Document:

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                                                                    EXHIBIT 10-E

                                  TRU*SERV(TM)

                              TRU*SERV CORPORATION
                          SUPPLEMENTAL RETIREMENT PLAN

                       (AMENDED EFFECTIVE JULY 24, 1998)

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    WORLD HEADQUARTERS  8600 W. Bryn Mawr Avenue Chicago, Illinois 60631-3505
                                  773/695-5000
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                          SUPPLEMENTAL RETIREMENT PLAN

                       Amended Effective January 1, 1998

SECTION 1. ESTABLISHMENT AND PURPOSE

1.1  ESTABLISHMENT OF THE PLAN. TRU*SERV CORPORATION (the "Company") has
heretofore established an unfunded supplemental retirement plan, which is known
as the "TRU*SERV CORPORATION SUPPLEMENTAL RETIREMENT PLAN"(the "Plan") and which
was originally effective January 1, 1988. This Amendment is effective January 1,
1998.

1.2  PURPOSE. The purpose of this Plan is to supplement the benefits from the
Company's Qualified Retirement Plan for selected executives of the Company and
its subsidiaries.

SECTION 2. DEFINITIONS

2.1  DEFINITIONS. Whenever used in this Plan, it is intended that the following
terms shall have the meanings set forth below:

          (a) "ACTUARIAL EQUIVALENT" means the term as defined in the Qualified
Retirement Plan.

          (b) "ADMINISTRATOR" means an individual or committee appointed by the
Chief Executive Officer and so identified to Participants.

          (c) "BOARD" means the board of Directors of the Company.

          (d) "CHANGE IN CORPORATE STRUCTURE" means either:

                    (I) During any period of two (2) consecutive years (not
              including any period prior to January 1, 1998), individuals who at
              the beginning of such period constitute the Board (and any new
              Director, whose election was approved by a vote of at least
              two-thirds (2/3) of the Directors then still in office who either
              were Directors at the beginning of

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              the period or whose election or nomination for election was so
              approved) cease for any reason to constitute a majority thereof;
              or (ii) the consummation of: (A) a plan of liquidation of the
              Company; or (B) sale or disposition of all or substantially all
              the Company's assets; or (C) a merger, consolidation, or
              reorganization of the Company with or involving any other
              corporation, including the merger of Cotter & Company and
              ServiStar Coast to Coast, July 1, 1997.

          (e) "CHIEF EXECUTIVE OFFICER" means the Chief Executive Officer of the
Company.

          (f) "COMPANY" MEANS TRU*SERV CORPORATION, a Delaware corporation.

          (g) EARLY RETIREMENT DATE means the date on which the participant
attains age 55 and completes at least 10 years of Service, or, with respect to
persons who on July 1, 1997, or, on December 31, 1997 were Officers of the
Company or Participants in the Plan, the date such person actually terminates
employment.

          (h) "FINAL AVERAGE COMPENSATION" means the average of the sum of the
Participant's base annual salary plus performance, plus bonuses, which are paid
for goal or performance achievements, and (including any reduction therein
related to a Participant-elected deferral of such base annual salary, or bonuses
to a later payment date, but excluding the payment of any such deferred base
salary or bonus in the year received) paid during the three (3) highest paid
calendar years in the ten (10) calendar years of continuous employment with the
Company or a Predecessor Corporation immediately preceding the date on which
occurs the earliest of the Participant's retirement (at or after his Normal
Retirement Date or Early Retirement Date), death, or Early Retirement Date),
death, or termination subsequent to a Change in Corporate Structure.

          (i) "HIS" means Participant, without regard to actual gender.
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          (j) "NORMAL RETIREMENT DATE" means the date on which a Participant has
both attained age sixty (60) and completed five (5) years of Service.

          (k) "OFFICER" means an employee holding one or more of the following
positions: President, Chief Executive Officer, Chief Operating Officer, or Vice
President, but shall not include Assistant Vice Presidents.

          (1) "PARTICIPANT" means an Officer or a management employee of the
Company or any subsidiary thereof who satisfies the participation requirement of
Section 3.1 hereof.

