SUPPLEMENTAL RETIREMENT PLAN
FOR
SENIOR MANAGEMENT OF
FOOTSTAR, INC.
Effective October 14, 1996
Amended and Restated Effective as of January 1, 2005

 

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TABLE OF CONTENTS

         
ARTICLE 1. INTRODUCTION
    1  
ARTICLE 2. DEFINITIONS
    2  
2.01 Actuarial Equivalent
    2  
2.02 Beneficiary
    2  
2.03 Benefit Commencement Date
    2  
2.04 Board
    2  
2.05 Cause
    2  
2.06 Change in Control
    3  
2.07 Committee
    4  
2.08 Code
    4  
2.09 Compensation
    4  
2.10 Corporation
    5  
2.11 Early Retirement Date
    5  
2.12 Footstar
    5  
2.13 Normal Retirement Date
    5  
2.14 Participant
    5  
2.15 Plan
    5  
2.16 Retiree
    5  
2.17 Retirement Administration Committee
    6  
2.18 Service; Year of Service
    6  
2.19 Supplemental Retirement Benefit
    6  
2.20 Vested Retirement Benefit
    6  
ARTICLE 3. PARTICIPATION
    7  
3.01 Eligible Executives
    7  
3.02 Participation
    7  
3.03 Reclassification
    7  
ARTICLE 4. SUPPLEMENTAL RETIREMENT BENEFIT
    8  
4.01 Eligibility for Supplemental Retirement Benefit
    8  
4.02 Normal Retirement Benefit
    8  
4.03 Early Retirement Benefit
    8  
4.04 Benefit Commencement Date
    8  
4.05 Form of Benefit Payment
    9  
ARTICLE 5. DEATH BENEFIT
    10  
5.01 Death After Early Retirement Date
    10  
5.02 Death Prior to Early Retirement Date
    10  
5.03 Death After Benefit Commencement Date
    11  
5.04 Designation of Beneficiary
    11  
ARTICLE 6. PARTICIPANT OBLIGATIONS
    12  
6.01 Confidentiality; Cooperation with Regard to Litigation
    12  
6.02 Non-competition
    12  
6.03 Non-solicitation of Employees
    13  
6.04 Definitions
    13  
ARTICLE 7. CHANGE IN CONTROL
    14  
7.01 Applicability
    14  
7.02 Retirees and Beneficiaries At Time of Change in Control
    14  
7.03 Termination of Employment Within 24 Months Following a Change in Control
    15  
7.04 Termination of Employment More Than 24 Months Following a Change in Control
    16  

Supplemental Retirement Plan for
Senior Management of Footstar, Inc.
Amended and Restated effective 1/1/2005

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ARTICLE 8. FORFEITURE OF BENEFITS
    17  
ARTICLE 9. ADMINISTRATION
    18  
9.01 Powers and Duties of the Committee
    18  
9.02 Retirement Administration Committee
    18  
9.03 Delegation of Duties
    18  
9.04 Expenses
    18  
9.05 Indemnification of Retirement Administration Committee
    19  
9.06 Liability
    19  
9.07 Appeals Procedure
    19  
ARTICLE 10. AMENDMENT OR TERMINATION
    20  
ARTICLE 11. GENERAL PROVISIONS
    21  
11.01 Right to Withhold Taxes
    21  
11.02 No Right to Continued Employment
    21  
11.03 Benefits Non-Assignable
    21  
11.04 Unfunded Plan
    21  
11.05 Mental or Physical Incompetency
    21  
11.06 Governing Laws
    21  
11.07 Severability
    21  

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Senior Management of Footstar, Inc.
Amended and Restated effective 1/1/2005

