Document:

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                                                                     EXHIBIT 4.5

                              FLORSHEIM GROUP, INC.
                      200 North LaSalle Street, Suite 1500
                          Chicago, Illinois 60601-1014

                                November 15, 2000

Apollo Investment Fund LP
Artemis America Partnership
c/o 1301 Avenue of the Americas
38th Floor
New York, New York 10019

Gentlemen:

                  Reference is made to that certain Credit Agreement dated as of
August 23, 1999, as amended through the Third Amendment to Credit Agreement,
dated as of November 15, 2000 (the "Credit Agreement"), 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"), the financial institutions from time to time
parties thereto (collectively, the "Lenders"), and BT Commercial Corporation,
individually and in its capacity as agent (the "Bank"). Unless otherwise defined
herein, capitalized terms shall have the meaning given to them in the Credit
Agreement.

                  On November 15, 2000, the Borrowers, the Bank and the Lenders
entered into the Third Amendment to Credit Agreement (the "Third Amendment"),
which, inter alia, (i) grants a waiver of the Borrowers' compliance with the
requirements of Sections 8.1.1 and 8.1.2 of the Credit Agreement for the twelve
fiscal month period ending with the third quarter of fiscal 2000 and (ii) amends
the requirements of Section 8.1.1 and 8.1.2 of the Credit Agreement with respect
to future quarterly test periods.

                  The effectiveness of the Third Amendment is conditioned upon
the Bank's receipt of those certain Contingent Purchase Agreements (each a
"Contingent Purchase Agreement" and together the "Contingent Purchase
Agreements") from Apollo Investment Fund LP ("AIF") and Artemis America
Partnership ("Artemis"), pursuant to Section 5.3 of the Third Amendment. Because
of the benefits to the Borrowers inherent in the Third Amendment, the Borrowers
have requested that AIF and Artemis furnish the Lenders with the Contingent
Purchase Agreements. As an inducement to AIF and Artemis to furnish the
requisite Contingent Purchase Agreements, the Borrowers are willing to agree, on
the terms and conditions set forth with specificity below, to voluntary,
periodic reductions of the Line of Credit so long as the Borrowers are
maintaining a "reserve" of $4,000,000 in excess borrowing availability. The
Borrowers believe that such a "reserve" will afford a sufficient surplus of
borrowing availability to provide for normal working capital requirements and
funding of the operation of the businesses of the Borrowers, as presently
contemplated and in light of current projections.

                  Accordingly, in consideration of the execution, delivery and
performance of the Contingent Purchase Agreements, to be dated as of November
15, 2000, and to be entered into among the Lenders and AIF and Artemis (AIF and
Artemis hereafter collectively, the "Contingent Purchasers"), the Borrowers
agree as follows:

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               1. From and after the date hereof until the Expiration Date or,
                  if sooner, the date upon which the Contingent Purchasers shall
                  be released of further obligation under the Contingent
                  Purchase Agreements, the Borrowers shall submit to each of the
                  Contingent Purchasers duplicate copies of each weekly and
                  monthly Borrowing Base Certificate delivered to the Bank
                  pursuant to Section 7.2(a) of the Credit Agreement,
                  concurrently with the delivery of the same to the Bank.

               2. Commencing February 15, 2001, and on the fifteenth day of each
                  successive calendar month thereafter (February 15, 2001 and
                  each such successive fifteenth day, a "Measurement Date")
                  until the Expiration Date or, if sooner, the date upon which
                  the Contingent Purchasers shall be released of further
                  obligation with respect to the purchase of any participation
                  under the Contingent Purchase Agreements, if Excess Capacity
                  (as hereafter defined) shown on each of the four weekly
                  Measurement Date (including any weekly Borrowing Base
                  Certificate submitted on such Measurement Date) is greater
                  than $4,000,000, then the Borrowers shall, on or before the
                  last Business Day of the calendar month in which such
                  Measurement Date shall have occurred, submit to the Bank a
                  request for a voluntary reduction in the Line of Credit
                  pursuant to Section 4.6(c) of the Credit Agreement in the
                  Reduction Amount (as hereinafter defined); provided, however,
                  that the aggregate sum of all such reductions in the Line of
                  Credit required under the provisions of this section 2 of this
                  letter shall not exceed $15,000,000.