          (m) "PREDECESSOR CORPORATION" means a corporation (and its
subsidiaries) which have been acquired by the Company or which became part of
the Company through a merger, consolidation or reorganization, including but not
limited to ServiStar Coast to Coast Corporation ("ServiStar").

          (n) "PRIMARY SOCIAL SECURITY BENEFIT" means the estimated monthly
primary old-age Social Security insurance benefit to which the Participant is or
would be entitled at his Normal Retirement Date or at his retirement if later,
based on the provisions of the Social Security Act in effect on the date of
retirement, before any offsets for earned income. For purposes of estimating the
Primary Social Security Benefit, it shall be assumed that the Participant has no
wages covered by Social Security after retirement.

          (o) "QUALIFIED RETIREMENT PLAN" means any retirement plan which is
maintained by the Company and/or any subsidiary thereof and which is a qualified
plan under Section 401 (a) of the Internal Revenue Code, excluding the TruServ
Corporation Employee Savings and Compensation Deferral Plan. The amount of the
benefits payable from such Qualified Retirement Plan shall be determined on an
actuarially equivalent lump sum basis in accordance with such retirement plan.

          (p) "SECULAR TRUST BENEFITS" means benefits from any "secular" trust
provided for by the Company, any of its subsidiaries, any Predecessor
Corporation or a Participant
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himself, under which contributions to the trust for a Participant's benefit are
immediately taxable to the Participant.

          (q) "SERVICE" shall have the same meaning in this Plan as "Years of
Service" in the Qualified Retirement Plan under which the Participant's last
date of hire. Service with a Predecessor shall also be counted and for this
purpose, such service shall be quantified in terms of Years of Service in
accordance with the rules of the Qualified Retirement Plan under which the
Participant is covered.

          (r) "SURVIVING SPOUSE" means the spouse to whom a deceased Participant
has been lawfully married: (1) for a period of at least one year ending on the
date of the Participant's death; or (2) where such death occurs after benefit
payments have commenced under the Plan, as of the commencement date of those
payments to the Participant.

SECTION 3. PARTICIPATION

3.1  SELECTION OF PARTICIPANTS. Officers of the Corporation shall be
participants in the Plan. The Chief Executive Officer, in his discretion, may
also select those persons to be Participants in the Plan from among those other
management employees of the Company and its subsidiaries who are Participants in
a Qualified Retirement Plan. Notwithstanding the foregoing, no employee
previously employed by ServiStar shall become a Participant in this Plan if he
has elected in writing to continue to participate in the ServiStar supplemental
executive retirement plan.

SECTION 4. RETIREMENT BENEFITS

4.1  NORMAL RETIREMENT BENEFIT.

     (a) ELIGIBILITY. A Participant shall receive a normal retirement benefit
upon termination of Service on or after his Normal Retirement Date.

     (b) AMOUNT.

     (i) BENEFIT. The Participant's benefit shall be a "Defined Lump Sum" which
shall be an amount equal to the sum of thirty-three (33) percent of the
Participant's Final Average Compensation for each Year of Service up to age
fifty-five (55) and forty-two (42) percent of the

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Participant's Final Average Compensation for each Year of Service after age
fifty-five (55), up to a maximum of six hundred sixty (660) percent of the
Participant's Final Average Compensation, reduced by the Actuarial Equivalent
lump sum amounts that the Participant has received or is eligible to receive
from any of the other sources of benefits described in Subsection 4.1(b)(ii).

     (ii)  OTHER SOURCES OF BENEFITS. The other sources of benefits include:

     Qualified Retirement Plans;

     Payments made to a participant's individual secular trust pursuant to
     Section 7.2; The lump sum equivalent of the Participant's Primary Social
     Security Benefit to which he is entitled, whether or not received,
     multiplied by a fraction, the numerator of which is the Participant's Years
     of Service (but not more than 20) and the denominator of which is 20; and

     Secular Trust Benefits (including the cash surrender value of any life
     insurance) plus any amounts paid to the Participant to "gross up" the
     Participant for taxes paid by the Participant with respect to contributions
     to a Secular Trust, under this Plan or any Predecessor Corporation plan.

     For purposes of calculating the lump sum equivalent of a Participant's
     Primary Social Security Benefit, such lump sum equivalent will be
     considered to be ninety-six (96) times the Primary Social Security Benefit.

