Exhibit 99(c)
DISTRIBUTION AND SERVICES AGREEMENT
dated as of
November 17, 1994
between
INTERCO INCORPORATED
and
THE FLORSHEIM SHOE COMPANY
and the
OTHER ENTITIES LISTED
ON THE SIGNATURE PAGES HEREOF
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS . . . . . . . . . . . 2
Section 1.01. Definitions . . . . . . . . . . . . . . . . . 2
ARTICLE II
THE DISTRIBUTION . . . . . . . . . . 6
Section 2.01. Cooperation Prior to the Distribution . . . . 6
Section 2.02. INTERCO Board Action; Conditions Precedent to
the Distribution . . . . . . . . . . . . . . . 7
Section 2.03. The Distribution . . . . . . . . . . . . . . . 8
Section 2.04. Sale of Fractional Shares and Odd Lot Shares . 9
Section 2.05. Fees and Expenses of Distribution Agent. . . . 9
ARTICLE III
TRANSITION ARRANGEMENTS . . . . . . . . 9
Section 3.01. Conduct of Florsheim Business Pending
Distribution . . . . . . . . . . . . . . . . . 9
Section 3.02. Revolving Credit Agreement . . . . . . . . . . 9
Section 3.03. Repayment of Allocable Debt . . . . . . . . . 9
Section 3.04. Intercompany Accounts . . . . . . . . . . . . 10
Section 3.05. Certain Intellectual Property Matters . . . 10
ARTICLE IV
INDEMNIFICATION . . . . . . . . . . 11
Section 4.01. Florsheim Indemnification of the INTERCO
Group . . . . . . . . . . . . . . . . . . . . 11
Section 4.02. INTERCO Indemnification of the Florsheim
Group . . . . . . . . . . . . . . . . . . . . 11
Section 4.03. Insurance and Third Party Obligations . . . . 11
SL01 203174.18 i
Page
ARTICLE V
INDEMNIFICATION PROCEDURES . . . . . . . 11
Section 5.01. Notice and Payment of Claims . . . . . . . . . 11
Section 5.02. Notice and Defense of Third-Party Claims . . . 12
ARTICLE VI
SERVICES . . . . . . . . . . . . 13
Section 6.01. Provision of Services . . . . . . . . . . . . 13
Section 6.02. Risk Management . . . . . . . . . . . . . . . 13
Section 6.03. Reimbursement . . . . . . . . . . . . . . . . 14
ARTICLE VII
EMPLOYEE MATTERS . . . . . . . . . . 14
Section 7.01. General . . . . . . . . . . . . . . . . . . . 14
Section 7.02. Pension . . . . . . . . . . . . . . . . . . . 14
Section 7.03. Savings Plans . . . . . . . . . . . . . . . . 15
Section 7.04. Stock Options . . . . . . . . . . . . . . . . 17
Section 7.05. Health and Welfare Plans . . . . . . . . . . . 17
Section 7.06. Multiemployer Pension Plans . . . . . . . . . 18
Section 7.07. No Third Party Beneficiaries . . . . . . . . . 19
ARTICLE VIII
INTERCO GUARANTEES . . . . . . . . . 19
Section 8.01. Performance of Guaranteed Leases . . . . . . . 19
Section 8.02. Termination . . . . . . . . . . . . . . . . . 21
Section 8.03 Dun & Bradstreet . . . . . . . . . . . . . . . 21
SL01 203174.18 ii
Page
ARTICLE IX
INFORMATION . . . . . . . . . . . 22
Section 9.01. Provision of Corporate Records . . . . . . . . 22
Section 9.02. Access to Information . . . . . . . . . . . . 22
Section 9.03. Litigation Cooperation . . . . . . . . . . . . 22
Section 9.04. Reimbursement . . . . . . . . . . . . . . . . 22
Section 9.05. Retention of Records . . . . . . . . . . . . . 22
Section 9.06. Confidentiality . . . . . . . . . . . . . . . 23
ARTICLE X
MISCELLANEOUS . . . . . . . . . . . 23
Section 10.01. Expenses . . . . . . . . . . . . . . . . . . . 23
Section 10.02. Notices . . . . . . . . . . . . . . . . . . . 24
Section 10.03. Amendment and Waiver . . . . . . . . . . . . . 24
Section 10.04. Counterparts . . . . . . . . . . . . . . . . . 24
Section 10.05. Governing Law . . . . . . . . . . . . . . . . 24
Section 10.06. Entire Agreement . . . . . . . . . . . . . . . 24
Section 10.07. Parties in Interest . . . . . . . . . . . . . 25
Section 10.08. Tax Sharing Agreement; After-Tax Payments . . 25
Section 10.09. Further Assurances and Consents . . . . . . . 25
Section 10.10. Arbitration . . . . . . . . . . . . . . . . . 26
SL01 203174.18 iii
DISTRIBUTION AND SERVICES AGREEMENT
DISTRIBUTION AND SERVICES AGREEMENT ("Agreement") dated
as of November 17, 1994 by and between INTERCO INCORPORATED, a
Delaware corporation (together with its successors and permitted
assigns, "INTERCO") and The Florsheim Shoe Company, a Delaware
corporation (together with its successors and permitted assigns,
"Florsheim"), and the other entities listed on the signature
pages hereof.
RECITALS
A. Florsheim is presently a wholly-owned subsidiary of
INTERCO.
B. Pursuant to the Capital Contribution Agreement (as
defined herein) INTERCO has contributed to Florsheim all of the
assets, properties, rights, contracts, claims, operations and
business of the Florsheim Business (as defined herein) and
Florsheim has agreed to assume, pay, perform and discharge (or
cause to be paid, performed and discharged) any and all debts,
losses, liabilities, claims, damages, obligations, payments,
costs and expenses to the extent arising out of or relating to
the business and operations of the Florsheim Business (such
contribution and assumption being referred to herein as the
"Reorganization").
C. The Board of Directors of INTERCO has determined
that it is in the best interest of INTERCO and the stockholders
of INTERCO to distribute (the "Distribution") to the holders of
INTERCO Common Stock (as defined herein) all of the outstanding
shares of Florsheim Common Stock (as defined herein).
D. It is the intention of the parties that the
Distribution will not be taxable to the stockholders of INTERCO
(pursuant to Section 355 of the Code (as defined herein)), and
that the Reorganization and Distribution together constitute a
reorganization under Section 368(a)(1)(D) of the Code.
E. The parties have determined that it is necessary
and desirable to set forth the principal corporate transactions
required to effect the Distribution and to set forth other
agreements that will govern certain other matters following such
Distribution.
F. In connection with the Distribution, INTERCO is
concurrently herewith entering into the Tax Sharing Agreement (as
defined herein) with Florsheim and its subsidiaries.
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G. INTERCO is entering into the Converse Distribution
Agreement (as defined herein) providing for a distribution of the
Converse Common Stock (as defined herein) in connection with the
Distribution.
NOW, THEREFORE, in consideration of the foregoing
premises and the mutual agreements, provisions and covenants
contained in this Agreement, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. As used herein, the
following terms have the following meaning:
"Action" means any claim, suit, arbitration, inquiry,
proceeding or investigation by or before any court, governmental
or other regulatory or administrative agency or commission or any
other tribunal.
"Allocable Debt" means that portion of the debt of
INTERCO and/or its subsidiaries allocated to members of the
Florsheim Group pursuant to the Allocation Agreement.
"Allocation Agreement" means that certain Allocation
Agreement dated January 27, 1993 by and among INTERCO, Florsheim
and other members of the INTERCO Group and the Florsheim Group.
"Ancillary Agreements" means all of the agreements,
instruments, understandings, assignments and other arrangements
entered into in connection with the transactions contemplated
hereby, including, without limitation, the Tax Sharing Agreement.