                  If, based upon the calculations required to be made on any
                  Measurement Date, the Borrowers shall be required to submit to
                  the Bank a request for a voluntary reduction in the Reduction
                  Amount pursuant to the preceding sentence, but the Borrowers
                  shall fail to comply with such requirement, then the
                  Contingent Purchasers may notify the Borrowers in writing of
                  such non-compliance (delivered to the attention of the Chief
                  Financial Officer, Florsheim Group, Inc.) and unless the
                  Borrowers shall notify the Contingent Purchasers in writing
                  that the Borrowers contest the same (accompanied by
                  computations supporting the contest) within three Business
                  Days of receipt of such written notification of
                  non-compliance, then (but only then) the Contingent Purchasers
                  shall be authorized to submit to the Bank such request for
                  such voluntary reduction in such Reduction Amount in the name
                  of the Borrowers, accompanied by a certification that the
                  Contingent Purchasers are entitled to do so (with a copy of
                  such request and certification to be delivered concurrently to
                  the Borrowers).

                  The "Excess Capacity" shall equal the excess availability for
                  Borrowings of Revolving Loans and issuance of Letters of
                  Credit, calculated by reference to each of the four weekly
                  Borrowing Base Certificates most recently submitted as set
                  forth in section 1 of this letter, as (a) the lesser of (i)
                  the Line of Credit or (ii) the Borrowing Base, minus (b) the
                  sum of (i) the Letter of Credit Obligations and (ii) the
                  outstanding principal balance

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                  of the Revolving Loans. The "Reduction Amount" shall equal (x)
                  the least amount of such Excess Capacity determined by
                  reference to any of the four weekly Borrowing Base
                  Certificates most recently submitted as of the applicable
                  Measurement Date (including any weekly Borrowing Base
                  Certificate submitted on such Measurement Date), minus (y)
                  $4,000,000; provided, however, that to the extent any
                  Reduction Amount determined on any Measurement Date would
                  cause the aggregate sum of all reductions in the Line of
                  Credit required under the provisions of this section 2 of this
                  letter to exceed $15,000,000, then such Reduction Amount shall
                  be adjusted by reducing the same by such excess over
                  $15,000,000.

                  The Contingent Purchasers may, however, choose to waive the
benefits of this agreement. Any such waiver shall be express and in writing; and
upon receipt of any such written waiver from either of the Contingent
Purchasers, the Borrowers may rely conclusively upon the same, and the same
shall be binding on both of the Contingent Purchasers.

                  Please acknowledge these understandings and confirm your
agreement with the terms and conditions of sections 1 and 2 of this letter set
forth above by signing and returning to us the copy of this letter provided for
such purpose, whereupon such agreement shall be become binding upon, and shall
inure to the benefit of, the Borrowers and the Contingent Purchasers and their
respective successors and assigns.

                                           Very truly yours,

                                           FLORSHEIM GROUP INC.

                                           By: /s/ Thomas P. Polke
                                              ----------------------------------
                                              Name: Thomas P. Polke
                                              Title: Executive Vice President,
                                                     Chief Financial Officer

                                           THE FLORSHEIM SHOE STORE COMPANY -
                                           NORTHEAST

                                           By: /s/ Thomas P. Polke
                                              ----------------------------------
                                              Name: Thomas P. Polke
                                              Title: Executive Vice President,
                                                     Chief Financial Officer

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                                           THE FLORSHEIM SHOE STORE COMPANY -
                                           WEST

                                           By: /s/ Thomas P. Polke
                                              ----------------------------------
                                              Name: Thomas P. Polke
                                              Title: Executive Vice President,
                                                     Chief Financial Officer

                                           FLORSHEIM OCCUPATIONAL FOOTWEAR, INC.

                                           By: /s/ Thomas P. Polke
                                              ----------------------------------
                                              Name: Thomas P. Polke
                                              Title: Executive Vice President,
                                                     Chief Financial Officer

                                           L.J. O'NEILL SHOE CO.