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ARTICLE 1. INTRODUCTION
The Supplemental Retirement Plan for Senior Management of Footstar, Inc. is
designed to provide a benefit which, when added to the retirement income
provided under other Company plans, will ensure the payment of a competitive
level of retirement income to key senior executives of Footstar, Inc., thereby
providing an additional incentive for assuring orderly management succession.
The Plan is intended to be an unfunded plan maintained “primarily for the
purpose of providing deferred compensation for a select group of management or
other highly compensated individuals” within the meaning of the Employee
Retirement Income Security Act.
Eligibility for participation in the Plan shall be limited to executives
designated by the Compensation Committee of the Board of Directors of Footstar,
Inc.
This Plan became effective as of October 14, 1996. The Plan subsequently was
amended and restated effective                     , 2002.
This document sets forth the provisions of the Plan as amended and restated
effective as of January 1, 2005 to comply with the requirements of Section 409A
of the Internal Revenue Code.
Supplemental Retirement Plan for
Senior Management of Footstar, Inc.
Amended and Restated effective 1/1/2005

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ARTICLE 1. DEFINITIONS
Wherever used herein, the following terms shall have the meanings set forth
below:
1.01 Actuarial Equivalent
“Actuarial Equivalent” means a benefit which is equivalent in value to another
benefit when computed on the basis of the following actuarial assumptions:

(a)   Mortality: The 1983 Group Annuity Mortality Table

(b)   Interest: The Pension Benefit Guaranty Corporation rate used in the
calculation of immediate annuities applicable to the month that benefits will
commence MINUS 0.5%.

1.02 Beneficiary
“Beneficiary” means the person designated by the Participant in accordance with
Section 5.04 to receive benefits in the event of the Participant’s death.
1.03 Benefit Commencement Date
“Benefit Commencement Date” means the first day on which benefits are scheduled
to commence for a Participant pursuant to Section 4.04.
1.04 Board
“Board” means the Board of Directors of Footstar, Inc.
1.05 Cause
“Cause” means, in connection with an involuntary termination by the Corporation
of a Participant’s employment, (a) the Participant’s willful and material breach
of Article 6 of this Plan; (b) the Participant is convicted of a felony
involving moral turpitude; or (c) the Participant engages in conduct that
constitutes willful gross neglect or willful gross misconduct in carrying out
his duties under this Plan, resulting, in either case, in material harm to the
financial condition or reputation of Footstar. For purposes of this Plan, an act
or failure to act on Participant’s part shall be considered “willful” if it was
done or omitted to be done by him or her not in good faith, and shall not
include any act or failure to act resulting from any incapacity of a
Participant.
A termination for Cause shall not take effect unless the following provisions
are complied with. The Participant shall be given written notice by Footstar of
its intention to terminate him or her or her for Cause, such notice (i) to state
in detail the particular act or acts or failure or failures to act that
constitute the grounds on which the proposed termination for Cause is based and
(ii) to be given within 90 days of Footstar’s learning of such act or acts or
failure or failures to act. The Participant shall have 10 days after the date
that such written notice has been given to him or her in which to cure such
conduct, to the extent such cure is possible. If he or she fails to cure such
conduct, the Participant shall then be entitled to a hearing before the
Committee at which the Participant is entitled to appear. Such hearing shall be
held within 15 days of such notice to the Participant, provided he or she
requests such hearing within 10 days of the written notice from Footstar of the
intention to terminate him or her or her for Cause. If, within five days
following such hearing, the Participant is furnished written notice by the Board
confirming that, in its judgment, grounds for Cause on the basis of the original
notice exist, he or she shall thereupon be terminated for Cause.
Supplemental Retirement Plan for
Senior Management of Footstar, Inc.
Amended and Restated effective 1/1/2005

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1.06 Change in Control

(a)   Effective on and after January 1, 2005, “Change in Control” means (i) a
change in the ownership of Footstar as determined in accordance with Treasury
Regulation section 1.409A-3(i)(5)(v), (ii) a change in effective control of
Footstar as determined in accordance with Treasury Regulation section
1.409A-3(i)(5)(vi), or (iii) a change in the ownership of a substantial portion
of the assets of Footstar as determined in accordance with Treasury Regulation
section 1.409A-3(i)(5)(vii).