     (c)  PAYMENT AND DURATION. Such Participant's Defined Lump Sum calculated
          in

               (b) above shall be paid on the first day of the calendar month
          after the date the Participant's Service terminates pursuant to this
          Section 4.1, unless with the consent of the Administrator, the Defined
          Lump Sum shall be converted into an Actuarial Equivalent single life
          annuity. Payment of monthly retirement benefits pursuant to a single
          life annuity, shall commence as on the first day of the calendar month
          beginning on or after the date the Participant's Service terminates
          pursuant to this Section 4.1, unless at the election of the
          Participant, the Defined Lump Sum is converted and shall continue to
          be paid as of the first day of each month for the remainder of the
          Participant's life. If a Participant is married, however, and does not
          elect benefits to be paid as provided in Section 6.1, such
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          amount shall be paid in the form of an Actuarial Equivalent joint and
          survivor annuity with fifty (50) percent of such Participant's reduced
          monthly lifetime amounts being payable to such Participant's Surviving
          Spouse for the remainder of such Spouse's life.

4.2  EARLY RETIREMENT BENEFITS.

     (a)  ELIGIBILITY. A Participant shall receive vested early retirement
benefits under the provisions of this Plan upon termination of his Service prior
to his Normal Retirement Date, but on or after his Early Retirement Date.

     (b)  AMOUNT. Upon termination of a Participant's Service, pursuant to (a)
above, the Participant shall be entitled to receive a vested early retirement
benefit. Such benefit shall be computed in the same manner as the Participant's
normal retirement benefit under Subsection 4.1(b), based on the Participant's
Final Average Compensation and Years of Service as of the date his Service
terminates.

     (c)  PAYMENT AND DURATION. Such Participant's Defined Lump Sum calculated
in Subsection 4.1(b) above shall be paid on the first day of the calendar month
after the date the Participant's Service terminates pursuant to Section 4.1(b)
unless with the consent of the Administrator, the defined lump sum shall be
converted into an Actuarial Equivalent single life annuity. Payment of monthly
retirement benefits pursuant to a single life annuity, shall commence as on the
first day of the calendar month beginning on or after the date the Participant's
Service terminates pursuant to this Section 4.2 unless at the election of the
Participant, the Defined Lump Sum is converted and shall continue to be paid as
on the first day of each month for the remainder of the Participant's life. If a
Participant is married, however, and does not elect benefits to be paid as
provided in Section 6.1, such amount shall be paid in the form of an Actuarial
Equivalent joint and survivor annuity with fifty (50) percent of such
Participant's reduced monthly lifetime amounts being payable to such
Participant's Surviving Spouse for the remainder of such Spouse's life.
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SECTION 5. DEATH BENEFIT

5.1  PAYMENTS TO SURVIVING SPOUSE.

     (a) ELIGIBILITY. A Surviving Spouse shall receive a death benefit under the
provisions of this Plan, upon the death, prior to the payment of a benefit, of a
Participant eligible to receive a retirement benefit under Subsection 4.1 or
4.2.

     (b) AMOUNT. The monthly death benefit payable to an eligible Surviving
Spouse shall be equal to fifty-five (55) percent of the Participant's Defined
Lump Sum determined in accordance with Subsection 4.1(b) or 4.2(b), whichever
is applicable, or at the surviving spouse's option converted to an Actuarial
Equivalent single life annuity.

     (c) PAYMENT AND DURATION. Such Surviving Spouse's death benefits shall be
in a single lump sum, with the consent of the Administrator, in an Actuarial
Equivalent single life annuity. Payment of monthly death benefits provided under
this Plan shall commence as of the first day of the calendar month beginning
after the date of a Participant's death and shall continue to be paid monthly
thereafter as of the first day of each month for the remainder of the Surviving
Spouse's life unless paid in a single lump sum.