                                           By: /s/ Thomas P. Polke
                                              ----------------------------------
                                              Name: Thomas P. Polke
                                              Title: Executive Vice President,
                                                     Chief Financial Officer

Confirmed, acknowledged and agreed to this
15th day of November, 2000

APOLLO INVESTMENT FUND, LP
By:  Apollo Advisors, LP
     Its General Partner

By: /s/ Josh Harris
   --------------------------------------------------
     Name: Josh Harris
          -------------------------------------------
     Title: Vice President
           ------------------------------------------

ARTEMIS AMERICA PARTNERSHIP
By:  Artemis S.A.
     Its Managing Partner

By: /s/ Emmanuel Cueff
   ----------------------------------------
    Name: Emmanuel Cueff
         ----------------------------------
     Title:
           --------------------------------

                                       4<PAGE>   1
                                                                    EXHIBIT 10-1

                              EMPLOYMENT AGREEMENT

                  THIS EMPLOYMENT AGREEMENT (hereinafter "this Agreement") is
made this 24th day of June 2000, between Florsheim Group, Inc. (hereinafter "the
Company") and Mr. Thomas Polke (hereinafter "Polke").

                              W I T N E S S E T H:
                              - - - - - - - - - -

                  WHEREAS, the Company desires to employ Polke as its Chief
Financial Officer and Executive Vice President, and Polke desires to be so
employed by the Company, on the terms and conditions hereinafter set forth;

                  NOW, THEREFORE, in consideration of the foregoing and of the
respective covenants and agreements herein set forth, the Company and Polke
hereby agree as follows:

                  1. Employment. The Company hereby agrees to employ Polke, and
Polke hereby agrees to serve, as Chief Financial Officer and Executive Vice
President of the Company. Polke agrees to perform diligently and faithfully such
services customary to such office as shall from time to time be reasonably
assigned to him by the Company's Board of Directors and the Chief Executive
Officer. Polke further agrees to use his reasonable best efforts to promote the
interests of the Company and to devote substantially all of his full business
time and energies to the business and affairs of the Company.

                  2. Term of Employment. The employment hereunder shall be for a
term of eighteen (18) months commencing on the date hereof (the "Effective
Date") and ending on the day immediately preceding the eighteen month
anniversary of the Effective Date (the "Expiration Date"), unless terminated
earlier pursuant to Paragraph 5 of this Agreement (the

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"Term of Employment"). Beginning on the first anniversary of the Effective Date
and on each anniversary date thereafter (each, an "Anniversary Date"), the Term
of Employment shall automatically be extended for twelve additional months
unless such extension is objected to by either the Company or Polke in writing
to the other party not less than ninety (90) days prior to an Anniversary Date.

                  3. Polke's Representations. Polke represents that he is not
bound by any agreement that would prohibit Polke from entering into this
Agreement or performing fully his duties hereunder. Polke further represents
that the execution of this Agreement shall not constitute a breach of any other
agreement to which Polke is a party. Polke shall indemnify and hold the Company
harmless against all losses, damages, liabilities, causes of action (including
reasonable attorneys' fees) resulting from Polke's breach of the representations
set forth herein.

                  4. Compensation and Other Related Matters.

                     (a) Salary. As compensation for services rendered
hereunder, Polke shall receive an annual base salary (the "Annual Base Salary")
in the amount of not less than Two Hundred Twenty-Five Thousand dollars
($225,000.00), which salary shall be paid in accordance with the Company's then
prevailing payroll practices. Polke's Annual Base Salary shall be reviewed and
increased solely in the discretion of the Company's Compensation Committee. The
Company shall not decrease Polke's Annual Base Salary during the Term of
Employment.

                     (b) Bonus. During the Term of Employment, at the end of
each fiscal year, Polke shall receive an annual bonus in the amount of 60% of
his Annual Base Salary upon the Company's achievement of budget, such budget
objectives to be determined by the Company's Compensation Committee in its sole
discretion exercised in good-faith, after

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consultation with management. In the event that Polke's bonus for the fiscal
year ending December 31, 2000 is less than $67,500, the Company will make a
payment to Polke equal to $67,500 less the bonus received by Polke (the "2000
Bonus"). If a Change of Control (as hereinafter defined) occurs during the first
year of this Agreement, the entire bonus target for the year shall be paid.
Subject to the foregoing, the annual bonus shall be paid in accordance with the
Company's existing practices.

                     (c) Benefits. During the Term of Employment, the Company
will provide Polke with fringe benefits, perquisites and other benefits of
employment equivalent to the fringe benefits, perquisites and other benefits
that are being provided to other senior executives of the Company.

                     (d) Business Expenses and Travel. Polke shall be entitled
to reimbursement from the Company for all reasonable expenses incurred by him in
performing his services hereunder, provided that such expenses are incurred and
accounted for in accordance with Company policy.

