU) that amends the presentation of comprehensive income in the financial statements. This ASU increases the prominence of comprehensive income in financial statements while eliminating the option in U.S. GAAP to present comprehensive income in the statement of changes in equity. Under this ASU, we will have the option to present the components of net income and comprehensive income in either one or two consecutive financial statements. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011 and requires full retrospective application. Upon adoption, we will be required to reclassify prior-period reported amounts for comprehensive income in accordance with the amended standards.

In September 2011, the FASB issued an accounting update that gives companies the option to make a qualitative evaluation about the likelihood of goodwill impairment. Companies will be required to perform the two-step impairment test only if it concludes that the fair value of a reporting unit is more likely than not less than its carrying value. The accounting update is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, with early adoption permitted. We do not expect that adoption of this accounting standard will have a material impact on our financial statements.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Our primary market risk results from fluctuations in interest rates. Our line of credit interest rate is the LIBOR rate plus 1.75%. Using an average floating rate borrowing of $10.0 million, a one percent change in the applicable rate would impact the Company’s annual interest expense by approximately $0.1 million.

We are also exposed to market risk related to the assumptions we make in estimating our pension liability. The assumed discount rate used, in part, to calculate the pension plan obligation is related to the prevailing long-term interest rates. At December 31, 2011, we used an estimated discount rate of 4.00%. A one-percentage point reduction in the discount rate would result in an increase in the actuarial present value of projected pension benefits by approximately $1.9 million at December 31, 2011. At December 31, 2011, we used an expected rate of return on plan assets of 8.0%. The historical annualized ten-year rate of return on pension plan assets is approximately 5.0%. A one percent change in the actual rate of return on pension plan assets would affect the charge to equity by approximately $0.1 million.

Our financial market risk arises from fluctuations in foreign currencies. Our net investment exposure in our foreign subsidiaries translated into U.S. dollars using the period-end exchange rates at December 31, 2011, was approximately $2.4 million. The potential loss in recorded value resulting from a hypothetical 10% adverse change in foreign exchange rates would be approximately $0.2 million at December 31, 2011. At December 31, 2011 we had no formal plans to liquidate any of our operating foreign subsidiaries within the consolidated group, and therefore, foreign exchange rate gains or losses on our foreign investments are reflected as a cumulative translation adjustment and do not affect our results of operations. As noted in Item 1 above, we have recently received Chinese government approval for the establishment of a Wholly Foreign Owned Enterprise (“WFOE”) in China. This legal entity structure expands the scope of our operations conducted by our Asia office staff from exclusively supporting our contract manufacturers to also allow activities related to developing and managing new distribution channels across China.

Item 8. Financial Statements and Supplementary Data

The consolidated statements of income, shareholders’ equity and comprehensive income and cash flows for each of the years in the three-year period ended December 31, 2011, and the related consolidated balance sheets of the Company as of December 31, 2011 and 2010, together with the related notes thereto and the Report of Independent Registered Public Accounting Firm appear on pages F-1 through F-23 hereof and are incorporated by reference in this Item 8.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

(a) Evaluation of disclosure controls and procedures. In accordance with Rule 13a-15(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), as of the end of the period covered by this Annual Report on Form 10-K, the Company’s management evaluated, with the participation of the Company’s President and Chief Executive Officer and Executive Vice President and Chief Financial Officer, the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Based upon their evaluation of these disclosure controls and procedures, the President and Chief Executive Officer and the Executive Vice President and Chief Financial Officer have concluded that the disclosure controls and procedures were effective as of the end of the period covered by this report.

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(b) Changes in internal control. There was no change in the Company’s internal control over financial reporting that occurred during the fourth quarter of 2011 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Management’s Annual Report on Internal Control over Financial Reporting

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control system was designed to provide reasonable assurance to management and the board of directors regarding the effectiveness of our internal control processes over the preparation and fair presentation of published financial statements.

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

We have assessed the effectiveness of our internal controls over financial reporting as of December 31, 2011. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework. Based on our assessment, we concluded that, as of December 31, 2011, our internal control over financial reporting is effective based on those criteria.

Our independent registered public accounting firm has issued an attestation report on the effectiveness of our internal control over financial reporting as of December 31, 2011, which is included herein.

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders

LaCrosse Footwear, Inc.

We have audited LaCrosse Footwear, Inc. and Subsidiaries’ internal control over financial reporting as of December 31, 2011, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. LaCrosse Footwear, Inc. and Subsidiaries’ management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying “Report of Management.” Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (a) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (b) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (c) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, LaCrosse Footwear, Inc. and Subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2011, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of LaCrosse Footwear, Inc. and Subsidiaries as of December 31, 2011 and 2010, and the related consolidated statements of income, shareholders’ equity and comprehensive income and cash flows for each of the three years in the period ended December 31, 2011 of LaCrosse Footwear, Inc. and Subsidiaries and our report dated March 2, 2012 expressed an unqualified opinion.

/s/ McGladrey & Pullen, LLP

Minneapolis, Minnesota

March 2, 2012

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Item 9B. Other Information

None.

PART III

Item 10. Directors, Executive Officers of the Registrant, and Corporate Governance

The information required by this Item with respect to executive officers, directors, Section 16 compliance and corporate governance will be set forth under the captions “Proposal 1 – Election of Directors,” “Board of Directors,” “Executive Compensation,” “Section 16(a) Beneficial Ownership Reporting Compliance” and “Report of the Audit Committee,” respectively, in the Company’s definitive Proxy Statement for its 2012 Annual Meeting of Shareholders to be filed with the SEC no later than April 30, 2012 (“Proxy Statement”). If the Proxy Statement is not filed with the SEC by April 30, 2012, such information will be included in an amendment to this Annual Report on Form 10-K filed by April 30, 2012.

We have adopted a Code of Ethics for Senior Financial Officers, Corporate Officers and Directors that covers, among others, our principal executive officer, our principal financial officer and our principal accounting officer. This Code of Ethics for Senior Financial Officers is posted on our website at www.lacrossefootwearinc.com. If any substantive amendments are made to the Code of Ethics for Senior Financial Officers or the Board of Directors grants any waiver from a provision of the Code of Ethics to any of our officers, then we will disclose the nature of such amendment or waiver on our website at the above address.

Item 11. Executive Compensation

The information required by this Item will be set forth under the captions “Director Compensation” and “Executive Compensation” in the Proxy Statement. If the Proxy Statement is not filed with the SEC by April 30, 2012, such information will be included in an amendment to this Annual Report on Form 10-K filed by April 30, 2012.

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Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this Item with respect to Security Ownership of Certain Beneficial Owners and Management will be set forth under the caption “Principal Shareholders” in the Proxy Statement. If the Proxy Statement is not filed with the SEC by April 30, 2012, such information will be included in an amendment to this Annual Report on Form 10-K filed by April 30, 2012.

The following table provides certain equity compensation information as of December 31, 2011:

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (1)		Weighted-average exercise  price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the first column) (2)
Equity compensation plans approved by security holders		887,699	$	12.80		454,002
Equity compensation plans not approved by security holders		—		—		—
Total		887,699	$	12.80		454,002

(1) Represents options to purchase the Company’s Common Stock granted under the Company’s 1993 Employee Stock Incentive Plan, 1997 Employee Stock Incentive Plan (the “1997 Plan”), 2001 Stock Incentive Plan (the “2001 Plan”), 2007 Long Term Incentive Plan and 2001 Non-Employee Director Stock Option Plan, As Amended and Restated (the “Director Plan”).

(2) Includes 353,002 shares of the Company’s Common Stock available for issuance under the 2007 Long Term Incentive Plan and 101,000 shares of the Company’s Common Stock available for issuance under the Director Plan.

Item 13. Certain Relationships, Related Transactions, and Director Independence

The information required by this Item will be set forth under the captions “Transactions with Related Persons,” “Compensation Committee Interlocks and Insider Participation,” and “Board of Directors” in the Proxy Statement. If the Proxy Statement is not filed with the SEC by April 30, 2012, such information will be included in an amendment to this Annual Report on Form 10-K filed by April 30, 2012.

Item 14. Principal Accountant Fees and Services

The information required by this Item will be set forth under the caption “Independent Registered Public Accounting Firm’s Fees” in the Proxy Statement. If the Proxy Statement is not filed with the SEC by April 30, 2012, such information will be included in an amendment to this Annual Report on Form 10-K filed by April 30, 2012.

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PART IV

Item 15. Exhibits and Financial Statement Schedules

	Financial Statements
1.	The following financial statements are included in this Annual Report on Form 10-K beginning on the pages indicated below:
	Report of Independent Registered Public Accounting Firm	F-1
	Consolidated Balance Sheets as of December 31, 2011 and 2010	F-2
	Consolidated Statements of Income for the Years ended December 31, 2011, 2010, and 2009	F-4
	Consolidated Statements of Shareholders’ Equity and Comprehensive Income for the Years ended December 31, 2011, 2010, and 2009	F-5
	Consolidated Statements of Cash Flows for the Years ended December 31, 2011, 2010, and 2009	F-6
	Notes to Consolidated Financial Statements	F-7
2.	Financial Statement Schedule
	The financial statement schedule for the years ended December 31, 2011 and 2010 is included in this Annual Report on Form 10-K and should be read in conjunction with the Consolidated Financial Statements.
	Report of Independent Registered Public Accounting Firm on Financial Statement Schedule	33
	Schedule II Valuation and Qualifying Accounts	34
	All other financial statement schedules are omitted since the required information is not present or is not present in amounts sufficient to require submission of the schedules, or because the information required is included in the consolidated financial statements and notes thereto.
3.	See the Exhibit Index for a description of exhibits filed with or incorporated by reference in this report.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.
	By	/s/ Joseph P. Schneider
		Joseph P. Schneider
		President and Chief Executive Officer
Date: March 2, 2012

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Joseph P. Schneider Joseph P. Schneider	President, Chief Executive Officer and Director (Principal Executive Officer)	March 2, 2012
/s/ David P. Carlson David P. Carlson	Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)	March 2, 2012
/s/ Richard A. Rosenthal Richard A. Rosenthal	Chairman of the Board and Director	March 2, 2012
/s/ Stephen F. Loughlin Stephen F. Loughlin	Director	March 2, 2012
/s/ Charles W. Smith Charles W. Smith	Director	March 2, 2012
/s/ John D. Whitcombe John D. Whitcombe	Director	March 2, 2012
/s/ William H. Williams William H. Williams	Director	March 2, 2012

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders

LaCrosse Footwear, Inc.

Our audits of the consolidated financial statements and internal control over financial reporting referred to in our report dated March 2, 2012 (included elsewhere in this Annual Report on Form 10-K) also included the financial statement schedule of LaCrosse Footwear, Inc. and Subsidiaries, listed in Item 15(a) of this Form 10-K. This schedule is the responsibility of LaCrosse Footwear, Inc.’s management. Our responsibility is to express an opinion based on our audits of the consolidated financial statements.

In our opinion, the financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

/s/ McGladrey & Pullen, LLP

Minneapolis, Minnesota

March 2, 2012

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LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

(In Thousands)

			Additions
	Balance at Beginning of Year		Charged to Costs and Expenses		Charged To Other Accounts		Deductions		Balance at End of Year
Year ended December 31, 2011
Accounts receivable allowances:
Allowance for discounts	$	165	$	1,096	$	—	$	968	$	293
Allowance for nondefective product		219		2,220		—		2,201		238
Allowance for doubtful accounts		133		125		—		110		148
Total	$	517	$	3,441	$	—	$	3,279	$	679
Allowance for slow-moving inventory	$	398	$	980	$	—	$	769	$	609
Deferred tax asset valuation allowance	$	1,022	$	—	$	—	$	17	$	1,005
Year ended December 31, 2010
Accounts receivable allowances:
Allowance for discounts	$	198	$	829	$	—	$	862	$	165
Allowance for nondefective product		171		1,701		—		1,653		219
Allowance for doubtful accounts		294		51		—		212		133
Total	$	663	$	2,581	$	—	$	2,727	$	517
Allowance for slow-moving inventory	$	797	$	520	$	—	$	919	$	398
Deferred tax asset valuation allowance	$	1,017	$	5	$	—	$	—	$	1,022

The accounts receivable, inventory, and deferred tax asset allowances above are deducted from the applicable asset accounts in the accompanying consolidated balance sheets.

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EXHIBIT INDEX

Exhibit Number	Exhibit Description
(3.1)	Restated Articles of Incorporation of LaCrosse Footwear, Inc. (Incorporated by reference to Exhibit (3.0) to LaCrosse Footwear, Inc.’s Form S-1 Registration Statement (Registration No. 33-75534))
(3.2)	Amended and Restated By-Laws of LaCrosse Footwear, Inc. together with amendments thereto
(10.1)*	LaCrosse Footwear, Inc. Retirement Plan (Incorporated by reference to Exhibit (10.18) to LaCrosse Footwear, Inc.’s Form S-1 Registration Statement (Registration No. 33-75534))
(10.2)*	LaCrosse Footwear, Inc. Employees’ Retirement Savings Plan (Incorporated by reference to Exhibit (10.19) to LaCrosse Footwear, Inc.’s Form S-1 Registration Statement (Registration No. 33-75534))
(10.3)*	LaCrosse Footwear, Inc. 1993 Employee Stock Incentive Plan (Incorporated by reference to Exhibit (10.20) to LaCrosse Footwear, Inc.’s Form S-1 Registration Statement (Registration No. 33-75534))
(10.4)*	LaCrosse Footwear, Inc. 1997 Employee Stock Incentive Plan (Incorporated by reference to Exhibit (10.17) to LaCrosse Footwear, Inc.’s Annual Report on Form 10-K for the year ended December 31, 1996)
(10.5)*	LaCrosse Footwear, Inc. 2001 Stock Incentive Plan, as amended (Incorporated by reference to Exhibit (10.1) of LaCrosse Footwear, Inc.’s Current Report on Form 8-K as filed with the Commission on May 9, 2005)
(10.6)*	Amended and Restated LaCrosse Footwear, Inc. 2001 Non-Employee Director Stock Option Plan, as amended (Incorporated by reference to Exhibit (4.1) of LaCrosse Footwear, Inc.’s Registration Statement on Form S-8 as filed with the Commission on May 3, 2007 (Registration No. 333-142598))
(10.7)*	LaCrosse Footwear, Inc. 2007 Long Term Incentive Plan (Incorporated by reference to Exhibit (4.1) of LaCrosse Footwear, Inc.’s Registration Statement on Form S-8 as filed with the Commission on May 3, 2007 (Registration No. 333-142597))
(10.8)*	LaCrosse Footwear, Inc. 2011 Annual Incentive Compensation Plan Document (Incorporated by reference to Exhibit (10.1) of LaCrosse Footwear, Inc.’s Current Report on Form 8-K as filed with the Commission on December 21, 2010)
(10.9)*	LaCrosse Footwear, Inc. 2012 Annual Incentive Compensation Plan Document (Incorporated by reference to Exhibit (10.1) of LaCrosse Footwear, Inc.’s Current Report on Form 8-K as filed with the Commission on December 22, 2011)
(10.10)	Single-Tenant Industrial Triple Net Lease, by and between LaCrosse Footwear, Inc. and ProLogis, dated October 14, 2005 (Incorporated by reference to Exhibit (10.2) to LaCrosse Footwear, Inc.’s Current Report on Form 8-K as filed with the Commission on October 20, 2005)
(10.11)	Single Tenant Industrial Triple Net Lease, dated June 11, 2008, by and between LaCrosse Footwear, Inc. and 267 Associates, L.L.C. (Incorporated by reference to Exhibit (10.1) to LaCrosse Footwear, Inc.’s Current Report on Form 8-K as filed with the Commission on June 13, 2008)

* A management contract or compensatory plan or arrangement.

-35-

Exhibit Number	Exhibit Description
(10.12)	Multi-Tenant Industrial Triple Net Lease, dated February 9, 2010, by and among LaCrosse Footwear, Inc., Danner, Inc., and DP Partners Portland I, LLC (Incorporated by reference to Exhibit (10.1) to LaCrosse Footwear, Inc.’s Current Report on Form 8-K as filed with the Commission on February 10, 2010)
(10.13)	Parking Lot Lease, dated February 9, 2010, by and among LaCrosse Footwear, Inc., Danner, Inc., and DP Partners Portland I, LLC (Incorporated by reference to Exhibit (10.2) to LaCrosse Footwear, Inc.’s Current Report on Form 8-K as filed with the Commission on February 10, 2010)
(10.14)	Certified Manufacturer Agreement, dated as of March 5, 2003, by and between W.L. Gore & Associates, Inc. and LaCrosse Footwear, Inc. (Incorporated by reference to Exhibit (10.14) to LaCrosse Footwear, Inc.’s Annual Report on Form 10-K filed with the Commission on March 7, 2008) [Confidential treatment has been granted with respect to a portion of this Agreement]
(10.15)	Trademark License, dated as of February 25, 2003, by and between W.L. Gore & Associates, Inc. and LaCrosse Footwear, Inc. (Incorporated by reference to Exhibit (10.15) to LaCrosse Footwear, Inc.’s Annual Report on Form 10-K filed with the Commission on March 7, 2008) [Confidential treatment has been granted with respect to a portion of this Agreement]
(10.16)	Amendment to Contractual Agreements, dated as of November 17, 2008, by and between W.L. Gore & Associates, Inc. and LaCrosse Footwear, Inc. (Incorporated by reference to Exhibit (10.18) to LaCrosse Footwear, Inc.’s Annual Report on Form 10-K filed with the Commission on March 7, 2008) [Confidential treatment has been granted with respect to a portion of this Agreement]
(10.17)	Replacement Revolving Line of Credit Note, dated as of December 22, 2011, issued by LaCrosse Footwear, Inc. in favor of Wells Fargo Bank, National Association
(10.18)	Continuing Security Agreement Rights to Payment and Inventory, dated as of December 22, 2011, granted by LaCrosse Footwear, Inc. in favor of Wells Fargo Bank, National Association
(10.19)	Security Agreement Equipment, dated as of December 22, 2011, granted by LaCrosse Footwear, Inc. in favor of Wells Fargo Bank, National Association
(10.20)	Third Party Security Agreement Rights to Payment and Inventory, dated as of December 22, 2011, issued by Danner, Inc. in favor of Wells Fargo Bank, National Association
(10.21)	Third Party Security Agreement Equipment, dated as of December 22, 2011, issued by Danner, Inc. in favor of Wells Fargo Bank, National Association
(10.22)	Third Amended and Restated Credit Agreement, dated December 22, 2011, by and between LaCrosse Footwear, Inc. as borrower, and Wells Fargo Bank, National Association, as lender
(21.1)	List of subsidiaries of LaCrosse Footwear, Inc.
(23.1)	Consent of McGladrey & Pullen, LLP
(31.1)	Certification of the President & Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934
(31.2)	Certification of the Executive Vice President & Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934
(32.1)	Certification of the President & Chief Executive Officer pursuant to 18 U.S.C. § 1350

-36-

Exhibit Number	Exhibit Description
(32.2)	Certification of the Executive Vice President & Chief Financial Officer pursuant to 18 U.S.C. § 1350
(101)	The following financial statements from LaCrosse Footwear, Inc.’s Form 10-K for the year ended December 31, 2011, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Shareholders’ Equity and Comprehensive Income, (iv) Consolidated Statements of Cash Flows, and (v) Notes to Consolidated Financial Statements, tagged as blocks of text. Information is furnished and not filed and is not incorporated by reference in any registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

-37-

INDEX

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	F-1
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated balance sheets		F-2 and F-3
Consolidated statements of income		F-4
Consolidated statements of shareholders’ equity and comprehensive income		F-5
Consolidated statements of cash flows		F-6
Notes to consolidated financial statements		F-7 - F-23

F - INDEX

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders

LaCrosse Footwear, Inc.

We have audited the accompanying consolidated balance sheets of LaCrosse Footwear, Inc. and Subsidiaries as of December 31, 2011 and 2010, and the related consolidated statements of income, shareholders’ equity and comprehensive income and cash flows for each of the three years in the period ended December 31, 2011. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of LaCrosse Footwear, Inc. and Subsidiaries as of December 31, 2011 and 2010, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2011, in conformity with U.S. generally accepted accounting principles.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), LaCrosse Footwear, Inc. and Subsidiaries’ internal control over financial reporting as of December 31, 2011, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 2, 2012 expressed an unqualified opinion on the effectiveness of LaCrosse Footwear, Inc. and Subsidiaries’ internal control over financial reporting.

/s/ McGladrey & Pullen, LLP

Minneapolis, Minnesota

March 2, 2012

F - 1

LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 31, 2011 and 2010

(In thousands, except share and per share data)

ASSETS	2011		2010
CURRENT ASSETS
Cash and cash equivalents (Notes 2 and 9)	$	774	$	4,274
Trade accounts and other receivables, less allowances of $679 in 2011 and $517 in 2010 (Note 9)		22,726		22,834
Inventories (Note 3)		48,648		40,071
Prepaid expenses and other		1,398		1,321
Deferred tax assets (Note 4)		1,771		1,614
Total current assets		75,317		70,114
PROPERTY AND EQUIPMENT
Leasehold improvements		7,206		7,173
Machinery and equipment		24,029		21,569
Gross property and equipment		31,235		28,742
Less accumulated depreciation		15,092		12,588
Property and equipment, net		16,143		16,154
OTHER ASSETS
Goodwill		10,753		10,753
Other assets		222		249
Total other assets		10,975		11,002
TOTAL ASSETS	$	102,435	$	97,270

See accompanying notes to consolidated financial statements.

F - 2

LIABILITIES AND SHAREHOLDERS’ EQUITY	2011			2010
CURRENT LIABILITIES
Short-term borrowings (Note 5)	$	16,869		$	—
Accounts payable		7,463			16,477
Accrued compensation		1,789			4,261
Other accruals		2,939			3,356
Total current liabilities		29,060			24,094
LONG-TERM DEBT (Note 5)		138			263
DEFERRED REVENUE (Note 5)		550			566
DEFERRED LEASE OBLIGATIONS		895			782
COMPENSATION AND BENEFITS (Note 8)		7,214			4,385
DEFERRED TAX LIABILITIES (Note 4)		1,450			2,732
Total liabilities		39,307			32,822
COMMITMENTS AND CONTINGENCIES (Notes 6, 8, and 9)
SHAREHOLDERS’ EQUITY (Notes 7, 8, 13 and 15)
Common stock, par value $.01 per share; authorized 50,000,000 shares; issued 6,717,627 shares		67			67
Additional paid-in capital		31,600			30,536
Accumulated other comprehensive loss		(6,058	)		(3,731	)
Retained earnings		38,538			38,789
Less cost of 213,003 and 258,775 shares of treasury stock		(1,019	)		(1,213	)
Total shareholders’ equity		63,128			64,448
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	102,435		$	97,270

See accompanying notes to consolidated financial statements.

F - 3

LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

Years Ended December 31, 2011, 2010, and 2009

(In thousands, except share and per share data)

	2011			2010			2009
Net sales (Note 10)	$	131,321		$	150,542		$	139,152
Cost of goods sold		80,085			91,413			85,062
Gross profit		51,236			59,129			54,090
Selling and administrative expenses		45,701			47,699			45,505
Operating income		5,535			11,430			8,585
Non-operating expense		(720	)		(239	)		(375	)
Income before income taxes		4,815			11,191			8,210
Income tax provision (Note 4)		1,815			4,310			2,700
Net income	$	3,000		$	6,881		$	5,510
Net income per common share:
Basic	$	0.46		$	1.07		$	0.87
Diluted	$	0.45		$	1.04		$	0.86
Weighted average number of common shares outstanding:
Basic		6,498,764			6,428,625			6,303,473
Diluted		6,639,199			6,590,009			6,374,936

See accompanying notes to consolidated financial statements.

F - 4

LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

AND COMPREHENSIVE INCOME

Years Ended December 31, 2011, 2010, and 2009

(In thousands)

	Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Loss			Retained Earnings			Treasury Stock			Total Shareholders’ Equity			Comprehensive Income
Balance, December 31, 2008	$	67	$	28,247	$	(4,029	)	$	39,173		$	(2,046	)	$	61,412
Net income		—		—		—			5,510			—			5,510		$	5,510
Employee benefit plan actuarial gain net of deferred tax of $411		—		—		641			—			—			641			641
Stock based compensation expense		—		581		—			—			—			581
Cash dividends paid		—		—		—			(3,154	)		—			(3,154	)
Exercise of stock options		—		213		—			—			352			565
Foreign currency translation adjustment		—		—		40			—			—			40			40
Comprehensive income																		6,191
Balance, December 31, 2009		67		29,041		(3,348	)		41,529			(1,694	)		65,595
Net income		—		—		—			6,881			—			6,881			6,881
Employee benefit plan actuarial loss net of deferred tax of $146		—		—		(229	)		—			—			(229	)		(229	)
Stock based compensation expense		—		560		—			—			—			560
Cash dividends paid		—		—		—			(9,621	)		—			(9,621	)
Exercise of stock options		—		935		—			—			540			1,475
Purchase of treasury stock		—		—		—			—			(59	)		(59	)
Foreign currency translation adjustment		—		—		(154	)		—			—			(154	)		(154	)
Comprehensive income																		6,498
Balance, December 31, 2010		67		30,536		(3,731	)		38,789			(1,213	)		64,448
Net income		—		—		—			3,000			—			3,000			3,000
Employee benefit plan actuarial loss net of deferred tax of $1,449		—		—		(2,266	)		—			—			(2,266	)		(2,266	)
Stock based compensation expense		—		698		—			—			—			698
Cash dividends paid		—		—		—			(3,251	)		—			(3,251	)
Exercise of stock options		—		366		—			—			194			560
Foreign currency translation adjustment		—		—		(61	)		—			—			(61	)		(61	)
Comprehensive income																	$	673
Balance, December 31, 2011	$	67	$	31,600	($	6,058	)	$	38,538		($	1,019	)	$	63,128

See accompanying notes to consolidated financial statements.

F - 5

LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 31, 2011, 2010, and 2009

(In thousands)

	2011			2010			2009
Cash Flows from Operating Activities
Net income	$	3,000		$	6,881		$	5,510
Adjustments to reconcile net income to net cash provided by (used in) operating activities, net of effects of acquisitions:
Depreciation and amortization		3,685			3,016			2,705
Loss on disposal of property and equipment		171			64			225
Stock-based compensation expense		698			560			581
Deferred income taxes		6			433			1,011
Changes in current assets and liabilities, net of effects of an acquisition in 2009:
Trade accounts and other receivables		95			(1,241	)		814
Inventories		(8,695	)		(13,150	)		1,740
Accounts payable		(9,005	)		8,120			(2,252	)
Accrued expenses and other		(3,729	)		381			1,872
Net cash provided by (used in) operating activities		(13,774	)		5,064			12,206
Cash Flows from Investing Activities
Purchases of property and equipment		(3,955	)		(10,604	)		(5,254	)
Proceeds from sales of property and equipment		3			1			41
Acquisition payment (Note 11)		—			—			(388	)
Net cash used in investing activities		(3,952	)		(10,603	)		(5,601	)
Cash Flows from Financing Activities
Net proceeds from short-term borrowings		16,869			—			—
Proceeds from long-term debt		—			300			—
Cash dividends paid		(3,251	)		(9,621	)		(3,154	)
Purchase of treasury stock		—			(59	)		—
Proceeds from exercise of stock options		560			1,475			565
Net cash provided by (used in) financing activities		14,178			(7,905	)		(2,589	)
Effect of foreign currency exchange rate changes on cash and cash equivalents		48			(21	)		40
Increase (decrease) in cash and cash equivalents		(3,500	)		(13,465	)		4,056
Cash and cash equivalents:
Beginning		4,274			17,739			13,683
Ending	$	774		$	4,274		$	17,739
SUPPLEMENTAL INFORMATION
Cash payments for income taxes	$	1,491		$	4,451		$	438
Cash payments for interest	$	265		$	15		$	—

See accompanying notes to consolidated financial statements.

F - 6

LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Nature of Business and Significant Accounting Policies

Nature of business:

LaCrosse Footwear, Inc. is a leading developer and marketer of branded, premium and innovative footwear for work and outdoor consumers. The Company’s trusted DANNER® and LACROSSE® brands are sold to a network of specialty retailers and distributors in North America, Europe, and Asia.

The Company markets its two brands through four channels of distribution: (1) wholesale, (2) government, (3) direct, and (4) international.