SECTION 6. OPTIONAL PAYMENT METHOD

6.1  MARRIED PARTICIPANT'S PAYMENT FORM ELECTION. A married Participant who is
     eligible to receive any benefits provided under Section 4 hereof may, prior
     to terminating Service, elect to have those benefits paid in the
     alternative form of a joint and survivor annuity which will continue
     monthly payments for life to his spouse equal to one hundred (100) percent
     of the actuarially reduced monthly amount paid to him during his lifetime.
     The benefits payable to the Participant and his spouse under this
     alternative form shall be the Actuarial Equivalent to the value of the
     benefits that would have otherwise been payable to him under Section 4
     hereof. A Participant's election under this Section 6 must be filed in
     writing with the Administrator at least sixty (60) days prior to the date
     his monthly benefit payments are to commence under Section 4.
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SECTION 7. FINANCING OF BENEFITS

7.1  CONTRACTUAL OBLIGATION. Subject to the provisions of Section 8.3 hereof, it
is intended that the Company is under a contractual obligation to fully fund all
benefit obligations, and to make the payments, under this Plan while it is in
effect.

7.2  PARTICIPANT SECURITY. A "rabbi" trust may be established under this Plan by
the execution of a separate trust agreement with one or more trustees. The
assets of the rabbi trust will be held, invested and disposed of by its trustee,
in accordance with the terms of the rabbi trust, for the exclusive purpose of
providing Plan benefits for those Participants employed by the Company. The
assets of the rabbi trust shall at all times be subject to the claims of the
general creditors of the Company.

The rabbi trust shall be a means of segregating and accumulating funds to be
used to pay benefits pursuant to the terms of this Plan, and no part of the
assets of the rabbi trust shall be recoverable by the Company, until all
benefits payable under this plan have been paid to Participants; provided,
however, that the assets of the rabbi trust shall be subject at all times to the
claims of the Company's creditors. Plan Participants and Surviving Spouses shall
have no preferred claim on, or any beneficial ownership interest in, any assets
of the rabbi trust. Any rights created under the Plan and rabbi trust shall be
mere unsecured contractual rights of Plan Participants and their surviving
spouses against the Company.

In the event of a Change in Corporate Structure, a Defined Lump Sum Payment
under Section 8.3, or if the Company has a Senior Debt to Capital Ratio of more
than 2.0 to 1.0, each Participant's vested benefits shall be transferred from
the Company and/or the rabbi trust to individual secular trusts for the
exclusive benefit of each Participant and Surviving Spouse. The assets
transferred from the rabbi trust to the individual secular trusts shall be
divided in proportion to the accrued benefit as of the date of the transfer.

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The Company shall be relieved of any obligation to pay any benefits under this
Plan to a Participant or surviving spouse to the extent such obligation has been
discharged through payments made under the rabbi trust or to a Participant's
Secular Trust.

7.3  For the purposes of this Section 7 the following definitions shall be
applicable:

     "Affiliate" shall mean any person, partnership, firm or corporation, which,
directly or indirectly, controls, is controlled by, or is under common control
with, the Company.

     "Capitalized Lease" shall mean any lease which is capitalized on the books
of the Company, or should be so capitalized under GAAP.

     "Debt to Worth Ratio" shall mean the relationship, expressed as a numerical
ratio, between:

               (i)   the total of all liabilities of Company which would appear
          on a balance sheet of Company in accordance with GAAP including
          Capitalized Lease obligations; and

               (ii)  Tangible Net Worth.

          "GAAP" shall mean generally accepted accounting principles currently
in effect in the United States as they may be changed or supplemented from time
to time.

          "Tangible Net Worth" shall mean the total of all assets which, under
GAAP, would appear on the consolidated balance sheet of the Company and its
Affiliates, less the sum of the following:

          (a)  the book amount of all such assets which would be treated as
intangibles under GAAP, including, without limitation, all such items as
goodwill, noncompete agreements, trademarks, trademark rights, trade names,
trade name rights, brands, copyrights, patents, patent rights, licenses,
deferred charges and unamortized debt discount and expense;

          (b)  any net write-up in the book value of any such assets resulting
from a revaluation thereof subsequent to January 1, 1998;
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          (c)  all reserves, including reserves for depreciation, obsolescence,
depletion, insurance and inventory valuation, but excluding contingency reserves
not allocated for any particular purpose and not deducted from assets;

          (d)  the amount, if any, at which any shares of stock of the Company
or any Affiliate appear on the asset side of such consolidated balance sheet;

          (e)  all liabilities of the Company and its Affiliates shown on such
consolidated balance sheet; and

          (f)  all investments in foreign Affiliates and unconsolidated domestic
Affiliates.