(b)   Effective prior to January 1, 2005, “Change in Control” means any of the
following occurrences:

  (i)   An acquisition by any Person of Beneficial Ownership of the shares of
common stock of Footstar then outstanding (the “Footstar Common Stock
Outstanding”) or the voting securities of Footstar then outstanding entitled to
vote generally in the election of directors (the “Footstar Voting Securities
Outstanding”), if such acquisition of Beneficial Ownership results in the
Person’s Beneficially Owning 25% or more of Footstar Common Stock Outstanding or
25% or more of the combined voting power of Footstar Voting Securities
Outstanding; or

  (ii)   The approval by the stockholders of Footstar of a reorganization,
merger, consolidation, complete liquidation or dissolution of Footstar, the sale
or disposition of all or substantially all of the assets of Footstar or similar
corporate transaction (in each case referred to in this Section 2.06(b) as a
(“Corporate Transaction”) or, if consummation of such Corporate Transaction is
subject, at the time of such approval by stockholders, to the consent of any
government or governmental agency, the obtaining of such consent (either
explicitly or implicitly); provided however, that any merger, consolidation,
sale, disposition or other similar transaction to or with a Participant or
entities controlled by a Participant shall not constitute a Corporate
Transaction; or

  (iii)   A change in the composition of the Board such that the individuals
who, as of the Effective Date, constitute the Board (such Board shall be
hereinafter referred to as the “Incumbent Board”) cease for any reason to
constitute at least a majority of the Board; provided however, for purposes of
this Section 2.06(b), that any individual who becomes a member of the Board
subsequent to the Effective Date whose election, or nomination for election by
Footstar’s stockholders, was approved by a vote of at least a majority of those
individuals who are members of the Board and who were also members of the
Incumbent Board (or deemed to be such pursuant to this proviso) shall be
considered as though such individual were a member of the Incumbent Board; and
provided, further, that any such individual whose initial assumption of office
occurs as a result of either an actual or threatened election contest (as such
terms are used in Rule 14a-11 of Regulation 14A under the Exchange Act,
including any successor to such Rule) or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than the Board shall in
no event be considered as a member of the Incumbent Board.

  (iv)   Notwithstanding the provisions set forth in paragraphs (a) and
(b) above, the following shall not constitute a Change in Control for purposes
of this Section 2.06(b):

  (A)   Any acquisition by or consummation of a Corporate Transaction with any
entity that was a subsidiary of Footstar immediately prior to the transaction or
an

Supplemental Retirement Plan for
Senior Management of Footstar, Inc.
Amended and Restated effective 1/1/2005

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      employee benefit plan (or related trust) sponsored or maintained by
Footstar or an entity that was a subsidiary of Footstar immediately prior to the
transaction if, immediately after such transaction (including consummation of
all related transactions), the surviving entity is controlled by no Person other
than such employee benefit plan (or related trust) and/or other Persons who
controlled Footstar immediately prior to such transactions; or

  (B)   Any acquisition or consummation of a Corporate Transaction following
which more than 50% of, respectively, the shares then outstanding of common
stock of the corporation resulting from such acquisition or Corporate
Transaction and the combined voting power of the voting securities then
outstanding of such corporation entitled to vote generally in the election of
directors is then Beneficially Owned, directly or indirectly, by all or
substantially all of the individuals and entities who were Beneficial Owners,
respectively, of the Footstar Common Stock Outstanding and Footstar Voting
Securities Outstanding immediately prior to such acquisition or Corporate
Transaction in substantially the same proportions as their ownership,
immediately prior to such acquisition or Corporate Transaction, of the Footstar
Common Stock Outstanding and Footstar Voting Securities Outstanding, as the case
may be.

  (v)   For purposes of this Section 2.06(b),

  (A)   The terms “Beneficial Ownership”, “Beneficially Owning”, “Beneficially
Owned” and “Beneficial Owners” shall have the meanings ascribed to such terms in
Rule 13d-3 under the Exchange Act (including any successor to such rule).

  (B)   The term “Exchange Act” means the Securities Exchange Act of 1934, as
amended from time to time, or any successor act thereto.

  (C)   The term “Person” shall have the meaning ascribed to such term in
Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
thereof, including “group” as defined in Section 13(d) thereof.

1.07 Committee
“Committee” means the Compensation Committee of the Board.
1.08 Code
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
1.09 Compensation
“Compensation” means the sum of:

(a)   The average of the Participant’s annual rate of base pay for the highest
three (3) years out of the last ten (10) years ending with the year in which the
Participant’s Compensation Measurement Date occurs; plus

(b)   The Participant’s full target annual incentive compensation award in
effect for the year in which the Participant’s Compensation Measurement Date
occurs.