                     (e) Legal Fees. The Company shall reimburse Polke for the
legal fees incurred in connection with this Agreement in the maximum amount of
$5,000.

                     (f) Equity Interest. Prior to October 31, 2000, Polke shall
purchase in the open market the lesser of (i) 37,500 shares of Common Stock of
the Company or (ii) shares of Common Stock of the Company having an aggregate
purchase price (including commissions) totaling $125,000. In addition, upon the
execution of this Agreement, Polke shall receive options pursuant to the
Company's 1994 Stock Option Plan (a copy of which Polke acknowledges has been
previously provided to him) to purchase an additional 155,000 shares of the
Company's common stock as follows:

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                         (a) 78,000 shares at Market;

                         (b) 38,000 shares at an exercise price of $5.00 per
                             share; and

                         (c) 39,000 shares at an exercise price of $7.50 per
                             share.

For purposes hereof, "Market" shall mean the average closing price of the
Company's Common Stock on the five (5) trading days immediately prior to the
Effective Date. Each tranche of options set forth above shall vest and become
exercisable in accordance with the Company's Stock Option Plan as detailed
below:

                    Anniversary Date      % of Each Tranche to Vest
                    ----------------      -------------------------

                          First                     25%
                          Second                    25%
                          Third                     50%

                  All of Polke's options shall expire on the tenth (10th)
anniversary of the Effective Date and when vested, shall remain exercisable
until the earlier to occur of (i) 30 days after Polke's employment terminates
for any reason, including, but not limited to, the expiration of the Term of
Employment or (ii) the tenth (10th) anniversary of the Effective Date or until
such later exercise date as is permitted under the provisions of the Company's
1994 Stock Option Plan.

                  In the event of a Change in Control, all of Polke's
outstanding but unvested options will become immediately vested and exercisable.

                  For purposes hereof Change in Control shall mean:

                                    (i) The acquisition (other than (i) from the
Company or (ii) by Apollo (as hereinafter defined)) by any person, entity or
"group", within the meaning of Section 13(d)(3) or 14(d)(2) of the 1934 Act,
excluding, for this purpose, the Company or its subsidiaries, or any employee
benefit plan of the Company or its subsidiaries, of beneficial

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ownership (within the meaning of Rule 17d-3 promulgated under the 1934 Act) of
50% or more of either the then outstanding shares or the combined voting power
of the Company's then outstanding voting securities entitled to vote generally
in the election of directors; or

                                    (ii) Individuals who, as of the Effective
Date constitute the Board (as of such date, the "Incumbent Board"), cease to
constitute at least a majority of the Board as a result of an actual or
threatened election contest relating to the election of the directors of the
Company, as such terms are used in Rule 14a-11 of Regulation 14A promulgated
under the 1934 Act (a "Proxy Vote"); provided, that any person becoming a
director subsequent to the first anniversary of the Effective Date whose
election, or nomination for election by the Company's stockholders, was approved
by a vote of at least a majority of the directors then comprising the Incumbent
Board (other than as a result of a Proxy Vote) shall be considered as though
such person were a member of the Incumbent Board; or

                                    (iii) Approval by the stockholders of the
Company of a reorganization, merger or consolidation, in each case, with respect
to which persons who were the stockholders of the Company immediately prior to
such reorganization, merger or consolidation do not, immediately thereafter,
own, directly or indirectly, more than 50% of the combined voting power entitled
to vote generally in the election of directors of the reorganized, merged or
consolidated company's then outstanding voting securities, and, as a result of
any of these transactions, Apollo ceases to be the largest shareholder of the
reorganized, merged or consolidated company or ceases to own at least 20% of the
remaining outstanding shares of the reorganized, merged or consolidated company;
or

                                    (iv) Approval by the stockholders of the
Company of a sale of all or substantially all of the assets of the Company; or

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                                    (v) Approval by the stockholders of the
Company of a liquidation or dissolution of the Company and, as a result of
either of these transactions, Apollo ceases to be the largest shareholder of the
Company, in each case, unless the transaction was approved by a majority of the
directors then comprising the Incumbent Board.

                     For purposes of the definition of "Change of Control", the
term "Apollo" shall mean Apollo Advisors, L.P., Lion Advisors, L.P., Artemis
America Partnership and any entity that controls, is controlled by or is under
common control with Apollo Advisors, L.P. Lion Advisors, L.P., and Artemis
America Partnership, including accounts under common management.