SECTION 8. MUTUAL AGREEMENTS

8.1   GUARANTEE OF EMPLOYMENT. Nothing herein shall be construed as conferring
upon the Participant any greater rights to employment by the Company and its
subsidiaries than he would otherwise have.

8.2   LIABILITY. Neither the Company and any subsidiary thereof nor any
shareholder, director, Officer or other employee of the Company or any other
person shall be liable for any act or failure to act under the Plan, except for
gross negligence or fraud.

8.3   AMENDMENT OR TERMINATION OF THE PLAN. The Company reserves the right to
      amend, modify, terminate, or discontinue the Plan at any time. Such
      action shall only be by resolution of the Board of Directors and shall be
      final, binding, and conclusive as to all parties, including any
      Participant, any Surviving Spouse thereof and all other Company or
      subsidiary employees and persons; provided, however, that any such
      Company action to amend, terminate or discontinue the Plan or to change
      the payment amount or the time and manner of payment thereof as then
      provided in the Plan shall not be effective and operative with respect
      to any Participant or Surviving Spouse who already is vested or has
      commenced receipt of benefit payments under Sections 4, 5, 6 or 9 hereof,
      as applicable, on the date of such Company action or with respect to any
      Spouse to whom benefits under Section 6 hereof, as applicable, would be
      payable due to the subsequent

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      death of any such Participant then receiving benefit payments. Unless any
      amendment, termination, or modification results in a new, or modified
      Plan, with equal or improved terms to this Plan, the benefits of all
      Participants in the Plan shall be vested and payable in a Defined Lump
      Sum in accordance with Section 4.2 at the effective time of such change
      in the terms of the Plan.

8.4   ASSIGNMENT OF RIGHTS. No benefits payable under this Plan shall be subject
in any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, charge, garnishment, execution or levy of any kind, either
voluntary or involuntary, prior to actually being received by the person
entitled to the benefit under the terms of the Plan; and any attempt to
anticipate, alienate, sell, transfer, assign, pledge, encumber, charge or
otherwise dispose of any right to benefits payable hereunder shall be void.

8.5   APPLICABLE LAW. This Plan is intended to constitute a plan which is
unfunded and is maintained by the Company primarily for the purpose of providing
deferred compensation for a select group of management or highly compensated
employees and that except to the extent that ERISA applies to such plan, the
laws of Illinois will apply.

8.6   OVERPAYMENT. If any payment under this or a Predecessor Corporation Plan
shall be determined by the Company to have been excessive or improper and the
Participant or his Surviving Spouse shall fail, upon Company request, to make
repayment to the Company of such overpayment, the Company shall deduct the
amount of such overpayment from any future benefit payments under this Plan.

8.7   FACILITY OF PAYMENT. Whenever a Participant or a Surviving Spouse entitled
to a monthly retirement benefit or death benefit hereunder shall be determined
to be under a legal disability or otherwise incapacitated in any way as so to be
unable to manage his or her financial affairs, the following provisions apply.
The Company may direct that all or any portion of the monthly retirement
payments or death benefits to be made to such Participant or Surviving Spouse
shall be made to such person's spouse or any other person, in any manner that
the Company considers advisable, to be expended for his benefit. The decision of
the Company shall, in each case, be

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final and binding upon all persons, and any payment made pursuant to this
provision shall operate as a complete discharge of the obligations of the
Company under the Plan.

8.8   ACTION CONCLUSIVE. The Administrator has sole discretion administering and
interpreting all provisions of this Plan. Any action or decision made by the
Administrator with respect to eligibility for and payment of supplemental
retirement income benefits of death benefits to be made under the Plan made by
the Administrator in good faith will be binding and conclusive on the
Participant, his Spouse or his beneficiary.

8.9   SUCCESSORS. The Plan shall be binding upon and inure to the benefit of the
Participant and the Company and any successor company of the Company by way of
merger, reorganization, acquisition, or sale by the Company of substantially all
of its assets.