"Assumed Liabilities" means the Liabilities arising
from the conduct or operation of the Florsheim Business or the
ownership or use of assets or other activities in connection
therewith, whether arising before, on or after the Distribution
Date, including but not limited to the Allocable Debt, any
Liabilities arising in connection with the Form 10 or the
Registration Statement, and any Liabilities set forth or
referenced in the audited financial statements of Florsheim
included in the Form 10. Notwithstanding the foregoing, Assumed
Liabilities shall not include (i) any debt of the INTERCO Group
for money borrowed (including but not limited to any such debt
evidenced by a note, debenture or other instrument) other than
the Allocable Debt, (ii) (X) any third party claims arising from
the conduct or operation of the Florsheim Business or the
ownership or use of assets in connection therewith prior to the
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Distribution Date if and only to the extent that such claims
("Covered Claims") are covered by the insurance of INTERCO (other
than insurance related to matters described in Article VII, which
shall be dealt with as described therein), (Y) any self-insured
retention for such Covered Claims that would be covered but for
such retention, and (Z) any letters of credit of INTERCO in favor
of an insurance carrier relating to such retention, (iii) any
Liability specifically retained by INTERCO pursuant to Article
VII hereof or (iv) any claims, losses, damages, demands, costs,
expenses or liabilities for any Tax (which shall be governed by
the Tax Sharing Agreement), but shall include any Liabilities
arising out of the Guaranteed Leases.
"Capital Contribution Agreement" means that certain
Capital Contribution Agreement dated October 1, 1994 by and
between INTERCO and Florsheim.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Commission" means the Securities and Exchange
Commission.
"Converse Common Stock" means the Common Stock, no par
value, of Converse.
"Converse" means Converse Inc., a Delaware corporation
and a wholly-owned subsidiary of INTERCO.
"Converse Credit Facility" means a secured revolving
credit and term loan facility for Converse in the amount of $200
million.
"Converse Distribution" means the distribution of
Converse Common Stock to the shareholders of INTERCO pursuant to
the Converse Distribution Agreement.
"Converse Distribution Agreement" means that certain
distribution agreement by and among INTERCO, Converse and the
subsidiaries of Converse relating to the distribution of Converse
Common Stock by INTERCO to the shareholders of INTERCO.
"Converse Form 10" means the registration statement on
Form 10 filed by Converse with the Commission to effect the
registration of the Converse Common Stock pursuant to the
Exchange Act, as such registration statement may be amended from
time to time.
"Credit Facility" means a secured credit facility for
Florsheim in the amount of $75 million for (i) the repayment of
a portion of the Allocable Debt and (ii) Florsheim's capital
SL01 203174.18 3
expenditures and any additional working capital needs following
the Distribution.
"Distribution Agent" means KeyCorp Shareholder
Services, Inc.
"Distribution Date" means the business day as of which
the Distribution shall be effective, as determined by the Board
of Directors of INTERCO or the Executive Committee thereof.
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Florsheim Business" means the business of
manufacturing, wholesaling and retailing of quality footwear as
conducted by The Florsheim Shoe Company division of INTERCO
(including without limitation any former division or subsidiary
operated in conjunction therewith) or the Florsheim Group or the
International Shoe Company or Florind Shoes Limited.
"Florsheim Bylaws" means the bylaws of Florsheim in the
form filed as an exhibit to the Form 10.
"Florsheim Certificate" means the restated certificate
of incorporation of Florsheim in the form filed as an exhibit to
the Form 10.
"Florsheim Common Stock" means the outstanding shares
of common stock, no par value, of Florsheim.
"Florsheim Group" means Florsheim and the Florsheim
Subsidiaries.
"Florsheim Liabilities" means all of (i) the
Liabilities of the Florsheim Group under this Agreement, (ii) the
Assumed Liabilities, and (iii) the Liabilities of the Florsheim
Group arising after the Distribution Date.
"Florsheim Subsidiaries" means The Florsheim Shoe Store
Company - Northeast, a Delaware corporation, The Florsheim Shoe
Store Company - West, a Delaware corporation, L.J. O'Neill Shoe
Company, a Missouri corporation, Hy-Test, Inc., a Missouri
corporation, Florsheim Australia Limited, an Australian
corporation, Florsheim Canada Inc., a Canadian corporation,
Florsheim Europe S.R.L., an Italian corporation, Florsheim
Pacific, Limited, a Hong Kong corporation and Florsheim S.A. de
C.V., a Mexican corporation.
"Form 10" means the registration statement on Form 10
filed by Florsheim with the Commission to effect the registration
of the Florsheim Common Stock pursuant to the Exchange Act, as
such registration statement may be amended from time to time.
"Group" means either the Florsheim Group or the INTERCO
Group.
"Guaranteed Lease" means any lease entered into in
connection with the Florsheim Business with respect to which any
member of the INTERCO Group is, directly or indirectly, liable by
guarantee or otherwise.
"Indemnifiable Loss" has the meaning set forth in
Section 4.01.
"Information Statement" means the information statement
to be sent to each holder of INTERCO Common Stock in connection
with the Distribution.
"Initial Borrowing" means a borrowing by the Florsheim
Group under the Credit Facility in an amount to be determined by
INTERCO on or prior to the Distribution Date.
"INTERCO Common Stock" means the outstanding shares of
common stock, no par value, of INTERCO.
"INTERCO Group" means INTERCO and its direct or
indirect subsidiaries (other than any member of the Florsheim
Group), including without limitation Converse and its direct or
indirect subsidiaries.
"INTERCO Liabilities" means all of (i) the Liabilities
of INTERCO under this Agreement, (ii) the Liabilities of the
INTERCO Group (other than any Florsheim Liabilities and any
Liabilities arising out of the Guaranteed Leases), whether
arising before, on or after the Distribution Date, (iii) (X) any
claims arising from the conduct or operation of the Florsheim
Business or the ownership or use of assets in connection
therewith prior to the Distribution Date if and only to the
extent that such claims ("Covered Claims") are covered by the
insurance of INTERCO (other than insurance related to matters
described in Article VII, which shall be dealt with as described
therein), (Y) any self-insured retention for such Covered Claims
that would be covered but for such retention, and (Z) any letters
of credit of INTERCO in favor of an insurance carrier relating to
such retention, and (iv) any Liability specifically retained by
INTERCO pursuant to Article VII hereof.
"Liabilities" means any and all claims, debts,
liabilities and obligations, absolute or contingent, matured or
not matured, liquidated or unliquidated, accrued or unaccrued,
known or unknown, whenever arising, including all costs and
expenses relating thereto, and including, without limitation,
those debts, liabilities and obligations arising under this
Agreement, any law, rule, regulation, action, order or consent
decree of any governmental entity or any award of any arbitrator
of any kind, and those arising under any contract, commitment or
undertaking.
"Notes" means the senior notes of Florsheim being
offered pursuant to the Registration Statement.
"Record Date" means the date determined by INTERCO's
Board of Directors or the Executive Committee thereof as the
record date for determining the stockholders of INTERCO entitled
to receive the Distribution.
"Registration Statement" means the registration
statement on Form S-1 under the Securities Act concerning the
public offering of up to $85 million in Notes, all of the net
proceeds of which shall be used for the repayment of a portion of
the Allocable Debt.
"Securities Act" means the Securities Act of 1933, as
amended.
"Tax" shall have the meaning given to such term in the
Tax Sharing Agreement.
"Tax Sharing Agreement" means the Tax Agreement of even
date herewith among INTERCO, Florsheim and certain subsidiaries
of Florsheim, as amended from time to time.
"Transferred Employee" means all current employees and
former employees (including without limitation all terminated
employees, retirees, laid-off employees, employees on leave, or
employees on short-term or long-term disability) of The
Florsheim Shoe Company division of INTERCO or the Florsheim Group
(including without limitation any former division or subsidiary
operated in conjunction therewith) or the International Shoe
Company.
ARTICLE II
THE DISTRIBUTION
Section 2.01. Cooperation Prior to the Distribution.