                     5. Termination.

                        (a) Disability. If, as a result of the incapacity of
Polke due to physical or mental illness, Polke is unable to perform
substantially and continuously the duties assigned to him hereunder, for a
period of three (3) consecutive months or for a non-consecutive period of nine
(9) months during any eighteen (18) month period during the Term of Employment,
the Company may terminate his employment for "Disability" upon thirty (30) days
prior written notice to Polke.

                        (b) Death. Polke's employment shall terminate
immediately upon the death of Polke.

                        (c) Cause. The Company shall be entitled to terminate
Polke's employment for "Cause." Such termination shall not become effective
until five (5) business days after the Company delivers such notice of
termination to Polke by hand delivery (during such five-day period, the Company
shall be entitled to direct Polke to leave the Company's

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premises and not report to work). Termination by the Company of the employment
of Polke for "Cause" shall mean termination based upon (i) the willful refusal
by Polke to follow lawful directions consistent with his responsibilities
hereunder communicated to him by the Company's Board of Directors; (ii) a
repeated and willful refusal by Polke to follow a lawful directive of the Chief
Executive Officer consistent with his responsibilities hereunder; (iii) the
engaging by Polke in conduct which is materially injurious to the Company,
monetarily or otherwise (except for actions undertaken by Polke in good faith
and consistent with his responsibilities hereunder); (iv) a conviction of, a
plea of nolo contendere, a plea or confession by Polke to, or commission of an
act involving, an act of fraud, misappropriation or embezzlement or to a felony;
(v) Polke's habitual drunkenness or use of illegal substances; (vi) a material
breach by Polke of this Agreement; (vii) an act of gross neglect or gross
misconduct by Polke which the Company's Board of Directors reasonably and in
good faith deems to be good and sufficient cause; or (viii) Polke's breach of
any of the representations set forth in Paragraph 3 of this Agreement.

                        (d) Termination Without Cause. The Company shall have
the right to terminate Polke's employment without cause at any time. Such
termination shall not become effective until five (5) business days after the
Company delivers such notice of termination to Polke by hand delivery (during
such five-day period, the Company shall be entitled to direct Polke to leave the
Company's premises and not report to work).

                        (e) Good Reason. Polke shall be entitled to terminate
his employment for Good Reason. For purposes of this Agreement, Good Reason
shall mean (i) a material breach of this Agreement by the Company; (ii) the
material reduction in Polke's responsibilities; (iii) a reduction in Polke's
Annual Base Salary; (iv) a reduction in Polke's title; or (v) the requirement,
after a Change of Control (as defined in this Agreement), that Polke move his

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principal place of business more than fifty (50) miles from the location of his
principal place of business at the time immediately prior to the Change of
Control, provided that Polke works for a transition period of six (6) months
following the Change of Control.

                     6. Compensation Upon Termination or During Disability.

                        (a) Disability. During any period that Polke fails to
perform his full-time duties with the Company as a result of incapacity due to
physical or mental illness (the "Disability Period"), Polke shall continue to
receive his then current Annual Base Salary, less any compensation payable to
Polke under the applicable disability insurance plan of the Company during such
period and shall continue to be provided with fringe benefits, perquisites and
other benefits as set forth in Paragraph 4(c) until his employment is terminated
pursuant to Paragraph 5(a) hereof. Thereafter, or in the event Polke's
employment shall be terminated by reason of his death, Polke shall be entitled
to receive (i) (a) his pro-rated annual bonus for the fiscal year in which his
employment terminates to the extent the Company achieves budget for such year or
(b) a pro-rated portion of his 2000 Bonus in the event his employment is
terminated prior to December 31, 2000, (ii) those benefits provided under the
Company's disability insurance program then in effect in accordance with the
terms of such program, and (iii) such other benefits to which Polke may be
entitled by law or pursuant to the terms of the Company's benefit plans.
Thereafter, the Company shall have no further obligation to Polke under this
Agreement, except with respect to expenses incurred under Paragraph 4(d) prior
to Polke's termination and with respect to the exercise of his stock options
under Paragraph 4(f).