Summary of significant accounting policies:

Principles of consolidation - The consolidated financial statements include the accounts of LaCrosse Footwear, Inc. and its wholly owned subsidiaries, Danner, Inc., LaCrosse International, Inc., and LaCrosse International Holdings, Inc. (collectively the “Company”). All material intercompany accounts and transactions have been eliminated in consolidation.

Use of estimates in the preparation of financial statements - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying footnotes. Significant items subject to estimates and assumptions include valuation allowances for trade accounts receivable, inventories, and deferred tax assets, as well as pension obligations, product warranties, stock-based compensation, and estimated future cash flows used together with the Company’s market capitalization in the annual impairment test of goodwill. Actual results could differ from those estimates.

Revenue recognition - Revenue is recognized when products are shipped, the customer takes title and assumes risk of loss, collection of related receivables is probable, persuasive evidence of an arrangement exists, and the sales price is fixed or determinable. Factory store revenues are recorded at the time of sale. Allowances for estimated returns and discounts are provided when the related revenue is recorded. Amounts billed for shipping and handling costs are recorded as a component of net sales.

Foreign currency translation and foreign currency transactions - The assets and liabilities of the Company’s foreign subsidiary have been translated into U.S. dollars using the exchange rates in effect at period end, and the net sales and expenses have been translated into U.S. dollars using average exchange rates in effect during the period. The foreign currency translation adjustments are included as a separate component of accumulated other comprehensive loss within shareholders’ equity.

Any gains or losses generated by foreign currency transactions are recorded in non-operating expense in the consolidated statements of income in the period in which they occur.

Cash and cash equivalents - The Company maintains its cash in money market accounts and U.S. Government money market accounts, which may, at times, exceed federally insured limits. The Company has not experienced any losses in such accounts. The carrying amounts of such assets are a reasonable estimate of their fair value due to the short term to maturity and readily available market for the investments.

F - 7

LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Nature of Business and Significant Accounting Policies, Continued

Fair value of financial instruments - The Company’s financial instruments, including cash and cash equivalents, trade accounts receivable, borrowings on the line of credit, and accounts payable are estimated to approximate their fair value due to their short maturities.

Trade accounts receivable and allowance for doubtful accounts - Trade accounts receivable are carried at the original invoice amount less estimated allowances for doubtful accounts, cash discounts and non-defective returns. The Company maintains an allowance for doubtful accounts for the uncertainty of its customers’ ability to make required payments. In determining the amount of the allowance, the Company considers historical levels of credit losses and makes judgments about the creditworthiness of customers based upon ongoing credit evaluations. The Company also analyzes its cash discount programs and return policies and future rates of non-defective returns to assess the adequacy of allowance levels and adjusts such allowances as necessary.

Inventories - Inventories are stated at the lower of cost or market. Cost is determined by the first-in, first-out (FIFO) method. Provision for potentially slow-moving or excess inventories is made based on management’s analysis of inventory levels, future sales forecasts, and current estimated market values.

Property and equipment - Property and equipment are carried at cost and are depreciated using the straight-line method over their estimated useful lives or lease term, whichever is shorter. Depreciable lives range from five to fifteen years for leasehold improvements and from two to fifteen years for machinery and equipment.

Goodwill - Goodwill represents the excess of the purchase price over the fair value of the net tangible and identified intangible assets. Goodwill is not amortized, but is subject to annual impairment tests. The Company reviews its goodwill for impairment annually, or more frequently if there is a triggering event. The Company uses a two-step test to assess goodwill for impairment. First, the fair value of the reporting unit is compared to its carrying value. If the fair value exceeds the carrying value, goodwill is not impaired and no further testing is required. The second step is performed if the carrying value exceeds the fair value. The implied fair value of the reporting unit’s goodwill must be determined and compared to the carrying value of the goodwill. If the carrying value of a reporting unit’s goodwill exceeds its implied fair value, an impairment loss equal to the difference will be recorded. The Company also reviews the carrying amount of goodwill for impairment if an event occurs or circumstances change that would indicate the carrying amount may be impaired. The Company tests for impairment at the end of the second quarter each year. As of June 25, 2011, the Company determined there was no impairment of its recorded goodwill and as of December 31, 2011, there has been no triggering event that would require an updated impairment review.

Recoverability and impairment of intangible assets and other long-lived assets - The Company reviews long-lived assets and certain identifiable intangible assets for impairment whenever events indicate that the carrying value may be impaired. In these cases, the Company estimates the future undiscounted net cash flows to be derived from the assets to determine whether a potential impairment exists. If the carrying value exceeds the estimate of future undiscounted cash flows, the Company then calculates the impairment as the excess of the carrying value of the asset over the estimate of its fair value. The Company has determined that there was no impairment as of December 31, 2011.

F - 8

LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Nature of Business and Significant Accounting Policies, Continued

Product warranties - The Company provides a limited warranty for the replacement of defective products for a specified time period after sale. The Company estimates the costs that may be incurred under its limited warranty and records a liability in the amount of such anticipated costs at the time product revenue is recognized. Factors that affect the Company’s warranty liability include sales experience along with historical and anticipated future rates of warranty claims.

Accruals for product warranties are included in other accruals in the accompanying consolidated balance sheets. Changes in the carrying amount of accrued product warranty cost for the years ended December 31, 2011 and 2010 are summarized as follows (in thousands):

	December 31,
	2011			2010
Accrued product warranties, beginning	$	1,588		$	1,409
Accruals for products sold		2,645			3,181
Warranty claims		(2,970	)		(3,002	)
Accrued product warranties, ending	$	1,263		$	1,588

Stock-based compensation - The Company uses the Black-Scholes model to estimate the fair value of all share-based compensation awards on the date of grant. The Company recognizes compensation expense for options on a straight-line basis over the requisite service period for each separately vesting portion of the award. Stock-based compensation expense recognized was $0.7 million ($0.07 per diluted share) for 2011, $0.6 million ($0.05 per diluted share) for 2010, and $0.6 million ($0.06 per diluted share) for 2009. See Note 7, “Stock Options” for additional information.

Income taxes - The provision for income taxes is based on earnings reported in the consolidated statements of income. Deferred tax assets and liabilities are determined by applying anticipated future tax rates to the cumulative temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. See Note 4, “Income Tax Matters” for additional information.

Research and development costs - Expenditures relating to the development of new products and processes are expensed as incurred. These costs include expenditures for compensation, materials, facilities, and other costs and do not represent a material portion of operating expenses.

Advertising and promotion - The Company advertises and promotes its products through national and regional media, displays, and catalogs and through cooperative advertising programs with wholesalers. Costs for these advertising and promotional programs are charged to expense as incurred. Advertising and promotional expenses included in the consolidated statements of income for the years ended December 31, 2011, 2010, and 2009 were $4.2 million, $3.7 million, and $3.1 million, respectively.

Net income per common share - The Company presents its net income on a per share basis for both basic and diluted common shares. Basic earnings per common share excludes all dilutive stock options and is computed using the weighted average number of common shares outstanding during the period. The diluted earnings per common share calculation assumes that all stock options were exercised and converted into common stock at the beginning of the period, unless their effect would be anti-dilutive.

F - 9

LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Nature of Business and Significant Accounting Policies, Continued

A reconciliation of the shares used in the basic and diluted earnings per common share is as follows:

	December 31,
	2011		2010		2009
Basic weighted average common shares outstanding		6,498,764		6,428,625		6,303,473
Dilutive stock options		140,435		161,384		71,463
Diluted weighted average common shares outstanding		6,639,199		6,590,009		6,374,936

Segment reporting - The Company is required to report selected segment information quarterly and to report annually entity-wide disclosures about products, major customers and the geographies in which the entity holds material assets and reports revenue. An operating segment is defined as a component that engages in business activities whose operating results are reviewed by the chief operating decision maker and for which discrete financial information is available. The Company has determined that it operates as a single segment. The Company manages its resources and assesses its performance on an enterprise-wide basis.

Reclassifications - Certain disclosure amounts in the prior-period financial statements have been reclassified to conform to the current-period presentation and have no effect on previously reported net income or stockholders’ equity.

Note 2. Fair Value of Financial Instruments

Cash and cash equivalents at December 31, 2011 and 2010 were $0.8 million and $4.3 million, respectively. The Company has categorized its cash and cash equivalents as a Level 1 financial asset, measured at fair value based on quoted prices in active markets of identical assets. The Company does not have any other financial assets or liabilities that are measured at fair value.

Note 3. Inventories

A summary of inventories is as follows (in thousands):

	December 31,
	2011			2010
Raw materials	$	4,893		$	8,186
Work in process		650			637
Finished goods		43,714			31,646
Subtotal		49,257			40,469
Less: provision for obsolete and slow-moving inventories		(609	)		(398	)
Total	$	48,648		$	40,071

F - 10

LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 4. Income Tax Matters

Income before income taxes consists of the following (in thousands):

	Years Ending December 31,
	2011		2010		2009
United States	$	4,574	$	10,935	$	7,983
Foreign		241		256		227
Total	$	4,815	$	11,191	$	8,210

Deferred tax assets and deferred tax liabilities consist of the following components (in thousands):

	December 31,
	2011			2010
Deferred tax assets:
Trade receivable allowances	$	139		$	88
Inventories		1,171			896
Compensation and benefits		3,909			2,593
Capitalized legal fees		447			259
Warranty reserves and other		1,221			1,344
Net operating loss carryforwards		1,033			1,039
Valuation allowance		(1,005	)		(1,022	)
Total deferred tax assets		6,915			5,197
Deferred tax liabilities:
Goodwill amortization		4,194			4,194
Property and equipment		2,112			1,859
Prepaid expenses and other		288			262
Total deferred tax liabilities		6,594			6,315
Net deferred tax assets (liabilities)	$	321		$	(1,118	)

The components giving rise to the deferred tax assets and deferred tax liabilities described above have been included in the accompanying consolidated balance sheets as follows (in thousands):

	December 31,
	2011			2010
Current assets	$	1,771		$	1,614
Noncurrent liabilities		(1,450	)		(2,732	)
Net deferred tax assets (liabilities)	$	321		$	(1,118	)

As of December 31, 2011 and 2010, the Company recorded a valuation allowance of $1.0 million related to the state of Wisconsin net operating loss (“NOL”) carryforwards, the realization of which is dependent on having taxable income in Wisconsin in future periods.

In future periods of earnings, the Company will report income tax expense offset by any further reductions in the valuation allowance based on an ongoing assessment of the future realization of the state NOL deferred tax assets.

F - 11

LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 4. Income Tax Matters, Continued

The total state net operating losses (NOLs) as of December 31, 2011 are approximately $19.8 million, which will expire as follows: $0.7 million in 2015, $5.3 million in 2016, $9.2 million in 2017, $2.5 million in 2018, $1.6 million in 2019, and $0.5 million in 2020.

The components of the provision for income taxes are as follows (in thousands):

	December 31,
	2011			2010			2009
Current:
Federal	$	1,321		$	2,949		$	1,714
State		395			866			431
Foreign		97			69			(372	)
Deferred:
Federal		78			496			545
State		(40	)		(31	)		(15	)
Foreign		(36	)		(39	)		397
Provision for income taxes	$	1,815		$	4,310		$	2,700

The differences between statutory federal tax rates and the effective tax rates reflected in the consolidated statements of income are as follows:

	December 31,
	2011			2010			2009
Statutory federal tax rate		34.0	%		34.0	%		34.0	%
State rate, net of federal tax effect		5.3	%		5.0	%		5.1	%
Federal and state research and experimentation credits		(4.3	%)		(1.3	%)		(2.0	%)
Liability for unrecognized tax benefits		0.5	%		0.0	%		(3.1	%)
Other, net		2.2	%		0.8	%		(1.1	%)
Effective income tax rate		37.7	%		38.5	%		32.9	%

A reconciliation of the beginning and ending liability for unrecognized income tax benefits for 2011 and 2010 is shown below (in thousands):

	December 31,
	2011		2010
Balance, beginning of year	$	23	$	17
Additions based on tax positions related to the current year		14		6
Additions for tax positions of prior years		7		—
Balance, end of year	$	44	$	23

The Company’s policy is to accrue interest related to potential underpayment of income taxes within the provision for income taxes. The liability for accrued interest as of December 31, 2011 and December 31, 2010 was insignificant. Interest is computed on the difference between the Company’s uncertain tax benefit positions and the amount deducted or expected to be deducted in the Company’s tax returns.

F - 12

LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 4. Income Tax Matters, Continued

The Company files a consolidated U.S. federal income tax return as well as foreign and state tax returns on a consolidated, combined, or stand-alone basis (depending upon the jurisdiction). The Company has concluded tax examinations for U.S. federal and Oregon state filings through the tax year ended December 2007 and December 2006, respectively. Depending on the jurisdiction, the Company is no longer subject to state examinations by tax authorities for years prior to the December 2006 and 2007 tax years. The Company is not subject to foreign tax examinations prior to the year ended December 2008.

Note 5. Financing Arrangements

On December 22, 2011, the Company entered into a 3-year extension of the Company’s previous line of credit agreement with Wells Fargo Bank, N.A, which expires May 1, 2015, unless renewed. Amounts borrowed under the agreement are secured by substantially all of the Company’s assets. The maximum aggregate principal amount of borrowings allowed from January 1 to May 31 is $22.5 million and from June 1 to December 31, the total available is $35 million. The credit agreement provides for an interest rate of LIBOR plus 1.75% and an annual commitment fee of 0.2% on the unused balance. The line of credit agreement contains financial covenants as well as restrictions on annual dividends and capital expenditures. There are no borrowing base limitations under the credit agreement. The Company is in compliance with all covenants as of December 31, 2011. At December 31, 2011 the Company had a $16.9 million outstanding balance on the line of credit. The Company had no outstanding borrowings due at December 31, 2010.

In May 2010, the Company received a loan of $0.3 million from the State of Oregon to finance equipment purchases at its new Danner factory which began operating in the third quarter of 2010. The State of Oregon will forgive all, or a portion of the loan, along with all interest accruing on any portion of the loan forgiven upon meeting employment criteria at the Danner factory. The employment criteria require the Company to maintain a certain number of employees at the Danner factory over a consecutive eight quarter period beginning July 1, 2010 and ending no later than September 30, 2014. At that time the remaining loan balance that has not been forgiven will bear interest at 5.0% per annum and will mature on October 31, 2014. As the Company meets the specified employment criteria at the Danner factory during a given period, a corresponding portion of the loan is reclassified to deferred revenue and amortized over the life of the equipment purchased with the loan.

Note 6. Lease Commitments and Contingencies

Lease Commitments - The Company has real estate operating leases for offices, factory store, and manufacturing and distribution centers under non-cancelable lease agreements expiring on various dates through 2025. The total rental expense included in the consolidated statements of income for each of the years ended December 31, 2011, 2010, and 2009 is $2.9 million. The future minimum lease payments required under non-cancelable operating leases at December 31, 2011 are: $2.6 million in 2012, $2.7 in 2013 and 2014, $2.6 million in 2015, $1.8 million in 2016, and $3.5 million thereafter.

Contingencies - In the normal course of business, the Company is subject to various claims and potential litigation. Although the ultimate resolution of legal proceedings cannot be predicted with certainty, management believes that any such matters that are currently known will not have a material adverse effect on the Company’s results of operations, liquidity or financial condition.

F - 13

LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 7. Stock Options

The Company has outstanding stock options under certain employee and director stock option plans. Outstanding employee stock options are subject to the provisions of the 1993 Employee Stock Incentive Plan, 1997 Employee Stock Incentive Plan, 2001 Stock Incentive Plan, and 2007 Long Term Incentive Plan. The Board of Directors’ stock options are subject to the provisions of the 2001 Non-Employee Director Stock Option Plan, as Amended and Restated. Prior to 2006, employee stock options vested over a period of five years and had a maximum term of ten years. Beginning in 2006, the employee stock option issuances vest over four years and have a maximum term of seven years. Prior to 2008, the directors’ stock options vested over a period of five years and had a maximum term of ten years. Beginning in 2008, the directors’ stock option issuances vest over four years and have a maximum term of seven years.

The Company is required to estimate the fair value of share-based awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense in the Company’s consolidated statements of income over the requisite service period for each separately vesting portion of an award. Because share-based compensation expense is based on awards that are ultimately expected to vest, share-based compensation expense is reduced for estimated forfeitures. Forfeitures are required to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

To calculate the share-based compensation expense, the Company uses the Black-Scholes option-pricing model. The Company’s determination of fair value of option-based awards on the date of grant is impacted by the Company’s stock price as well as assumptions regarding certain highly subjective variables. These variables include, but are not limited to, the Company’s expected stock price volatility over the term of the awards, the anticipated risk-free interest rate, anticipated future dividend yields and the expected life of the options. The anticipated risk-free interest rate is based on a treasury instrument whose term is consistent with the expected life of the stock options granted. The expected volatility, life of options and dividend yield are based on historical experience.

The following table lists the assumptions used by the Company in determining the fair value of stock options and the resulting fair value for the years ended December 31, 2011, 2010, and 2009:

	December 31,
	2011			2010			2009
Expected dividend yield		3.2	%		4.1	%		3.7	%
Expected stock price volatility		51	%		50	%		46	%
Risk-free interest rate		1.7	%		2.4	%		1.4	%
Expected life of options		4.4 years			4.7 years			4.6 years
Weighted average fair value of options	$	5.50		$	4.22		$	3.26

F - 14

LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 7. Stock Options, Continued

The following table represents stock option activity for the three years ended December 31, 2011:

	Common Shares Under Options			Weighted Average Exercise Price		Average Remaining Contract Life
Options outstanding December 31, 2008		796,839		$	11.12
Granted		193,150			11.46
Canceled		(97,799	)		12.8
Exercised		(82,667	)		5.52
Options outstanding December 31, 2009		809,523			11.57
Granted		172,975			13.32
Canceled		(55,830	)		13.63
Exercised		(127,431	)		10.43
Options outstanding December 31, 2010		799,237			11.99
Granted		189,750			16.49
Canceled		(55,516	)		15.06
Exercised		(45,772	)		11.14
Options outstanding December 31, 2011		887,699		$	12.80		3.7 years
Options exercisable December 31, 2011		523,577		$	11.42		3.7 years

The Company’s nonvested stock option activity for the year ended December 31, 2011 is as follows:

	Number of Shares
Nonvested stock options at beginning of year		350,573
Vested		(120,685	)
Canceled		(55,516	)
Granted		189,750
Nonvested stock options at end of year		364,122

Shares available for future stock grants to employees and directors under existing plans were approximately 454,000 at December 31, 2011. The aggregate intrinsic value of options outstanding at December 31, 2011 was $1.1 million, and the aggregate intrinsic value of exercisable options was $1.1 million. The total intrinsic value of options exercised during 2011, 2010, and 2009 was $0.3 million, $0.8 million, and $0.4 million, respectively. At December 31, 2011, there was approximately $0.5 million of unrecognized compensation cost related to share-based payments to be recognized over a weighted-average period of approximately 1.3 years. The total fair value of options vesting in 2011 and 2010 was approximately $0.7 and $0.6 million; respectively. A tax benefit of $0.1 million, $0.3 million and $0.1 million was recognized in 2011, 2010, and 2009, respectively, from the exercise of stock options.

Note 8. Compensation and Benefit Agreements

The Company has a defined benefit pension plan covering eligible past employees and less than 1% of its current employees. Eligible participants are entitled to monthly pension benefits beginning at normal retirement age sixty-five (65). The monthly benefit payable at normal retirement date under the plan is equal to a specified dollar amount or percentage of average monthly compensation, as defined in the plan, multiplied by years of benefit service (maximum of 38 years). The Company’s funding policy is to make not less than the minimum contribution required by applicable regulations, plus such amounts as the Company may determine to be appropriate from time to time. The Company froze the plan during 2003 and as a result, participants do not accrue any additional years of service regardless of any increases in their compensation or completion of additional years of credited service.

F - 15

LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 8. Compensation and Benefit Agreements, Continued

The Company also sponsors an unfunded defined benefit postretirement death benefit plan that covers eligible past employees. The Company funds this postretirement benefit obligation as the benefits are paid.

Summary of pension and other postretirement benefit plans (in thousands):	Pension Benefits December 31,						Other Benefits December 31,
	2011			2010			2011			2010
Changes in benefit obligations:
Obligations at beginning of year	$	16,985		$	16,337		$	269		$	275
Interest cost		872			908			15			16
Benefits paid		(1,188	)		(1,137	)		(24	)		(22	)
Actuarial losses		2,672			877			—			—
Obligations at end of year	$	19,341		$	16,985		$	260		$	269
Changes in plan assets:
Fair value of assets at beginning of year	$	12,869		$	11,932		$	—		$	—
Actual return on assets		(209	)		1,290			—			—
Company contributions		915			784			24			22
Benefits paid		(1,188	)		(1,137	)		(24	)		(22	)
Fair value of assets at end of year	$	12,387		$	12,869		$	—		$	—
Funded status at end of year:
Plan assets less than obligations	$	(6,954	)	$	(4,116	)	$	(328	)	$	(297	)
Unrecognized loss		9,136			5,421			68			28
Accrued benefit (cost)	$	2,182		$	1,305		$	(260	)	$	(269	)
Total compensation and benefits liabilities	$	6,954		$	4,116		$	260		$	269

The following is a reconciliation to the compensation and benefits financial statement line item on the accompanying balance sheets:

	December 31,
	2011		2010
Pension benefits	$	6,954	$	4,116
Other benefits		260		269
Total compensation and benefits	$	7,214	$	4,385

F - 16

LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 8. Compensation and Benefit Agreements, Continued

Changes to Accumulated Other Comprehensive Loss pertaining to the defined benefit pension plan for the years ended December 31, 2011, 2010, and 2009 are shown below (in thousands):

	Prior Service Cost			Unrecognized (Gains)/Losses			Total			Deferred Tax Amount			Accumulated Other Comprehensive Loss
Balance, December 31, 2008	$	94		$	6,004		$	6,098		$	(2,378	)	$	3,720
Incurred in the current year		—			(764	)		(764	)		299			(465	)
Recognized as component of net periodic cost		(94	)		(194	)		(288	)		112			(176	)
Balance, December 31, 2009		—			5,046			5,046			(1,967	)		3,079
Incurred in the current year		—			528			528			(206	)		322
Recognized as component of net periodic cost		—			(153	)		(153	)		60			(93	)
Balance, December 31, 2010		—			5,421			5,421			(2,113	)		3,308
Incurred in the current year		—			3,897			3,897			(1,520	)		2,377
Recognized as component of net periodic cost		—			(182	)		(182	)		71			(111	)
Balance, December 31, 2011	$	—		$	9,136		$	9,136		$	(3,562	)	$	5,574
To be recognized as component of net periodic cost in 2012	$	—		$	345

Accumulated other comprehensive loss reported on the Company’s consolidated balance sheets consists of adjustments related to foreign currency translation and the actuarial loss related to pension benefits. The components of accumulated other comprehensive loss are as follows:

	December 31,
	2011		2010
Pension actuarial loss, net of tax	$	5,574	$	3,308
Foreign currency translation adjustment		484		423
Accumulated other comprehensive loss	$	6,058	$	3,731

F - 17

LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 8. Compensation and Benefit Agreements, Continued

Components of net periodic cost for the years ended December 31 are shown below (in thousands):

	Pension Benefits									Other Benefits
	December 31,									December 31,
	2011			2010			2009			2011			2010			2009
Cost (income) recognized during the year:
Interest cost	$	872		$	908		$	944		$	15		$	16		$	17
Expected return on plan assets		(1,016	)		(940	)		(798	)		—			—			—
Amortization of loss		182			153			194			—			—			—
Curtailment		—			—			146			—			—			—
Net periodic cost	$	38		$	121		$	486		$	15		$	16		$	17
	Pension Benefits									Other Benefits
	December 31,									December 31,
	2011			2010			2009			2011			2010			2009
Assumptions used in determining net periodic cost:
Discount rate		4.0	%		5.25	%		5.75	%		4.0	%		5.25	%		5.75	%
Expected return on plan assets		8.0	%		8.0	%		8.0	%		*			*			*

* This plan does not have separate assets, as a result there is no actual or expected return on plan assets.

The discount rate used is based on an assumed portfolio of high quality bonds with cash flows matching the timing of expected benefit payments. The expected return on plan assets is based on the asset allocation mix and historical returns, taking into account current and expected market conditions. The actual returns on pension plan assets were approximately 0% in 2011, 12% in 2010, and 26% in 2009. The historical annualized ten-year rate of return on pension plan assets is approximately 5%.

The Company’s pension plan asset allocation at December 31, 2011 and 2010 and target allocation for 2012 are as follows:

	Target Allocation	Percentage of Plan Assets December 31,
Asset Category	2012	2011			2010
Equity securities - mutual funds	50%-60%		54	%		57	%
Debt securities - mutual funds	40%-50%		46	%		43	%
Total			100	%		100	%

The pension plan investment strategy is to maintain a diversified portfolio designed to achieve an average long-term rate of return of 8%. The assets of the plan are strategically allocated between asset categories according to the target minimum and maximum allocations. Asset allocation target ranges for each asset category are monitored and may be changed from time to time based on asset allocation studies performed by the plan’s investment advisor, with evaluations of the risk and return expectations for various weightings of the authorized asset categories. Additional asset categories may also be added to the plan within the context of the investment objectives.

F - 18

LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 8. Compensation and Benefit Agreements, Continued

The Company expects to contribute approximately $1.0 million to the pension plan in 2012. The following benefit payments are expected to be paid from the plan over the next ten years (in thousands):

Year(s)	Pension Benefits		Other Benefits
2012	$	1,132	$	24
2013		1,107		25
2014		1,084		25
2015		1,119		25
2016		1,138		25
2017-2021		5,801		119

The Company has adopted a framework for measuring the fair value of plan assets that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy are described as follows:

Level 1 - Inputs to the valuation methodology are unadjusted quoted prices for identical assets in active markets that the plan has the ability to access.

Level 2 - Inputs to the valuation methodology include:

• Quoted prices for similar assets in active markets;

• Quoted prices for identical or similar assets in inactive markets;

• Inputs other than quoted prices that are observable for the asset;

• Inputs that are derived principally from or corroborated by observable market data by correlation or other means.

If the asset has a specified (contractual) term, the level 2 input must be observable for substantially the full term of the asset.

Level 3 - Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The asset’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

F - 19

LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 8. Compensation and Benefit Agreements, Continued

The following table sets forth by level, within the fair value hierarchy, the Plan’s assets at fair value as of December 31, 2011:

(in thousands)	Level 1		Level 2		Level 3		Total
Equity securities - domestic mutual funds	$	4,961	$	—	$	—	$	4,961
Equity securities - international mutual funds		1,785		—		—		1,785
Debt securities - mutual funds		5,641		—		—		5,641
Total	$	12,387	$	—	$	—	$	12,387

The following table sets forth by level, within the fair value hierarchy, the Plan’s assets at fair value as of December 31, 2010:

(in thousands)	Level 1		Level 2		Level 3		Total
Equity securities - domestic mutual funds	$	5,450	$	—	$	—	$	5,450
Equity securities - international mutual funds		1,924		—		—		1,924
Debt securities - mutual funds		5,495		—		—		5,495
Total	$	12,869	$	—	$	—	$	12,869

The Company has an employee retirement savings plan, which is classified as a defined contribution plan under Section 401(k) of the Internal Revenue Code. The plan allows employees to defer a portion of their annual compensation through pre-tax contributions.

For this plan, the Company matches 100% of the first 3% and 50% of the next 2% of an employee’s contributions, up to a maximum of 4% of the employee’s compensation. Matching contributions for the years ended December 31, 2011, 2010, and 2009 were $0.6 million, $0.6 million, and $0.5 million, respectively. The discretionary contributions to the employees’ 401(k) accounts for the years ended December 31, 2011, 2010 and 2009 were $0.1 million for each year.

Note 9. Significant Risks and Uncertainties

Concentrations of Credit Risk - Cash - At December 31, 2011 and 2010, the Company had $0.8 million and $4.3 million, respectively, in cash and money market accounts at financial institutions, which included amounts in excess of the federally insured limits.

Concentration of Credit Risk - Accounts Receivable - The Company has a relatively small number of key wholesalers that comprise a relatively significant portion of its total accounts receivable balance. Generally, the Company does not require collateral or other security to support customer receivables. However, the Company continually monitors and evaluates customers’ creditworthiness to minimize potential credit risks associated with its accounts receivable. The Company has determined that there is no material accounts receivable credit risk exposure beyond the current allowance for uncollectible accounts in the consolidated financial statements.