(a) INTERCO and Florsheim shall prepare, and INTERCO shall mail
to the holders of INTERCO Common Stock as of the Record Date, the
Information Statement, which shall set forth appropriate
disclosure concerning Florsheim, the Distribution and any other
appropriate matters. INTERCO and Florsheim shall also prepare,
and Florsheim shall file with the Commission, the Form 10, which
shall include or incorporate by reference the Information
Statement. INTERCO and Florsheim shall use reasonable efforts to
cause the Form 10 to become effective under the Exchange Act.
INTERCO and Florsheim shall also prepare, and Florsheim shall
file with the Commission, the Registration Statement. INTERCO
and Florsheim shall use reasonable efforts to cause the
Registration Statement to become effective under the Securities
Act.
(b) INTERCO and Florsheim shall cooperate in
preparing, filing with the Commission and causing to become
effective any registration statements or amendments thereto that
are appropriate to reflect the establishment of or amendments to
any employee benefit and other plans contemplated by this
Agreement.
(c) INTERCO and Florsheim shall take all such action
as may be necessary or appropriate under the securities or blue
sky laws of states or other political subdivisions of the United
States in connection with the transactions contemplated by this
Agreement.
(d) Florsheim shall prepare, file and pursue an
application to permit listing of the Florsheim Common Stock on
the Nasdaq National Market.
Section 2.02. INTERCO Board Action; Conditions
Precedent to the Distribution. INTERCO's Board of Directors or
the Executive Committee thereof shall, in its discretion,
establish the Record Date and the Distribution Date and any
appropriate procedures in connection with the Distribution. In
no event shall the Distribution occur unless the following
conditions shall, unless waived by INTERCO, have been satisfied:
(a) all necessary regulatory approvals shall have been
received;
(b) the Form 10 shall have become effective under the
Exchange Act;
(c) The Registration Statement shall have become
effective and the sale of the Notes pursuant thereto shall have
been completed.
(d) a favorable response shall have been received from
the Staff of the Commission with respect to INTERCO's no-action
request concerning, among other things, whether the Distribution
may be effected without registration of the Florsheim Common
Stock under the Securities Act and whether the Converse
Distribution may be effected without registration of the Converse
Common Stock under the Securities Act;
(e) Florsheim shall have arranged for the Credit
Facility;
(f) Converse shall have arranged for the Converse
Credit Facility and Converse shall have repaid its allocated
portion of the debt of INTERCO and/or its subsidiaries as
specified by the Converse Distribution Agreement;
(g) The Converse Form 10 shall have become effective
under the Exchange Act and the Converse Distribution shall have
been formally approved by the INTERCO Board of Directors and
shall not have been abandoned or deferred;
(h) Florsheim shall have paid the Allocable Debt in
accordance with this Agreement;
(i) Florsheim's Board of Directors, as named in the
Form 10, shall have been elected by INTERCO, as sole stockholder
of Florsheim, and the Florsheim Certificate and Florsheim Bylaws
shall be in effect;
(j) the Florsheim Common Stock shall have been
approved for listing on the Nasdaq National Market, subject to
official notice of issuance;
(k) INTERCO's Board of Directors shall have formally
approved the Distribution and shall not have abandoned, deferred
or modified the Distribution at any time prior to the Record
Date;
(l) INTERCO's Board of Directors shall have received an
opinion of counsel satisfactory to it that the Distribution
should not be taxable to the stockholders of INTERCO (pursuant to
Section 355 of the Code);
(m) the transactions contemplated by Sections 3.02 and
3.03 shall have been consummated in all material respects;
(n) the Florsheim Group shall have obtained insurance
(or binders therefor) providing coverage to the Florsheim Group
similar to the coverage provided by insurance in place prior to
the Distribution Date; and
(o) the INTERCO Group shall have obtained refinancing
of its debt on terms acceptable to it in its sole discretion.
Section 2.03. The Distribution. On the Distribution
Date or as soon thereafter as practicable, subject to the
conditions set forth in this Agreement, INTERCO shall deliver to
the Distribution Agent a certificate or certificates representing
all of the then outstanding shares of Florsheim held by the
INTERCO Group, endorsed in blank, and shall instruct the
Distribution Agent, except as otherwise provided in Section 2.04,
to distribute to each holder of record of INTERCO Common Stock on
the Record Date a certificate or certificates representing one
share of Florsheim Common Stock for each six shares of INTERCO
Common Stock so held. Florsheim agrees to provide all
certificates for shares of Florsheim Common Stock that the
Distribution Agent shall require in order to effect the
Distribution.
Section 2.04. Sale of Fractional Shares and Odd Lot
Shares. The Distribution Agent shall not distribute (a) any
fractional share of Florsheim Common Stock ("Fractional Shares")
to any holder or (b) fewer than 100 shares of Florsheim Common
Stock ("Odd Lot Shares") to any holder who elects prior to a
specified date to have the Distribution Agent sell such Odd Lot
Shares for its account. The Distribution Agent shall aggregate
all such Fractional Shares and Odd Lot Shares and sell them in an
orderly manner after the Distribution Date in the open market
and, after completion of such sales, distribute a pro rata
portion of the proceeds from such sales, based upon the average
gross selling price of all such Florsheim Common Stock, less a
pro rata portion of the aggregate brokerage commissions payable
in connection with such sales, to each holder of INTERCO Common
Stock who would otherwise have received a Fractional Share or Odd
Lot Shares.
Section 2.05. Fees and Expenses of Distribution Agent.
The fees and expenses of the Distribution Agent, except as
provided in Section 2.04, shall be paid by INTERCO.
ARTICLE III
TRANSITION ARRANGEMENTS
Section 3.01. Conduct of Florsheim Business Pending
Distribution. (a) Prior to the Distribution Date, Florsheim or
any member of the Florsheim Group shall not, without the prior
consent in writing of INTERCO, make any public announcement,
issue any press release or distribute any prospectus (as defined
in the Securities Act) and each shall use its best efforts not to
take any action which may prejudice or delay the consummation of
the Distribution.
(b) Prior to satisfaction or waiver of the conditions
set forth in Section 2.02, the business of the Florsheim Group
shall be operated for the sole benefit of INTERCO and its
stockholders.
Section 3.02. Revolving Credit Agreement. On or prior
to the Distribution Date INTERCO shall obtain refinancing of its
current revolving credit agreement, the new terms of which shall
not constitute obligations of the Florsheim Group.
Section 3.03. Repayment of Allocable Debt. On or
prior to the Distribution Date, INTERCO shall contribute to
Florsheim's capital an amount equal to the Allocable Debt less
the net proceeds of the offering of the Notes and the Initial
Borrowing. Immediately following the sale of the Notes and
establishment of the Credit Facility and the Initial Borrowing,
the Florsheim Group shall repay to the lenders of the Allocable
Debt an amount equal to the Allocable Debt, upon which payment
the Florsheim Group shall be released from any and all claims or
obligations arising under the Allocation Agreement.
Section 3.04. Intercompany Accounts. Other than as
specifically described herein, all intercompany accounts as of
the Distribution Date will be cancelled.
Section 3.05. Certain Intellectual Property Matters.
(a) Except as otherwise set forth herein, after the Distribution
Date, neither Florsheim nor any member of the Florsheim Group
shall use the name "INTERCO" or any similar trademarks
(collectively, the "INTERCO Tradenames") or any tradename or
trademark likely to cause confusion with the INTERCO Tradenames.
(b) After the Distribution Date, the Florsheim Group
shall have the right to sell existing inventory and to use
existing brochures, packaging, labelling, containers, supplies,
advertising materials, technical data sheets and any similar
materials bearing any INTERCO Tradenames until the earlier of (i)
one year after the Distribution Date and (ii) the date existing
stocks are exhausted. The Florsheim Group shall have the right
to use the INTERCO Tradenames in advertising that cannot be
changed by the Florsheim Group using reasonable efforts for a
period not to exceed twelve months after the Distribution Date.