                        (b) Death. Upon Polke's death, Polke's estate shall be
entitled to his pro-rated annual bonus in the year of his death to the
extent that the Company achieves budget for such year or a pro-rated portion of
his 2000 Bonus in the event his death occurs prior to

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December 31, 2000. Thereafter, the Company shall have no further obligation to
Polke under this Agreement, except with respect to expenses incurred under
Paragraph 4(d) prior to Polke's death and with respect to the exercise of his
stock options under Paragraph 4(f).

                        (c) Cause. If Polke's employment shall be terminated by
the Company for "Cause" as defined in Paragraph 5(c) of this Agreement,
the Company shall continue to pay Polke his then current Annual Base Salary and
provide him with fringe benefits, perquisites and other benefits as set forth in
Paragraph 4(c) through the date of termination of Polke's employment.
Thereafter, the Company shall have no further obligation to Polke under this
Agreement, except with respect to expenses incurred under Paragraph 4(d) prior
to Polke's termination and with respect to the exercise of his stock options
under Paragraph 4(f).

                        (d) Termination Without Cause by the Company. If the
Company terminates Polke's employment with the Company pursuant to Paragraph
5(d) of this Agreement, the Company shall pay Polke (i) his then current Annual
Base Salary for a period of eighteen (18) months from the date of termination of
Polke's employment (the "Severance Period"), (ii) (a) his pro-rated bonus for
the fiscal year in which his employment terminates to the extent the Company
achieves budget for such year or (b) a pro-rated portion of his 2000 Bonus in
the event his employment is terminated prior to December 31, 2000, and (iii)
during the eighteen (18) month Severance Period, the Company shall continue to
provide Polke with fringe benefits, perquisites and other benefits as set forth
in Paragraph 4(c) of this Agreement. Thereafter, the Company shall have no
further obligation to Polke under this Agreement, except with respect to
expenses incurred under Paragraph 4(d) prior to Polke's termination and with
respect to the exercise of his stock options under Paragraph 4(f).

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                        (e) Good Reason. In the event that Polke terminates his
employment for Good Reason pursuant to Paragraph 5(e) of the Agreement, the
Company shall pay Polke (i) his then current Annual Base Salary during the
eighteen (18) month Severance Period, (ii) (a) his pro-rated bonus for the
fiscal year in which his employment terminates to the extent the Company
achieves budget for such year or (b) a pro-rated portion of his 2000 Bonus in
the event his employment is terminated prior to December 31, 2000, and (iii)
during the eighteen (18) month Severance Period, the Company shall continue to
provide Polke with fringe benefits, perquisites and other benefits as set forth
in Paragraph 4(c) of this Agreement. Thereafter, the Company shall have no
further obligation to Polke under this Agreement, except with respect to
expenses incurred under Paragraph 4(d) prior to Polke's termination and with
respect to the exercise of his stock options under Paragraph 4(f).

                        (f) Expiration of this Agreement. In the event that the
Company objects to an extension of the Term of Employment, and Polke continues
to work until the Term of Employment expires, the Company shall pay Polke his
then current Annual Base Salary for a period of twelve (12) months from the date
of termination of Polke's employment and during such period, the Company shall
continue to provide Polke with fringe benefits, perquisites and other benefits
as set forth in Paragraph 4(c) of this Agreement. In addition, in the event that
this Agreement expires during any portion of a fiscal year, Polke shall be
entitled to receive a pro-rated bonus for such fiscal year, provided that the
Company achieves budget for such fiscal year. Notwithstanding the foregoing, if
the Company objects to an extension of the Term of Employment in conjunction
with or following a Change of Control (as defined in this Agreement) and Polke
continues to work until the Term of Employment expires, the Company shall pay
Polke (i) his then current Annual Base Salary during the eighteen (18) month

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Severance Period, (ii) his pro-rated bonus for the fiscal year in which his
employment terminates to the extent the Company achieves budget for such year,
and (iii) during the eighteen (18) month Severance Period, the Company shall
continue to provide Polke with fringe benefits, perquisites and other benefits
as set forth in Paragraph 4(c) of this Agreement. Thereafter, the Company shall
have no further obligation to Polke under this Agreement, except with respect to
expenses incurred under Paragraph 4(d) prior to Polke's termination and with
respect to the exercise of his stock options under Paragraph 4(f).