SECTION 9. CHANGE IN CORPORATE STRUCTURE

In the event of a Change in Corporate Structure each Participant at the time of
the change in the Corporate Structure who is not already vested under the Plan
shall be vested and have a right to receive all benefits calculated and paid in
accordance with Section 4.2. Unless such surviving or successor employer agrees
to maintain the Plan in accordance with its existing, or improved terms
following the Change in Corporate Structure the benefits of all Participants in
the Plan shall be vested and payable in a Defined Lump Sum, at the effective
time of any such change in the terms of the Plan.

                                Executed on this ___ day of ____________, 1998.

Attest:
By:__________________________   By: _________________________

Title:_______________________   Title: ______________________<PAGE>   1
                                                                     EXHIBIT 4.1

                      SECOND AMENDMENT TO CREDIT AGREEMENT

         This Second Amendment to Credit Agreement (the "Amendment") is made on
this 15th day of May, 2000 by and among Florsheim Group Inc., The Florsheim Shoe
Store Company-Northeast, The Florsheim Shoe Store Company-West, Florsheim
Occupational Footwear, Inc., and L.J. O'Neill Shoe Co. (collectively, the
"Borrowers"), each of the financial institutions from time to time a party
thereto (individually, a "Lender" and collectively the "Lenders") and BT
Commercial Corporation, (individually ("BTCC") and in its capacity as agent (the
"Agent")).

                              W I T N E S S E T H:

         WHEREAS, the Agent, the Lenders and the Borrowers are parties to that
certain Credit Agreement dated as of August 23, 1999, as amended through the
date hereof (the "Credit Agreement"); and

         WHEREAS, the parties desire to amend the Credit Agreement, as more
fully set forth herein.

         NOW, THEREFORE, in consideration of the mutual agreements herein
contained and the other good and valuable consideration, the adequacy of which
is hereby acknowledged, and subject to the terms and conditions hereof, the
parties hereto agree as follows:

         SECTION 1 DEFINITIONS. Unless otherwise defined herein, all capitalized
terms shall have the meaning given to them in the Credit Agreement.

         SECTION 2 AMENDMENTS TO CREDIT AGREEMENT.

                  2.1 Section 1.1 of the Credit Agreement is hereby further
amended by inserting the following new defined term in proper alphabetical
sequence:

                           "SENIOR INDEBTEDNESS means Indebtedness of the
                           Consolidated Entity, other than Indebtedness which
                           has subordination terms, covenants, pricing and other
                           terms which have been approved in writing by the
                           Majority Lenders."

                  2.2 Section 1.1 of the Credit Agreement is hereby further
amended by deleting the defined term "LIBOR Rate Margin in its entirety, and
inserting the following in its stead:

                           "LIBOR RATE MARGIN means three and one-half percent
                           (3.50%) per annum for each Interest Period for a
                           LIBOR Rate Loan, provided however, that if

<PAGE>   2

                           the ratio of (1) Indebtedness to (2) EBITDA as of the
                           end of any fiscal quarter shall be less than 5.0 to
                           1.0, based on such financial reports delivered by
                           Florsheim to Agent sufficient to Agent's reasonable
                           satisfaction concerning such fact, and so long as no
                           Default or Event of Default then exists, the LIBOR
                           Rate Margin shall, effective on the first day of the
                           calendar month following the month in which the Agent
                           has confirmed such fact, be three percent (3.00%) per
                           annum for any Interest Period occurring during the
                           three (3) calendar months commencing with the month
                           in which the reduction in the LIBOR Rate Margin is
                           effective (except that notwithstanding the foregoing,
                           if a Default or Event of Default shall occur during
                           any period during the term hereof in which the
                           Borrowers are otherwise entitled to the benefit of a
                           reduced LIBOR Rate Margin, no such reduction shall be
                           effective during the pendency of any such Default or
                           Event of Default). At such time as the financial
                           reports delivered by Florsheim to Agent demonstrate
                           that the ratio of total Indebtedness to EBITDA as at
                           the end of any fiscal quarter shall be equal to or
                           greater than 5.0:1.0, then, in such event, the LIBOR
                           Rate Margin shall revert to three and one-half
                           percent (3.50%)."