F - 20

LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 10. Enterprise-wide Disclosures

The Company sells its products to two market categories, work and outdoor. The following table presents information about the Company’s net sales attributed to these two market categories (in thousands):

	Years Ended December 31,
Net sales:	2011		2010		2009
Work Market	$	76,858	$	94,751	$	88,200
Outdoor Market		54,463		55,791		50,952
Total	$	131,321	$	150,542	$	139,152

The following table presents information about the Company’s net sales by geography based on the location of the customer (in thousands):

	Years Ended December 31,
Net sales:	2011		2010		2009
United States	$	121,671	$	141,987	$	131,897
Foreign Countries		9,650		8,555		7,255
Total	$	131,321	$	150,542	$	139,152

Included in the Company’s consolidated balance sheets at December 31, 2011 and 2010 are the net assets located outside of the United States of approximately $4.2 million and $3.5 million, respectively. The net book value of long-lived assets located outside of the United States totaled $1.2 million and $0.7 million at December 31, 2011 and 2010, respectively.

The Company sells its products to a large number of customers in different markets across multiple product categories. One customer accounted for 9%, 21%, and 20% of total revenues for the years ended December 31, 2011, 2010, and 2009, respectively.

Note 11. Acquisition

On May 8, 2009, the Company announced the formation of Environmentally Neutral Design Outdoor, Inc. (“END”). END was formed in the second quarter of 2009 when the Company acquired substantially all the assets of the predecessor company doing business as END Footwear for $0.4 million. The assets acquired included inventory, intellectual property, and property and equipment. END’s results of operations since the date of acquisition have been included in the consolidated financial statements. On August 7, 2009, the Company announced its plans to discontinue END as a standalone footwear brand and to integrate its platform of lightweight footwear designs into the Danner brand.

F - 21

LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 12. Quarterly Selected Financial Data (Unaudited)

The following reflects the Company’s unaudited quarterly results of operations for 2011 and 2010 (in thousands except per share data):

	2011
	Q1			Q2			Q3		Q4
Net sales	$	25,188		$	27,056		$	35,250	$	43,827
Gross profit		10,437			10,410			13,992		16,397
Operating income (loss)		(947	)		(193	)		2,949		3,726
Income tax provision (benefit)		(422	)		(121	)		1,084		1,274
Net income (loss)		(650	)		(185	)		1,670		2,165
Basic income (loss) per common share	($	0.10	)	($	0.03	)	$	0.26	$	0.33
Diluted income (loss) per common share	($	0.10	)	($	0.03	)	$	0.25	$	0.33

		$25,181		$25,181		$25,181		$25,181
	2010
	Q1		Q2		Q3		Q4
Net sales	$	34,227	$	26,553	$	37,682	$	52,081
Gross profit		13,768		10,863		14,016		20,483
Operating income		2,731		195		2,054		6,450
Income tax provision		1,047		61		857		2,345
Net income		1,662		101		1,146		3,973
Basic income per common share	$	0.26	$	0.02	$	0.18	$	0.62
Diluted income per common share	$	0.25	$	0.02	$	0.17	$	0.60

Note 13. Cash Dividends

In 2009, the Company paid quarterly dividends of $0.8 million, or $0.125 per common share, totaling $3.2 million.

During the first quarter of 2010, the Company paid a special dividend and a quarterly dividend totaling $7.2 million or $1.125 per common share. Subsequently, quarterly dividends totaling $2.4 million, in the amount of $0.125 per common share, were paid in the second, third and fourth quarters, respectively.

In 2011, the Company paid quarterly dividends of $0.8 million, or $0.125 per common share, totaling $3.3 million.

Note 14. Recent Accounting Pronouncements

In May 2011, the FASB issued an accounting standards update (ASU) that amends the presentation of comprehensive income in the financial statements. This ASU increases the prominence of comprehensive income in financial statements while eliminating the option in U.S. GAAP to present comprehensive income in the statement of changes in equity. Under this ASU, the Company will have the option to present the components of net income and comprehensive income in either one or two consecutive financial statements. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011 and requires full retrospective application. Upon adoption, we will be required to reclassify prior-period reported amounts for comprehensive income in accordance with the amended standards.

F - 22

LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 14. Recent Accounting Pronouncements, Continued

In September 2011, the FASB issued an accounting update that gives companies the option to make a qualitative evaluation about the likelihood of goodwill impairment. Companies will be required to perform the two-step impairment test only if it concludes that the fair value of a reporting unit is more likely than not less than its carrying value. The accounting update is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, with early adoption permitted. We do not expect that adoption of this accounting standard will have a material impact on our financial statements.

Note 15. Subsequent Event

On February 2, 2012, the Company announced a first quarter cash dividend of twelve and one-half cents ($0.125) per share of common stock. This first quarter dividend will be paid on March 18, 2012 to shareholders of record as of the close of business on February 22, 2012. The total cash payment for this dividend will be approximately $0.8 million.

F - 23

EX-3.2

Exhibit 3.2

AMENDMENT TO

AMENDED AND RESTATED BY-LAWS

OF

LACROSSE FOOTWEAR, INC.

(a Wisconsin corporation)

Adopted February 5, 2012

Section 3.01 of the Company’s Amended and Restated Bylaws is hereby amended in its entirety to read as follows:

“3.01. General Powers, Classification and Number. All corporate powers shall be exercised by or under the authority of, and the business affairs of the corporation managed under the direction of, the Board of Directors. The number of directors of the corporation shall be six (6), divided into three classes, each consisting of two (2) directors, and designated as Class I, Class II and Class III, respectively. At each annual meeting of shareholders, the successors to the class of directors whose terms shall expire at the time of such annual meeting shall be elected to hold office until the third succeeding annual meeting of shareholders, and until their successors are duly elected and qualified.”

AMENDMENT TO

AMENDED AND RESTATED BY-LAWS

OF

LACROSSE FOOTWEAR, INC.

(a Wisconsin corporation)

Adopted February 1, 2006

Section 3.01 of the Company’s Amended and Restated Bylaws is hereby amended in its entirety to read as follows:

“3.01. General Powers, Classification and Number. All corporate powers shall be exercised by or under the authority of, and the business affairs of the corporation managed under the direction of, the Board of Directors. The number of directors of the corporation shall be seven (7), divided into three classes of two (2), two (2) and three (3) directors, respectively, and designated as Class I, Class II and Class III, respectively. At each annual meeting of shareholders, the successors to the class of directors whose terms shall expire at the time of such annual meeting shall be elected to hold office until the third succeeding annual meeting of shareholders, and until their successors are duly elected and qualified.”

AMENDED AND RESTATED BY-LAWS

OF

LACROSSE FOOTWEAR, INC.

(a Wisconsin corporation)

Adopted October 30, 2005

ARTICLE I

OFFICES

1.01. Principal and Business Offices. The corporation may have such principal and other business offices, either within or without the State of Wisconsin, as the Board of Directors may designate or as the business of the corporation may require from time to time.

1.02. Registered Office. The registered office of the corporation required by the Wisconsin Business Corporation Law to be maintained in the State of Wisconsin may be, but need not be, identical with the principal office in the State of Wisconsin, and the address of the registered office may be changed from time to time by the Board of Directors or by the registered agent. The business office of the registered agent of the corporation shall be identical to such registered office.

ARTICLE II

SHAREHOLDERS

2.01. Annual Meeting. The annual meeting of the shareholders shall be held at such time and date as may be fixed by or under the authority of the Board of Directors, for the purpose of electing directors and for the transaction of such other business as may come before the meeting. If the election of directors shall not be held on the day fixed as herein provided for any annual meeting of the shareholders, or at any adjournment thereof, the Board of Directors shall cause the election to be held at a special meeting of the shareholders as soon thereafter as is practicable.

2.02. Special Meetings. Special meetings of the shareholders, for any purpose or purposes, unless otherwise prescribed by the Wisconsin Business Corporation Law, may be called by the Chairman of the Board, the Board of Directors or the Chief Executive Officer. The corporation shall call a special meeting of shareholders in the event that the holders of at least 10 % of all of the votes entitled to be cast on any issue proposed to be considered at the proposed special meeting sign, date and deliver to the corporation one or more written demands for the meeting describing one or more purposes for which it is to be held. The corporation shall give notice of such a special meeting within thirty days after the date that the demand is delivered to the corporation.

2.03. Place of Meeting. The Board of Directors may designate any place, either within or without the State of Wisconsin, as the place of meeting for any annual or special meeting of shareholders. If no designation is made, the place of meeting shall be the principal office of the corporation. Any meeting may be adjourned to reconvene at any place designated by vote of a majority of the shares represented thereat.

2.04. Notice of Meeting. Written notice stating the date, time and place of any meeting of shareholders and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten days nor more than sixty days before the date of the

meeting (unless a different time is provided by the Wisconsin Business Corporation Law or the articles of incorporation), either personally or by mail, by or at the direction of the Chairman of the Board, the Chief Executive Officer or the Secretary, to each shareholder of record entitled to vote meeting and to such other persons as required by the Wisconsin Business Corporation Law. If mailed, such notice shall be deemed to be effective when deposited in the United States mail, addressed to the shareholder at his or her address as it appears on the stock record books of the corporation, with postage thereon prepaid. If an annual or special meeting of shareholders is adjourned to a different date, time or place, the corporation shall not be required to give notice of the new date, time or place if the new date, time or place is announced at the meeting before adjournment; provided, however, that if a new record date for an adjourned meeting is or must be fixed, the corporation shall give notice of the adjourned meeting to persons who are shareholders as of the new record date.

2.05. Waiver of Notice. A shareholder may waive any notice required by the Wisconsin Business Corporation Law, the articles of incorporation or these by-laws before or after the date and time stated in the notice. The waiver shall be in writing and signed by the shareholder entitled to the notice, contain the same information that would have been required in the notice under applicable provisions of the Wisconsin Business Corporation Law (except that the time and place of meeting need not be stated) and be delivered to the corporation for inclusion in the corporate records. A shareholder’s attendance at a meeting, in person or by proxy, waives objection to all of the following: (a) lack of notice or defective notice of the meeting, unless the shareholder at the beginning of the meeting or promptly upon arrival objects to holding the meeting or transacting business at the meeting; and (b) consideration of a particular matter at the meeting that is not within the purpose described in the meeting notice, unless the shareholder objects to considering the matter when it is presented.

2.06. Fixing of Record Date. The Board of Directors may fix in advance a date as the record date for the purpose of determining shareholders entitled to notice of and to vote at any meeting of shareholders, shareholders entitled to demand a special meeting as contemplated by Section 2.02 hereof, shareholders entitled to take any other action, or shareholders for any other purpose. Such record date shall not be more than seventy days prior to the date on which the particular action, requiring such determination of shareholders, is to be taken. If no record date is fixed by the Board of Directors or by the Wisconsin Business Corporation Law for the determination of shareholders entitled to notice of and to vote at a meeting of shareholders, the record date shall be the close of business on the day before the first notice is given to shareholders. If no record date is fixed by the Board of Directors or by the Wisconsin Business Corporation Law for the determination of shareholders entitled to demand a special meeting as contemplated in Section 2.02 hereof, the record date shall be the date that the first shareholder signs the demand. Except as provided by the Wisconsin Business Corporation Law for a court-ordered adjournment, a determination of shareholders entitled to notice of and to vote at a meeting of shareholders is effective for any adjournment of such meeting unless the Board of Directors fixes a new record date, which it shall do if the meeting is adjourned to a date more than 120 days after the date fixed for the original meeting. The record date for determining shareholders entitled to a distribution (other than a distribution involving a purchase, redemption at other acquisition of the corporation’s shares) or a share dividend is the date on which the Board of Directors authorized the distribution or share dividend, as the case may be, unless the Board of Directors fixes a different record date.

2.07. Shareholders’ List for Meetings. After a record date for a special or annual meeting of shareholders has been fixed, the corporation shall prepare a list of the names of all of the shareholders entitled to notice of the meeting. The list shall be arranged by class or series of shares, if any, and show the address of and number of shares held by each shareholder. Such list shall be available for inspection by any shareholder, beginning two business days after notice of the meeting is given for which the list was prepared and continuing to the date of the meeting, at the corporation’s principal office or at a place identified in the meeting notice in the city where the meeting will be held. A shareholder or his or her agent may, on written demand, inspect and, subject to the limitations imposed by the Wisconsin Business Corporation Law, copy the list, during regular business hours and at his or her expense, during the period that it is available for inspection pursuant to this Section 2.07. The corporation shall make the shareholders’ list available at the meeting and any shareholder or his or her agent or attorney may inspect the list at any time during the meeting or any adjournment thereof. Refusal or failure to prepare or make available the shareholders’ list shall not affect the validity of any action taken at a meeting of shareholders.

2.08. Quorum and Voting Requirements. Shares entitled to vote as a separate voting group may take action on a matter at a meeting only if a quorum of those shares exists with respect to that matter. If the corporation has only one class of common stock outstanding, such class shall constitute a separate voting group for purposes of this Section 2.08. Except as otherwise provided in the articles of incorporation or the Wisconsin Business Corporation Law, a majority of the votes entitled to be cast on the matter shall constitute a quorum of the voting group for action on that matter. Once a share is represented for any purpose at a meeting, other than for the purpose of objecting to holding the meeting or transacting business at the meeting, it is considered present for purposes of determining whether a quorum exists for the remainder of the meeting and for any adjournment of that meeting unless a new record date is or must be set for the adjourned meeting. If a quorum exists, except in the case of the election of directors, action on a matter shall be approved if the votes cast within the voting group favoring the action exceed the votes cast opposing the action, unless the articles of incorporation or the Wisconsin Business Corporation Law requires a greater number of affirmative votes. Unless otherwise provided in the articles of incorporation, each director shall be elected by a plurality of the votes cast by the shares entitled to vote in the election of directors at a meeting at which a quorum is present. Though less than a quorum of the outstanding votes of a voting group are represented at a meeting, a majority of the votes so represented may adjourn the meeting from time to time without further notice. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified.

2.09. Conduct of Meeting. If a Chairman has been appointed, the Chairman shall, when present, call the meeting of shareholders to order and shall preside at all meetings of the shareholders. In the absence of the Chairman, the Chief Executive Officer, and in his or her absence, the President, and in his or her absence, a Vice President in the order or rank as established by the Board of Directors, and in their absence, any person chosen by the shareholders present shall call the meeting of the shareholders to order and shall act as chairman of the meeting, and the Secretary of the corporation shall act as secretary of all meetings of the shareholders, but, in the absence of the Secretary, the presiding officer may appoint any other person to act as secretary of the meeting.

2.10. Proxies. At all meetings of shareholders, a shareholder may vote his or her shares in person or by proxy. A shareholder may appoint a proxy to vote or otherwise act for the shareholder by signing an appointment form, either personally or by his or her attorney-in-fact. An appointment of a proxy

is effective when received by the Secretary or other officer or agent of the corporation authorized to tabulate votes. An appointment is valid for eleven months from the date of its signing unless a different period is expressly provided in the appointment form.

2.11. Voting of Shares. Except as provided in the articles of incorporation or in the Wisconsin Business Corporation Law, each outstanding share, regardless of class, is entitled to one vote on each matter voted on at a meeting of shareholders.

2.12. Action without Meeting. Any action required or permitted by the articles of incorporation or these by-laws or any provision of the Wisconsin Business Corporation Law to be taken at a meeting of the shareholders may be taken without a meeting and without action by the Board of Directors if a written consent or consents, describing the action so taken, is signed by all of the shareholders entitled to vote with respect to the subject matter thereof and delivered to the corporation for inclusion in the corporate records.

2.13. Acceptance of Instruments Showing Shareholder Action. If the name signed on a vote, consent, waiver or proxy appointment corresponds to the name of a shareholder, the corporation, if acting in good faith, may accept the vote, consent, waiver or proxy appointment and give it effect as the act of a shareholder. If the name signed on a vote, consent, waiver or proxy appointment does not correspond to the name of a shareholder, the corporation, if acting in good faith, may accept the vote, consent, waiver or proxy appointment and give it effect as the act of the shareholder if any of the following apply:

(a) The shareholder is an entity and the name signed purports to be that of an officer or agent of the entity.

(b) The name purports to be that of a personal representative, administrator, executor, guardian or conservator representing the shareholder and, if the corporation requests, evidence of fiduciary status acceptable to the corporation is presented with respect to the vote, consent, waiver or proxy appointment.

(c) The name signed purports to be that of a receiver or trustee in bankruptcy of the shareholder and, if the corporation requests, evidence of this status acceptable to the corporation is presented with respect to the vote, consent, waiver or proxy appointment.

(d) The name signed purports to be that of a pledgee, beneficial owner, or attorney-in-fact of the shareholder and, if the corporation requests, evidence acceptable to the corporation of the signatory’s authority to sign for the shareholder is presented with respect to the vote, consent, waiver or proxy appointment.

(e) Two or more persons are the shareholders as co-tenants or fiduciaries and the name signed purports to be the name of at least one of the co-owners and the person signing appears to be acting on behalf of all co-owners.

The corporation may reject a vote, consent, waiver or proxy appointment if the Secretary or other officer or agent of the corporation who is authorized to tabulate votes, acting in good faith, has reasonable basis for doubt about the validity of the signature on it or about the signatory’s authority to sign for the shareholder.

2.14 Shareholder Business to be Conducted at the Annual Meeting of Shareholders. Shareholders may nominate one or more persons for election as directors at the annual meeting of shareholders or propose business to be brought before the annual meeting of shareholders, or both, only if (i) such business is a proper matter for shareholder action under the Wisconsin Business Corporation Law and (ii) the shareholder has given timely notice in proper written form of such shareholder’s intent to make such nomination or nominations or to propose such business.

To be timely, a shareholder’s notice relating to the annual meeting shall be delivered to the Secretary at the principal executive offices of the corporation not less than 120 or more than 180 days prior to the first anniversary (the “Anniversary”) of the date on which the corporation first mailed its proxy materials for the preceding year’s annual meeting of shareholders. However, if the date of the annual meeting is advanced more than 30 days prior to or delayed by more than 30 days after the Anniversary of the preceding year’s annual meeting, then notice by the shareholder to be timely must be delivered to the Secretary at the principal executive offices of the corporation not later than the close of business on the later of (a) the 90th day prior to such annual meeting or (b) the 15th day following the day on which public announcement of the date of such meeting is first made.

To be in proper form a shareholder’s notice to the Secretary shall be in writing and shall set forth (a) the name and address of the shareholder of record who intends to make the nomination(s) or propose the business, and the name and address of the beneficial owner, if any, on whose behalf the nomination(s) or proposal(s) are to be made, (b) as the case may be, the name and address of the person or persons to be nominated, or a brief description of the business to be proposed, (c) a representation that the shareholder is a holder of record of stock of the corporation, that the shareholder intends to vote such stock at such meeting and, in the case of nomination of a director or directors, intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice, (d) in the case of nomination of a director or directors, a description of all arrangements or understandings between the shareholder and each nominee or any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the shareholder, (e) such other information regarding each nominee or each matter of business to be proposed by such shareholder as would be required to be included in a proxy statement filed pursuant to Regulation 14A promulgated by the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), had the nominee been nominated, or intended to be nominated, or the matter been proposed, or intended to be proposed, by the Board of Directors, and (f) in the case of nomination of a director or directors, the consent of each nominee to serve as a director of the corporation if so elected. The Board of Directors (or an authorized committee thereof) or the Chairman or other person presiding over the meeting of shareholders may refuse to acknowledge the nomination of any person or the proposal of any business not made in compliance with the foregoing procedures.

Notwithstanding the foregoing provisions of this Section 2.14, a shareholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to matters set forth in this Section 2.14. Nothing in this Section 2.14 shall affect any rights of shareholders to request inclusion of proposals in the corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act nor grant any shareholder a right to have any nominee included in the corporation’s proxy statement.

ARTICLE III

BOARD OF DIRECTORS

3.01. General Powers, Classification and Number. All corporate powers shall be exercised by or under the authority of, and the business affairs of the corporation managed under the direction of, the Board of Directors. The number of directors of the corporation shall be eight (8), divided into three classes of three, (3), two (2) and three (3) directors, respectively, and designated as Class I, Class II and Class III, respectively. At each annual meeting of shareholders, the successors to the class of directors whose terms shall expire at the time of such annual meeting shall be elected to hold office until the third succeeding annual meeting of shareholders, and until their successors are duly elected and qualified.

3.02. Tenure and Qualifications. Each director shall hold office until the next annual meeting of shareholders in the year in which such director’s term expires and until his or her successor shall have been duly elected and, if necessary, qualified, or until there is a decrease in the number of directors which takes effect after the expiration of his or her term, or until his or her prior retirement, death, resignation or removal. A director may be removed from office only as provided in the articles of incorporation at a meeting of the shareholders called for the purpose of removing the director, and the meeting notice shall state that the purpose, or one of the purposes, of the meeting is removal of the director. A director may resign at any time by delivering written notice which complies with the Wisconsin Business Corporation Law to the Board of Directors, to the Chairman of the Board or to the corporation. A director’s resignation is effective when the notice is delivered unless the notice specifies a later effective date. Directors need not be residents of the State of Wisconsin or shareholders of the corporation.

3.03. Regular Meetings. A regular meeting of the Board of Directors shall be held without other notice than this by-law immediately after the annual meeting of shareholders and each adjourned session thereof. The place of such regular meeting shall be the same as the place of the meeting of shareholders which precedes it, or such other suitable place as may be announced at such meeting of shareholders. The Board of Directors shall provide, by resolution, the date, time and place, either within or without the State of Wisconsin, for the holding of additional regular meetings of the Board of Directors without other notice than such resolution.

3.04. Special Meetings. Special meetings of the Board of Directors may be called by or at the request of the Chairman of the Board, the Chief Executive Officer, the Secretary or any two directors. The Chairman of the Board, the Chief Executive Officer or Secretary may fix any place, either within or without the State of Wisconsin, as the place for holding any special meeting of the Board of Directors, and if no other place is fixed the place of the meeting shall be the principal business office of the corporation in the State of Wisconsin.

3.05. Notice; Wavier. Notice of each special meeting of the Board of Directors shall be given by written notice or oral notice. Written notice shall be delivered or communicated in person, by telegraph, teletype, facsimile or electronic transmission, or other form of wire or wireless communication, or by mail or private carrier, to each director at his business address or at such other address as such director shall have designated in writing filed with the Secretary, in each case not less than forty-eight hours prior to the meeting. The notice need not prescribe the purpose of the special meeting of the Board of Directors or the business to be transacted at such meeting. Oral notice shall be communicated in person or by telephone (including voice mail, answering machine

or answering service) to a telephone number designated in writing by the director to the Secretary and is effective when communicated. If mailed, written notice shall be deemed to be effective seventy-two (72) hours after it is deposited in the United States mail so addressed, with postage thereon prepaid. If written notice is given by telegram, such notice shall be deemed to be effective when the telegram is delivered to the telegraph company. If written notice is given by private carrier, such notice shall be deemed to be effective when delivered to the private carrier.

Whenever any notice whatever is required to be given to any director of the corporation under the articles of incorporation or these by-laws or any provision of the Wisconsin Business Corporation Law, a waiver thereof in writing, signed at any time, whether before or after the date and time of meeting, by the director entitled to such notice shall be deemed equivalent to the giving of such notice. The corporation shall retain any such waiver as part of the permanent corporate records. A director’s attendance at or participation in a meeting waives any required notice to him or her of the meeting unless the director at the beginning of the meeting or promptly upon his or her arrival objects to holding the meeting or transacting business at the meeting and does not thereafter vote for or assent to action taken at the meeting.

3.06. Quorum. Except as otherwise provided by the Wisconsin Business Corporation Law or by the articles of incorporation or these by-laws, a majority of the number of directors specified in Section 3.01 of these by-laws shall constitute a quorum for the transaction of business at any meeting of the Board of Directors. Except as otherwise provided by the Wisconsin Business Corporation Law or by the articles of incorporation or by these bylaws, a quorum of any committee of the Board of Directors created pursuant to Section 3.12 hereof shall consist of a majority of the number of directors appointed to serve on the committee. A majority of the directors present (though less than such quorum) may adjourn any meeting of the Board of Directors or any committee thereof, as the case may be, from time to time without further notice.

3.07. Manner of Acting. The affirmative vote of a majority of the directors present at a meeting of the Board of Directors or a committee thereof at which a quorum is present shall be the act of the Board of Directors or such committee, as the case may be, unless the Wisconsin Business Corporation Law, the articles of incorporation or these bylaws require the vote of a greater number of directors.

3.08. Conduct of Meetings. If appointed, the Chairman shall call meetings of the Board of Directors to order and shall act as chairman of the meeting. In the absence of the Chairman, the Chief Executive Officer, and in his or her absence, the President (subject to Section 4.07), and in his or her absence, a Vice President (subject to Section 4.08), and in his or her absence, any director chosen by the directors present, shall call meetings of the Board of Directors to order and shall act as chairman of the meeting. The Secretary of the corporation shall act as secretary of all meetings of the Board of Directors but in the absence of the Secretary, the presiding officer may appoint any other person present to act as secretary of the meeting. Minutes of any regular or special meeting of the Board of Directors shall be prepared and distributed to each director.

3.09. Vacancies. Any vacancies occurring in the Board of Directors, including a vacancy created by an increase in the number of directors, shall be filled only as provided in the articles of incorporation. A vacancy that will occur at a specific later date, because of a resignation effective at a later date or otherwise, may be filled before the vacancy occurs, but the new director may not take office until the vacancy occurs.

3.10. Compensation. The Board of Directors, irrespective of any personal interest of any of its members, may establish reasonable compensation of all directors for services to the corporation as directors, officers or otherwise, or may delegate such authority to an appropriate committee. The Board of Directors also shall have authority to provide for or delegate authority to an appropriate committee to provide for reasonable pensions, disability or. death benefits, and other benefits or payments, to directors, officers and employees and to their estates, families, dependents or beneficiaries on account of prior services rendered by such directors, officers and employees to the corporation.

3.11. Presumption of Assent. A director who is present and is announced as present at a meeting of the Board of Directors or any committee thereof created in accordance with Section 3.12 hereof, when corporate action is taken, assents to the action taken unless any of the following occurs: (a) the director objects at the beginning of the meeting or promptly upon his or her arrival to holding the meeting or transacting business at the meeting; (b) the director’s dissent or abstention from the action taken is entered in the minutes of the meeting; or (c) the director delivers written notice that complies with the Wisconsin Business Corporation Law of his or her dissent or abstention to the presiding officer of the meeting before its adjournment or to the corporation immediately after adjournment of the meeting. Such right of dissent or abstention shall not apply to a director who votes in favor of the action taken.

3.12. Committees. The Board of Directors by resolution adopted by the affirmative vote of a majority of all of the directors then in office may create one or more committees, appoint members of the Board of Directors to serve on the committees and designate other members of the Board of Directors to serve as alternates. Each committee shall have two or more members who shall, unless otherwise provided by the Board of Directors, serve at the pleasure of the Board of Directors. A committee may be authorized to exercise the authority of the Board of Directors, except that a committee may not do any of the following: (a) authorize distributions; (b) approve or propose to shareholders action that the Wisconsin Business Corporation Law requires to be approved by shareholders; (c) fill vacancies on the Board of Directors or, unless the Board of Directors provides by resolution that vacancies on a committee shall be filled by the affirmative vote of the remaining committee members, on any Board committee; (d) amend the corporation’s articles of incorporation; (e) adopt, amend or repeal by-laws; (f) approve a plan of merger not requiring shareholder approval; (g) authorize or approve reacquisition of shares, except according to a formula or method prescribed by the Board of Directors; and (h) authorize or approve the issuance or sale or contract for sale of shares, or determine the designation and relative rights, preferences and limitations of a class or series of shares, except that the Board of Directors may authorize a committee to do so within limits prescribed by the Board of Directors. Unless otherwise provided by the Board of Directors in creating the committee, a committee may employ counsel, accountants and other consultants to assist it in the exercise of its authority.

3.13. Meetings by Telephone or other Communication Technology.

(a) Any or all directors may participate in a regular or special meeting or in a committee meeting of the Board of Directors by, or conduct the meeting through the use of, telephone or any other means of communication by which either: (i) all participating directors may simultaneously hear each other during the meeting, or (ii) all communications during the meeting are immediately transmitted to each participating director, and each participating director is able to immediately send messages to all other participating directors.

(b) If a meeting will be conducted through the use of any means described in paragraph (a), all participating directors shall be informed that a meeting is taking place at which official business may be transacted. A director participating in a meeting by any means described in paragraph (a) is deemed to be present in person at the meeting.