                     7. Confidentiality and Restrictive Covenants.

                        (a) Polke acknowledges that:

                            (i) the business in which the Company is engaged is
intensely competitive and that his employment by the Company will require that
he have access to and knowledge of confidential information of the Company,
including, but not limited to, certain/all of the Company's plans for creation,
acquisition or disposition of products, expansion plans, financial status and
plans, products, improvements, formulas, designs or styles, method of
distribution, customer lists, product development plans, rules and regulations,
personnel information and trade secrets of the Company, all of which are of
vital importance to the success of the Company's business (collectively,
"Confidential Information");

                            (ii) the direct or indirect disclosure of any
Confidential Information would place the Company at a serious competitive
disadvantage and would do serious damage, financial and otherwise, to the
Company's business;

                            (iii) by his training, experience and expertise,
Polke's services to the Company will be special and unique; and

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                            (iv) if Polke leaves the Company's employ to work
for a competitive business, in any capacity, it would cause the Company
irreparable harm.

                        (b) Covenant Against Disclosure. Polke therefore
covenants and agrees that all Confidential Information relating to the business
products and services of the Company, any subsidiary, affiliate or customer
shall be and remain the sole property and confidential business information of
the Company, free of any rights of Polke. Polke further agrees not to make any
use of the Confidential Information or disclose Confidential Information to
third parties except in the performance of his duties hereunder or with the
prior written consent of the Company. The obligations of Polke under this
Paragraph 7 shall survive any termination of this Agreement. Polke agrees that,
upon any termination of his employment with the Company, all Confidential
Information in his possession, directly or indirectly, that is in written or
other tangible form (together with all duplicates thereof) will forthwith be
returned to the Company and will not be retained by Polke or furnished to any
third party, either by sample, facsimile, film, audio or video cassette,
electronic data, verbal communication or any other means of communication.

                        (c) Non-competition. Polke agrees that, during the Term
of Employment and for a period of eighteen (18) months following the termination
of employment for any reason (including, without limitation, the expiration of
this Agreement), Polke will not, directly or indirectly, own, manage, operate,
control or participate in the ownership, management or control of, or be
connected as an officer, employee, partner, director, consultant, or otherwise
with, or have any financial interest in, or aid or assist anyone else in the
conduct of, any entity or business which competes with any business conducted by
the Company or any of its subsidiaries or affiliates either by (i) selling
products to customers of the Company that are similar to the

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products sold by the Company; (ii) selling casual or dress footwear or apparel
generally; (iii) operating similar retail operations engaged in the sale of
footwear or apparel; or (iv) otherwise competing in a competitive business.
Polke's ownership of securities of a public company engaged in competition with
the Company not in excess of five (5) percent of any class of such securities
shall not be considered a breach of the covenants set forth in this Paragraph 7.

                        (d) Further Covenant. Until the date which is two (2)
years after the date of the termination of Polke's employment hereunder for any
reason, Polke will not, directly or indirectly, take any of the following
actions, and, to the extent Polke owns, manages, operates, controls, is employed
by or participates in the ownership, management, operation or control of, or is
connected in any manner with, any business, Polke will use his best efforts to
ensure that such business does not take any of the following actions:

                            (i) persuade or attempt to persuade any customer of
the Company to cease doing business with the Company or any of its subsidiaries
or affiliates, or to reduce the amount of business it does with the Company or
any of its subsidiaries or affiliates;

                            (ii) solicit for himself or any entity the business
of a customer of the Company or any of its subsidiaries or affiliates, or
solicit any business which was a customer of the Company or any of its
subsidiaries or affiliates within six months prior to the termination of Polke's
employment; and

                            (iii) persuade, attempt to persuade or hire any
employee of the Company or any of its subsidiaries or affiliates or any
individual who was an employee of the Company or any of its subsidiaries or
affiliates during the two (2) years prior to Polke's termination of employment,
to leave the employ of the Company or any of its subsidiaries or affiliates.

                                       13
<PAGE>   14

                     8. Intellectual Property. Polke hereby agrees that any and
all improvements, inventions, discoveries, formulae, processes, methods,
know-how, confidential data, trade secrets and other proprietary information
made, developed or created by Polke (whether at the request or suggestion of the
Company or otherwise, whether alone or in conjunction with others, and whether
during regular working hours of work or otherwise) during the period of his
employment with the Company, which may be directly or indirectly useful in, or
relate to, the business of or tests being carried out by the Company or any of
its subsidiaries or affiliates, shall be the Company's exclusive property as
against Polke, and Polke shall promptly deliver to the Board of Directors of the
Company all papers, drawings, models, data and other material relating to any
invention made, developed or created by him as aforesaid and shall promptly and
fully disclose to the Board of Directors all material improvements, inventions,
discoveries, formulae, processes, methods, know-how, confidential data, trade
secrets, and other proprietary information made, developed or created by Polke.