The Florsheim Group shall comply with all applicable laws or
regulations in any use of packaging or labelling containing the
INTERCO Tradenames.
(c) The Florsheim Group shall not be obligated to
change the INTERCO Tradenames on finished goods in inventory and
goods in the hands of dealers, distributors and customers at the
time of expiration of a time period set forth in (b) above.
(d) Florsheim agrees to use, and shall cause the other
members of the Florsheim Group to use, reasonable efforts to
cease using the INTERCO Tradenames on buildings, cars, trucks and
other fixed assets as soon as possible but in any event within a
period not to exceed one year after the Distribution Date.
(e) The obliteration of the INTERCO Tradenames shall
be deemed compliance with the Florsheim Group's covenants not to
use the INTERCO Tradenames pursuant to this Section 3.05.
(f) Except with the prior written consent of
Florsheim, after the Distribution Date neither INTERCO nor any
member of the INTERCO Group shall use the name "Florsheim" or any
other trademarks of the Florsheim Group (collectively the
"Florsheim Tradenames") or any tradename or trademark likely to
cause confusion with the Florsheim Tradenames.
ARTICLE IV
INDEMNIFICATION
Section 4.01. Florsheim Indemnification of the INTERCO
Group. Subject to Section 4.03, on and after the Distribution
Date, each member of the Florsheim Group shall jointly and
severally indemnify, defend and hold harmless the INTERCO Group,
and each of their respective directors, officers, employees and
agents (the "INTERCO Indemnitees") from and against any and all
damage, loss, liability and expense (including, without
limitation, reasonable expenses of investigation and reasonable
attorneys' fees and expenses in connection with any and all
Actions or threatened Actions) (collectively, "Indemnifiable
Losses") incurred or suffered by any of the INTERCO Indemnitees
and arising out of, or due to the failure of any member of the
Florsheim Group to pay, perform or otherwise discharge, any of
the Florsheim Liabilities.
Section 4.02. INTERCO Indemnification of the Florsheim
Group. Subject to Section 4.03, on and after the Distribution
Date, INTERCO shall indemnify, defend and hold harmless the
Florsheim Group, and each of their respective directors,
officers, employees and agents (the "Florsheim Indemnitees") from
and against any and all Indemnifiable Losses incurred or suffered
by any of the Florsheim Indemnitees and arising out of, or due to
the failure of any member of the INTERCO Group to pay, perform or
otherwise discharge, any of the INTERCO Liabilities.
Section 4.03. Insurance and Third Party Obligations.
Any indemnification pursuant to Sections 4.01 or 4.02 shall be
paid net of the amount of any insurance (other than any insurance
paid for by the applicable Indemnitee) or other amounts that
would be payable by any third party to the indemnified party in
the absence of this Agreement. It is expressly agreed that no
insurer or any other third party shall be (a) entitled to a
benefit it would not be entitled to receive in the absence of the
foregoing indemnification provisions, (b) relieved of the
responsibility to pay any claims to which it is obligated or (c)
entitled to any subrogation rights with respect to any obligation
hereunder.
ARTICLE V
INDEMNIFICATION PROCEDURES
Section 5.01. Notice and Payment of Claims. If any
INTERCO or Florsheim Indemnitee (the "Indemnified Party")
determines that it is or may be entitled to indemnification by
any party (the "Indemnifying Party") under Article IV (other than
in connection with any Action or claim subject to Section 5.02),
the Indemnified Party shall deliver to the Indemnifying Party a
written notice specifying, to the extent reasonably practicable,
the basis for its claim for indemnification and the amount for
which the Indemnified Party reasonably believes it is entitled to
be indemnified. After the Indemnifying Party shall have been
notified of the amount for which the Indemnified Party seeks
indemnification, the Indemnifying Party shall, within 30 days
after receipt of such notice, pay the Indemnified Party such
amount in cash or other immediately available funds (or reach
agreement with the Indemnified Party as to a mutually agreeable
alternative payment schedule) unless the Indemnifying Party
objects to the claim for indemnification or the amount thereof.
If the Indemnifying Party does not give the Indemnified Party
written notice objecting to such claim and setting forth the
grounds therefor within the same 30 day period, the Indemnifying
Party shall be deemed to have acknowledged its liability for such
claim and the Indemnified Party may exercise any and all of its
rights under applicable law to collect such amount.
Section 5.02. Notice and Defense of Third-Party
Claims. Promptly following the earlier of (a) receipt of notice
of the commencement by a third party of any Action against or
otherwise involving any Indemnified Party or (b) receipt of
information from a third party alleging the existence of a claim
against an Indemnified Party, in either case, with respect to
which indemnification may be sought pursuant to this Agreement (a
"Third-Party Claim"), the Indemnified Party shall give the
Indemnifying Party written notice thereof. The failure of the
Indemnified Party to give notice as provided in this Section 5.02
shall not relieve the Indemnifying Party of its obligations under
this Agreement, except to the extent that the Indemnifying Party
is prejudiced by such failure to give notice. Within 30 days
after receipt of such notice, the Indemnifying Party may (a) by
giving written notice thereof to the Indemnified Party,
acknowledge liability for and at its option elect to assume the
defense of such Third-Party Claim at its sole cost and expense or
(b) object to the claim of indemnification set forth in the
notice delivered by the Indemnified Party pursuant to the first
sentence of this Section 5.02; provided that if the Indemnifying
Party does not within the same 30 day period give the Indemnified
Party written notice objecting to such claim and setting forth
the grounds therefor or electing to assume the defense, the
Indemnifying Party shall be deemed to have acknowledged its
liability for such Third-Party Claim. Any contest of a Third-
Party Claim as to which the Indemnifying Party has elected to
assume the defense shall be conducted by attorneys employed by
the Indemnifying Party and reasonably satisfactory to the
Indemnified Party; provided that the Indemnified Party shall have
the right to participate in such proceedings and to be
represented by attorneys of its own choosing at the Indemnified
Party's sole cost and expense. If the Indemnifying Party assumes
the defense of a Third-Party Claim, the Indemnifying Party may
settle or compromise the claim without the prior written consent
of the Indemnified Party; provided that the Indemnifying Party
may not agree to any such settlement pursuant to which any such
remedy or relief, other than monetary damages for which the
Indemnifying Party shall be responsible hereunder, shall be
applied to or against the Indemnified Party, without the prior
written consent of the Indemnified Party, which consent shall not
be unreasonably withheld. If the Indemnifying Party does not
assume the defense of a Third-Party Claim for which it has
acknowledged liability for indemnification under Article IV, the
Indemnified Party may require the Indemnifying Party to reimburse
it on a current basis for its reasonable expenses of
investigation, reasonable attorney's fees and reasonable out-of-
pocket expenses incurred in defending against such Third-Party
Claim and the Indemnifying Party shall be bound by the result
obtained with respect thereto by the Indemnified Party; provided
that the Indemnifying Party shall not be liable for any
settlement effected without its consent, which consent shall not
be unreasonably withheld. The Indemnifying Party shall pay to
the Indemnified Party in cash the amount for which the
Indemnified Party is entitled to be indemnified (if any) within
15 days after the final resolution of such Third-Party Claim
(whether by the final nonappealable judgment of a court of
competent jurisdiction or otherwise) or, in the case of any
Third-Party Claim as to which the Indemnifying Party has not
acknowledged liability, within 15 days after such Indemnifying
Party's objection has been resolved by settlement, compromise or
the final nonappealable judgment of a court of competent
jurisdiction.