(c) Notwithstanding the foregoing, no action may be taken at any meeting held by such means on any particular matter which the presiding officer determines, in his or her sole discretion, to be inappropriate under the circumstances for action at a meeting held by such means. Such determination shall be made and announced in advance of such meeting.

3.14. Action without Meeting. Any action required or permitted by the Wisconsin Business Corporation Law to be taken at a meeting of the Board of Directors or a committee thereof created pursuant to Section 3.12 hereof may be taken without a meeting if the action is taken by all members of the Board or of the committee. The action shall be evidenced by one or more written consents describing the action taken, signed by each director or committee member and retained by the corporation. Such action shall be effective when the last director or committee member signs the consent, unless the consent specifies a different effective date.

ARTICLE IV

OFFICERS

4.01. Number. The officers of the corporation shall include a Chief Executive Officer, a Secretary, and a Chief Financial Officer, each of whom shall be elected or appointed by the Board of Directors. Such other officers and assistant officers as may be deemed necessary may be elected or appointed by the Board of Directors. The Board of Directors may also authorize any duly authorized officer to appoint one or more officers or assistant officers. Any two or more offices may be held by the same person.

4.02. Election and Term of Office. The officers of the corporation to be elected by the Board of Directors shall be’ elected annually by the Board of Directors at the first meeting of the Board of Directors held after each annual meeting of the shareholders. If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as is practicable. Each officer shall hold office until his or her successor shall have been duly elected or until his or her prior death, resignation or removal.

4.03. Removal. The Board of Directors may remove any officer and, unless restricted by the Board of Directors or these by-laws, an officer may remove any officer or assistant officer appointed by that officer, at any time, with or without cause and notwithstanding the contract rights, if any, of the officer removed. The appointment of an officer does not of itself create contract rights.

4.04. Resignation. An officer may resign at any time by delivering notice to the corporation that complies with the Wisconsin Business Corporation Law. The resignation shall be effective when the notice is delivered, unless the notice specifies a later effective date and the corporation accepts the later effective date.

4.05. Vacancies. A vacancy in any principal office because of death, resignation, removal, disqualification or otherwise, shall be filled by the Board of Directors for the unexpired portion of the term. If a resignation of an officer is effective at a later date as contemplated by Section 4.04 hereof, the Board of Directors may fill the pending vacancy before the effective date if the Board provides that the successor may not take office until the effective date.

4.06. Chief Executive Officer. The Chief Executive Officer shall supervise and control all of the assets, business, and affairs of the corporation, subject to the direction and control of the Board of Directors. The Chief Executive Officer shall vote the shares owned by the corporation in other corporations, domestic or foreign, unless otherwise prescribed by resolution of the Board. In general, the Chief Executive Officer shall perform all duties incident to the office of Chief Executive Officer and such other duties as may be prescribed by the Board from time to time. The Chief Executive Officer shall, unless a Chairman of the Board of Directors has been appointed and is present, preside at all meetings of the shareholders and the Board of Directors. The Chief Executive Officer may, but need not, be a member of the Board of Directors.

4.07. President. In the absence of the Chief Executive Officer or the Chief Executive Officer’s inability to act, the President shall perform all the duties of the Chief Executive Officer and when so acting shall have all the powers of, and be subject to all the restrictions upon, the Chief Executive Officer; provided that the President, if not also serving as the Chief Executive Officer, shall not assume the authority to preside as chairman of meetings of the Board unless the President is a member of the Board. The President shall have such other powers and perform such other duties as from time to time may be respectively prescribed by the Board, these Bylaws or the Chief Executive Officer.

4.08. Vice Presidents. In the absence of the Chief Executive Officer and the President, or in the event of the death, inability or refusal to act of the Chief Executive Officer and the President, or in the event that it shall be impracticable for the Chief Executive Officer and the President to act personally, the Vice Presidents, if any, in order of their rank as fixed by the Board of Directors or, if not ranked, a Vice President designated by the Board, shall perform all the duties of the Chief Executive Officer or the President and, when so acting, shall have all the powers and be subject to all the restrictions upon the Chief Executive Officer or the President; provided that no such Vice President shall assume the authority to preside as chairman of meetings of the Board unless such Vice President is a member of the Board. Any Vice President may sign, with the Secretary or Assistant Secretary, certificates for shares of the corporation and shall perform such other duties and have such authority as from time to time may be delegated or assigned to him or her by the Chief Executive Officer, the President or the Board of Directors. The execution of any instrument of the corporation by any Vice President shall be conclusive evidence, as to third parties, of his or her authority to act in the stead of the Chief Executive Officer and the President.

4.09. Secretary. The Secretary shall: (a) keep minutes of the meetings of the shareholders and of the Board of Directors (and of committees thereof) in one or more books provided for that purpose (including records of actions taken by the shareholders or the Board of Directors (or committees thereof) without a meeting); (b) see that all notices are duly given in accordance with the provisions of these by-laws or as required by the Wisconsin Business. Corporation Law; (c) be custodian of the corporate records and of the seal of the corporation, if any, and see that the seal of the corporation, if any, is affixed to all documents the execution of which on behalf of the corporation under its seal is duly authorized; (d) maintain a record of the shareholders of the corporation, in a form that

permits preparation of a list of the names and addresses of all shareholders, by class or series of shares and showing the number and class or series of shares held by each shareholder; (e) sign with the Chief Executive Officer, the President or a Vice President, certificates for shares of the corporation, the issuance of which shall have been authorized by resolution of the Board of Directors; (f) have general charge of the stock transfer books of the corporation; and (g) in general perform all duties incident to the office of Secretary and have such other duties and exercise such authority as from time to time may be delegated or assigned by the Chief Executive Officer, the President or by the Board of Directors.

4.10. Chief Financial Officer. The Chief Financial Officer shall: (a) have charge and custody of and be responsible for all funds and securities of the corporation; (b) receive and give receipts for moneys due and payable to the corporation from any source whatsoever, and deposit all such moneys in the name of the corporation in such banks, trust companies or other depositaries as shall be selected in accordance with the provisions of Section 5.04; and (c) in general perform all of the duties incident to the office of the Chief Financial Officer and have such other duties and exercise such other authority as from time to time may be delegated or assigned by the Chief Executive Officer, the President or by the Board of Directors. If required by the Board of Directors, the Chief Financial Officer shall give a bond for the faithful discharge of his or her duties in such sum and with such surety or sureties as the Board of Directors shall determine.

4.11. Assistants and Acting Officers. The Board of Directors shall have the power to appoint, or to authorize any duly appointed officer of the corporation to appoint, any person to act as assistant to any officer, or as agent for the corporation in his or her stead, or to perform the duties of such officer whenever for any reason it is impracticable for such officer to act personally, and such assistant or acting officer or other agent so appointed by the Board of Directors or an authorized officer shall have the power to perform all the duties of the office to which he or she is so appointed to be an assistant, or as to which he or she is so appointed to act, except as such power may be otherwise defined or restricted by the Board of Directors or the appointing officer.

ARTICLE V

CONTRACTS, LOANS, CHECKS

AND DEPOSITS; SPECIAL CORPORATE ACTS

5.01. Contracts. The Board of Directors may authorize any officer or officers, agent or agents, to enter into any contract or execute or deliver any instrument in the name of and on behalf of me corporation, and such authorization may be general or confined to specific instances. In the absence of other designation, all deeds, mortgages and instruments of assignment or pledge made by the corporation shall be executed in me name of the corporation by the Chief Executive Officer, the President or one of the Vice Presidents and by the Secretary, an Assistant Secretary or the Chief Financial Officer; the Secretary or an Assistant Secretary, when necessary or required, shall affix the corporate seal, if any, thereto; and when so executed no other party to such instrument or any third party shall be required to make any inquiry into the authority of the signing officer or officers.

5.02. Loans. No indebtedness for borrowed money shall be contracted on behalf of the corporation and no evidences of such indebtedness shall be issued in its name unless authorized by or under the authority of a resolution of the Board of Directors. Such authorization may be general or confined to specific instances.

5.03. Checks, Drafts, etc. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation, shall be signed by such officer or officers, agent or agents of the corporation and in such manner as shall from time to time be determined by or under the authority of a resolution of the Board of Directors.

5.04. Deposits. All funds of the corporation not otherwise employed shall be deposited from time to time to the credit of the corporation in such banks, trust companies or other depositaries as may be selected by or under the authority of a resolution of the Board of Directors.

5.05. Voting of Securities Owned by this Corporation. Subject always to the specific directions of the Board of Directors, (a) any shares or other securities issued by any other corporation and owned or controlled by this corporation may be voted at any meeting of security holders of such other corporation by the Chief Executive Officer of this corporation if he or she be present, or in his or her absence, the President of this corporation if he or she be present, or in his or her absence, by any Vice President of this corporation who may be present, and (b) whenever, in the judgment of the Chief Executive Officer, or in his or her absence, of the President, or in his or her absence, of any Vice President, it is desirable for this corporation to execute a proxy or written consent in respect to any shares or other securities issued by any other corporation and owned by this corporation, such proxy or consent shall be executed in the name of this corporation by the Chief Executive Officer, the President or one of the Vice Presidents of this corporation, without necessity of any authorization by the Board of Directors, affixation of corporate seal, if any, or countersignature or attestation by another officer. Any person or persons designated in the manner above stated as the proxy or proxies of this corporation shall have full right, power and authority to vote the shares or other securities issued by such other corporation and owned by this corporation the same as such shares or other securities might be voted by this corporation.

ARTICLE VI

CERTIFICATES FOR SHARES; TRANSFER OF SHARES

6.01. Certificates for Shares. Certificates representing shares of the corporation shall be in such form, consistent with the Wisconsin Business Corporation Law, as shall be determined by the Board of Directors. Such certificates shall be signed by the Chief Executive Officer, the President or a Vice President and by the Secretary or an Assistant Secretary. All certificates for shares shall be consecutively numbered or otherwise identified. The name and address of the person to whom the shares represented thereby are issued, with the number of shares and date of issue, shall be entered on the stock transfer books of the corporation. All certificates surrendered to the corporation for transfer shall be cancelled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and cancelled, except as provided in Section 6.06.

6.02. Facsimile Signatures and Seal. The seal of the corporation, if any, on any certificates for shares may be a facsimile. The signature of the Chief Executive Officer, the President or Vice President and the Secretary or Assistant Secretary upon a certificate may be facsimiles if the certificate is manually signed on behalf of a transfer agent, or a registrar, other than the corporation itself or an employee of the corporation.

6.03. Signature by Former Officers. The validity of a share certificate is not affected if a person who signed the certificate (either manually or in facsimile) no longer holds office when the certificate is issued.

6.04. Transfer of Shares. Prior to due presentment of a certificate for shares for registration of transfer, the corporation may treat the registered owner of such shares as the person exclusively entitled to vote, to receive notifications and otherwise to have and exercise all the rights and power of an owner. Where a certificate for shares is presented to the corporation with a request to register for transfer, the corporation shall not be liable to the owner or any other person suffering loss as a result of such registration of transfer if (a) there were on or with the certificate the necessary endorsements, and (b) the corporation had no duty to inquire into adverse claims or has discharged any such duty. The corporation may require reasonable assurance that such endorsements are genuine and effective and compliance with such other regulations as may be prescribed by or under the authority of the Board of Directors.

6.05. Restrictions on Transfer. The face or reverse side of each certificate representing shares shall bear a conspicuous notation of any restriction imposed by the corporation upon the transfer of such shares.

6.06. Lost, Destroyed or Stolen Certificates. Where the owner claims that certificates for shares have been lost, destroyed or wrongfully taken, a new certificate shall be issued in place thereof if the owner (a) so requests before the corporation has notice that such shares have been acquired by a bona fide purchaser, (b) files with the corporation a sufficient indemnity bond if required by the Board of Directors or any principal officer, and (c) satisfies such other reasonable requirements as may be prescribed by or under the authority of the Board of Directors.

6.07. Consideration for Shares. The Board of Directors may authorize shares to be issued for consideration consisting of any tangible or intangible property or benefit to the corporation, including cash, promissory notes, services performed, contracts for services to be performed or other securities of the corporation. Before the corporation issues shares, the Board of Directors shall determine that the consideration received or to be received for the shares to be issued is adequate. The determination of the Board of Directors is conclusive insofar as the adequacy of consideration for the issuance of shares relates to whether the shares are validly issued, fully paid and nonassessable. The corporation may place in escrow shares issued in whole or in part for a contract for future services or benefits, a promissory note, or otherwise for property to be issued in the future, or make other arrangements to restrict the transfer of the shares, and may credit distributions in respect of the shares against their purchase price, until the services are performed, the benefits or property are received or the promissory note is paid. If the services are not performed, the benefits or property are not received or the promissory note is not paid, the corporation may cancel, in whole or in part, the shares escrowed or restricted and the distributions credited.

6.08. Stock Regulations. The Board of Directors shall have the power and authority to make all such further rules and regulations, not inconsistent with law, as it may deem expedient concerning the issue, transfer and registration of shares of the corporation.

6.09. Shares Without Certificates. The Board of Directors may authorize the issuance of any shares of any of its classes or series without certificates. The authorization does not affect shares represented by certificates until the certificates are surrendered to the corporation. Within a

reasonable time after the issuance or transfer of shares without certificates, the corporation shall send the stockholder a written statement that includes (i) all of the information required on share certificates, and (ii) any transfer restrictions applicable to the shares.

ARTICLE VII

SEAL

7.01. The Board of Directors may provide for a corporate seal for the corporation.

ARTICLE VIII

INDEMNIFICATION

8.01. Provision of Indemnification. The corporation shall, to the fullest extent permitted or required by Sections 180.0850 to 180.0859, inclusive, of the Wisconsin Business Corporation Law, including any amendments thereto (but in the case of any such amendment only to the extent such amendment permits or requires the corporation to provide broader indemnification rights than prior to such amendment), indemnify its Directors and Officers against any and all Liabilities, and advance any and all reasonable Expenses, incurred thereby in any Proceeding to which any such Director or Officer is a Party because he or she is or was a Director or Officer of the corporation. The corporation shall also indemnify an employee who is not a Director or Officer, to the extent that the employee has been successful on the merits or otherwise in defense of a Proceeding, for all Expenses incurred in the Proceeding if the employee was a Party because he or she is or was an employee of the corporation. The rights to indemnification granted hereunder shall not be deemed exclusive of any other rights to indemnification against Liabilities or the advancement of Expenses which a Director, Officer or employee may be entitled under any written agreement, Board resolution, vote of shareholders, the Wisconsin Business Corporation Law or otherwise. The corporation may, but shall not be required to, supplement the foregoing rights to indemnification against Liabilities and advancement of Expenses under this Section 8.01 by the purchase of insurance on behalf of any one or more of such Directors, Officers or employees, whether or not the corporation would be obligated to indemnify or advance Expenses to such Director, Officer or employee under this Section 8.01. All capitalized terms used in this Article VIII and not otherwise defined herein shall have the meaning set forth in Section 180.0850 of the Wisconsin Business Corporation Law.

ARTICLE IX

AMENDMENTS

9.01. By Shareholders. These by-laws may be amended or repealed and new by-laws may be adopted by the shareholders at any annual or special meeting of the shareholders at which a quorum is in attendance.

9.02. By Directors. Except as otherwise provided by the Wisconsin Business Corporation Law or the articles of incorporation, these by-laws may also be amended or repealed and new by-laws may be adopted by the Board of Directors by affirmative vote of a majority of the number of directors present at any meeting at which a quorum is in attendance; provided, however, that the shareholders in adopting, amending or repealing a particular bylaw may provide therein that the Board of Directors may not amend, repeal or readopt that by-law.

9.03. Implied Amendments. Any action taken or authorized by the shareholders or by the Board of Directors which would be inconsistent with the by-laws then in effect, but which is taken or authorized by affirmative vote of not less than the number of shares or the number of directors required to amend the by-laws so that the by-laws would be consistent with such action, shall be given the same effect as though the by-laws had been temporarily amended or suspended so far, but only so far, as is necessary to permit the specific action so taken or authorized.

EX-10.17

Exhibit 10.17

REPLACEMENT REVOLVING LINE OF CREDIT NOTE

(VARIABLE MAXIMUM)

$35,000,000.00	Portland, Oregon
	December 22, 2011

FOR VALUE RECEIVED, the undersigned LACROSSE FOOTWEAR, INC. (“Borrower”) promises to pay to the order of WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”) at its office at Portland RCBO, 1300 S. W. Fifth Avenue, Portland, Oregon 97201, or at such other place as the holder hereof may designate, in lawful money of the United States of America and in immediately available funds, the principal sum of Thirty Five Million Dollars ($35,000,000.00), or so much thereof as may be advanced and be outstanding, with interest thereon, to be computed on each advance from the date of its disbursement as set forth herein.

DEFINITIONS:

As used herein, the following terms shall have the meanings set forth after each, and any other term defined in this Note shall have the meaning set forth at the place defined:

(a) “Business Day” means any day except a Saturday, Sunday or any other day on which commercial banks in Oregon are authorized or required by law to close.

(b) “Daily One Month LIBOR” means for any day, the rate of interest equal to LIBOR then in effect for delivery for a one (1) month period.

(c) “Fixed Rate Term” means a period commencing on a Business Day and continuing for one (1) or three (3) months, as designated by Borrower, during which all or a portion of the outstanding principal balance of this Note bears interest determined in relation to LIBOR; provided however, that no Fixed Rate Term may be selected for a principal amount less than Two Hundred Fifty Thousand Dollars ($250,000.00); and provided further, that no Fixed Rate Term shall extend beyond the scheduled maturity date hereof. If any Fixed Rate Term would end on a day which is not a Business Day, then such Fixed Rate Term shall be extended to the next succeeding Business Day.

(d) “LIBOR” means the rate per annum (rounded upward, if necessary, to the nearest whole 1/8 of 1%) and determined pursuant to the following formula:

LIBOR =	Base LIBOR
	100% - LIBOR Reserve Percentage

(i) “Base LIBOR” means the rate per annum for United States dollar deposits quoted by Bank (A) for the purpose of calculating effective rates of interest for loans making reference to LIBOR, as the Inter-Bank Market Offered Rate, with the understanding that such rate is quoted by Bank for the purpose of calculating effective rates of interest for loans making reference thereto, on the first day of a Fixed Rate Term for delivery of funds on said date for a period of time approximately equal to the number of days in such Fixed Rate Term and in an amount approximately equal to the principal amount to which such Fixed Rate Term applies, or (B) for the purpose of calculating effective rates of interest for loans making reference to the Daily One Month LIBOR Rate, as the Inter-Bank Market Offered Rate in effect from time to time for delivery of funds for one (1) month in amounts approximately equal to the principal amount

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of such loans. Borrower understands and agrees that Bank may base its quotation of the Inter-Bank Market Offered Rate upon such offers or other market indicators of the Inter-Bank Market as Bank in its discretion deems appropriate including, but not limited to, the rate offered for U.S. dollar deposits on the London Inter-Bank Market.

(ii) “LIBOR Reserve Percentage” means the reserve percentage prescribed by the Board of Governors of the Federal Reserve System (or any successor) for “Eurocurrency Liabilities” (as defined in Regulation D of the Federal Reserve Board, as amended), adjusted by Bank for expected changes in such reserve percentage during the applicable term of this Note.

INTEREST:

(a) Interest. The outstanding principal balance of this Note shall bear interest (computed on the basis of a 360-day year, actual days elapsed) either (i) at a fluctuating rate per annum determined by Bank to be one and three quarter percent (1.75%) above the Daily One Month LIBOR Rate in effect from time to time, or (ii) at a fixed rate per annum determined by Bank to be one and three quarter percent (1.75%) above LIBOR in effect on the first day of the applicable Fixed Rate Term. When interest is determined in relation to the Daily One Month LIBOR Rate, each change in the interest rate shall become effective each Business Day that the Bank determines that the Daily One Month LIBOR Rate has changed. Bank is hereby authorized to note the date, principal amount and interest rate applicable thereto and any payments made thereon on Bank’s books and records (either manually or by electronic entry) and/or on any schedule attached to this Note, which notations shall be prima facie evidence of the accuracy of the information noted.

(b) Selection of Interest Rate Options. At any time any portion of this Note bears interest determined in relation to LIBOR for a Fixed Rate Term, it may be continued by Borrower at the end of the Fixed Rate Term applicable thereto so that all or a portion thereof bears interest determined in relation to the Daily One Month LIBOR Rate or to LIBOR for a new Fixed Rate Term designated by Borrower. At any time any portion of this Note bears interest determined in relation to the Daily One Month LIBOR Rate, Borrower may at any time convert all or a portion thereof so that it bears interest determined in relation to LIBOR for a Fixed Rate Term designated by Borrower. At such time as Borrower requests an advance hereunder or wishes to select an interest rate determined in relation to the Daily One Month LIBOR Rate or a Fixed Rate Term for all or a portion of the outstanding principal balance hereof, and at the end of each Fixed Rate Term, Borrower shall give Bank notice specifying: (i) the interest rate option selected by Borrower; (ii) the principal amount subject thereto; and (iii) for each LIBOR selection for a Fixed Rate Term, the length of the applicable Fixed Rate Term. Any such notice may be given by telephone (or such other electronic method as Bank may permit) so long as, with respect to each LIBOR selection for a Fixed Rate Term, (A) if requested by Bank, Borrower provides to Bank written confirmation thereof not later than three (3) Business Days after such notice is given, and (B) such notice is given to Bank prior to 10:00 a.m. on the first day of the Fixed Rate Term, or at a later time during any Business Day if Bank, at its sole option but without obligation to do so, accepts Borrower’s notice and quotes a fixed rate to Borrower. If Borrower does not immediately accept a fixed rate when quoted by Bank, the quoted rate shall expire and any subsequent LIBOR request from Borrower shall be subject to a redetermination by Bank of the applicable fixed rate. If no specific designation of interest is made at the time any advance is requested hereunder or at the end of any Fixed Rate Term, Borrower shall be deemed to have made a Daily One Month LIBOR Rate interest selection for such advance or the principal amount to which such Fixed Rate Term applied.

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(c) Taxes and Regulatory Costs. Borrower shall pay to Bank immediately upon demand, in addition to any other amounts due or to become due hereunder, any and all (i) withholdings, interest equalization taxes, stamp taxes or other taxes (except income and franchise taxes) imposed by any domestic or foreign governmental authority and related in any manner to LIBOR, and (ii) future, supplemental, emergency or other changes in the LIBOR Reserve Percentage, assessment rates imposed by the Federal Deposit Insurance Corporation, or similar requirements or costs imposed by any domestic or foreign governmental authority or resulting from compliance by Bank with any request or directive (whether or not having the force of law) from any central bank or other governmental authority and related in any manner to LIBOR to the extent they are not included in the calculation of LIBOR. In determining which of the foregoing are attributable to any LIBOR option available to Borrower hereunder, any reasonable allocation made by Bank among its operations shall be conclusive and binding upon Borrower.

(d) Payment of Interest. Interest accrued on this Note shall be payable on the last day of each month, commencing December 31, 2011.

(e) Default Interest. From and after the maturity date of this Note, or such earlier date as all principal owing hereunder becomes due and payable by acceleration or otherwise, or at Bank’s option upon the occurrence, and during the continuance of an Event of Default, the outstanding principal balance of this Note shall bear interest at an increased rate per annum (computed on the basis of a 360-day year, actual days elapsed) equal to four percent (4%) above the rate of interest from time to time applicable to this Note.

BORROWING AND REPAYMENT:

(a) Borrowing and Repayment. Borrower may from time to time during the term of this Note borrow, partially or wholly repay its outstanding borrowings, and reborrow, subject to all of the limitations, terms and conditions of this Note and of any document executed in connection with or governing this Note; provided however, that the total outstanding borrowings under this Note shall not at any time exceed the principal amount set forth above or such lesser amount as shall at any time be available hereunder. The unpaid principal balance of this obligation at any time shall be the total amounts advanced hereunder by the holder hereof less the amount of principal payments made hereon by or for Borrower, which balance may be endorsed hereon from time to time by the holder. The outstanding principal balance of this Note shall be due and payable in full on May 1, 2015.

(b) Adjustments in Availability. Notwithstanding the principal amount set forth above, the maximum principal amount available under this Note shall be (i) at any time (other than during each Reduction Period, as defined below) $35,000,000.00 and (ii) from and including January 1 through May 31 of each year (each such period, a “Reduction Period”) the aggregate amount of $22,500,000.00. If the outstanding principal balance of this Note at any time is greater than the maximum principal amount then available hereunder, Borrower shall immediately make a principal reduction on this Note in an amount sufficient to reduce the then outstanding principal balance hereof to an amount not greater than the then maximum principal amount available hereunder. Such principal reduction shall be subject to any applicable prepayment fee provided below.

(c) Advances. Advances hereunder, to the total amount of the principal sum stated above, may be made by the holder at the oral or written request of (i) David P. Carlson, Joseph P. Schneider or Kirk Layton, any one acting alone, who are authorized to request advances and

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direct the disposition of any advances until written notice of the revocation of such authority is received by the holder at the office designated above, or (ii) any person, with respect to advances deposited to the credit of any deposit account of Borrower, which advances, when so deposited, shall be conclusively presumed to have been made to or for the benefit of Borrower regardless of the fact that persons other than those authorized to request advances may have authority to draw against such account. The holder shall have no obligation to determine whether any person requesting an advance is or has been authorized by Borrower.

(d) Application of Payments. Each payment made on this Note shall be credited first, to any interest then due and second, to the outstanding principal balance hereof. All payments credited to principal shall be applied first, to the outstanding principal balance of this Note which bears interest determined in relation to the Daily One Month LIBOR Rate, if any, and second, to the outstanding principal balance of this Note which bears interest determined in relation to LIBOR, with such payments applied to the oldest Fixed Rate Term first.

PREPAYMENT:

(a) Daily One Month LIBOR Rate. Borrower may prepay principal on any portion of this Note which bears interest determined in relation to the Daily One Month LIBOR Rate at any time, in any amount and without penalty.

(b) LIBOR. Borrower may prepay principal on any portion of this Note which bears interest determined in relation to LIBOR at any time and in the minimum amount of One Hundred Thousand Dollars ($100,000.00); provided however, that if the outstanding principal balance of such portion of this Note is less than said amount, the minimum prepayment amount shall be the entire outstanding principal balance thereof. In consideration of Bank providing this prepayment option to Borrower, or if any such portion of this Note shall become due and payable at any time prior to the last day of the Fixed Rate Term applicable thereto by acceleration or otherwise, Borrower shall pay to Bank immediately upon demand a fee which is the sum of the discounted monthly differences for each month from the month of prepayment through the month in which such Fixed Rate Term matures, calculated as follows for each such month:

(i) Determine the amount of interest which would have accrued each month on the amount prepaid at the interest rate applicable to such amount had it remained outstanding until the last day of the Fixed Rate Term applicable thereto.

(ii) Subtract from the amount determined in (i) above the amount of interest which would have accrued for the same month on the amount prepaid for the remaining term of such Fixed Rate Term at LIBOR in effect on the date of prepayment for new loans made for such term and in a principal amount equal to the amount prepaid.

(iii) If the result obtained in (ii) for any month is greater than zero, discount that difference by LIBOR used in (ii) above.

Borrower acknowledges that prepayment of such amount may result in Bank incurring additional costs, expenses and/or liabilities, and that it is difficult to ascertain the full extent of such costs, expenses and/or liabilities. Borrower, therefore, agrees to pay the above-described prepayment fee and agrees that said amount represents a reasonable estimate of the prepayment costs,

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expenses and/or liabilities of Bank. If Borrower fails to pay any prepayment fee when due, the amount of such prepayment fee shall thereafter bear interest until paid at a rate per annum two percent (2.00%) above the Daily One Month LIBOR Rate in effect from time to time (computed on the basis of a 360-day year, actual days elapsed).

EVENTS OF DEFAULT:

This Note is made pursuant to and is subject to the terms and conditions of that certain Third Amended and Restated Credit Agreement between Borrower and Bank of even date herewith, as amended from time to time (the “Credit Agreement”). Any default in the payment or performance of any obligation under this Note, or any defined event of default under the Credit Agreement, shall constitute an “Event of Default” under this Note.