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Senior Management of Footstar, Inc.
Amended and Restated effective 1/1/2005

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“Compensation Measurement Date” means (i) the date on which the Participant
terminates employment with the Corporation for any reason; or (ii) in the event
of a Change in Control, the date of the Change in Control if such date would
result in a higher amount of Compensation for the Participant.
1.10 Corporation

(a)   On and after January 1, 2005, “Corporation” means Footstar and any
corporation which is a member of a controlled group of corporations (as defined
in Code Section 414(b) but applying such section using a fifty percent (50%)
ownership threshold instead of eighty percent (80%)) which includes Footstar and
any trade or business (whether or not incorporated) which is under common
control (as defined in Code Section 414(c) but applying such section using a
fifty percent (50%) ownership threshold instead of eighty percent (80%)) with
Footstar.

(b)   Prior to January 1, 2005, “Corporation” means Footstar, Inc. and any
subsidiary or other entity at any time at which 50% or more of the voting power
or beneficial interest of such subsidiary or other entity, is owned directly or
indirectly, by Footstar.

1.11 Early Retirement Date
“Early Retirement Date” means the date on which the Participant completes 10
Years of Service and attains age 55. A Participant whose employment terminates
for any reason within 60 days of the date on which he or she would have
satisfied both of the conditions set forth in the preceding sentence shall be
deemed to have reached his or her Early Retirement Date.
1.12 Footstar
“Footstar” means Footstar, Inc. and any successor to all or a substantial
portion of its assets or business which assumes the obligations of Footstar.
1.13 Normal Retirement Date
“Normal Retirement Date” means the date on which the Participant completes 10
Years of Service and attains age 60. A Participant whose employment terminates
for any reason within 60 days of the date on which he or she would have
satisfied both of the conditions set forth in the preceding sentence shall be
deemed to have reached his or her Normal Retirement Date.
1.14 Participant
“Participant” means any employee who is participating in the Plan pursuant to
Article 3.
1.15 Plan
“Plan” means the Supplemental Retirement Plan for Senior Management of Footstar,
Inc. as set forth herein, and any amendments thereto.
1.16 Retiree
     “Retiree” means a Participant who has terminated employment and is eligible
to receive, or is receiving, a Supplemental Retirement Benefit pursuant to
Article 4.
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Senior Management of Footstar, Inc.
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1.17 Retirement Administration Committee
“Retirement Administration Committee means the Committee of the Starfund 401(k)
Profit Sharing Plan of Footstar, Inc. and Affiliated Companies.
1.18 Service; Year of Service
“Service” means a Participant’s period of active employment with the Corporation
while a Participant, but excluding, unless otherwise provided by the Committee,
any period during which the Participant was (a) engaged as a consultant or
(b) receiving salary continuance or severance payments. “Service” also shall
include any additional periods that may be credited to a Participant by the
Committee in its sole discretion.
“Year of Service” means a period of 12 consecutive months of Service.
1.19 Supplemental Retirement Benefit
“Supplemental Retirement Benefit” means the retirement benefit payable to a
Retiree as determined pursuant to Article 4.
1.20 Vested Retirement Benefit
“Vested Retirement Benefit” means the aggregate annualized value of any benefits
in respect of a Participant under any pension, retirement, or deferred profit
sharing plan maintained by the Corporation (other than this Plan) that either
have been paid prior to the Participant’s Benefit Commencement Date or are
vested as of the Participant’s Benefit Commencement Date. For this purpose,

(a)   Any elective pre-tax or after-tax contributions made by or on behalf of
the Participant, and any earnings attributable to such contributions, shall not
be taken into account; and

(b)   The aggregated annualized value of such benefits shall be computed in the
form of a single life annuity for the Participant’s life in accordance with the
Actuarial Equivalent assumptions set forth in Section 2.01.