ARTICLE VI
SERVICES
Section 6.01. Provision of Services. Each party shall
make available to the other Party during normal business hours
and in a manner that will not unreasonably interfere with such
party's business, its financial, tax, accounting, employee
benefits and similar staff and services (collectively "Services")
whenever and to the extent that they may be reasonably required
in connection with the preparation of tax returns, audits,
claims, litigation or administration of employee benefit plans
and otherwise to assist in effecting an orderly transition
following the Distribution. The Services shall be provided for a
one year period following the Distribution Date.
Section 6.02 Risk Management. From the Distribution
Date until March 1, 1997, INTERCO shall provide Florsheim with
risk management services with respect to property and casualty
insurance, including without limitation loss control, claims
administration and policy administration, as historically
provided by INTERCO to Florsheim ("Risk Services"). It is
understood that Risk Services shall not be provided with respect
to any medical, disability or life insurance. Any premiums for
any insurance for the Florsheim Group shall be the sole liability
of and paid by Florsheim. Florsheim can terminate the Risk
Services at any time upon payment of any termination fees or
expenses associated with such cancellation.
Any first party claims pending or drafts in process
will be forwarded to Florsheim to reimburse it for losses to its
property or goods incurred prior to the Distribution Date.
Section 6.03. Reimbursement. A party providing
Services to the other party pursuant to this Article VI shall be
entitled to receive from the recipient upon the presentation of
invoices therefor, payment for all out-of-pocket costs and
expenses as may be reasonably incurred in providing such
Services.
ARTICLE VII
EMPLOYEE MATTERS
Section 7.01. General. Except as otherwise set forth
in this Article VII, (a) the INTERCO Group shall retain any and
all liabilities relating to or arising out of any employee
benefit, compensation, or welfare arrangement (a "Plan") in
respect of any employee ("INTERCO Employee") of INTERCO or its
subsidiaries who is not a Transferred Employee and (b) the
INTERCO Group shall have no liability relating to or arising out
of any Plan in respect of Transferred Employees.
Section 7.02. Pension. (a) Each Transferred Employee
who is a participant in the INTERCO INCORPORATED Retirement Plan
("INTERCO Retirement Plan") will cease accruing benefits
thereunder, and shall become fully vested for any previously
accrued benefits, as of the Distribution Date.
(b) Florsheim shall establish a new retirement plan or
plans, if applicable (the "Florsheim Retirement Plan"), which
shall provide that Transferred Employees previously covered under
the INTERCO Retirement Plan shall receive service credit for
their service with any member of any Group prior to the
Distribution Date to the extent that such service was recognized
by the INTERCO Retirement Plan and for all purposes for which
such credit was relevant under the INTERCO Retirement Plan. The
Florsheim Retirement Plan shall be designed so that the combined
benefits under the INTERCO Retirement Plan and the Florsheim
Retirement Plan for Transferred Employees who remain participants
in the Florsheim Plan shall be substantially similar to the
benefits that would have accrued under the INTERCO Retirement
Plan had the Transferred Employees remained participants thereof.
Florsheim shall provide INTERCO with all relevant employee
information necessary for INTERCO to calculate the benefits to
which such Transferred Employees are eligible under the INTERCO
Retirement Plan as described under Section 7.02(a) or otherwise
to fulfill its obligations hereunder.
(c) The Florsheim Group shall assume as of the
Distribution Date all of the obligations, if any, of the INTERCO
Group to Transferred Employees under supplemental pension or
welfare plans, arrangements or agreements with Transferred
Employees, including without limitation the INTERCO INCORPORATED
Supplemental Retirement Plan ("INTERCO Supplemental Plan"). For
this purpose, Florsheim agrees to establish a supplemental
employee retirement plan containing substantially the same terms
as the INTERCO Supplemental Plan, covering at least the one
Transferred Employee currently covered by such plan, and
providing the same benefits to such employee as such employee
would have received had the Distribution not occurred and the
employee remained eligible under the INTERCO Supplemental Plan
until normal retirement age. In addition, INTERCO shall transfer
to Florsheim its rights and obligations under the Split Dollar
Agreement currently in place between INTERCO and the president of
Florsheim, including all rights in the split-dollar life
insurance policy issued in connection therewith.
Section 7.03. Savings Plans. (a) INTERCO shall take
all appropriate or necessary action to spin-off from the Savings
Plan for the Employees of INTERCO INCORPORATED and Affiliates
("INTERCO Savings Plan") into a new savings plan ("New Savings
Plan") the entire accumulated assets representing the interests
(whether vested or non-vested) of Transferred Employees,
calculated as of the close of business on the date of such spin-
off ("Valuation Date"). As of the date of such spin-off,
Florsheim shall become the sponsor of the New Savings Plan and
any ties or liability of INTERCO to or for such plan, either as
plan sponsor or adopting employer or otherwise, shall cease. The
transaction described in this Section 7.03 shall be referred to
as the "Spin-off".
(b) Florsheim and INTERCO each warrant to the other
that they will comply with the requirements of Section 414(l) of
the Code and that accrued benefits of Transferred Employees under
the New Savings Plan immediately after the Spin-off will not be
less than such Transferred Employees' accrued benefits under the
INTERCO Savings Plan immediately prior to the Spin-off.
Florsheim and INTERCO shall, in connection with the Spin-off,
cooperate in making all appropriate filings required under the
Code or the Employee Retirement Income Security Act of 1974, and
the regulations thereunder. Following the Spin-off, Florsheim
shall provide evidence acceptable to INTERCO of the qualification
of, or the filing of a determination letter with respect to, the
New Savings Plan under Section 401(a) of the Code, and the
exemption from tax of any related trust under Section 501(a) of
the Code. In no event may any additional contributions be made
by the Transferred Employees to the INTERCO Savings Plan
following the Distribution Date. Without limiting the generality
of the foregoing, any amounts withheld by Florsheim for
contribution to the INTERCO Savings Plan prior to the
Distribution Date, which contributions have not been processed
and charged to Florsheim prior to the Distribution Date, will be
contributed by Florsheim to the New Savings Plan following the
Distribution Date for the account of the Transferred Employees
from whom such amounts were withheld.
(c) The account balances of Transferred Employees
under the INTERCO Savings Plan shall be spun-off in kind (unless
the respective parties otherwise agree), credited with any
proportionate contributions to the respective date of spin-off
and reduced by any customary plan expense, benefit or withdrawal
payments in respect of Transferred Employees occurring prior to
the date of the Spin-off. Such spun-off amounts shall not
include any amounts attributable to Transferred Employees which
have been forfeited.
(d) Florsheim shall, effective as of the date of the
Spin-off, assume all of the obligations of the INTERCO Group in
respect of the account balances of the Transferred Employees
under the INTERCO Savings Plan (exclusive of any portion of such
account balances which is paid or otherwise withdrawn prior to
the date of spin-off described in this Section 7.03) on or prior
to the Distribution Date. The Florsheim Group shall not assume
any other obligations or liabilities arising under or
attributable to the INTERCO Savings Plan.
(e) It shall be a condition of INTERCO's obligation to
spin-off any account balances hereunder that INTERCO shall have
obtained the consent to such Spin-off of any insurance company
under any guaranteed investment contract, or shall otherwise have
avoided or minimized any penalty or market adjustment for
premature termination of such vehicle or other impairment of the
value thereof or the return thereon. In the event such penalty
or adjustment cannot be avoided, INTERCO may elect that all
account balances shall be retained in the INTERCO Savings Plan.
(f) If the conditions of this Section 7.03 are met
with respect to the New Savings Plan, INTERCO shall grant a
royalty-free, perpetual, non-exclusive license to Florsheim to
use the name "SMART Program" in connection with the New Savings
Plan (including the right to use "SMART Program" in conjunction
with the name "Florsheim" for such Plan) so long as the New
Savings Plan remains qualified under Section 401(a) and
Section 401(k) of the Code. Florsheim shall have no right
whatsoever to transfer or sublicense the name "SMART Program" to
any other person or in connection with any other use.