MISCELLANEOUS:

(a) Remedies. Upon the occurrence of any Event of Default, the holder of this Note, at the holder’s option, may declare all sums of principal and interest outstanding hereunder to be immediately due and payable without presentment, demand, notice of nonperformance, notice of protest, protest or notice of dishonor, all of which are expressly waived by Borrower, and the obligation, if any, of the holder to extend any further credit hereunder shall immediately cease and terminate. Borrower shall pay to the holder 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 the holder’s in-house counsel), expended or incurred by the holder in connection with the enforcement of the holder’s rights and/or the collection of any amounts which become due to the holder under this Note, and the prosecution or defense of any action in any way related to this Note, 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 Borrower or any other person or entity.

(b) Obligations Joint and Several. Should more than one person or entity sign this Note as a Borrower, the obligations of each such Borrower shall be joint and several.

(c) Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of Oregon.

[SIGNATURES ON NEXT PAGE]

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UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY BANK 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 undersigned has executed this Note as of the date first written above.

LACROSSE FOOTWEAR, INC.
By:	/s/ Joseph P. Schneider
	Joseph P. Schneider, President/
	Chief Executive Officer
By:	/s/ David P. Carlson
	David P. Carlson, Executive Vice
	President/Chief Financial Officer

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EX-10.18

Exhibit 10.18

	CONTINUING SECURITY AGREEMENT
WELLS FARGO	RIGHTS TO PAYMENT AND INVENTORY

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 accounts, deposit accounts, chattel paper (whether electronic or tangible), instruments, promissory notes, documents, general intangibles, payment intangibles, software, letter of credit rights, health-care insurance receivables and other rights to payment (collectively called “Rights to Payments”), now existing or at any time hereafter, and prior to the termination hereof, arising (whether they arise from the sale, lease or other disposition of inventory or from performance of contracts for service, manufacture, construction, repair or otherwise or from any other source whatsoever), including all securities, guaranties, warranties, indemnity agreements, insurance policies, supporting obligations and other agreements pertaining to the same or the property described therein, and in all goods returned by or repossessed from Debtor’s customers, together with a security interest in all inventory, goods held for sale or lease or to be furnished under contracts for service, goods so leased or furnished, raw materials, component parts and embedded software, work in process or materials used or consumed in Debtor’s business and all warehouse receipts, bills of lading and other documents evidencing goods owned or acquired by Debtor, and all goods covered thereby, now or at any time hereafter, and prior to the termination hereof, owned or acquired by Debtor, wherever located, and all products thereof (collectively called “Inventory”), whether in the possession of Debtor, warehousemen, bailees or any other person, or in process of delivery and whether located at Debtor’s places of business or elsewhere (with all Rights to Payment and Inventory referred to herein collectively as the “Collateral”), excluding all Excluded Collateral as defined below, 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, all Rights to Payment, including returned premiums, with respect to any insurance relating to any of the foregoing, and all Rights to Payment with respect to any claim or cause of action affecting or relating to any of the foregoing (hereinafter called “Proceeds”). As used herein “Excluded Collateral” means (i) all “Intent to Use” applications for trademark or service mark registrations filed pursuant to Section 1(b) of the Lanham Act, and all goodwill associated therewith and all other assets, rights and interests that uniquely reflect or embody such goodwill (each, a “Lanham Act Application”), unless and until an Amendment to Allege Use or a Statement of Use under Section 1(c) and 1(d) of said Act has been filed with respect to this Agreement; and (ii) contracts with the United States Government or any political subdivision thereof for which any necessary consent for the security interest granted hereunder has not been obtained from the United States Government or such subdivision under 31 U.S.C. §3727 and 41 U.S.C. §15, and the regulations in effect thereunder, and accounts generated under such contracts.

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.

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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 warehouse receipts, bills of sale, bills of lading and other documents, instruments or money 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 and, where applicable, in the Collateral 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; (g) to the extent that Collateral consists of particular Rights to Payment in excess of $100,000.00, all persons appearing to be obligated on these particular items of Collateral and Proceeds have authority and capacity to contract and are bound as they appear to be, all property subject to chattel paper has been properly registered and filed in compliance with law and to perfect the interest of Debtor in such property, and all such Collateral and Proceeds comply with all applicable laws concerning form, content and manner of preparation and execution, including where applicable Federal Reserve Regulation Z and any State consumer credit laws.

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 warehouse receipts, bills of sale, bills of lading and other documents, instruments or money 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) to insure Inventory and, where applicable, Rights to Payment 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) not to use any Inventory for any unlawful purpose or in any way that would void any insurance required to be carried in connection therewith; (d) not to remove Inventory (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; (e) to pay when due all license fees, registration fees and other charges in connection with any Collateral (f) not to permit any security interest in or lien on the Collateral or Proceeds, including without limitation, liens arising from the storage of Inventory, except in favor of Bank or as set forth in the Credit Agreement, or Permitted Encumbrances; (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) to furnish reports to Bank of all

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acquisitions, returns, sales and other dispositions of the Inventory in such form and detail and at such times as Bank may require; (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 Rights to Payment and Proceeds, in trust and as the property of Bank, and to immediately endorse as appropriate and deliver such Rights to Payment and 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 Rights to Payment, 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 Rights to Payment or Proceeds in any material respect; (n) on demand, to deliver to Bank returned property resulting from, or payment equal to, such allowances or credits on any Rights to Payment or Proceeds or to execute such documents and do such other things as Bank may reasonably request for the purpose of perfecting, preserving and enforcing its security interest in such returned property; (o) from time to time, when requested by Bank, to prepare and deliver a schedule of all Collateral and Proceeds subject to this Agreement and to assign in writing and deliver to Bank all accounts, contracts, leases and other chattel paper, instruments, documents and other evidences thereof; (p) in the event Bank elects to receive payments of Rights to Payment or 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; and (q) 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 all Collateral in good and saleable condition in accordance with the standards and practices adhered to generally by users and manufacturers 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.

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 Collateral or 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 hererby 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 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; (o) to preserve or release the interest evidenced by chattel paper to which Bank is entitled hereunder and to endorse and deliver any evidence of title incidental thereto; and (p) 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.

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

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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 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 Event of Default under the Credit Agreement; (b) 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; (c) any material representation or warranty made by Debtor herein shall prove to be incorrect, false or misleading in any material respect when made; (d) Debtor shall fail to observe or perform any obligation or agreement contained herein; (e) 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 (f) 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 bylaw, 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, 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. With respect to any sale by Bank of any Collateral subject to this Agreement, Debtor hereby expressly grants to Bank the right to sell such Collateral using any or all of Debtor’s trademarks, trade names, trade name rights and/or proprietary labels or marks. 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.

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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 any 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 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 148^th 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

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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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EX-10.19

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 148^th 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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EX-10.20

Exhibit 10.20

	THIRD PARTY SECURITY AGREEMENT
WELLS FARGO	RIGHTS TO PAYMENT AND INVENTORY

1. GRANT OF SECURITY INTEREST. In consideration of any credit or other financial accommodation heretofore, now or hereafter extended or made to LaCrosse Footwear, Inc. (“Borrower”) by WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”), and for other valuable consideration, as security for the payment of all Indebtedness of Borrower to Bank, the undersigned Danner, Inc. (“Owner”) hereby grants and transfers to Bank a security interest in all accounts, deposit accounts, chattel paper (whether electronic or tangible), instruments, promissory notes, documents, general intangibles, payment intangibles, software, letter of credit rights, health-care insurance receivables and other rights to payment (collectively called “Rights to Payment”), now existing or at any time hereafter, and prior to the termination hereof, arising (whether they arise from the sale, lease or other disposition of inventory or from performance of contracts for service, manufacture, construction, repair or otherwise or from any other source whatsoever), including all securities, guaranties, warranties, indemnity agreements, insurance policies, supporting obligations and other agreements pertaining to the same or the property described therein, and in all goods returned by or repossessed from Owner’s customers, together with a security interest in all inventory, goods held for sale or lease or to be furnished under contracts for service, goods so leased or furnished, raw materials, component parts and embedded software, work in process or materials used or consumed in Owner’s business, and all warehouse receipts, bills of lading and other documents evidencing goods owned or acquired by Owner, and all goods covered thereby, now or at any time hereafter, and prior to the termination hereof, owned or acquired by Owner, wherever located, and all products thereof (collectively called “Inventory”), whether in the possession of Owner, warehousemen, bailees or any other person, or in process of delivery, and whether located at Owner’s places of business or elsewhere (with all Rights to Payment and Inventory referred to herein collectively as the “Collateral”), excluding all Excluded Collateral as defined below, together with whatever is receivable or received when any of the Collateral or proceeds thereof are sold, collected, exchanged or otherwise disposed of, whether such disposition is voluntary or involuntary, including without limitation, all rights to payment, including returned premiums, with respect to any insurance relating to any of the foregoing, and all rights to payment with respect to any claim or cause of action affecting or relating to any of the foregoing (hereinafter called “Proceeds”). As used herein “Excluded Collateral” means (i) all “Intent to Use” applications for trademark or service mark registrations filed pursuant to Section 1(b) of the Lanham Act, and all goodwill associated therewith and all other assets, rights and interests that uniquely reflect or embody such goodwill (each, a “Lanham Act Application”), unless and until an Amendment to Allege Use or a Statement of Use under Section 1(c) and 1(d) of said Act has been filed with respect to this Agreement; and (ii) contracts with the United States Government or any political subdivision thereof for which any necessary consent for the security interest granted hereunder has not been obtained from the United States Government or such subdivision under 31 U.S.C. §3727 and 41 U.S.C. §15, and the regulations in effect thereunder, and accounts generated under such contracts. The word “Indebtedness” is used herein in its most comprehensive sense and includes any and all advances, debts, obligations and liabilities of Borrower 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 recovery upon such Indebtedness may be or hereafter becomes unenforceable.

2. CONTINUING AGREEMENT; REVOCATION; OBLIGATION UNDER OTHER AGREEMENTS. This is a continuing agreement and all rights, powers and remedies hereunder shall apply to all past, present and future Indebtedness of Borrower to Bank, including that arising under successive transactions which shall either continue the Indebtedness, increase or decrease it, or from time to time create new Indebtedness after all or any prior Indebtedness has been satisfied, and notwithstanding the death, incapacity, dissolution, liquidation or bankruptcy of Borrower or Owner or any other event or proceeding affecting Borrower or Owner. This Agreement shall not apply to any new Indebtedness of Borrower to Bank created after actual receipt by Bank of written notice of its revocation as to such new Indebtedness; provided however, that loans or advances made by Bank to Borrower after revocation under commitments existing prior to receipt by Bank of such revocation, and extensions, renewals or modifications, of any kind, of Indebtedness incurred by Borrower or committed by Bank prior to receipt by Bank of such revocation, shall not be considered new Indebtedness. Any such notice must be sent to Bank by registered U.S. mail, postage prepaid, addressed to its office at Portland Middle Market-OR, P6101-133 1300 S. W. Fifth Avenue, Portland, OR 97201, or at such other address as Bank shall from time to time designate. The obligations of Owner hereunder shall be in addition to any obligations of Owner under any other grants or pledges of security for any liabilities or

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obligations of Borrower or any other persons heretofore or hereafter given to Bank unless said other grants or pledges of security are expressly modified or revoked in writing; and this Agreement shall not, unless expressly herein provided, affect or invalidate any such other grants or pledges of security.

3. OBLIGATIONS INDEPENDENT; SEPARATE ACTIONS; WAIVER OF STATUTE OF LIMITATIONS; REINSTATEMENT OF LIABILITY. The obligations hereunder are independent of the obligations of Borrower, and a separate action or actions may be brought and prosecuted against Owner whether action is brought against Borrower or any other person, or whether Borrower or any other person is joined in any such action or actions. Owner acknowledges that this Agreement is absolute and unconditional, there are no conditions precedent to the effectiveness of this Agreement, and this Agreement is in full force and effect and is binding on Owner as of the date written below, regardless of whether Bank obtains collateral or any guaranties from others or takes any other action contemplated by Owner. Owner waives the benefit of any statute of limitations affecting Owner’s liability hereunder or the enforcement thereof, and Owner agrees that any payment of any Indebtedness or other act which shall toll any statute of limitations applicable thereto shall similarly operate to toll such statute of limitations applicable to Owner’s liability hereunder. The liability of Owner hereunder shall be reinstated and revived and the rights of Bank shall continue if and to the extent that for any reason any amount at any time paid on account of any Indebtedness secured hereby is rescinded or must otherwise be restored by Bank, whether as a result of any proceedings in bankruptcy or reorganization or otherwise, all as though such amount had not been paid. The determination as to whether any amount so paid must be rescinded or restored shall be made by Bank in its sole discretion; provided however, that if Bank chooses to contest any such matter at the request of Owner, Owner agrees to indemnify and hold Bank harmless from and against all 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 therewith, including without limitation, in any litigation with respect thereto.

4. OBLIGATIONS OF BANK. 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 Owner 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 Owner 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.

5.1 Owner represents and warrants to Bank that: (a) Owner’s legal name is exactly as set forth on the first page of this Agreement, and all of Owner’s organizational documents or agreements delivered to Bank are complete and accurate in every respect; (b) Owner 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; (c) Owner 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 Third Amended and Restated Credit Agreement of even date herewith between Borrower and Bank, as amended, renewed or restated from time to time (the “Credit Agreement”) or as otherwise agreed to by Bank, or heretofore disclosed by Owner to Bank, in writing; (e) all statements contained herein and, where applicable, in the Collateral are true and complete in all material respects; (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; and (g) to the extent that Collateral consists of particular rights to payment in excess of $100,000.00, all persons appearing to be obligated on these particular items of Collateral and Proceeds have authority and capacity to contract and are bound as they appear to be, all property subject to chattel paper has been properly registered and filed in compliance with law and to perfect the interest of Owner in such property, and all such Collateral and Proceeds comply with all applicable laws concerning form, content and manner of preparation and execution, including where applicable Federal Reserve Regulation Z and any State consumer credit laws.

5.2 Owner further represents and warrants to Bank that: (a) the Collateral pledged hereunder is so pledged at Borrower’s request; (b) Bank has made no representation to Owner as to the creditworthiness of Borrower; and (c) Owner has established adequate means of obtaining from Borrower on a continuing basis financial and other information pertaining to Borrower’s financial condition. Owner agrees to keep adequately informed from such means of any facts, events or circumstances which might in any way affect Owner’s risks hereunder, and Owner further agrees that Bank shall have no obligation to disclose to Owner any information or material about Borrower which is acquired by Bank in any manner.

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6. COVENANTS OF OWNER.

6.1 Owner agrees in general: (a) 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 the Bank after taking possession or control thereof; (b) to permit Bank to exercise its powers; (c) to execute and deliver such documents as Bank deems necessary to create, perfect and continue the security interests contemplated hereby; (d) not to change Owner’s 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; (e) not to change the places where Owner 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 Owner’s records concerning the Collateral and Proceeds without giving Bank prior written notice of the address to which Owner is moving same; and (f) 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 Owner 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 Owner to perfect Bank’s security interest in Collateral and Proceeds; (b) to insure Inventory and, where applicable, Rights to Payment 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) not to use any Inventory for any unlawful purpose or in any way that would void any insurance required to be carried in connection therewith; (d) not to remove Inventory (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 Owner’s premises, except (A) for deliveries to buyers in the ordinary course of Owner’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 Owner 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; (e) not to permit any security interest in or lien on the Collateral or Proceeds, including without limitation, liens arising from the storage of Inventory, except in favor of Bank or as set forth in the Credit Agreement or Permitted Encumbrances; (f) 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 Owner’s business, sales of damaged obsolete surplus, or worn-out property, or as otherwise permitted herein or in the Credit Agreement; (g) to furnish reports to Bank of all acquisitions, returns, sales and other dispositions of the Inventory in such form and detail and at such times as Bank may require; (h) to permit Bank to inspect the Collateral at any time; (i) 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; (j) if requested by Bank during the continuance of an Event of Default, to receive and use reasonable diligence to collect Rights to Payment and Proceeds, in trust and as the property of Bank, and to immediately endorse as appropriate and deliver such Rights to Payment and Proceeds to Bank daily in the exact form in which they are received together with a collection report in form satisfactory to Bank; (k) not to commingle Rights to Payment, Proceeds or collections thereunder with other property; (l) to give only normal allowances and credits and to advise Bank thereof immediately in writing if they affect any Rights to Payment or Proceeds in any material respect; (m) on demand, to deliver to Bank returned property resulting from, or payment equal to, such allowances or credits on any Rights to Payment or Proceeds or to execute such documents and do such other things as Bank may reasonably request for the purpose of perfecting, preserving and enforcing its security interest in such returned property; (n) from time to time, when requested by Bank, to prepare and deliver a schedule of all Collateral and Proceeds subject to this Agreement and to assign in writing and deliver to Bank all accounts, contracts, leases and other chattel paper, instruments, documents and other evidences thereof; (o) in the event Bank elects to receive payments of Rights to Payment or 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; and (p) 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 all Collateral in good and saleable condition in accordance with the standards and practices adhered to generally by users and manufacturers 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.

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7. POWERS OF BANK. Owner 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 Borrower or Owner is in default: (a) to perform any obligation of Owner hereunder in Owner’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 Collateral or 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 Owner, and promptly deliver the originals thereof (or, if the mail consists of Collateral or Proceeds, copies) to Owner; (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 Owner would have, but for this Agreement, with respect to all Collateral and Proceeds subject hereto; (m) to enter onto Owner’s premises in inspecting the Collateral; (n) 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; (o) to preserve or release the interest evidenced by chattel paper to which Bank is entitled hereunder and to endorse and deliver any evidence of title incidental thereto; and (p) to do all acts and things and execute all documents in the name of Owner or otherwise, deemed by Bank as necessary, proper and convenient in connection with the preservation, perfection or enforcement of its rights hereunder.

8. OWNER’S WAIVERS.

8.1 Owner waives any right to require Bank to: (a) proceed against Borrower or any other person; (b) marshal assets or proceed against or exhaust any security held from Borrower or any other person; (c) give notice of the terms, time and place of any public or private sale or other disposition of personal property security held from Borrower or any other person; (d) take any other action or pursue any other remedy in Bank’s power; or (e) make any presentment or demand for performance, or give any notice of nonperformance, protest, notice of protest or notice of dishonor hereunder or in connection with any obligations or evidences of indebtedness held by Bank as security for or which constitute in whole or in part the Indebtedness secured hereunder, or in connection with the creation of new or additional Indebtedness.

8.2 Owner waives any defense to its obligations hereunder based upon or arising by reason of: (a) any disability or other defense of Borrower or any other person; (b) the cessation or limitation from any cause whatsoever, other than payment in full, of the Indebtedness of Borrower or any other person; (c) any lack of authority of any officer, director, partner, agent or any other person acting or purporting to act on behalf of Borrower which is a corporation, partnership or other type of entity, or any defect in the formation of Borrower; (d) the application by Borrower of the proceeds of any Indebtedness for purposes other than the purposes represented by Borrower to, or intended or understood by, Bank or Owner; (e) any act or omission by Bank which directly or indirectly results in or aids the discharge of Borrower or any portion of the Indebtedness secured hereby by operation of law or otherwise, or which in any way impairs or suspends any rights or remedies of Bank against Borrower in the absence of Bank’s gross negligence, willful misconduct or bad faith; (f) any impairment of the value of any interest in any security for the Indebtedness or any portion thereof, including without limitation, the failure to obtain or maintain perfection or recordation of any interest in any such security, the release of any such security without substitution, and/or the failure to preserve the value of, or to comply with applicable law in disposing of, any such security; (g) any modification of the Indebtedness secured hereby, in any form whatsoever, including any modification made after revocation hereof to such Indebtedness incurred prior to such revocation, and including without limitation the renewal, extension, acceleration or other change in time for payment of, or other change in the terms of, the

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Indebtedness or any portion thereof, including increase or decrease of the rate of interest thereon; or (h) any requirement that Bank give any notice of acceptance of this Agreement. Until all Indebtedness secured hereby shall have been paid in full, Owner shall have no right of subrogation, and Owner waives any right to enforce any remedy which Bank now has or may hereafter have against Borrower or any other person, and waives any benefit of, or any right to participate in, any security now or hereafter held by Bank. Owner further waives all rights and defenses Owner may have arising out of (i) any election of remedies by Bank, even though that election of remedies, such as a non-judicial foreclosure with respect to any security for any portion of the Indebtedness secured hereby, destroys Owner’s rights of subrogation or Owner’s rights to proceed against Borrower for reimbursement, or (ii) any loss of rights Owner may suffer by reason of any rights, powers or remedies of Borrower in connection with any anti-deficiency laws or any other laws limiting, qualifying or discharging Borrower’s Indebtedness, whether by operation of law or otherwise, including any rights Owner may have to a fair market value hearing to determine the size of a deficiency following any foreclosure sale or other disposition of any real property security for any portion of the Indebtedness secured hereby.

9. AUTHORIZATIONS TO BANK. Owner authorizes Bank either before or after revocation hereof, without notice to or demand on Owner, and without affecting Owner’s liability hereunder, from time to time to: (a) alter, compromise, renew, extend, accelerate or otherwise change the time for payment of, or otherwise change the terms of, the Indebtedness secured hereby or any portion thereof, including increase or decrease of the rate of interest thereon; (b) take and hold security, other than the Collateral and Proceeds, for the payment of the Indebtedness secured hereby or any portion thereof, and exchange, enforce, waive, subordinate or release the Collateral and Proceeds, or any part thereof, or any such other security; (c) apply the Collateral and Proceeds or such other security and direct the order or manner of sale thereof, including without limitation, a non-judicial sale permitted by the terms of the controlling security agreement, mortgage or deed of trust, as Bank in its discretion may determine; (d) release or substitute any one or more of the endorsers or guarantors of the Indebtedness secured hereby, or any portion thereof, or any other party thereto; and (e) apply payments received by Bank from Borrower to any Indebtedness of Borrower to Bank, in such order as Bank shall determine in its sole discretion, whether or not such Indebtedness is covered by this Agreement, and Owner hereby waives any provision of law regarding application of payments which specifies otherwise. Bank may without notice assign this Agreement in whole or in part.

10. PAYMENT OF PREMIUMS, TAXES, CHARGES, LIENS AND ASSESSMENTS. Owner 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 Owner 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 Owner to Bank, due and payable immediately upon demand, together with interest at the rate set forth in Section 17 of this Agreement, and shall be secured by the Collateral and Proceeds, subject to all terms and conditions of this Agreement.

11. EVENTS OF DEFAULT. The occurrence of any of the following shall constitute an “Event of Default” under this Agreement: (a) any Event of Default under the Credit Agreement; (b) 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 Borrower and Bank, including without limitation any loan agreement, relating to or executed in connection with any Indebtedness secured hereby; (c) any representation or warranty made by Owner herein shall prove to be incorrect, false or misleading in any material respect when made; (d) Owner shall fail to observe or perform any obligation or agreement contained herein; (e) any material impairment of the rights of Bank in any Collateral or Proceeds or any attachment or like levy on any property of Owner; and (f) Bank, in good faith, believes that $2,000,000.00 or more of any or all 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 11, “material impairment” means having an adverse effect of at least $2,000,000.00.

12. REMEDIES. Upon the occurrence of any Event of Default, Bank shall have and may exercise without demand any and all 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 Owner 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, failure or discontinuance of Bank in

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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) Owner will deliver to Bank from time to time, as requested by Bank, current lists of all Collateral and Proceeds; (b) Owner 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, Owner 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 Owner, enter onto Owner’s premises and take possession of the Collateral. With respect to any sale by Bank of any Collateral subject to this Agreement, Owner hereby expressly grants to Bank the right to sell such Collateral using any or all of Owner’s trademarks, trade names, trade name rights and/or proprietary labels or marks. Owner further agrees that Bank shall have no obligation to process or prepare any Collateral for sale or other disposition.

13. 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, 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.

14. STATUTE OF LIMITATIONS. Until all Indebtedness secured hereby shall have been paid in full and all commitments by Bank to extend credit to Borrower 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 Borrower may have ceased, unless such liability shall have ceased due to the payment in full of all Indebtedness secured hereunder.

15. MISCELLANEOUS. Owner hereby waives any right to require Bank to (i) proceed against Borrower or any other person, (ii) marshal assets or proceed against or exhaust any security from Borrower, Owner or any other person, (iii) perform any obligation of Owner 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 any Event of Default, Owner further waives any right to direct the application of payments or security for any Indebtedness of Borrower, Owner or indebtedness of customers of Owner.

16. NOTICES. All notices, requests and demands required under this Agreement must be in writing, addressed to Bank at the address specified in Section 2 hereof and to Owner 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.

17. COSTS, EXPENSES AND ATTORNEYS’ FEES. Owner 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,

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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 connection with any bankruptcy proceeding (including without limitation, any adversary proceeding, contested matter or motion brought by Bank or any other person) relating to Owner 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.

18. 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 Owner may not assign or transfer any of its interests or rights hereunder without Bank’s prior written consent. Owner acknowledges that Bank has the right to sell, assign, transfer, negotiate or grant participations in all or any part of, or any interest in, any Indebtedness of Borrower to Bank and any obligations with respect thereto, including this Agreement. In connection therewith, Bank may disclose all documents and information which Bank now has or hereafter acquires relating to Owner and/or this Agreement, whether furnished by Borrower, Owner or otherwise. Owner further agrees that Bank may disclose such documents and information to Borrower.

19. AMENDMENT. This Agreement may be amended or modified only in writing signed by Bank and Owner.

20. 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.

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

22. ARBITRATION.

22.1 Arbitration. The parties hereto agree, upon demand by any party, to submit to binding arbitration all claims, disputes and controversies between or among them (and their respective employees, officers, directors, attorneys, and other agents), whether in tort, contract or otherwise in any way arising out of or relating to this Agreement and its negotiation, execution, collateralization, administration, repayment, modification, extension, substitution, formation, inducement, enforcement, default or termination.

22.2 Governing Rules. Any arbitration proceeding will (a) proceed in a location in Oregon selected by the American Arbitration Association (“AAA”); (b) 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 (c) 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 herein, 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. §91 or any similar applicable state law.

22.3 No Waiver of Provisional Remedies, Self-Help and Foreclosure. The arbitration requirement does not limit the right of any party to (a) foreclose against real or personal property collateral; (b) exercise self-help remedies relating to collateral or proceeds of collateral such as setoff or repossession; or (c) 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 (a), (b) and (c) of this paragraph.

22.4 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

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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.

22.5 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. Any 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.

22.6 Class Proceedings and Consolidations. No party hereto shall be entitled to join or consolidate disputes by or against others in any arbitration, except parties who have executed this Agreement or any other contract, instrument or document relating to any Indebtedness secured hereby, or to include in any arbitration any dispute as a representative or member of a class, or to act in any arbitration in the interest of the general public or in a private attorney general capacity.

22.7 Payment Of Arbitration Costs And Fees. The arbitrator shall award all costs and expenses of the arbitration proceeding.

22.8 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 party required in the ordinary course of its business, by applicable law or regulation, or to the extent necessary to exercise any judicial review rights set forth herein. 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 documents between the parties or the subject matter of the dispute shall control. This arbitration provision shall survive termination, amendment or expiration of any of the documents or any relationship between the parties.

23. 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.

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

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

Owner 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 148^th Avenue, Portland, OR 97230-3438; 5352 Performance Way, Whitestown, IN 46075; and 17634 NE Airport Way, Portland, OR 97230 and such other addresses of which the Owner notifies the Bank from time to time. Owner 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.

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UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY BANK 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, this Agreement has been duly executed as of December 22, 2011.

Danner, 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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EX-10.21

Exhibit 10.21

	THIRD PARTY SECURITY AGREEMENT
WELLS FARGO	EQUIPMENT

1. GRANT OF SECURITY INTEREST. In consideration of any credit or other financial accommodation heretofore, now or hereafter extended or made to LaCrosse Footwear, Inc. (“Borrower”), or any of them, by WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”), and for other valuable consideration, as security for the payment of all Indebtedness of Borrower to Bank, the undersigned Danner, Inc. (“Owner”) hereby grants and transfers to 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 Owner, wherever located, whether in the possession of Owner or any other person and whether located on Owner’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”). The word “Indebtedness” is used herein in its most comprehensive sense and includes any and all advances, debts, obligations and liabilities of Borrower, 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 Borrower may be liable individually or jointly, or whether recovery upon such Indebtedness may be or hereafter becomes unenforceable.