                     Polke shall, upon the Company's request and without any
payment therefor, execute any documents necessary or advisable in the opinion of
the Company's counsel to direct issuance of patents or copyrights of the Company
with respect to such inventions as are to be in the Company's exclusive property
as against Polke under this Paragraph 8 or to vest in the Company title to such
inventions as against Polke, the expense of securing any such patent or
copyright, to be borne by the Company.

                     9. Breach by Polke. Both parties recognize that the
services to be rendered under this Agreement by Polke are special, unique and
extraordinary in character, and that in the event of a breach by Polke of the
terms and conditions of Paragraphs 7 or 8 to be performed by him, then the
Company shall be entitled, if it so elects, to institute and prosecute
proceedings in

                                       14
<PAGE>   15

any court of competent jurisdiction, either in law or in equity, to obtain
damages for any breach of this Agreement, or to enforce the specific performance
thereof by Polke. Without limiting the generality of the foregoing, the parties
acknowledge that a breach by Polke of his obligations under Paragraph 7 or 8
would cause the Company irreparable harm, that no adequate remedy at law would
be available in respect thereof and that therefore the Company would be entitled
to injunctive relief with respect thereto.

                     10. Miscellaneous.

                         (a) Successors; Binding Agreement. This Agreement and
the obligations of the Company hereunder and all rights of Polke hereunder shall
inure to the benefit of the parties hereto and their respective heirs, personal
representatives, successors and assigns, provided, however, that the duties of
Polke hereunder are personal to Polke and may not be delegated or assigned by
him.

                         (b) Notice. All notices of termination and other
communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered by hand or mailed by
United States registered mail, return receipt requested, addressed as follows:

                         If to the Company:

                              The Florsheim Group
                              200 North LaSalle
                              Chicago, Illinois 60601
                              Attention: Peter Corritori

                                       15
<PAGE>   16

                         If to Polke:

                              Mr. Thomas Polke
                              12326 Mackinac Road
                              Lockport, IL 60441

or to such other address as either party may designate by notice to the other,
which notice shall be deemed to have been given upon receipt.

                        (c) Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York without
regard to the conflict of law rules thereof.

                        (d) Waivers. The waiver of either party hereto of any
right hereunder or of any failure to perform or breach by the other party hereto
shall not be deemed a waiver of any other right hereunder or of any other
failure or breach by the other party hereto, whether of the same or a similar
nature or otherwise. No waiver shall be deemed to have occurred unless set forth
in writing executed by or on behalf of the waiving party. No such written waiver
shall be deemed a continuing waiver unless specifically stated therein, and each
such waiver shall operate only as to the specific term or condition waived and
shall not constitute a waiver of such term or condition for the future or as to
any act other than that specifically waived.

                        (e) Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall otherwise remain in full
force and effect. Moreover, if any one or more of the provisions contained in
this Agreement is held to be excessively broad as to duration, scope or
activity, such provisions shall be construed by limiting and reducing them so as
to be enforceable to the maximum extent compatible with applicable law.

                                       16
<PAGE>   17

                        (f) Counterparts. This Agreement may be executed in
several counterparts, each of which shall be deemed an original,
but all of which shall constitute one and the same instrument.

                        (g) Entire Agreement. This Agreement sets forth the
entire agreement and understanding of the parties in respect of the subject
matter contained herein, and supersedes all prior agreements, promises,
covenants, arrangements, communications, representations or warranties, whether
oral or written, by any officer, employee or representative of either party in
respect of said subject matter. This Agreement may not be modified except by a
writing signed by each of the parties hereto and referring specifically to the
provision or provisions intended to be affected.

                        (h) Headings Descriptive. The headings of the several
paragraphs of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any of this Agreement.

                  IN WITNESS WHEREOF, the Company and Polke have executed this
Agreement as of the date first written above.

THOMAS POLKE                               FLORSHEIM GROUP, INC.

/s/ Thomas Polke                           By: /s/ Peter P. Corritori Jr.
----------------------                        ----------------------------------
                                              Name: Peter P. Corritori Jr.
                                              Title: CEO

                                       17

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