(g) In the event that the Spin-off as described in (a)
above does not occur by the Distribution Date, then INTERCO shall
cause the INTERCO Savings Plan to provide (i) for full vesting of
the account balances of the respective Transferred Employees
under the INTERCO Savings Plan as of the Distribution Date and
(ii) that no additional contributions by Transferred Employees to
the INTERCO Savings Plan can be made following the Distribution
Date.
Section 7.04. Stock Options. (a) Any Transferred
Employees who hold options for INTERCO Common Stock ("INTERCO
Options") which are exercisable at the time of the Distribution
Date will be given the right, in lieu of exercising such options
for INTERCO Common Stock in accordance with their terms, to
exchange such options, in whole or in part, for options to
purchase Florsheim Common Stock ("Florsheim Options"). The
number of shares of Florsheim Common Stock purchasable under the
Florsheim Options to be received by a Transferred Employee who
exercises such right, the exercise price of such Florsheim
Options, and the other rights of option holders will be
determined so as to at least substantially preserve the economic
gain or loss inherent in the INTERCO options being exchanged.
Transferred Employees who choose to exchange their exercisable
INTERCO Options for Florsheim Options and who have not exercised
such options prior to six months following the Distribution will
be paid by Florsheim at such time an amount in cash equal to 10%
of any economic gain inherent in the INTERCO Options exchanged.
(b) Any Transferred Employees who hold INTERCO Options
which are not exercisable at the time of the Distribution Date
(which options will therefore terminate unexercised) will be
granted new Florsheim Options following the Distribution Date.
The number of shares of Florsheim Common Stock purchasable under
the Florsheim Options to be received by such Transferred
Employee, the exercise price of such Florsheim Options, and the
other rights of option holders will be determined so as to
substantially preserve the economic loss or gain inherent in the
INTERCO options which terminate.
(c) In general, the terms and exercise dates of the
Florsheim Options granted to Transferred Employees hereunder
shall be the same as those for the INTERCO options previously
held.
Section 7.05. Health and Welfare Plans. (a) The
Florsheim Group shall assume as of the Distribution Date all the
obligations, if any, of the INTERCO Group, whether existing on
the Distribution Date or arising thereafter, to provide coverage
and benefits for Transferred Employees under Title X of the
Consolidated Omnibus Budget Reconciliation Act of 1985 and
Section 4980B of the Code.
(b) Florsheim shall establish a new medical plan
("Florsheim Medical Plan") for the Transferred Employees
providing substantially the same benefits as currently provided
to the Transferred Employees under the INTERCO INCORPORATED
Medical Care Plan ("INTERCO Medical Plan"). All medical expenses
otherwise covered under the INTERCO Medical Plan which are
incurred prior to the Distribution Date (even if a claim for
reimbursement thereof is not made until after the Distribution
Date) will be paid out of the INTERCO Medical Plan. All other
medical expenses otherwise covered under the Florsheim Medical
Plan (without reference to any pre-existing condition or waiting
periods) shall be paid out of the Florsheim Medical Plan.
(c) INTERCO shall take all appropriate or necessary
action to spin-off from The Flexible Compensation Plan for
Employees of INTERCO INCORPORATED and Its Operating Companies
("INTERCO BEST Plan") into a new flexible compensation plan ("New
BEST Plan") the entire accumulated assets representing the
interests of Transferred Employees, calculated as of the close of
business on the date of such spin-off. As of the date of such
spin-off, Florsheim shall become the sponsor of the New BEST Plan
and any ties or liability of INTERCO to or for such plan, either
as plan sponsor or adopting employer or otherwise shall cease.
INTERCO shall grant a royalty-free, perpetual, non-exclusive
license to Florsheim to use the name "BEST Plan" in connection
with the New BEST Plan (including the right to use "BEST Plan" in
conjunction with the name "Florsheim" for such Plan) so long as
the New BEST Plan remains qualified under Section 125 of the
Code. Florsheim shall have no right whatsoever to sell,
transfer, assign or sublicense the name "BEST Plan" to any other
person or use such name in connection with any other use.
(d) Florsheim shall establish a long term disability
plan, a short term disability plan and an accidental death plan
("Other Florsheim Welfare Plans") with substantially the same
features and providing substantially the same benefits to the
Transferred Employees as do the INTERCO INCORPORATED long term
disability plan, short term disability plan and accidental death
plan ("Other INTERCO Welfare Plans") with respect to the
Transferred Employees. Claims incurred by Transferred Employees
prior to the Distribution Date shall be paid out of the Other
INTERCO Welfare Plans; claims incurred by Transferred Employees
on or following the Distribution Date shall be paid out of the
Other Florsheim Welfare Plans.
Section 7.06. Multiemployer Pension Plans. Florsheim
has had in the past, and continues to have, an obligation to make
contributions to the Central States, Southeast and Southwest
Areas Pension Plan ("Central States"), a multiemployer pension
plan as such term is defined in Section 4001(a)(3) of ERISA (a
"Multiemployer Plan"). In the past, International Shoe Company
also had a contribution obligation to Central States. The
parties agree that included within the definition of Assumed
Liabilities is any and all liability to any Multiemployer Plan
(including, without limitation, Central States) to the extent
that such liability is attributable to contributions made to any
such Multiemployer Plan on behalf of any Transferred Employee
(including, without limitation, present or former employees of
any member of the Florsheim Group or of International Shoe
Company). Each member of the Florsheim Group jointly and
severally agrees that it will indemnify and defend any member of
the INTERCO Group from and against any such liability.
Section 7.07. No Third Party Beneficiaries. Neither
Transferred Employees nor any current, former or retired employee
of any member of the INTERCO Group shall be entitled to enforce
the provisions of this Article 7 against the respective parties
as third party beneficiaries thereof.
ARTICLE VIII
INTERCO GUARANTEES
Section 8.01. Performance of Guaranteed Leases.
(a) Each member of the Florsheim Group jointly and severally
agrees that it will (i) perform all of its obligations under each
Guaranteed Lease to the extent necessary to avoid any liability
of any member of the INTERCO Group with respect thereto and
(ii) indemnify, defend and hold harmless each member of the
INTERCO Group from and against any and all damage, loss,
liability and expense (including, without limitation, reasonable
expenses of investigation and reasonable attorneys' fees and
expenses in connection with any and all Actions or threatened
Actions) incurred or suffered by any member of the INTERCO Group
and arising out of, or due to the failure or alleged failure of
any member of the Florsheim Group to perform or otherwise dis-
charge, any of such obligations. The Florsheim Group shall use
its reasonable best efforts to obtain a release of the INTERCO
Group from its obligations under the Guaranteed Leases if and to
the extent that such efforts are consistent with the business
objectives of the Florsheim Group and do not adversely affect the
relationship between the Florsheim Group and the lessors under
the Guaranteed Leases.
(b) So long as the obligations of all members of the
INTERCO Group under any Guaranteed Leases have not been fully and
finally discharged:
(i) Florsheim will keep, and will cause each
member of the Florsheim Group to keep, proper books of
record and account in which full, true and correct
entries shall be made in all material respects of all
dealings and transactions in relation to the business
conducted by the Florsheim Group, and will permit, and
will cause each member of the Florsheim Group to
permit, representatives of INTERCO or any member of the
INTERCO Group to visit and inspect any of their
respective properties, to examine and make abstracts
from any of their respective books and records and to
discuss their respective affairs, finances and accounts
with their respective officers, employees and
independent public accountants and, subject to any
applicable privilege, counsel, all at such reasonable
times and as often as may be reasonably desired;
(ii) Florsheim will keep, and will cause each
member of the Florsheim Group to keep, all material
property useful and necessary in the Florsheim Business
in good working order and condition, ordinary wear and
tear excepted, and will preserve, renew and keep in
full force and effect, and will cause each member of
the Florsheim Group to preserve, renew and keep in full
force and effect, all material licenses necessary to
conduct the Florsheim Business;
(iii) Florsheim will deliver to INTERCO:
(A) as soon as available and in any event
within 90 days after the end of each fiscal year
of Florsheim, its annual report on Form 10-K for
such fiscal year;
(B) as soon as available and in any event
within 45 days after the end of each of the first
three quarters of each fiscal year of Florsheim,
its quarterly report on Form 10-Q for such fiscal
quarter;
(C) as soon as available and in any event
within sixty days after the end of each calendar
quarter of Florsheim, a certificate of the chief
financial officer setting forth in reasonable
detail information concerning the remaining
obligations under the Guaranteed Leases as of the
end of such quarter; and
(D) from time to time such additional
information regarding the financial position or
business of the Florsheim Group and the Guaranteed
Leases, as INTERCO may reasonably request; and
(iv) From time to time as reasonably requested by
INTERCO, appropriate representatives of Florsheim
(including one or more members of its senior
management) will make themselves available to review
with representatives of INTERCO the status of the
Guaranteed Leases. At least one meeting each calendar
quarter, within 60 days of the end of each quarter,
shall be deemed to be reasonable if requested by
INTERCO.