2. CONTINUING AGREEMENT; REVOCATION; OBLIGATION UNDER OTHER AGREEMENTS. This is a continuing agreement and all rights, powers and remedies hereunder shall apply to all past, present and future Indebtedness of Borrower to Bank, including that arising under successive transactions which shall either continue the Indebtedness, increase or decrease it, or from time to time create new Indebtedness after all or any prior Indebtedness has been satisfied, and notwithstanding the death, incapacity, dissolution, liquidation or bankruptcy of Borrower or Owner or any other event or proceeding affecting Borrower or Owner. This Agreement shall not apply to any new Indebtedness of Borrower to Bank created after actual receipt by Bank of written notice of its revocation as to such new Indebtedness; provided however, that loans or advances made by Bank to Borrower after revocation under commitments existing prior to receipt by Bank of such revocation, and extensions, renewals or modifications, of any kind, of Indebtedness incurred by Borrower or committed by Bank prior to receipt by Bank of such revocation, shall not be considered new Indebtedness. Any such notice must be sent to Bank by registered U.S. mail, postage prepaid, addressed to its office at Portland Middle Market-OR, P6101-133 1300 S. W. Fifth Avenue, Portland, OR 97201, or at such other address as Bank shall from time to time designate. The obligations of Owner hereunder shall be in addition to any obligations of Owner under any other grants or pledges of security for any liabilities or obligations of Borrower or any other persons heretofore or hereafter given to Bank unless said other grants or pledges of security are expressly modified or revoked in writing; and this Agreement shall not, unless expressly herein provided, affect or invalidate any such other grants or pledges of security.

3. OBLIGATIONS INDEPENDENT; SEPARATE ACTIONS; WAIVER OF STATUTE OF LIMITATIONS; REINSTATEMENT OF LIABILITY. The obligations hereunder are independent of the obligations of Borrower, and a separate action or actions may be brought and prosecuted against Owner whether action is brought against Borrower or any other person, or whether Borrower or any other person is joined in any such action or actions. Owner acknowledges that this Agreement is absolute and unconditional, there are no conditions precedent to the effectiveness of this Agreement, and this Agreement is in full force and effect and is binding on Owner as of the date written below, regardless of whether Bank obtains collateral or any guaranties from others or takes any other action contemplated by Owner. Owner waives the benefit of any statute of limitations affecting Owner’s liability hereunder or the enforcement thereof, and Owner agrees that any payment of any Indebtedness or other act which shall toll any statute of limitations applicable thereto shall similarly operate to toll such statute of limitations applicable to Owner’s liability hereunder. The liability of Owner hereunder shall be reinstated and revived and the rights of Bank shall

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continue if and to the extent that for any reason any amount at any time paid on account of any Indebtedness secured hereby is rescinded or must otherwise be restored by Bank, whether as a result of any proceedings in bankruptcy or reorganization or otherwise, all as though such amount had not been paid. The determination as to whether any amount so paid must be rescinded or restored shall be made by Bank in its sole discretion; provided however, that if Bank chooses to contest any such matter at the request of Owner, Owner agrees to indemnify and hold Bank harmless from and against all 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 therewith, including without limitation, in any litigation with respect thereto.

4. OBLIGATIONS OF BANK. 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 Owner 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 Owner 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.

5.1 Owner represents and warrants to Bank that: (a) Owner’s legal name is exactly as set forth on the first page of this Agreement, and all of Owner’s organizational documents or agreements delivered to Bank are complete and accurate in every respect; (b) Owner 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; (c) Owner 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 Third Amended and Restated Credit Agreement of even date herewith between Borrower and Bank, as amended, renewed or restated from time to time (the “Credit Agreement”), or as otherwise agreed to by Bank, or heretofore disclosed by Owner 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.

5.2 Owner further represents and warrants to Bank that: (a) the Collateral pledged hereunder is so pledged at Borrower’s request; (b) Bank has made no representation to Owner as to the creditworthiness of Borrower; and (c) Owner has established adequate means of obtaining from Borrower on a continuing basis financial and other information pertaining to Borrower’s financial condition. Owner agrees to keep adequately informed from such means of any facts, events or circumstances which might in any way affect Owner’s risks hereunder, and Owner further agrees that Bank shall have no obligation to disclose to Owner any information or material about Borrower which is acquired by Bank in any manner.

6. COVENANTS OF OWNER.

6.1 Owner agrees in general: (a) 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 the Bank after taking possession or control thereof; (b) to permit Bank to exercise its powers; (c) to execute and deliver such documents as Bank deems necessary to create, perfect and continue the security interests contemplated hereby; (d) not to change Owner’s 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; (e) not to change the places where Owner 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 Owner’s records concerning the Collateral and Proceeds without giving Bank prior written notice of the address to which Owner is moving same; and (f) 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 Owner 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 Owner to perfect Bank’s security interest in Collateral and Proceeds; (b) where applicable, to insure the tangible moveable Collateral (other than warehouse receipts, bills

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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 Owner’s premises, except (A) for deliveries to buyers in the ordinary course of Owner’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 Owner 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 Owner’s premises except in the ordinary course of Owner’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 Owner’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.

7. POWERS OF BANK. Owner 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 Borrower or Owner is in default: (a) to perform any obligation of Owner hereunder in Owner’s name or otherwise; (b) to give notice to account debtors of 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 Owner, and promptly deliver the originals thereof (or, if the mail consists of Collateral or Proceeds, copies) to Owner; (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 Owner would have, but for this Agreement, with respect to all Collateral and Proceeds subject hereto; (m) to enter onto Owner’s premises in inspecting the Collateral; (n) to do all acts and things and execute all documents in the name of Owner or otherwise,

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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. OWNER’S WAIVERS.

8.1 Owner waives any right to require Bank to: (a) proceed against Borrower or any other person; (b) marshal assets or proceed against or exhaust any security held from Borrower or any other person; (c) give notice of the terms, time and place of any public or private sale or other disposition of personal property security held from Borrower or any other person; (d) take any other action or pursue any other remedy in Bank’s power; or (e) make any presentment or demand for performance, or give any notice of nonperformance, protest, notice of protest or notice of dishonor hereunder or in connection with any obligations or evidences of indebtedness held by Bank as security for or which constitute in whole or in part the Indebtedness secured hereunder, or in connection with the creation of new or additional Indebtedness.

8.2 Owner waives any defense to its obligations hereunder based upon or arising by reason of: (a) any disability or other defense of Borrower or any other person; (b) the cessation or limitation from any cause whatsoever, other than payment in full, of the Indebtedness of Borrower or any other person; (c) any lack of authority of any officer, director, partner, agent or any other person acting or purporting to act on behalf of Borrower which is a corporation, partnership or other type of entity, or any defect in the formation of Borrower; (d) the application by Borrower of the proceeds of any Indebtedness for purposes other than the purposes represented by Borrower to, or intended or understood by, Bank or Owner; (e) any act or omission by Bank which directly or indirectly results in or aids the discharge of Borrower or any portion of the Indebtedness secured hereby by operation of law or otherwise, or which in any way impairs or suspends any rights or remedies of Bank against Borrower in the absence of Bank’s gross negligence, willful misconduct or bad faith; (f) any impairment of the value of any interest in any security for the Indebtedness or any portion thereof, including without limitation, the failure to obtain or maintain perfection or recordation of any interest in any such security, the release of any such security without substitution, and/or the failure to preserve the value of, or to comply with applicable law in disposing of, any such security; (g) any modification of the Indebtedness secured hereby, in any form whatsoever, including any modification made after revocation hereof to such Indebtedness incurred prior to such revocation, and including without limitation the renewal, extension, acceleration or other change in time for payment of, or other change in the terms of, the Indebtedness or any portion thereof, including increase or decrease of the rate of interest thereon; or (h) any requirement that Bank give any notice of acceptance of this Agreement. Until all Indebtedness secured hereby shall have been paid in full, Owner shall have no right of subrogation, and Owner waives any right to enforce any remedy which Bank now has or may hereafter have against Borrower or any other person, and waives any benefit of, or any right to participate in, any security now or hereafter held by Bank. Owner further waives all rights and defenses Owner may have arising out of (i) any election of remedies by Bank, even though that election of remedies, such as a non-judicial foreclosure with respect to any security for any portion of the Indebtedness secured hereby, destroys Owner’s rights of subrogation or Owner’s rights to proceed against Borrower for reimbursement, or (ii) any loss of rights Owner may suffer by reason of any rights, powers or remedies of Borrower in connection with any anti-deficiency laws or any other laws limiting, qualifying or discharging Borrower’s Indebtedness, whether by operation of law or otherwise, including any rights Owner may have to a fair market value hearing to determine the size of a deficiency following any foreclosure sale or other disposition of any real property security for any portion of the Indebtedness secured hereby.

9. AUTHORIZATIONS TO BANK. Owner authorizes Bank either before or after revocation hereof, without notice to or demand on Owner, and without affecting Owner’s liability hereunder, from time to time to: (a) alter, compromise, renew, extend, accelerate or otherwise change the time for payment of, or otherwise change the terms of, the Indebtedness secured hereby or any portion thereof, including increase or decrease of the rate of interest thereon; (b) take and hold security, other than the Collateral and Proceeds, for the payment of the Indebtedness secured hereby or any portion thereof, and exchange, enforce, waive, subordinate or release the Collateral and Proceeds, or any part thereof, or any such other security; (c) apply the Collateral and Proceeds or such other security and direct the order or manner of sale thereof, including without limitation, a non-judicial sale permitted by the terms of the controlling security agreement, mortgage or deed of trust, as Bank in its discretion may determine; (d) release or substitute any one or more of the endorsers or guarantors of the Indebtedness secured hereby, or any portion thereof, or any other party thereto; and (e) apply payments received by Bank from Borrower to any Indebtedness of Borrower to Bank, in such order as Bank shall determine in its sole discretion, whether or not such Indebtedness is covered by this Agreement, and Owner hereby waives any provision of law regarding application of payments which specifies otherwise. Bank may without notice assign this Agreement in whole or in part.

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10. PAYMENT OF PREMIUMS, TAXES, CHARGES, LIENS AND ASSESSMENTS. Owner 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 Owner 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 Owner to Bank, due and payable immediately upon demand, together with interest at the rate set forth in Section 17 of this Agreement, and shall be secured by the Collateral and Proceeds, subject to all terms and conditions of this Agreement.

11. EVENTS OF DEFAULT. The occurrence of any of the following shall constitute an “Event of Default” under this Agreement: (a) any Event of Default under the Credit Agreement; (b) 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 Borrower and Bank, including without limitation any loan agreement, relating to or executed in connection with any Indebtedness secured hereby; (c) any representation or warranty made by Owner herein shall prove to be incorrect, false or misleading in any material respect when made; (d) Owner shall fail to observe or perform any obligation or agreement contained herein; (e) any material impairment of the rights of Bank in any Collateral or Proceeds or any attachment or like levy on any property of Owner; and (f) Bank, in good faith, believes that $2,000,000.00 or more of any or all 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 11, “material impairment” means having an adverse effect of at least $2,000,000.00.

12. REMEDIES. Upon the occurrence of any Event of Default, Bank shall have and may exercise without demand any and all 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 Owner 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, 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) Owner will deliver to Bank from time to time, as requested by Bank, current lists of all Collateral and Proceeds; (b) Owner 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, Owner 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 Owner, enter onto Owner’s premises and take possession of the Collateral. Owner further agrees that Bank shall have no obligation to process or prepare any Collateral for sale or other disposition.

13. 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, 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

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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.

14. STATUTE OF LIMITATIONS. Until all Indebtedness secured hereby shall have been paid in full and all commitments by Bank to extend credit to Borrower 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 Borrower may have ceased, unless such liability shall have ceased due to the payment in full of all Indebtedness secured hereunder.

15. MISCELLANEOUS. Owner hereby waives any right to require Bank to (i) proceed against Borrower or any other person, (ii) marshal assets or proceed against or exhaust any security from Borrower, Owner or any other person, (iii) perform any obligation of Owner 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 any Event of Default, Owner further waives any right to direct the application of payments or security for any Indebtedness of Borrower, Owner or indebtedness of customers of Owner.

16. NOTICES. All notices, requests and demands required under this Agreement must be in writing, addressed to Bank at the address specified in Section 2 hereof and to Owner 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.

17. COSTS, EXPENSES AND ATTORNEYS’ FEES. Owner 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 connection with any bankruptcy proceeding (including without limitation, any adversary proceeding, contested matter or motion brought by Bank or any other person) relating to Owner 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.

18. 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 Owner may not assign or transfer any of its interests or rights hereunder without Bank’s prior written consent. Owner acknowledges that Bank has the right to sell, assign, transfer, negotiate or grant participations in all or any part of, or any interest in, any Indebtedness of Borrower to Bank and any obligations with respect thereto, including this Agreement. In connection therewith, Bank may disclose all documents and information which Bank now has or hereafter acquires relating to Owner and/or this Agreement, whether furnished by Borrower, Owner or otherwise. Owner further agrees that Bank may disclose such documents and information to Borrower.

19. AMENDMENT. This Agreement may be amended or modified only in writing signed by Bank and Owner.

20. 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.

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

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22. ARBITRATION.

22.1 Arbitration. The parties hereto agree, upon demand by any party, to submit to binding arbitration all claims, disputes and controversies between or among them (and their respective employees, officers, directors, attorneys, and other agents), whether in tort, contract or otherwise in any way arising out of or relating to this Agreement and its negotiation, execution, collateralization, administration, repayment, modification, extension, substitution, formation, inducement, enforcement, default or termination.

22.2 Governing Rules. Any arbitration proceeding will (a) proceed in a location in Oregon selected by the American Arbitration Association (“AAA”); (b) 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 (c) 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 herein, 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. §91 or any similar applicable state law.

22.3 No Waiver of Provisional Remedies, Self-Help and Foreclosure. The arbitration requirement does not limit the right of any party to (a) foreclose against real or personal property collateral; (b) exercise self-help remedies relating to collateral or proceeds of collateral such as setoff or repossession; or (c) 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 (a), (b) and (c) of this paragraph.

22.4 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.

22.5 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. Any 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.

22.6 Class Proceedings and Consolidations. No party hereto shall be entitled to join or consolidate disputes by or against others in any arbitration, except parties who have executed this Agreement or any other contract, instrument

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or document relating to any Indebtedness secured hereby, or to include in any arbitration any dispute as a representative or member of a class, or to act in any arbitration in the interest of the general public or in a private attorney general capacity.

22.7 Payment Of Arbitration Costs And Fees. The arbitrator shall award all costs and expenses of the arbitration proceeding.

22.8 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 party required in the ordinary course of its business, by applicable law or regulation, or to the extent necessary to exercise any judicial review rights set forth herein. 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 documents between the parties or the subject matter of the dispute shall control. This arbitration provision shall survive termination, amendment or expiration of any of the documents or any relationship between the parties.

23. 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.

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

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

Owner 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 148^th Avenue, Portland, OR 97230-3438; 5352 Performance Way, Whitestown, IN 46075; and 17634 NE Airport Way, Portland, OR 97230 and such other addresses of which the Owner notifies the Bank from time to time. Owner 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.

UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY BANK 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, this Agreement has been duly executed as of December 22, 2011.

Danner, 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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EX-10.22

Exhibit 10.22

THIRD AMENDED AND RESTATED CREDIT AGREEMENT

THIS THIRD AMENDED AND RESTATED CREDIT AGREEMENT (this “Agreement”) is entered into as of December 22 2011, by and between LACROSSE FOOTWEAR, INC., a Wisconsin corporation (“Borrower”), and WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”).

RECITALS

Borrower and Bank are parties to that certain Second Amended and Restated Credit Agreement dated as of March 1, 2009 (as previously amended, the “Existing Agreement”). 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. For ease of reference, the parties have decided to amend and restate the Existing Agreement in its entirety.

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 up to and including May 1, 2015 under a revolving line of credit (“Line of Credit”) not to exceed (i) at any time (other than during each Reduction Period, as defined below) the aggregate principal amount of Thirty Five Million Dollars ($35,000,000.00) and (ii) from and including January 1 through May 31 of each year (each such period, a “Reduction Period”) the aggregate amount of Twenty-Two Million Five Hundred Thousand Dollars ($22,500,000.00), the proceeds of which shall be used to finance the working capital requirements and other business expenses of Borrower and Borrower’s wholly-owned subsidiary, Danner, Inc., a Wisconsin corporation (“Danner”), including, without limitation, loans or advances to Borrower’s Subsidiaries that are permitted in Section 5.7. Borrower’s obligation to repay advances under the Line of Credit shall be evidenced by that certain Replacement Revolving Line of Credit Note of even date herewith (“Line of Credit Note”), which note replaces that certain Revolving Line of Credit Note dated September 16, 2011 in the principal amount of $35,000,000.00 executed and delivered by Borrower in connection with the Existing Agreement. All terms of the Line of Credit Note are incorporated herein by this reference.

(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 usance, standby and/or sight 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 (“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 highest rate of interest then 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 banker’s 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 that 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 that 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, 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 highest rate of interest then 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 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 above.

SECTION 1.2. INTEREST/FEES.

(a) Interest. The outstanding principal balance of each loan advance subject hereto and the amount of each drawing paid under any Letter of Credit or Usance Draft shall bear interest from the date of such advance or the date such drawing is paid, respectively, to the date such amount is fully repaid by Borrower at the rate of interest set forth in the Line of Credit Note.

(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 Loan Documents (as defined below).

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(c) Unused Commitment Fee. Borrower shall pay to Bank a fee equal to twenty hundredths percent (0.20%) per annum (computed on the basis of a 360-day year, actual days elapsed) on the average daily unused amount of the Line of Credit, which fee shall be calculated on a monthly basis by Bank and shall be due and payable by Borrower in arrears within fifteen (15) days after each billing is sent by Bank. The foregoing fee shall be calculated based on a Line of Credit of $22,500,000.00 during each Reduction Period.

(d) Letter of Credit Fees. Borrower shall pay to Bank (i) fees upon the issuance of each Letter of Credit equal to one and three quarter percent (1.75%) per annum (computed on the basis of a 360-day year, actual days elapsed) of the face amount thereof, and (ii) fees upon the payment or negotiation of each drawing under any Letter of Credit and fees 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 and an acceptance fee for each Usance Draft) determined in accordance with Bank’s standard fees and charges then in effect for such activity.

SECTION 1.3. COLLECTION OF PAYMENTS. Borrower authorizes Bank to collect all principal, interest and fees due under each credit subject hereto by charging Borrower’s deposit account number 4100055821 with Bank, or any other deposit account maintained by Borrower with Bank, for the full amount thereof. Should there be insufficient funds in any such deposit account to pay all such sums when due, the full amount of such deficiency shall be immediately due and payable by Borrower.

SECTION 1.4. COLLATERAL.

As security for all indebtedness of Borrower to Bank subject hereto, Borrower hereby reaffirms its prior grant of a security interest in the Existing Security Agreement (as defined below) executed by it, and Bank and Borrower shall, and Borrower shall cause Danner to, enter into the New Security Agreements (as defined below), which shall amend and restate the Existing Security Agreements in their entirety and constitute security interests of first priority (subject to Permitted Encumbrances, as defined in Section 5.8 below) in all Collateral.

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.

Unless an Event of Default exists, none of Borrower nor any Material Subsidiary shall be obligated to perfect the Bank’s security interest under a Security Agreement by any means other than UCC financing statements and continuation statements covering the Collateral and filings of appropriate notices of security interests in the U.S. Patent and Trademark Office with respect to the trademarks listed on Exhibit A attached hereto, except that:

(a) with respect to chattel paper or instruments, if the amount owing to Borrower or a Material Subsidiary thereunder exceeds $100,000.00, Borrower or the Material 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 for which documents of title are issued, Borrower or the Material Subsidiary shall either put Bank in possession of the documents of title to such in-transit

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inventory, or there shall be a duly filed UCC-1 financing statement of record with respect to the Borrower or the Material 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 each Material 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 the relevant Material Subsidiary’s request made in connection with sales or transfers of equipment, fixtures or improvements permitted under Section 6(c) of the Security Agreements, while they are in effect, or the New Security Agreements, Bank shall release its security interest therein of fact and record.

SECTION 1.5. DEFINED TERMS.

References in this Agreement to fiscal quarters and fiscal years are to Borrower’s fiscal quarters and fiscal years. As used herein:

“AAA” has the meaning given to it in Section 7.11(b).

“Agreement” has the meaning given to it in the Introductory Paragraph.

“Bank” has the meaning given to it in the Introductory Paragraph.

“Bankruptcy Code” has the meaning given to it in Section 6.1(f).

“Borrower” has the meaning given to it in the Introductory Paragraph.

“Business Day” means any day except a Saturday, Sunday or any other day on which commercial banks in Oregon are authorized or required by law to close.

“Change in Control” means that (a) a majority of the directors of Borrower shall be persons other than persons (i) for whose election proxies shall have been solicited by the board of directors of Borrower (other than pursuant to a solicitation Borrower or its directors are contractually required to make in connection with a sale of any of Borrower’s equity or assets) or for whose appointment or election is otherwise approved or ratified by the board of directors of Borrower or (ii) who are then serving as directors appointed by the board of directors to fill vacancies on the board of directors caused by death or resignation (but not by removal) or to fill newly-created directorships or (b) any “person” or “group” (as such terms are used in Section 13(d) of the Securities Exchange Act of 1934) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have “beneficial ownership” of all securities that such person or group has the right to acquire whether such right is immediately exercisable or only after the passage of time), directly or indirectly, of Voting Stock of Borrower (or other securities convertible into such Voting Stock) representing 30 percent or more of the combined voting power of all Voting Stock of Borrower [(provided that any Voting Stock now or hereafter held by Virginia Schneider and her extended family, or any heirs or devises of Virginia Schneider and her extended family, and any trust in which Virginia Schneider and/or her extended family are beneficiaries, and the beneficiaries of such trusts, and the transferees, successors and assigns of any of the foregoing, shall be excluded from calculation for the purposes of this clause (b))]. For this

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purposes, “Voting Stock” means capital stock of Borrower the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors of Borrower, even though the right to so vote has been suspended by the happening of a contingency.

“Collateral” means all property and rights and interests in property of Borrower and Danner that is subject to any Security Agreement.

“Current Ratio” has the meaning given to it in Section 4.9(d).

“Daily One Month LIBOR” has the meaning given to it in the Line of Credit Note”

“Danner” has the meaning given to it in Section 1.1(a).

“Event of Default” has the meaning given to it in Section 6.1.

“Existing Agreement” has the meaning given to it in the Recital.

“Existing Security Agreement” means either (i) the Security Agreement for the benefit of Bank dated as of April 15, 2004 executed and delivered by Borrower (as amended, modified or supplemented prior to the date hereof) or (ii) the Third Party Security Agreement for the benefit of Bank dated as of April 15, 2004 executed and delivered by Danner (as amended, modified or supplemented prior to the date hereof).

“ERISA” has the meaning given to it in Section 2.9.

“Foreign Subsidiary” means a Subsidiary that is a “controlled foreign corporation” as that term is used in Section 956 of the Internal Revenue Code.

“GAAP” means generally accepted accounting principles in effect in the United States (or with respect to a foreign Subsidiary, in the country of its formation or operations), consistently applied.

“Letter of Credit” has the meaning given to it in Section 1.1(b).

“Line of Credit Note” has the meaning given to it in Section 1.1(a).

“Loan Documents” has the meaning given to it in Section 2.2.

“material” and “material adverse effect” have the meanings given to them in Section 2.11.

“Material Subsidiary” means Danner and any direct or indirect Subsidiary of Borrower that (including, without duplication, the assets and revenues of its own Subsidiaries) represents ten percent or more of the consolidated assets or consolidated revenues of Borrower.

“New Security Agreement” means any one of the following executed and delivered contemporaneously herewith for the benefit of Bank, as amended, modified or supplemented from time to time: (i) executed by Borrower: (A) Security Agreement – Equipment and (B) Continuing Security Agreement – Rights to Payment and Inventory; and (ii) executed by Danner: (A) Third Party Security Agreement – Equipment and (B) Third Party Security Agreement – Rights to Payment and Inventory.

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“Permitted Encumbrances” has the meaning given to it in Section 5.8.

“Permitted Transactions” has the meaning given to it in Section 5.5.

“Plan” has the meaning given to it in Section 2.9.

“Prior Note” has the meaning given to it in Section 1.1(a).

“Reduction Period” has the meaning given to it in Section 1.1(a).

“Rules” has the meaning given to it in Section 7.11(b).

“Security Agreement” means any Existing Security Agreement or, upon its amendment and restatement by any New Security Agreement, the relevant New Security Agreement.

“Subordinated Debt” has the meaning given to it in Section 4.9(a).

“Subsidiary” of a person or entity means a corporation, partnership, joint venture, limited liability company or other business entity of which more than 50% of the stock or other equity interests having ordinary voting power for the election of directors, managing general partners or other governing body (other than stock or other equity interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such person or entity.

“Tangible Net Worth” has the meaning given to it in Section 4.9(a).

“Third Party Obligor” has the meaning given to it in Section 6.1(d).

“Total Liabilities” has the meaning given to it in Section 4.9(b).

“Usance Draft” has the meaning given to it in Section 1.1(b)

In this Agreement words denoting the singular shall include the plural, and vice versa, and words denoting any gender shall include all genders.

All accounting terms used in the Loan Documents shall be construed, and all financial records and reports prepared or provided pursuant to the Loan Documents shall be prepared in a consistent manner, in accordance with GAAP. If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either Borrower or Bank shall so request, Borrower and Bank shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP; provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) Borrower shall provide to the Bank financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.

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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 Wisconsin, and is qualified or licensed to do business (and is in good standing as a foreign corporation, if applicable) in all 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. As of the date hereof, 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 $2,000,000.00, 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 annual financial statement of Borrower dated December 31, 2010, and all interim quarterly financial statements delivered to Bank since said date, true copies of which have been delivered by Borrower to Bank prior to the date hereof, (a) are complete and correct and present fairly Borrower’s financial condition and results of operations as of the date thereof and for the period covered thereby, (b) disclose all liabilities of Borrower as of December 31, 2010 that were required to be reflected or reserved against under GAAP, whether liquidated or unliquidated, fixed or contingent, and (c) have been prepared in accordance with GAAP, provided that each interim quarterly financial statement is subject to and exclusive of normal year-end audit adjustments and the addition of certain 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 otherwise permitted by Bank in writing.

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SECTION 2.6. INCOME TAX RETURNS. As of the date hereof, Borrower has no knowledge of any pending assessments or adjustments of its income tax payable with respect to any year, provided, routine tax examinations with respect to which no underreporting or misreporting of material information by Borrower is asserted by the relevant taxing authority or is known to Borrower’s officers do not constitute breaches of this representation and warranty.

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.

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”); Borrower has not materially violated any provision 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 initiated by Borrower; Borrower has met its minimum funding requirements under ERISA with respect to each Plan; and each Plan will be able to fulfill its benefit obligations as they come due in accordance with the Plan documents and under GAAP.

SECTION 2.10. OTHER OBLIGATIONS. Borrower is not in material default on any obligation for borrowed money, any purchase money obligation in excess of $1,000,000.00 or any other material lease, commitment, contract, instrument or obligation.

SECTION 2.11. ENVIRONMENTAL MATTERS. Except as disclosed by Borrower to Bank in writing prior to the date hereof, (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 $2,000,000.00 or greater.

SECTION 2.12. SUBSIDIARIES. As of the date hereof, Borrower’s direct and indirect Subsidiaries are: (a) Danner; (b) Lacrosse International, Inc., an Oregon corporation; (c) LaCrosse International Holdings, Inc., an Oregon corporation; (d) LaCrosse Europe ApS, a Danish company; and (e) LaCrosse Footwear Canada, Inc., a Canadian corporation.

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ARTICLE III

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 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) Documentation. Bank shall have received all additional documents which may be required in connection with such extension of credit.

(c) Additional Letter of Credit Documentation. Prior to the issuance of each Letter of Credit, Bank shall have received a Letter of Credit Agreement in the Lender’s customary form, properly completed and duly executed by Borrower.

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 the Material Subsidiaries 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 the Material Subsidiaries.

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;

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(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 and 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 normal year-end audit adjustments and the absence of footnotes), (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, and (c) discloses the names of all Subsidiaries that in the preceding fiscal quarter have become Material Subsidiaries;

(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 financial statements 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; and

(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 the Material Subsidiaries’ businesses; and comply with the provisions of all documents pursuant to which Borrower is organized and/or which govern Borrower’s and the Material Subsidiaries’ continued existence and with the requirements of all laws, rules, regulations and orders of any governmental authority applicable to Borrower, the Material Subsidiaries 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 on 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 Danner, 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 the Material Subsidiaries 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 the Material Subsidiaries 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 the Material Subsidiaries’ businesses 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.