                  2.3 Section 8.1 of the Credit Agreement is hereby deleted in
its entirety, and the following is inserted in its stead:

                           "8.1 INTEREST COVERAGE RATIO. The Consolidated Entity
                           shall have as of the end of each fiscal period set
                           forth below a ratio of EBITDA to Interest Expense of
                           not less than the ratio set forth below:

<PAGE>   3

-------------------------------------------------------------------
                 PERIOD                                   RATIO
-------------------------------------------------------------------
twelve  fiscal  months  ending  with the                 1.0:1.0
third quarter of fiscal 2000
-------------------------------------------------------------------
twelve  fiscal  months  ending  with the                 1.3:1.0
fourth quarter of fiscal 2000
-------------------------------------------------------------------
twelve  fiscal  months  ending  with the                 1.4:1.0
first quarter of fiscal 2001
-------------------------------------------------------------------
twelve  fiscal  months  ending  with the                 1.4:1.0
second quarter of  fiscal 2001
-------------------------------------------------------------------
twelve  fiscal  months  ending  with the                 1.6:1.0
third quarter of fiscal 2001
-------------------------------------------------------------------
twelve fiscal months ending with the                     1.7:1.0
fourth quarter of fiscal 2001, and each
fiscal quarter thereafter for the then
ending twelve fiscal month period
-------------------------------------------------------------------

                  2.4 Article 8 of the Credit Agreement is hereby amended by
inserting the following new Section 8.1.1:

                           "8.1.1 SENIOR LEVERAGE RATIO. The Consolidated Entity
                           shall have as of the end of each fiscal period set
                           forth below a ratio of Senior Indebtedness to EBITDA
                           of not more than the ratio set forth below:

<PAGE>   4

-------------------------------------------------------------------
                 PERIOD                                   RATIO
-------------------------------------------------------------------
twelve fiscal months ending with the                     11.00:1.0
second quarter of fiscal 2000
-------------------------------------------------------------------
twelve fiscal months ending with the third               7.15:1.0
quarter of fiscal 2000
-------------------------------------------------------------------
twelve fiscal months ending with the                     5.00:1.0
fourth quarter of fiscal 2000
-------------------------------------------------------------------
twelve fiscal months ending with the first               4.50:1.0
quarter of fiscal 2001
-------------------------------------------------------------------
twelve fiscal months ending with the                     4.25:1.0
second quarter of fiscal 2001
-------------------------------------------------------------------
twelve fiscal months ending with the third               4.00:1.0
quarter of fiscal 2001
-------------------------------------------------------------------
twelve fiscal months ending with the                     4.00:1.00
fourth quarter of fiscal 2001
-------------------------------------------------------------------
twelve fiscal months ending with the first               3.50:1.0
quarter of fiscal 2002, and each fiscal
quarter thereafter for the then ending
twelve fiscal month period
-------------------------------------------------------------------

<PAGE>   5

                  2.5 Article 8 of the Credit Agreement is hereby further
amended by inserting the following new Section 8.1.2:

                           "TOTAL LEVERAGE RATIO. The Consolidated Entity shall
                           have as of the end of each fiscal period set forth
                           below a ratio of Indebtedness to EBITDA of not less
                           than the ratio set forth below:

-------------------------------------------------------------------
                 PERIOD                                   RATIO
-------------------------------------------------------------------

twelve fiscal months ending with the                     13.00:1.0
second quarter of fiscal 2000
-------------------------------------------------------------------
twelve fiscal months ending with the third                8.50:1.0
quarter of fiscal 2000
-------------------------------------------------------------------
twelve fiscal months ending with the                      6.15:1.0
fourth quarter of fiscal 2000
-------------------------------------------------------------------
twelve fiscal months ending with the first                5.50:1.0
quarter of fiscal 2001
-------------------------------------------------------------------
twelve fiscal months ending with the                      5.50:1.0
second quarter of fiscal 2001
-------------------------------------------------------------------
twelve fiscal months ending with the third                5.25:1.0
quarter of fiscal 2001
-------------------------------------------------------------------
twelve fiscal months ending with the                      5.25:1.00
fourth quarter of fiscal 2001
-------------------------------------------------------------------
twelve fiscal months ending with the first                5.00:1.0
quarter of fiscal 2002, and each fiscal
quarter thereafter for the then ending
twelve fiscal month period
-------------------------------------------------------------------

<PAGE>   6

                  2.6 Section 8.2 of the Credit Agreement is hereby amended by
deleting the first sentence thereof, and inserting the following its stead:

                           "The Consolidated Entity shall not make payments for
                           Capital Expenditures in excess of $8,500,000 during
                           fiscal 2000 and any fiscal year thereafter."