(c) Florsheim shall promptly (and in any event within
five days) notify INTERCO of:
(i) any notice or other communication
(including any cure notice or notice of default)
from any other party that any Guaranteed Lease is
not being performed substantially in accordance
with its terms (provided that Florsheim shall not
have to notify INTERCO of an erroneous
notification of a late lease payment by a landlord
resulting from misapplication of the lease payment
by the landlord); and
(ii) any termination of any Guaranteed Lease;
(d) Florsheim shall propose to INTERCO its response to
any matter requiring notice to INTERCO under Section 8.02(c)
promptly (and in any event not more than 10 days) after the
giving of such notice. Florsheim thereafter shall keep INTERCO
advised of such matter and, prior to taking or agreeing to take
any material action in response to or related to any such matter,
consider in good faith any comments INTERCO may make in
connection therewith.
(e) Without the prior written consent of INTERCO,
neither Florsheim nor any member of the Florsheim Group shall
take any action that would reasonably be expected to adversely
affect the potential liability of any member of the INTERCO Group
with respect to the Guaranteed Leases, whether by increasing the
likelihood or amount of any such liability, extending the time
during which such liability remains or otherwise, including any
such increase or extension caused by an amendment, renewal or
extensions of any Guaranteed Lease (or any part thereof).
Notwithstanding the foregoing, Florsheim may exercise existing
renewal options if (i) the rental provided for in the option is
below fair market rent or (ii) the store is in a location that is
of material importance to Florsheim in light of potential
alternate locations and would not be available to Florsheim
unless an existing renewal option is exercised. Florsheim will
provide at least 30 days' prior written notice to INTERCO of the
exercise of an option of a Guaranteed Lease and furnish details
to INTERCO demonstrating that Florsheim is entitled to exercise
the option pursuant to the foregoing sentence.
Section 8.02. Termination. All provisions of this
Article VIII shall terminate if all obligations of all members of
the INTERCO Group under the Guaranteed Leases shall be fully and
finally discharged.
Section 8.03. Dun & Bradstreet. INTERCO agrees to
notify Dun & Bradstreet of the termination of INTERCO's ownership
of the Florsheim Group immediately after the Distribution Date.
The Florsheim Group agrees to take such ministerial actions as
INTERCO may reasonably request to notify any person who is a
beneficiary of any Dun & Bradstreet guarantee of the termination
of INTERCO's ownership of the Florsheim Group, and to certify to
such notification.
ARTICLE IX
INFORMATION
Section 9.01. Provision of Corporate Records. Each
Group shall arrange as soon as practicable following the
Distribution Date for the provision to the other Group of
existing corporate governance documents (e.g. minute books, stock
registers, stock certificates, documents of title, etc.) in its
possession relating to such other Group or its business and
affairs.
Section 9.02. Access to Information. From and after
the Distribution Date each Group shall afford the other Group and
its accountants, counsel and other designated representatives
reasonable access (including using reasonable efforts to give
access to persons or firms possessing information) and
duplicating rights during normal business hours to all records,
books, contacts, instruments, computer data and other data and
information in such Group's possession relating to the business
and affairs of such other Group (other than data and information
subject to an attorney/client or other privilege), insofar as
such access is reasonably required by such other Group including,
without limitation, for audit, accounting and litigation
purposes, as well as for purposes of fulfilling disclosure and
reporting obligations.
Section 9.03. Litigation Cooperation. Each Group
shall use reasonable efforts to make available to the other
Group, upon written request, its officers, directors, employees
and agents as witnesses to the extent that such persons may
reasonably be required in connection with any legal,
administrative or other proceedings arising out of the business
of the other Group prior to the Distribution Date in which the
requesting party may from time to time be involved.
Section 9.04. Reimbursement. Each Group providing
information or witnesses under Sections 9.01, 9.02 or 9.03 to the
other Group shall be entitled to receive from the recipient, upon
the presentation of invoices therefor, payment for all out-of-
pocket costs and expenses as may be reasonably incurred in
providing such information or witnesses.
Section 9.05. Retention of Records. Except as
otherwise required by law or agreed to in writing, each party
shall, and shall cause the members of its respective Group to,
retain all information relating to the other Group's business in
accordance with the past practice of such party. Notwithstanding
the foregoing, except as provided in the Tax Sharing Agreement,
any party may destroy or otherwise dispose of any information at
any time, provided that, prior to such destruction or disposal,
(a) such party shall provide no less than 90 days' prior written
notice to the other party, specifying the information proposed to
be destroyed or disposed of and (b) if the recipient of such
notice shall request in writing prior to the scheduled date for
such destruction or disposal that any of the information proposed
to be destroyed or disposed of be delivered to such requesting
party, the party proposing the destruction or disposal shall
promptly arrange for the delivery of such of the information as
was requested at the expense of the requesting party.
Section 9.06. Confidentiality. Each party shall hold
and shall cause its directors, officers, employees, agents,
consultants and advisors to hold in strict confidence, unless
compelled to disclose by judicial or administrative process or,
in the opinion of its counsel, by other requirements of law, all
information (other than any such information relating solely to
the business or affairs of such party) concerning the other party
(except to the extent that such information can be shown to have
been (a) in the public domain through no fault of such party or
(b) later lawfully acquired on a non-confidential basis from
other sources by the party to which it was furnished), and
neither party shall release or disclose such information to any
other person, except its auditors, attorneys, financial advisors,
bankers and other consultants and advisors who shall be advised
of and agree in writing to comply with the provisions of this
Section 9.06. Each party shall be deemed to have satisfied its
obligation to hold confidential information concerning or
supplied by the other party if it exercises the same care as it
takes to preserve confidentiality for its own similar
information.
ARTICLE X
MISCELLANEOUS
Section 10.01. Expenses. Except as specifically
provided in this Agreement (or the Tax Sharing Agreement, if
relevant), all costs and expenses incurred in connection with the
preparation, execution, delivery and implementation of this
Agreement and with the consummation of the transactions
contemplated by this Agreement (including transfer taxes and the
fees and expenses of all counsel, accountants and financial and
other advisors) shall be paid by the party incurring such cost or
expense. It is understood and agreed that the Florsheim Group
shall pay or be responsible for the initial fees payable to the
lenders and the agent under the Credit Facility and the
underwriting and discounts and commissions payable in respect of
the offering of the Notes. Notwithstanding the foregoing, it is
understood and agreed that the INTERCO Group (not including
Converse and its direct and indirect subsidiaries) shall pay the
legal, filing, accounting, printing and other accountable and
out-of-pocket expenditures in connection with the
(i) preparation, printing and filing of the Form 10,
(ii) obtaining of the Credit Facility and (iii) preparation,
printing and filing of the Registration Statement and the
offering and sale of the Notes.