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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 any Material Subsidiary may in good faith contest or as to which a bona fide dispute may arise, and (b) for which Borrower or such Material Subsidiary has made provision, in accordance with GAAP, for eventual payment thereof in the event Borrower is obligated to make such payment.

SECTION 4.8. LITIGATION. Promptly give notice in writing to Bank of any litigation pending or threatened against Borrower or Danner with a claim(s) in excess of an aggregate of $2,000,000.00.

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, determined as of the end of each fiscal quarter, not less than $45,000,000.00, increasing (on a permanent and cumulative basis) as of the end of each fiscal quarter (commencing September 25, 2011), by an amount equal to 25% of Borrower’s net income after taxes in the fiscal quarter then most recently ended (with no deduction for losses), 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 1.50 to 1.0 determined as of the end of each fiscal quarter, with “Total Liabilities” defined as the aggregate of current and non-current liabilities less Subordinated Debt, and with Tangible Net Worth. 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 under the Line of Credit.

SECTION 4.10. NOTICE TO BANK. Promptly after an officer of Borrower becomes aware of (but in no event more than five (5) days after an officer of Borrower becomes aware of 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 (without prior or concurrent renewal or replacement) 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 $2,000,000.00 or more.

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SECTION 4.11. NEW MATERIAL SUBSIDIARY. In the event that, at any time, non-Material Subsidiaries of Borrower (including, without duplication, such Subsidiaries’ Subsidiaries) represent, in the aggregate, more than 20% of the consolidated assets or consolidated revenues of Borrower, Borrower shall, in writing to Bank, given concurrently with the reports given to Bank pursuant to section 4.3(c), designate sufficient non-Material Subsidiaries to be (and which shall be) deemed for all purposes Material Subsidiaries such that the remaining non-Material Subsidiaries no longer represent more than 20% of the consolidated assets or consolidated revenues of Borrower. New Material Subsidiaries shall be deemed as such for purposes of the relevant representations, warranties, affirmative and negative covenants and Events of Default at the beginning of the Borrower’s fiscal quarter that immediately follows the fiscal quarter in which the new Material Subsidiary became a Material Subsidiary. Borrower shall cause each Subsidiary that becomes a Material Subsidiary after the date hereof to execute (promptly after becoming a Material Subsidiary) Security Agreements in substantially the form of the New Security Agreements executed by Danner, provided, however, that (a) no such action shall be required with respect to a Foreign Subsidiary and (b) any security interest granted in the voting stock (or equivalent equity interests) of a Foreign Subsidiary shall be limited to 65% of each class of such Foreign Subsidiary’s outstanding voting stock (or equivalent equity interests).

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 the Material Subsidiaries 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. In any fiscal year, in excess of an aggregate of $12,000,000.00 in any fiscal year: pay any dividend or distribution either in cash, stock or any other property on Borrower’s stock now or hereafter outstanding, or redeem, retire, repurchase or otherwise acquire any shares of any class of Borrower’s stock now or hereafter outstanding.

SECTION 5.3. CAPITAL EXPENDITURES. Make any additional investment in fixed assets in any fiscal year in excess of an aggregate of $8,000,000.00.

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 the Material Subsidiaries 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 $2,000,000.00 in any fiscal year, (c) any other liabilities of Borrower existing as of, and disclosed to Bank prior to, the date hereof, including without limitation that certain loan to Borrower from the State of Oregon, acting by and through its Oregon Business Development Department, in the original principal amount of $300,000, (d) indebtedness or liabilities secured by Permitted Encumbrances, and (e) other such indebtedness or liabilities that are not in excess of $1,000,000.00 at any one time.

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SECTION 5.5. MERGER, CONSOLIDATION, TRANSFER OF ASSETS. Merge into or consolidate with any other entity other than: (a) the merger of a Material 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; or 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 the Material Subsidiaries. “Permitted Transactions” means (i) mergers with other entities whose businesses are substantially similar to that of Borrower’s or Danner’s so long as Borrower or a Material Subsidiary is the surviving entity, (ii) the acquisition by Borrower or a Material Subsidiary of all or substantially all of the assets of other entities or divisions thereof, (iii) the acquisition by Borrower or a Material Subsidiary of not less than a majority of the outstanding ownership interests in other entities; and if, with respect to each of the foregoing, and prior to entering into a definitive agreement, (aa) Borrower demonstrates to Bank’s satisfaction, on a pro forma basis, that Borrower will remain in compliance with all of the financial covenants set forth in Section 4.9, and (bb) no breach of this Agreement or any other Loan Document would exist following such transaction, and (iv) the formation of a Subsidiary of Borrower and any loan or advance to, investment in, or sale or contribution of inventory to, such Subsidiary permitted by Section 5.7 below.

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 any Material 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 (a) any such loans, advances or investments existing as of, and disclosed to Bank prior to, the date hereof, (b) loans or advances to employees or officers of Borrower or its Subsidiaries of Borrower as permitted by law, and (c) loans or advances to, or investments in, or credit balances owing from sales of inventory to, or contribution of inventory to, any direct or indirect Subsidiary of Borrower.

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 or any Material Subsidiary’s assets now owned or hereafter acquired, except (i) any of the foregoing in favor of Bank, (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 arc 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 a Subsidiary (or a freight forwarder, agent or contractor therefor) for goods while in transit in the ordinary course of business; (d) maritime liens that

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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 interests 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 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 its 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 that 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, a Material 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 (other than to Borrower or a Subsidiary thereof), including Bank and with respect to any such default which by its nature can be remedied, 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 or an affiliate thereof, or Borrower or a Subsidiary thereof, the amount thereof exceeds $2,000,000.00, 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, a Material Subsidiary or any Third Party Obligor; or the recording of any abstract of judgment against Borrower, a Material Subsidiary or any Third Party Obligor in any county in which Borrower, a Material 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, a

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Material Subsidiary or any Third Party Obligor; or the entry of a judgment against Borrower, a Material Subsidiary or any Third Party Obligor; and with respect to each of the foregoing, the uninsured amount in dispute exceeds $3,000,000.00 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, a Material Subsidiary or any Third Party Obligor (and the same is not dismissed within 60 days after its commencement), or Borrower, a Material 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, a Material Subsidiary or any Third Party Obligor shall be adjudicated a bankrupt, or an order for relief shall be entered against Borrower, a Material 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 30 days after written notice from Bank to Borrower.

(h) The dissolution or liquidation of any of Borrower, a Material 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, Material Subsidiary or Third Party Obligor and such action is not dismissed or abandoned within 60 days after its commencement.

(i) Any Change in Control of Borrower occurs.

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 (or immediately upon the occurrence of an Event of Default described in Section 6.1(f)) and without notice become immediately due and payable without presentment, demand, protest or notice of dishonor, all of which are hereby expressly waived by Borrower; (b) at Bank’s option (or immediately upon the occurrence of an Event of Default described in Section 6.1(f)), 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

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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 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 other Loan Documents must be in writing delivered to each party at the following address:

BORROWER:	LACROSSE FOOTWEAR, INC.
	17634 NE Airport Way Portland, OR 97230 Attention: President, CEO or Chief Financial Officer
BANK:	WELLS FARGO BANK, NATIONAL ASSOCIATION 1300 S. W. Fifth Ave. Portland, OR 97208 Attention: James Bednark, Senior 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 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 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

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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 Material 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 interests or rights 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. The representations, warranties, and obligations of, and restrictions upon, Borrower and Danner contained in agreements between or among either or both of them and Bank that are related to the Credit Agreement or Existing Security Agreements shall be deemed merged into, and amended and restated in full by, this Agreement and the New Security Agreements as of the date hereof. This Agreement may be amended or modified only in writing signed by each party hereto. This Agreement may be amended or modified only in writing signed by each party hereto. This Agreement amends and restates in its entirety the Existing Agreement. 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.

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.

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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 (and their respective employees, officers, directors, attorneys, and other agents), whether in tort, contract or otherwise in any way arising out of or relating to (i) any credit subject hereto, or any of the Loan Documents, and their negotiation, execution, collateralization, administration, repayment, modification, extension, substitution, formation, inducement, enforcement, default or termination; or (ii) requests 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 herein, 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. §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.

(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

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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. Any request 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. No party hereto shall be entitled to join or consolidate disputes by or against others in any arbitration, except parties who have executed any Loan Document, or to include in any arbitration any dispute as a representative or member of a class, or to act in any arbitration in the interest of the general public or in a private attorney general capacity.

(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 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 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.

19

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.		WELLS FARGO BANK, NATIONAL ASSOCIATION
By:	/s/ Joseph P. Schneider	By:	/s/ James R. Bednark
	Joseph P. Schneider, President/		James R. Bednark, Senior Vice President
	Chief Executive Officer
By:	/s/ David P. Carlson
	David P. Carlson, Executive Vice
	President/Chief Financial Officer

20

EXHIBIT A

TO

THIRD AMENDED AND RESTATED CREDIT AGREEMENT

Certain U.S. Registered Trademarks

Reg. No.	Owner	Description of Mark	Date Registered
1743247	LaCrosse Footwear, Inc.		12/29/92
1713804	LaCrosse Footwear, Inc.	LACROSSE	9/8/92
1164720	LaCrosse Footwear, Inc.		8/11/81
3881730	LaCrosse Footwear, Inc.	LACROSSE	11/23/10
1715913	LaCrosse Footwear, Inc.		9/15/92
1266401	Danner, Inc.		2/7/84
3282469	Danner, Inc.	DANNER	8/21/07

EX-21.1

EXHIBIT 21.1

SUBSIDIARIES OF LACROSSE FOOTWEAR, INC.

AS OF DECEMBER 31, 2011

Name	Jurisdiction of Incorporation	Percent Ownership
Danner, Inc.	Wisconsin	100%
LaCrosse International, Inc.	Oregon	100%
LaCrosse International Holdings, Inc.	Oregon	100%
LaCrosse Europe, ApS	Denmark	100% (subsidiary of LaCrosse International Holdings, Inc.)

EX-23.1

EXHIBIT 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 33-77516, 33-77518, 333-2702, 333-106067, 333-125712, 333-142597, 333-142598, 333-166861 and 333-166864) pertaining to the LaCrosse Footwear, Inc. Employees’ Retirement Savings Plan, the LaCrosse Footwear, Inc. Union Employees’ Retirement Savings Plan, the LaCrosse Footwear, Inc. 1993 Employee Stock Incentive Plan, the LaCrosse Footwear, Inc. 1997 Stock Incentive Plan, the LaCrosse Footwear, Inc. 2001 Stock Incentive Plan, the LaCrosse Footwear, Inc. 2001 Non-Employee Director Stock Option Plan, the LaCrosse Footwear, Inc. 2007 Long Term Incentive Plan, the Amended and Restated LaCrosse Footwear, Inc. 2001 Non-Employee Director Stock Option Plan, and the Amended and Restated LaCrosse Footwear, Inc. 2007 Long Term Incentive Plan of our reports dated March 2, 2012, relating to our audit of the consolidated financial statements, the financial statement schedule, and internal control over financial reporting which appear in this Annual Report on Form 10-K of LaCrosse Footwear, Inc. for the year ended December 31, 2011.

/s/ McGladrey & Pullen, LLP

Minneapolis, Minnesota

March 2, 2012

EX-31.1

Exhibit 31.1

Certification of the President and Chief Executive Officer

Pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934

I, Joseph P. Schneider, certify that:

1) I have reviewed this annual report on Form 10-K of LaCrosse Footwear, Inc. (“the registrant”);

2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4) The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 2, 2012

/s/ Joseph P. Schneider

Joseph P. Schneider

President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of Executive Vice President and Chief Financial Officer

Pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934

I, David P. Carlson, certify that:

1) I have reviewed this annual report on Form 10-K of LaCrosse Footwear, Inc. (“the registrant”);

2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4) The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 2, 2012

/s/ David P. Carlson

David P. Carlson

Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

Written Statement of the President and Chief Executive Officer

Pursuant to 18 U.S.C. §1350

Solely for the purposes of complying with 18 U.S.C. §1350, I, the undersigned President and Chief Executive Officer of LaCrosse Footwear, Inc. (the “Company”), hereby certify, based on my knowledge, that the Annual Report on Form 10-K of the Company for year ended December 31, 2011 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 2, 2012

/s/ Joseph P. Schneider

Joseph P. Schneider

EX-32.2

Exhibit 32.2

Written Statement of the Executive Vice President and Chief Financial Officer

Pursuant to 18 U.S.C. §1350

Solely for the purposes of complying with 18 U.S.C. §1350, I, the undersigned Executive Vice President and Chief Financial Officer of LaCrosse Footwear, Inc. (the “Company”), hereby certify, based on my knowledge, that the Annual Report on Form 10-K of the Company for the year ended December 31, 2011 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 2, 2012

/s/ David P. Carlson

David P. Carlson

XML

Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2011

Fair Value of Financial Instruments [Abstract]

Fair Value of Financial Instruments

Note 2. Fair Value of Financial Instruments

Cash and cash equivalents at December 31, 2011 and 2010 were $0.8 million and $4.3 million, respectively. The Company has categorized its cash and cash equivalents as a Level 1 financial asset, measured at fair value based on quoted prices in active markets of identical assets. The Company does not have any other financial assets or liabilities that are measured at fair value.

XML

Nature of Business and Significant Accounting Policies

12 Months Ended

Dec. 31, 2011

Nature of Business and Significant Accounting Policies [Abstract]

Nature of Business and Significant Accounting Policies

Note 1. Nature of Business and Significant Accounting Policies

Nature of business:

LaCrosse Footwear, Inc. is a leading developer and marketer of branded, premium and innovative footwear for work and outdoor consumers. The Company’s trusted DANNER® and LACROSSE® brands are sold to a network of specialty retailers and distributors in North America, Europe, and Asia.

The Company markets its two brands through four channels of distribution: (1) wholesale, (2) government, (3) direct, and (4) international.

Summary of significant accounting policies:

Principles of consolidation - The consolidated financial statements include the accounts of LaCrosse Footwear, Inc. and its wholly owned subsidiaries, Danner, Inc., LaCrosse International, Inc., and LaCrosse International Holdings, Inc. (collectively the “Company”). All material intercompany accounts and transactions have been eliminated in consolidation.

Use of estimates in the preparation of financial statements - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying footnotes. Significant items subject to estimates and assumptions include valuation allowances for trade accounts receivable, inventories, and deferred tax assets, as well as pension obligations, product warranties, stock-based compensation, and estimated future cash flows used together with the Company’s market capitalization in the annual impairment test of goodwill. Actual results could differ from those estimates.

Revenue recognition - Revenue is recognized when products are shipped, the customer takes title and assumes risk of loss, collection of related receivables is probable, persuasive evidence of an arrangement exists, and the sales price is fixed or determinable. Factory store revenues are recorded at the time of sale. Allowances for estimated returns and discounts are provided when the related revenue is recorded. Amounts billed for shipping and handling costs are recorded as a component of net sales.

Foreign currency translation and foreign currency transactions - The assets and liabilities of the Company’s foreign subsidiary have been translated into U.S. dollars using the exchange rates in effect at period end, and the net sales and expenses have been translated into U.S. dollars using average exchange rates in effect during the period. The foreign currency translation adjustments are included as a separate component of accumulated other comprehensive loss within shareholders’ equity.

Any gains or losses generated by foreign currency transactions are recorded in non-operating expense in the consolidated statements of income in the period in which they occur.

Cash and cash equivalents - The Company maintains its cash in money market accounts and U.S. Government money market accounts, which may, at times, exceed federally insured limits. The Company has not experienced any losses in such accounts. The carrying amounts of such assets are a reasonable estimate of their fair value due to the short term to maturity and readily available market for the investments.

Fair value of financial instruments - The Company’s financial instruments, including cash and cash equivalents, trade accounts receivable, borrowings on the line of credit, and accounts payable are estimated to approximate their fair value due to their short maturities.

Trade accounts receivable and allowance for doubtful accounts - Trade accounts receivable are carried at the original invoice amount less estimated allowances for doubtful accounts, cash discounts and non-defective returns. The Company maintains an allowance for doubtful accounts for the uncertainty of its customers’ ability to make required payments. In determining the amount of the allowance, the Company considers historical levels of credit losses and makes judgments about the creditworthiness of customers based upon ongoing credit evaluations. The Company also analyzes its cash discount programs and return policies and future rates of non-defective returns to assess the adequacy of allowance levels and adjusts such allowances as necessary.

Inventories - Inventories are stated at the lower of cost or market. Cost is determined by the first-in, first-out (FIFO) method. Provision for potentially slow-moving or excess inventories is made based on management’s analysis of inventory levels, future sales forecasts, and current estimated market values.

Property and equipment - Property and equipment are carried at cost and are depreciated using the straight-line method over their estimated useful lives or lease term, whichever is shorter. Depreciable lives range from five to fifteen years for leasehold improvements and from two to fifteen years for machinery and equipment.

Goodwill - Goodwill represents the excess of the purchase price over the fair value of the net tangible and identified intangible assets. Goodwill is not amortized, but is subject to annual impairment tests. The Company reviews its goodwill for impairment annually, or more frequently if there is a triggering event. The Company uses a two-step test to assess goodwill for impairment. First, the fair value of the reporting unit is compared to its carrying value. If the fair value exceeds the carrying value, goodwill is not impaired and no further testing is required. The second step is performed if the carrying value exceeds the fair value. The implied fair value of the reporting unit’s goodwill must be determined and compared to the carrying value of the goodwill. If the carrying value of a reporting unit’s goodwill exceeds its implied fair value, an impairment loss equal to the difference will be recorded. The Company also reviews the carrying amount of goodwill for impairment if an event occurs or circumstances change that would indicate the carrying amount may be impaired. The Company tests for impairment at the end of the second quarter each year. As of June 25, 2011, the Company determined there was no impairment of its recorded goodwill and as of December 31, 2011, there has been no triggering event that would require an updated impairment review.

Recoverability and impairment of intangible assets and other long-lived assets - The Company reviews long-lived assets and certain identifiable intangible assets for impairment whenever events indicate that the carrying value may be impaired. In these cases, the Company estimates the future undiscounted net cash flows to be derived from the assets to determine whether a potential impairment exists. If the carrying value exceeds the estimate of future undiscounted cash flows, the Company then calculates the impairment as the excess of the carrying value of the asset over the estimate of its fair value. The Company has determined that there was no impairment as of December 31, 2011.

Product warranties - The Company provides a limited warranty for the replacement of defective products for a specified time period after sale. The Company estimates the costs that may be incurred under its limited warranty and records a liability in the amount of such anticipated costs at the time product revenue is recognized. Factors that affect the Company’s warranty liability include sales experience along with historical and anticipated future rates of warranty claims.

Accruals for product warranties are included in other accruals in the accompanying consolidated balance sheets. Changes in the carrying amount of accrued product warranty cost for the years ended December 31, 2011 and 2010 are summarized as follows (in thousands):

	December 31,
	2011			2010
Accrued product warranties, beginning	$	1,588		$	1,409
Accruals for products sold		2,645			3,181
Warranty claims		(2,970	)		(3,002	)
Accrued product warranties, ending	$	1,263		$	1,588

Stock-based compensation - The Company uses the Black-Scholes model to estimate the fair value of all share-based compensation awards on the date of grant. The Company recognizes compensation expense for options on a straight-line basis over the requisite service period for each separately vesting portion of the award. Stock-based compensation expense recognized was $0.7 million ($0.07 per diluted share) for 2011, $0.6 million ($0.05 per diluted share) for 2010, and $0.6 million ($0.06 per diluted share) for 2009. See Note 7, “Stock Options” for additional information.

Income taxes - The provision for income taxes is based on earnings reported in the consolidated statements of income. Deferred tax assets and liabilities are determined by applying anticipated future tax rates to the cumulative temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. See Note 4, “Income Tax Matters” for additional information.

Research and development costs - Expenditures relating to the development of new products and processes are expensed as incurred. These costs include expenditures for compensation, materials, facilities, and other costs and do not represent a material portion of operating expenses.

Advertising and promotion - The Company advertises and promotes its products through national and regional media, displays, and catalogs and through cooperative advertising programs with wholesalers. Costs for these advertising and promotional programs are charged to expense as incurred. Advertising and promotional expenses included in the consolidated statements of income for the years ended December 31, 2011, 2010, and 2009 were $4.2 million, $3.7 million, and $3.1 million, respectively.

Net income per common share - The Company presents its net income on a per share basis for both basic and diluted common shares. Basic earnings per common share excludes all dilutive stock options and is computed using the weighted average number of common shares outstanding during the period. The diluted earnings per common share calculation assumes that all stock options were exercised and converted into common stock at the beginning of the period, unless their effect would be anti-dilutive.

A reconciliation of the shares used in the basic and diluted earnings per common share is as follows:

	December 31,
	2011		2010		2009
Basic weighted average common shares outstanding		6,498,764		6,428,625		6,303,473
Dilutive stock options		140,435		161,384		71,463
Diluted weighted average common shares outstanding		6,639,199		6,590,009		6,374,936

Segment reporting - The Company is required to report selected segment information quarterly and to report annually entity-wide disclosures about products, major customers and the geographies in which the entity holds material assets and reports revenue. An operating segment is defined as a component that engages in business activities whose operating results are reviewed by the chief operating decision maker and for which discrete financial information is available. The Company has determined that it operates as a single segment. The Company manages its resources and assesses its performance on an enterprise-wide basis.

Reclassifications - Certain disclosure amounts in the prior-period financial statements have been reclassified to conform to the current-period presentation and have no effect on previously reported net income or stockholders’ equity.

XML

Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010
CURRENT ASSETS
Cash and cash equivalents (Notes 2 and 9)	$ 774	$ 4,274
Trade accounts and other receivables, less allowances of $679 in 2011 and $517 in 2010 (Note 9)	22,726	22,834
Inventories (Note 3)	48,648	40,071
Prepaid expenses and other	1,398	1,321
Deferred tax assets (Note 4)	1,771	1,614
Total current assets	75,317	70,114
PROPERTY AND EQUIPMENT
Leasehold improvements	7,206	7,173
Machinery and equipment	24,029	21,569
Gross property and equipment	31,235	28,742
Less accumulated depreciation	15,092	12,588
Property and equipment, net	16,143	16,154
OTHER ASSETS
Goodwill	10,753	10,753
Other assets	222	249
Total other assets	10,975	11,002
TOTAL ASSETS	102,435	97,270
CURRENT LIABILITIES
Short-term borrowings (Note 5)	16,869	0
Accounts payable	7,463	16,477
Accrued compensation	1,789	4,261
Other accruals	2,939	3,356
Total current liabilities	29,060	24,094
LONG-TERM DEBT (Note 5)	138	263
DEFERRED REVENUE (Note 5)	550	566
DEFERRED LEASE OBLIGATIONS	895	782
COMPENSATION AND BENEFITS (Note 8)	7,214	4,385
DEFERRED TAX LIABILITIES (Note 4)	1,450	2,732
Total liabilities	39,307	32,822
COMMITMENTS AND CONTINGENCIES (Notes 6, 8, and 9)
SHAREHOLDERS' EQUITY (Notes 7, 8, 13 and 15)
Common stock, par value $.01 per share; authorized 50,000,000 shares; issued 6,717,627 shares	67	67
Additional paid-in capital	31,600	30,536
Accumulated other comprehensive loss	(6,058)	(3,731)
Retained earnings	38,538	38,789
Less cost of 213,003 and 258,775 shares of treasury stock	(1,019)	(1,213)
Total shareholders' equity	63,128	64,448
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$ 102,435	$ 97,270

XML

Consolidated Statements of Shareholders' Equity and Comprehensive Income (Parenthetical) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Employee benefit plan, deferred tax	$ 1,449	$ 146	$ 411
Accumulated Other Comprehensive Loss
Employee benefit plan, deferred tax	1,449	146	411
Comprehensive Income
Employee benefit plan, deferred tax	$ 1,449	$ 146	$ 411

XML

Subsequent Event

12 Months Ended

Dec. 31, 2011

Subsequent Event [Abstract]

Subsequent Event

Note 15. Subsequent Event

On February 2, 2012, the Company announced a first quarter cash dividend of twelve and one-half cents ($0.125) per share of common stock. This first quarter dividend will be paid on March 18, 2012 to shareholders of record as of the close of business on February 22, 2012. The total cash payment for this dividend will be approximately $0.8 million.

XML

Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Cash Flows from Operating Activities
Net income	$ 3,000	$ 6,881	$ 5,510
Adjustments to reconcile net income to net cash provided by (used in) operating activities, net of effects of acquisitions:
Depreciation and amortization	3,685	3,016	2,705
Loss on disposal of property and equipment	171	64	225
Stock-based compensation expense	698	560	581
Deferred income taxes	6	433	1,011
Changes in current assets and liabilities, net of effects of an acquisition in 2009:
Trade accounts and other receivables	95	(1,241)	814
Inventories	(8,695)	(13,150)	1,740
Accounts payable	(9,005)	8,120	(2,252)
Accrued expenses and other	(3,729)	381	1,872
Net cash provided by (used in) operating activities	(13,774)	5,064	12,206
Cash Flows from Investing Activities
Purchases of property and equipment	(3,955)	(10,604)	(5,254)
Proceeds from sales of property and equipment	3	1	41
Acquisition payment (Note 11)			(388)
Net cash used in investing activities	(3,952)	(10,603)	(5,601)
Cash Flows from Financing Activities
Net proceeds from short-term borrowings	16,869
Proceeds from long-term debt		300
Cash dividends paid	(3,251)	(9,621)	(3,154)
Purchase of treasury stock		(59)
Proceeds from exercise of stock options	560	1,475	565
Net cash provided by (used in) financing activities	14,178	(7,905)	(2,589)
Effect of foreign currency exchange rate changes on cash and cash equivalents	48	(21)	40
Increase (decrease) in cash and cash equivalents	(3,500)	(13,465)	4,056
Cash and cash equivalents:
Beginning	4,274	17,739	13,683
Ending	774	4,274	17,739
SUPPLEMENTAL INFORMATION
Cash payments for income taxes	1,491	4,451	438
Cash payments for interest	$ 265	$ 15

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Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010
Consolidated Balance Sheets [Abstract]
Allowances for trade accounts and other receivables	$ 679	$ 517
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	6,717,627	6,717,627
Treasury stock, shares	213,003	258,775

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Enterprise-wide Disclosures

12 Months Ended

Dec. 31, 2011

Enterprise-wide Disclosures [Abstract]

Enterprise-wide Disclosures

Note 10. Enterprise-wide Disclosures

The Company sells its products to two market categories, work and outdoor. The following table presents information about the Company’s net sales attributed to these two market categories (in thousands):

	Years Ended December 31,
Net sales:	2011		2010		2009
Work Market	$	76,858	$	94,751	$	88,200
Outdoor Market		54,463		55,791		50,952
Total	$	131,321	$	150,542	$	139,152

The following table presents information about the Company’s net sales by geography based on the location of the customer (in thousands):

	Years Ended December 31,
Net sales:	2011		2010		2009
United States	$	121,671	$	141,987	$	131,897
Foreign Countries		9,650		8,555		7,255
Total	$	131,321	$	150,542	$	139,152

Included in the Company’s consolidated balance sheets at December 31, 2011 and 2010 are the net assets located outside of the United States of approximately $4.2 million and $3.5 million, respectively. The net book value of long-lived assets located outside of the United States totaled $1.2 million and $0.7 million at December 31, 2011 and 2010, respectively.

The Company sells its products to a large number of customers in different markets across multiple product categories. One customer accounted for 9%, 21%, and 20% of total revenues for the years ended December 31, 2011, 2010, and 2009, respectively.

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Document and Entity Information (USD $)	12 Months Ended
	Dec. 31, 2011	Feb. 24, 2012	Jun. 25, 2011
Document and Entity Information [Abstract]
Entity Registrant Name	LACROSSE FOOTWEAR INC
Entity Central Index Key	0000919443
Document Type	10-K
Document Period End Date	Dec. 31, 2011
Amendment Flag	false
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	FY
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Public Float			$ 70,820,171
Entity Common Stock, Shares Outstanding		6,508,562

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Acquisition

12 Months Ended

Dec. 31, 2011

Acquisition [Abstract]

Acquisition

Note 11. Acquisition

On May 8, 2009, the Company announced the formation of Environmentally Neutral Design Outdoor, Inc. (“END”). END was formed in the second quarter of 2009 when the Company acquired substantially all the assets of the predecessor company doing business as END Footwear for $0.4 million. The assets acquired included inventory, intellectual property, and property and equipment. END’s results of operations since the date of acquisition have been included in the consolidated financial statements. On August 7, 2009, the Company announced its plans to discontinue END as a standalone footwear brand and to integrate its platform of lightweight footwear designs into the Danner brand.