         SECTION 3. AMENDMENT FEE. In consideration of the agreement of the
Agent and Lenders to enter into this Amendment, the Borrowers shall pay to the
Agent, for the benefit of the Lenders, an amendment fee in the amount of Five
Hundred Thousand Dollars ($500,000) on the date hereof. The Agent is hereby
authorized by the Borrower to charge such fee to Borrowers' Loan Account.

         SECTION 4. CONDITIONS PRECEDENT. The effectiveness of this Amendment is
expressly conditioned upon satisfaction of the following conditions precedent:

                  4.1 The Borrowers shall have paid the amendment fee in the
amount of $500,000 to the Agent for the benefit of the Lenders;

                  4.2 Agent shall have received copies of this Amendment duly
executed by the Borrowers and the Majority Lenders; and

                  4.3 Agent shall have received such other documents,
certificates and assurances as it shall reasonably request.

         SECTION 5. REAFFIRMATION OF BORROWERS. The Borrowers hereby represent
and warrant to Agent and Lender that (i) the representations and warranties set
forth in Section 5 of the Credit Agreement are true and correct on and as of the
date hereof, except to the extent (a) that any such representations or
warranties relate to a specific date, or (b) of changes thereto as a result of
transactions for which Agent and Lenders have granted their consent; (ii) the
Borrowers are on the date hereof in compliance with all of the terms and
provisions set forth in the Credit Agreement as hereby amended; and (iii) upon
execution hereof no Default or Even of Default has occurred and is continuing or
has not previously been waived.

         SECTION 6. FULL FORCE AND EFFECT. Except as herein amended, the Credit
Agreement and all other Credit Documents shall remain in full force and effect.

         SECTION 7. COUNTERPARTS. This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.

<PAGE>   7

         IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be executed and delivered in Chicago, Illinois by their proper and
duly authorized officers as of the date first set forth above.

                                       BORROWER:

                                       FLORSHEIM GROUP INC.

                                       By:  /s/ Richard J. Anglin
                                           Name:    Richard J. Anglin
                                           Title:   Executive Vice President,
                                                    Chief Financial Officer

                                       THE FLORSHEIM SHOE STORE
                                        COMPANY - NORTHEAST

                                       By:  /s/ Richard J. Anglin
                                           Name:    Richard J. Anglin
                                           Title:   Executive Vice President,
                                                    Chief Financial Officer

                                       THE FLORSHEIM SHOE STORE
                                        COMPANY - WEST

                                       By:  /s/ Richard J. Anglin
                                           Name:    Richard J. Anglin
                                           Title:   Executive Vice President,
                                                    Chief Financial Officer

                                       FLORSHEIM OCCUPATIONAL
                                        FOOTWEAR, INC.

                                       By:  /s/ Richard J. Anglin
                                           Name:    Richard J. Anglin
                                           Title:   Executive Vice President,
                                                    Chief Financial Officer

<PAGE>   8

                                       L.J. O'NEILL SHOE CO.

                                       By:  /s/ Richard J. Anglin
                                           Name:    Richard J. Anglin
                                           Title:   Executive Vice President,
                                                    Chief Financial Officer

                                       AGENT:

                                       BT COMMERCIAL CORPORATION, as Agent

                                       By:  /s/ Frank Fazio
                                           Name:    Frank Fazio
                                           Title:   Director

                                       LENDERS:

                                       BT COMMERCIAL CORPORATION

                                       By:  /s/ Frank Fazio
                                           Name:    Frank Fazio
                                           Title:   Director

                                       LASALLE BANK NATIONAL ASSOCIATION

                                       By: /s/ Steven M. Marks
                                           Name:    Steven M. Marks
                                           Title:   First Vice-President

                                       DIME COMMERCIAL CORP.

                                       By: /s/ Dan Bueno
                                           Name:    Dan Bueno
                                           Title:   Assistant Treasurer

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