Section 10.02. Notices. All notices and communications
under this Agreement shall be in writing and any communication or
delivery hereunder shall be deemed to have been duly given when
received addressed as follows:
If to INTERCO, to:
INTERCO INCORPORATED
101 South Hanley Road
St. Louis, Missouri 63105
Attention: Secretary
If to Florsheim, to:
The Florsheim Shoe Company
130 South Canal Street
Chicago, Illinois 60606
Attention: Secretary
Any party may, by written notice so delivered to the other
parties, change the address to which delivery of any notice shall
thereafter be made.
Section 10.03. Amendment and Waiver. This Agreement
may not be altered or amended, nor may rights hereunder be
waived, except by an instrument in writing executed by the party
or parties to be charged with such amendment or waiver. No
waiver of any terms, provision or condition of or failure to
exercise or delay in exercising any rights or remedies under this
Agreement, in any one or more instances, shall be deemed to be,
or construed as, a further or continuing waiver of any such term,
provision, condition, right or remedy or as a waiver of any other
term, provision or condition of this Agreement.
Section 10.04. Counterparts. This Agreement may be
executed in one or more counterparts each of which shall be
deemed an original instrument, but all of which together shall
constitute but one and the same Agreement.
Section 10.05. Governing Law. This Agreement shall be
construed in accordance with, and governed by, the laws of the
State of Missouri, without regard to the conflicts of law rules
of such state.
Section 10.06. Entire Agreement. This Agreement,
together with the Ancillary Agreements, constitute the entire
understanding of the parties hereto with respect to the subject
matter hereof, superseding all negotiations, prior discussions
and prior agreements and understandings relating to such subject
matter. To the extent that the provisions of this Agreement are
inconsistent with the provisions of any Ancillary Agreements, the
provisions of such Ancillary Agreement shall prevail.
Section 10.07. Parties in Interest. None of the
parties hereto may assign its rights or delegate any of its
duties under this Agreement without the prior written consent of
each other party. This Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and their
respective successors and permitted assigns. Nothing contained
in this Agreement, express or implied, is intended to confer any
benefits, rights or remedies upon any person or entity other than
the INTERCO Group and the Florsheim Group, and the INTERCO and
Florsheim Indemnitees under Articles IV and V hereof.
Section 10.08. Tax Sharing Agreement; After-Tax
Payments. (a) This Agreement shall not govern any Tax, and any
and all claims, losses, damages, demands, costs, expenses,
liabilities, refunds, deductions, write-offs, or benefits
relating to Taxes shall be exclusively governed by the Tax
Sharing Agreement.
(b) If at the time Florsheim is required to make any
payment to INTERCO under this Agreement INTERCO owes Florsheim
any amount under the Tax Sharing Agreement, then such amounts
shall be offset and the excess shall be paid by the party liable
for such excess. Similarly, if at the time INTERCO is required
to make any payment to Florsheim under this Agreement Florsheim
owes INTERCO any amount under the Tax Sharing Agreement, then
such amounts shall be offset and the excess shall be paid by the
party liable for such excess.
(c) Except as otherwise provided herein, any amount
payable under Section 4.01 of this Agreement shall be paid in an
"After-Tax Amount" (as defined in the Tax Sharing Agreement).
Section 10.09. Further Assurances and Consents. In
addition to the actions specifically provided for elsewhere in
this Agreement, each of the parties hereto will use its
reasonable efforts to (i) execute and deliver such further
instruments and documents and take such other actions as any
other party may reasonably request in order to effectuate the
purposes of this Agreement and to carry out the terms hereof and
(ii) take, or cause to be taken, all actions, and to do, or cause
to be done, all things, reasonably necessary, proper or advisable
under applicable laws, regulations and agreements or otherwise to
consummate and make effective the transactions contemplated by
this Agreement, including, without limitation, using its
reasonable efforts to obtain any consents and approvals and to
make any filings and applications necessary or desirable in order
to consummate the transactions contemplated by this Agreement;
provided that no party hereto shall be obligated to pay any
consideration therefor (except for filing fees and other similar
charges) to any third party from whom such consents, approvals
and amendments are requested or to take any action or omit to
take any action if the taking of or the omission to take such
action would be unreasonably burdensome to the party, its Group
or its Group's business.
Section 10.10 Arbitration. Resolution of any and all
disputes arising from or in connection with this Agreement,
whether based on contract, tort, statute or otherwise, including,
but not limited to, disputes over arbitrability and disputes in
connection with claims by third parties (collectively,
"Disputes") shall be exclusively governed by and settled in
accordance with the provisions of this Section 10.10; provided,
however, that nothing contained herein shall preclude either
party from seeking or obtaining (a) injunctive relief or (b)
equitable or other judicial relief to enforce the provisions
hereof or to preserve the status quo pending resolution of
Disputes hereunder. INTERCO or Florsheim (each a "Party") may
commence proceedings hereunder by delivering a written notice to
the other Party providing a reasonable description of the Dispute
to the other, and expressly requesting arbitration hereunder.
The parties hereby agree to submit all Disputes to arbitration
under the terms hereof, which arbitration shall be final,
conclusive and binding upon the parties, their successors and
assigns. The arbitration shall be conducted in St. Louis by
three arbitrators acting by majority vote (the "Panel") selected
by agreement of the Parties not later than ten (10) days after
delivery of the Demand or, failing such agreement, appointed
pursuant to the commercial arbitration rules of the American
Arbitration Association, as amended from time to time (the "AAA
Rules"). If an arbitrator so selected becomes unable to serve,
his or her successors shall be similarly selected or appointed.
The arbitration shall be conducted pursuant to the Federal
Arbitration Act and such procedures as the Parties may agree, or,
in the absence of or failing such agreement, pursuant to the AAA
Rules. Notwithstanding the foregoing: (a) each Party shall have
the right to audit the books and records of the other Party that
are reasonably related to the Dispute; (b) each Party shall
provide to the other, reasonably in advance of any hearing,
copies of all documents which a Party intends to present in such
hearing; (c) each party shall be allowed to conduct reasonable
discovery through written requests for information, document
requests, requests for stipulation of fact and depositions, the
nature and extent of which discovery shall be determined by the
Panel, taking into account the needs of the Parties and the
desirability of making discovery expeditious and cost effective.
All hearings shall be conducted on an expedited schedule, and all
proceedings shall be confidential. Either party may at its
expense make a stenographic record thereof. The Panel shall
complete all hearings not later than ninety (90) days after its
selection or appointment, and shall make a final award not later
than thirty (30) days thereafter. The award shall be in writing
and shall specify the factual and legal basis for the award. The
Panel shall apportion all costs and expenses of arbitration,
including the Panel's fees and expenses and fees and expenses of
experts, between the prevailing and non-prevailing Party as the
Panel deems fair and reasonable. Notwithstanding the foregoing,
in no event may the Panel award multiple, punitive or exemplary
damages.
THIS AGREEMENT CONTAINS BINDING ARBITRATION PROVISIONS WHICH MAY
BE ENFORCED BY THE PARTIES
IN WITNESS WHEREOF, the parties hereto have executed
and delivered this Agreement as of the day and year first above
written.
INTERCO INCORPORATED
By:David P. Howard
Name: David P. Howard
Title: Vice President
THE FLORSHEIM SHOE COMPANY
By:Larry J. Svoboda
Name: Larry J. Svoboda
Title: Vice President
THE FLORSHEIM SHOE STORE COMPANY - NORTHEAST
By:Larry J. Svoboda
Name: Larry J. Svoboda
Title: Vice President
THE FLORSHEIM SHOE STORE COMPANY - WEST
By:Larry J. Svoboda
Name: Larry J. Svoboda
Title: Vice President
L.J. O'NEILL SHOE COMPANY
By:Larry J. Svoboda
Name: Larry J. Svoboda
Title: Vice President
HY-TEST, INC.
By:Larry J. Svoboda
Name: Larry J. Svoboda
Title: Vice President