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Consolidated Statements of Income (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Consolidated Statements of Income [Abstract]
Net sales (Note 10)	$ 131,321	$ 150,542	$ 139,152
Cost of goods sold	80,085	91,413	85,062
Gross profit	51,236	59,129	54,090
Selling and administrative expenses	45,701	47,699	45,505
Operating income	5,535	11,430	8,585
Non-operating expense	(720)	(239)	(375)
Income before income taxes	4,815	11,191	8,210
Income tax provision (Note 4)	1,815	4,310	2,700
Net income	$ 3,000	$ 6,881	$ 5,510
Net income per common share:
Basic	$ 0.46	$ 1.07	$ 0.87
Diluted	$ 0.45	$ 1.04	$ 0.86
Weighted average number of common shares outstanding:
Basic	6,498,764	6,428,625	6,303,473
Diluted	6,639,199	6,590,009	6,374,936

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Financing Arrangements

12 Months Ended

Dec. 31, 2011

Financing Arrangements [Abstract]

Financing Arrangements

Note 5. Financing Arrangements

On December 22, 2011, the Company entered into a 3-year extension of the Company’s previous line of credit agreement with Wells Fargo Bank, N.A, which expires May 1, 2015, unless renewed. Amounts borrowed under the agreement are secured by substantially all of the Company’s assets. The maximum aggregate principal amount of borrowings allowed from January 1 to May 31 is $22.5 million and from June 1 to December 31, the total available is $35 million. The credit agreement provides for an interest rate of LIBOR plus 1.75% and an annual commitment fee of 0.2% on the unused balance. The line of credit agreement contains financial covenants as well as restrictions on annual dividends and capital expenditures. There are no borrowing base limitations under the credit agreement. The Company is in compliance with all covenants as of December 31, 2011. At December 31, 2011 the Company had a $16.9 million outstanding balance on the line of credit. The Company had no outstanding borrowings due at December 31, 2010.

In May 2010, the Company received a loan of $0.3 million from the State of Oregon to finance equipment purchases at its new Danner factory which began operating in the third quarter of 2010. The State of Oregon will forgive all, or a portion of the loan, along with all interest accruing on any portion of the loan forgiven upon meeting employment criteria at the Danner factory. The employment criteria require the Company to maintain a certain number of employees at the Danner factory over a consecutive eight quarter period beginning July 1, 2010 and ending no later than September 30, 2014. At that time the remaining loan balance that has not been forgiven will bear interest at 5.0% per annum and will mature on October 31, 2014. As the Company meets the specified employment criteria at the Danner factory during a given period, a corresponding portion of the loan is reclassified to deferred revenue and amortized over the life of the equipment purchased with the loan.

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Income Tax Matters

12 Months Ended

Dec. 31, 2011

Income Tax Matters [Abstract]

Income Tax Matters

Note 4. Income Tax Matters

Income before income taxes consists of the following (in thousands):

	Years Ending December 31,
	2011		2010		2009
United States	$	4,574	$	10,935	$	7,983
Foreign		241		256		227
Total	$	4,815	$	11,191	$	8,210

Deferred tax assets and deferred tax liabilities consist of the following components (in thousands):

	December 31,
	2011			2010
Deferred tax assets:
Trade receivable allowances	$	139		$	88
Inventories		1,171			896
Compensation and benefits		3,909			2,593
Capitalized legal fees		447			259
Warranty reserves and other		1,221			1,344
Net operating loss carryforwards		1,033			1,039
Valuation allowance		(1,005	)		(1,022	)
Total deferred tax assets		6,915			5,197
Deferred tax liabilities:
Goodwill amortization		4,194			4,194
Property and equipment		2,112			1,859
Prepaid expenses and other		288			262
Total deferred tax liabilities		6,594			6,315
Net deferred tax assets (liabilities)	$	321		$	(1,118	)

The components giving rise to the deferred tax assets and deferred tax liabilities described above have been included in the accompanying consolidated balance sheets as follows (in thousands):

	December 31,
	2011			2010
Current assets	$	1,771		$	1,614
Noncurrent liabilities		(1,450	)		(2,732	)
Net deferred tax assets (liabilities)	$	321		$	(1,118	)

As of December 31, 2011 and 2010, the Company recorded a valuation allowance of $1.0 million related to the state of Wisconsin net operating loss (“NOL”) carryforwards, the realization of which is dependent on having taxable income in Wisconsin in future periods.

In future periods of earnings, the Company will report income tax expense offset by any further reductions in the valuation allowance based on an ongoing assessment of the future realization of the state NOL deferred tax assets.

The total state net operating losses (NOLs) as of December 31, 2011 are approximately $19.8 million, which will expire as follows: $0.7 million in 2015, $5.3 million in 2016, $9.2 million in 2017, $2.5 million in 2018, $1.6 million in 2019, and $0.5 million in 2020.

The components of the provision for income taxes are as follows (in thousands):

	December 31,
	2011			2010			2009
Current:
Federal	$	1,321		$	2,949		$	1,714
State		395			866			431
Foreign		97			69			(372	)
Deferred:
Federal		78			496			545
State		(40	)		(31	)		(15	)
Foreign		(36	)		(39	)		397
Provision for income taxes	$	1,815		$	4,310		$	2,700

The differences between statutory federal tax rates and the effective tax rates reflected in the consolidated statements of income are as follows:

	December 31,
	2011			2010			2009
Statutory federal tax rate		34.0	%		34.0	%		34.0	%
State rate, net of federal tax effect		5.3	%		5.0	%		5.1	%
Federal and state research and experimentation credits		(4.3	%)		(1.3	%)		(2.0	%)
Liability for unrecognized tax benefits		0.5	%		0.0	%		(3.1	%)
Other, net		2.2	%		0.8	%		(1.1	%)
Effective income tax rate		37.7	%		38.5	%		32.9	%

A reconciliation of the beginning and ending liability for unrecognized income tax benefits for 2011 and 2010 is shown below (in thousands):

	December 31,
	2011		2010
Balance, beginning of year	$	23	$	17
Additions based on tax positions related to the current year		14		6
Additions for tax positions of prior years		7		—
Balance, end of year	$	44	$	23

The Company’s policy is to accrue interest related to potential underpayment of income taxes within the provision for income taxes. The liability for accrued interest as of December 31, 2011 and December 31, 2010 was insignificant. Interest is computed on the difference between the Company’s uncertain tax benefit positions and the amount deducted or expected to be deducted in the Company’s tax returns.

The Company files a consolidated U.S. federal income tax return as well as foreign and state tax returns on a consolidated, combined, or stand-alone basis (depending upon the jurisdiction). The Company has concluded tax examinations for U.S. federal and Oregon state filings through the tax year ended December 2007 and December 2006, respectively. Depending on the jurisdiction, the Company is no longer subject to state examinations by tax authorities for years prior to the December 2006 and 2007 tax years. The Company is not subject to foreign tax examinations prior to the year ended December 2008.

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Valuation and Qualifying Accounts

12 Months Ended

Dec. 31, 2011

Valuation and Qualifying Accounts [Abstract]

VALUATION AND QUALIFYING ACCOUNTS

LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

(In Thousands)

			Additions
	Balance at Beginning of Year		Charged to Costs and Expenses		Charged To Other Accounts		Deductions		Balance at End of Year
Year ended December 31, 2011
Accounts receivable allowances:
Allowance for discounts	$	165	$	1,096	$	—	$	968	$	293
Allowance for nondefective product		219		2,220		—		2,201		238
Allowance for doubtful accounts		133		125		—		110		148
Total	$	517	$	3,441	$	—	$	3,279	$	679
Allowance for slow-moving inventory	$	398	$	980	$	—	$	769	$	609
Deferred tax asset valuation allowance	$	1,022	$	—	$	—	$	17	$	1,005
Year ended December 31, 2010
Accounts receivable allowances:
Allowance for discounts	$	198	$	829	$	—	$	862	$	165
Allowance for nondefective product		171		1,701		—		1,653		219
Allowance for doubtful accounts		294		51		—		212		133
Total	$	663	$	2,581	$	—	$	2,727	$	517
Allowance for slow-moving inventory	$	797	$	520	$	—	$	919	$	398
Deferred tax asset valuation allowance	$	1,017	$	5	$	—	$	—	$	1,022

The accounts receivable, inventory, and deferred tax asset allowances above are deducted from the applicable asset accounts in the accompanying consolidated balance sheets.

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Quarterly Selected Financial Data (Unaudited)

12 Months Ended

Dec. 31, 2011

Quarterly Selected Financial Data [Abstract]

Quarterly Selected Financial Data (Unaudited)

Note 12. Quarterly Selected Financial Data (Unaudited)

The following reflects the Company’s unaudited quarterly results of operations for 2011 and 2010 (in thousands except per share data):

	2011
	Q1			Q2			Q3		Q4
Net sales	$	25,188		$	27,056		$	35,250	$	43,827
Gross profit		10,437			10,410			13,992		16,397
Operating income (loss)		(947	)		(193	)		2,949		3,726
Income tax provision (benefit)		(422	)		(121	)		1,084		1,274
Net income (loss)		(650	)		(185	)		1,670		2,165
Basic income (loss) per common share	($	0.10	)	($	0.03	)	$	0.26	$	0.33
Diluted income (loss) per common share	($	0.10	)	($	0.03	)	$	0.25	$	0.33

		$25,181		$25,181		$25,181		$25,181
	2010
	Q1		Q2		Q3		Q4
Net sales	$	34,227	$	26,553	$	37,682	$	52,081
Gross profit		13,768		10,863		14,016		20,483
Operating income		2,731		195		2,054		6,450
Income tax provision		1,047		61		857		2,345
Net income		1,662		101		1,146		3,973
Basic income per common share	$	0.26	$	0.02	$	0.18	$	0.62
Diluted income per common share	$	0.25	$	0.02	$	0.17	$	0.60

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Compensation and Benefit Agreements

12 Months Ended

Dec. 31, 2011

Compensation and Benefit Agreements [Abstract]

Compensation and Benefit Agreements

Note 8. Compensation and Benefit Agreements

The Company has a defined benefit pension plan covering eligible past employees and less than 1% of its current employees. Eligible participants are entitled to monthly pension benefits beginning at normal retirement age sixty-five (65). The monthly benefit payable at normal retirement date under the plan is equal to a specified dollar amount or percentage of average monthly compensation, as defined in the plan, multiplied by years of benefit service (maximum of 38 years). The Company’s funding policy is to make not less than the minimum contribution required by applicable regulations, plus such amounts as the Company may determine to be appropriate from time to time. The Company froze the plan during 2003 and as a result, participants do not accrue any additional years of service regardless of any increases in their compensation or completion of additional years of credited service.

The Company also sponsors an unfunded defined benefit postretirement death benefit plan that covers eligible past employees. The Company funds this postretirement benefit obligation as the benefits are paid.

Summary of pension and other postretirement benefit plans (in thousands):	Pension Benefits December 31,						Other Benefits December 31,
	2011			2010			2011			2010
Changes in benefit obligations:
Obligations at beginning of year	$	16,985		$	16,337		$	269		$	275
Interest cost		872			908			15			16
Benefits paid		(1,188	)		(1,137	)		(24	)		(22	)
Actuarial losses		2,672			877			—			—
Obligations at end of year	$	19,341		$	16,985		$	260		$	269
Changes in plan assets:
Fair value of assets at beginning of year	$	12,869		$	11,932		$	—		$	—
Actual return on assets		(209	)		1,290			—			—
Company contributions		915			784			24			22
Benefits paid		(1,188	)		(1,137	)		(24	)		(22	)
Fair value of assets at end of year	$	12,387		$	12,869		$	—		$	—
Funded status at end of year:
Plan assets less than obligations	$	(6,954	)	$	(4,116	)	$	(328	)	$	(297	)
Unrecognized loss		9,136			5,421			68			28
Accrued benefit (cost)	$	2,182		$	1,305		$	(260	)	$	(269	)
Total compensation and benefits liabilities	$	6,954		$	4,116		$	260		$	269

The following is a reconciliation to the compensation and benefits financial statement line item on the accompanying balance sheets:

	December 31,
	2011		2010
Pension benefits	$	6,954	$	4,116
Other benefits		260		269
Total compensation and benefits	$	7,214	$	4,385

Changes to Accumulated Other Comprehensive Loss pertaining to the defined benefit pension plan for the years ended December 31, 2011, 2010, and 2009 are shown below (in thousands):

	Prior Service Cost			Unrecognized (Gains)/Losses			Total			Deferred Tax Amount			Accumulated Other Comprehensive Loss
Balance, December 31, 2008	$	94		$	6,004		$	6,098		$	(2,378	)	$	3,720
Incurred in the current year		—			(764	)		(764	)		299			(465	)
Recognized as component of net periodic cost		(94	)		(194	)		(288	)		112			(176	)
Balance, December 31, 2009		—			5,046			5,046			(1,967	)		3,079
Incurred in the current year		—			528			528			(206	)		322
Recognized as component of net periodic cost		—			(153	)		(153	)		60			(93	)
Balance, December 31, 2010		—			5,421			5,421			(2,113	)		3,308
Incurred in the current year		—			3,897			3,897			(1,520	)		2,377
Recognized as component of net periodic cost		—			(182	)		(182	)		71			(111	)
Balance, December 31, 2011	$	—		$	9,136		$	9,136		$	(3,562	)	$	5,574
To be recognized as component of net periodic cost in 2012	$	—		$	345

Accumulated other comprehensive loss reported on the Company’s consolidated balance sheets consists of adjustments related to foreign currency translation and the actuarial loss related to pension benefits. The components of accumulated other comprehensive loss are as follows:

	December 31,
	2011		2010
Pension actuarial loss, net of tax	$	5,574	$	3,308
Foreign currency translation adjustment		484		423
Accumulated other comprehensive loss	$	6,058	$	3,731

Components of net periodic cost for the years ended December 31 are shown below (in thousands):

	Pension Benefits									Other Benefits
	December 31,									December 31,
	2011			2010			2009			2011			2010			2009
Cost (income) recognized during the year:
Interest cost	$	872		$	908		$	944		$	15		$	16		$	17
Expected return on plan assets		(1,016	)		(940	)		(798	)		—			—			—
Amortization of loss		182			153			194			—			—			—
Curtailment		—			—			146			—			—			—
Net periodic cost	$	38		$	121		$	486		$	15		$	16		$	17
	Pension Benefits									Other Benefits
	December 31,									December 31,
	2011			2010			2009			2011			2010			2009
Assumptions used in determining net periodic cost:
Discount rate		4.0	%		5.25	%		5.75	%		4.0	%		5.25	%		5.75	%
Expected return on plan assets		8.0	%		8.0	%		8.0	%		*			*			*

* This plan does not have separate assets, as a result there is no actual or expected return on plan assets.

The discount rate used is based on an assumed portfolio of high quality bonds with cash flows matching the timing of expected benefit payments. The expected return on plan assets is based on the asset allocation mix and historical returns, taking into account current and expected market conditions. The actual returns on pension plan assets were approximately 0% in 2011, 12% in 2010, and 26% in 2009. The historical annualized ten-year rate of return on pension plan assets is approximately 5%.

The Company’s pension plan asset allocation at December 31, 2011 and 2010 and target allocation for 2012 are as follows:

	Target Allocation	Percentage of Plan Assets December 31,
Asset Category	2012	2011			2010
Equity securities - mutual funds	50%-60%		54	%		57	%
Debt securities - mutual funds	40%-50%		46	%		43	%
Total			100	%		100	%

The pension plan investment strategy is to maintain a diversified portfolio designed to achieve an average long-term rate of return of 8%. The assets of the plan are strategically allocated between asset categories according to the target minimum and maximum allocations. Asset allocation target ranges for each asset category are monitored and may be changed from time to time based on asset allocation studies performed by the plan’s investment advisor, with evaluations of the risk and return expectations for various weightings of the authorized asset categories. Additional asset categories may also be added to the plan within the context of the investment objectives.

The Company expects to contribute approximately $1.0 million to the pension plan in 2012. The following benefit payments are expected to be paid from the plan over the next ten years (in thousands):

Year(s)	Pension Benefits		Other Benefits
2012	$	1,132	$	24
2013		1,107		25
2014		1,084		25
2015		1,119		25
2016		1,138		25
2017-2021		5,801		119

The Company has adopted a framework for measuring the fair value of plan assets that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy are described as follows:

Level 1 - Inputs to the valuation methodology are unadjusted quoted prices for identical assets in active markets that the plan has the ability to access.

Level 2 - Inputs to the valuation methodology include:

• Quoted prices for similar assets in active markets;

• Quoted prices for identical or similar assets in inactive markets;

• Inputs other than quoted prices that are observable for the asset;

• Inputs that are derived principally from or corroborated by observable market data by correlation or other means.

If the asset has a specified (contractual) term, the level 2 input must be observable for substantially the full term of the asset.

Level 3 - Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The asset’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

The following table sets forth by level, within the fair value hierarchy, the Plan’s assets at fair value as of December 31, 2011:

(in thousands)	Level 1		Level 2		Level 3		Total
Equity securities - domestic mutual funds	$	4,961	$	—	$	—	$	4,961
Equity securities - international mutual funds		1,785		—		—		1,785
Debt securities - mutual funds		5,641		—		—		5,641
Total	$	12,387	$	—	$	—	$	12,387

The following table sets forth by level, within the fair value hierarchy, the Plan’s assets at fair value as of December 31, 2010:

(in thousands)	Level 1		Level 2		Level 3		Total
Equity securities - domestic mutual funds	$	5,450	$	—	$	—	$	5,450
Equity securities - international mutual funds		1,924		—		—		1,924
Debt securities - mutual funds		5,495		—		—		5,495
Total	$	12,869	$	—	$	—	$	12,869

The Company has an employee retirement savings plan, which is classified as a defined contribution plan under Section 401(k) of the Internal Revenue Code. The plan allows employees to defer a portion of their annual compensation through pre-tax contributions.

For this plan, the Company matches 100% of the first 3% and 50% of the next 2% of an employee’s contributions, up to a maximum of 4% of the employee’s compensation. Matching contributions for the years ended December 31, 2011, 2010, and 2009 were $0.6 million, $0.6 million, and $0.5 million, respectively. The discretionary contributions to the employees’ 401(k) accounts for the years ended December 31, 2011, 2010 and 2009 were $0.1 million for each year.

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Lease Commitments and Contingencies

12 Months Ended

Dec. 31, 2011

Lease Commitments and Contingencies [Abstract]

Lease Commitments and Contingencies

Note 6. Lease Commitments and Contingencies

Lease Commitments - The Company has real estate operating leases for offices, factory store, and manufacturing and distribution centers under non-cancelable lease agreements expiring on various dates through 2025. The total rental expense included in the consolidated statements of income for each of the years ended December 31, 2011, 2010, and 2009 is $2.9 million. The future minimum lease payments required under non-cancelable operating leases at December 31, 2011 are: $2.6 million in 2012, $2.7 in 2013 and 2014, $2.6 million in 2015, $1.8 million in 2016, and $3.5 million thereafter.

Contingencies - In the normal course of business, the Company is subject to various claims and potential litigation. Although the ultimate resolution of legal proceedings cannot be predicted with certainty, management believes that any such matters that are currently known will not have a material adverse effect on the Company’s results of operations, liquidity or financial condition.

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Stock Options

12 Months Ended

Dec. 31, 2011

Stock Options [Abstract]

Stock Options

Note 7. Stock Options

The Company has outstanding stock options under certain employee and director stock option plans. Outstanding employee stock options are subject to the provisions of the 1993 Employee Stock Incentive Plan, 1997 Employee Stock Incentive Plan, 2001 Stock Incentive Plan, and 2007 Long Term Incentive Plan. The Board of Directors’ stock options are subject to the provisions of the 2001 Non-Employee Director Stock Option Plan, as Amended and Restated. Prior to 2006, employee stock options vested over a period of five years and had a maximum term of ten years. Beginning in 2006, the employee stock option issuances vest over four years and have a maximum term of seven years. Prior to 2008, the directors’ stock options vested over a period of five years and had a maximum term of ten years. Beginning in 2008, the directors’ stock option issuances vest over four years and have a maximum term of seven years.

The Company is required to estimate the fair value of share-based awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense in the Company’s consolidated statements of income over the requisite service period for each separately vesting portion of an award. Because share-based compensation expense is based on awards that are ultimately expected to vest, share-based compensation expense is reduced for estimated forfeitures. Forfeitures are required to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

To calculate the share-based compensation expense, the Company uses the Black-Scholes option-pricing model. The Company’s determination of fair value of option-based awards on the date of grant is impacted by the Company’s stock price as well as assumptions regarding certain highly subjective variables. These variables include, but are not limited to, the Company’s expected stock price volatility over the term of the awards, the anticipated risk-free interest rate, anticipated future dividend yields and the expected life of the options. The anticipated risk-free interest rate is based on a treasury instrument whose term is consistent with the expected life of the stock options granted. The expected volatility, life of options and dividend yield are based on historical experience.

The following table lists the assumptions used by the Company in determining the fair value of stock options and the resulting fair value for the years ended December 31, 2011, 2010, and 2009:

	December 31,
	2011			2010			2009
Expected dividend yield		3.2	%		4.1	%		3.7	%
Expected stock price volatility		51	%		50	%		46	%
Risk-free interest rate		1.7	%		2.4	%		1.4	%
Expected life of options		4.4 years			4.7 years			4.6 years
Weighted average fair value of options	$	5.50		$	4.22		$	3.26

The following table represents stock option activity for the three years ended December 31, 2011:

	Common Shares Under Options			Weighted Average Exercise Price		Average Remaining Contract Life
Options outstanding December 31, 2008		796,839		$	11.12
Granted		193,150			11.46
Canceled		(97,799	)		12.8
Exercised		(82,667	)		5.52
Options outstanding December 31, 2009		809,523			11.57
Granted		172,975			13.32
Canceled		(55,830	)		13.63
Exercised		(127,431	)		10.43
Options outstanding December 31, 2010		799,237			11.99
Granted		189,750			16.49
Canceled		(55,516	)		15.06
Exercised		(45,772	)		11.14
Options outstanding December 31, 2011		887,699		$	12.80		3.7 years
Options exercisable December 31, 2011		523,577		$	11.42		3.7 years

The Company’s nonvested stock option activity for the year ended December 31, 2011 is as follows:

	Number of Shares
Nonvested stock options at beginning of year		350,573
Vested		(120,685	)
Canceled		(55,516	)
Granted		189,750
Nonvested stock options at end of year		364,122

Shares available for future stock grants to employees and directors under existing plans were approximately 454,000 at December 31, 2011. The aggregate intrinsic value of options outstanding at December 31, 2011 was $1.1 million, and the aggregate intrinsic value of exercisable options was $1.1 million. The total intrinsic value of options exercised during 2011, 2010, and 2009 was $0.3 million, $0.8 million, and $0.4 million, respectively. At December 31, 2011, there was approximately $0.5 million of unrecognized compensation cost related to share-based payments to be recognized over a weighted-average period of approximately 1.3 years. The total fair value of options vesting in 2011 and 2010 was approximately $0.7 and $0.6 million; respectively. A tax benefit of $0.1 million, $0.3 million and $0.1 million was recognized in 2011, 2010, and 2009, respectively, from the exercise of stock options.

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Significant Risks and Uncertainties

12 Months Ended

Dec. 31, 2011

Significant Risks and Uncertainties [Abstract]

Significant Risks and Uncertainties

Note 9. Significant Risks and Uncertainties

Concentrations of Credit Risk - Cash - At December 31, 2011 and 2010, the Company had $0.8 million and $4.3 million, respectively, in cash and money market accounts at financial institutions, which included amounts in excess of the federally insured limits.

Concentration of Credit Risk - Accounts Receivable - The Company has a relatively small number of key wholesalers that comprise a relatively significant portion of its total accounts receivable balance. Generally, the Company does not require collateral or other security to support customer receivables. However, the Company continually monitors and evaluates customers’ creditworthiness to minimize potential credit risks associated with its accounts receivable. The Company has determined that there is no material accounts receivable credit risk exposure beyond the current allowance for uncollectible accounts in the consolidated financial statements.

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Recent Accounting Pronouncements

12 Months Ended

Dec. 31, 2011

Recent Accounting Pronouncements [Abstract]

Recent Accounting Pronouncements

Note 14. Recent Accounting Pronouncements

In May 2011, the FASB issued an accounting standards update (ASU) that amends the presentation of comprehensive income in the financial statements. This ASU increases the prominence of comprehensive income in financial statements while eliminating the option in U.S. GAAP to present comprehensive income in the statement of changes in equity. Under this ASU, the Company will have the option to present the components of net income and comprehensive income in either one or two consecutive financial statements. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011 and requires full retrospective application. Upon adoption, we will be required to reclassify prior-period reported amounts for comprehensive income in accordance with the amended standards.

In September 2011, the FASB issued an accounting update that gives companies the option to make a qualitative evaluation about the likelihood of goodwill impairment. Companies will be required to perform the two-step impairment test only if it concludes that the fair value of a reporting unit is more likely than not less than its carrying value. The accounting update is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, with early adoption permitted. We do not expect that adoption of this accounting standard will have a material impact on our financial statements.

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Consolidated Statements of Shareholders' Equity and Comprehensive Income (USD $) In Thousands	Total	Common Stock	Additional Paid-In Capital	Accumulated Other Comprehensive Loss	Retained Earnings	Treasury Stock	Comprehensive Income
Balance at Dec. 31, 2008	$ 61,412	$ 67	$ 28,247	$ (4,029)	$ 39,173	$ (2,046)
Net income	5,510				5,510		5,510
Employee benefit plan actuarial gain/loss net of deferred tax of $411, $146 and $1,449 for years ended 2009, 2010 and 2011 respectively	641			641			641
Stock based compensation expense	581		581
Cash dividends paid	(3,154)				(3,154)
Exercise of stock options	565		213			352
Foreign currency translation adjustment	40			40			40
Comprehensive income							6,191
Balance at Dec. 31, 2009	65,595	67	29,041	(3,348)	41,529	(1,694)
Net income	6,881				6,881		6,881
Employee benefit plan actuarial gain/loss net of deferred tax of $411, $146 and $1,449 for years ended 2009, 2010 and 2011 respectively	(229)			(229)			(229)
Stock based compensation expense	560		560
Cash dividends paid	(9,621)				(9,621)
Exercise of stock options	1,475		935			540
Purchase of treasury stock	(59)					(59)
Foreign currency translation adjustment	(154)			(154)			(154)
Comprehensive income							6,498
Balance at Dec. 31, 2010	64,448	67	30,536	(3,731)	38,789	(1,213)
Net income	3,000				3,000		3,000
Employee benefit plan actuarial gain/loss net of deferred tax of $411, $146 and $1,449 for years ended 2009, 2010 and 2011 respectively	(2,266)			(2,266)			(2,266)
Stock based compensation expense	698		698
Cash dividends paid	(3,251)				(3,251)
Exercise of stock options	560		366			194
Foreign currency translation adjustment	(61)			(61)			(61)
Comprehensive income							673
Balance at Dec. 31, 2011	$ 63,128	$ 67	$ 31,600	$ (6,058)	$ 38,538	$ (1,019)

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Inventories

12 Months Ended

Dec. 31, 2011

Inventories [Abstract]

Inventories

Note 3. Inventories

A summary of inventories is as follows (in thousands):

	December 31,
	2011			2010
Raw materials	$	4,893		$	8,186
Work in process		650			637
Finished goods		43,714			31,646
Subtotal		49,257			40,469
Less: provision for obsolete and slow-moving inventories		(609	)		(398	)
Total	$	48,648		$	40,071

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Cash Dividends

12 Months Ended

Dec. 31, 2011

Cash Dividends [Abstract]

Cash Dividends

Note 13. Cash Dividends

In 2009, the Company paid quarterly dividends of $0.8 million, or $0.125 per common share, totaling $3.2 million.

During the first quarter of 2010, the Company paid a special dividend and a quarterly dividend totaling $7.2 million or $1.125 per common share. Subsequently, quarterly dividends totaling $2.4 million, in the amount of $0.125 per common share, were paid in the second, third and fourth quarters, respectively.

In 2011, the Company paid quarterly dividends of $0.8 million, or $0.125 per common share, totaling $3.3 million.