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Senior Management of Footstar, Inc.
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ARTICLE 2. PARTICIPATION
2.01 Eligible Executives
Participation in this Plan shall be limited to such employees of the Corporation
as selected by the Committee who, in the opinion of the Committee, occupy a
position of senior management with the Corporation.
2.02 Participation
An executive shall become a Participant in the Plan only if the executive is
individually selected by, and specifically named by, the Committee for inclusion
in the Plan. In addition, the Committee shall have the complete discretionary
authority to impose such conditions upon initial participation by an executive
or continuing participation by an executive who is already a Participant, as the
Committee, in its sole discretion, determines appropriate, including the
execution by the Participant of such documents and agreements, which may include
restrictive covenants and other conditions, that the Committee requires.
2.03 Reclassification
If a Participant is reclassified to a responsibility which, in the opinion of
the Committee, is not a senior management position at any time prior to becoming
eligible for benefits in accordance with Article 4, the Participant’s continuing
eligibility will be subject to the approval of the Committee.
Supplemental Retirement Plan for
Senior Management of Footstar, Inc.
Amended and Restated effective 1/1/2005

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ARTICLE 3. SUPPLEMENTAL RETIREMENT BENEFIT
3.01 Eligibility for Supplemental Retirement Benefit

(a)   A Participant shall be eligible to receive the Supplemental Retirement
Benefit under this Plan if he or she terminates employment for any reason other
than death or termination by the Corporation for Cause after attaining his or
her Early Retirement Date or Normal Retirement Date.

(b)   Except as otherwise provided pursuant to Article 7, a Participant shall
not be eligible to receive the Supplemental Retirement Benefit under this Plan
if he or she does not meet the conditions set forth in this Section 4.01.

3.02 Normal Retirement Benefit
The amount of the Supplemental Retirement Benefit payable to a Participant who
terminates employment at or after reaching his or her Normal Retirement Date
shall be an annual benefit payable for the life of the Participant equal to the
lesser of (a) or (b):

(a)   the excess, if any, of

  (i)   2% of the Participant’s Compensation multiplied by his or her Years of
Service;

      REDUCED BY

  (ii)   the Actuarial Equivalent value of the Participant’s Vested Retirement
Benefits determined as of his or her employment termination date.

(b)   50% of the Participant’s Compensation.

3.03 Early Retirement Benefit
The amount of the Supplemental Retirement Benefit payable to a Participant who
terminates employment after reaching his or her Early Retirement Date but prior
to his or her Normal Retirement Date shall be an annual benefit payable for the
life of the Participant equal to the Normal Retirement Benefit determined under
Section 4.02 reduced by 4% for each whole and partial year (treating a partial
year as a whole year) prior to the date the Participant would have reached his
or her Normal Retirement Date.
3.04 Benefit Commencement Date
Payment of a Participant’s Supplemental Retirement Benefit shall commence as of
the first day of the month next following the Participant’s employment
termination date.
Notwithstanding the foregoing, in no event shall payment to a Participant who is
a “specified employee” within the meaning of Code Section 409A on his or her
employment termination date, commence earlier than the first day following the
end of the six (6) month period following such termination date.
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Senior Management of Footstar, Inc.
Amended and Restated effective 1/1/2005

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3.05 Form of Benefit Payment

(a)   Single Life Annuity. A Participant’s Supplemental Retirement Benefit shall
be payable in the form of a single life annuity for the life of the Participant
unless he or she elects an optional form of payment pursuant to paragraph (b) or
(c).

(b)   Optional Annuity Forms of Payment. A Participant may elect to have his or
her Supplemental Retirement Benefit paid in the form of an annuity payable for
the life of the Participant with a survivor annuity continuing for the life of
his or her Beneficiary. The amount of the annuity continued to the Beneficiary
shall be 50% or 100% of the amount payable to the Participant. The amount of
such benefit shall be equal to the Actuarial Equivalent value of the single life
annuity payable under paragraph (a). An election of an optional annuity form of
payment must be made at least 12 months prior to the Participant’s Benefit
Commencement Date in accordance with the procedures established by Retirement
Administration Committee.

(c)   Lump Sum Payment Option. A Participant may elect to have his or her
Supplemental Retirement Benefit paid in a single lump sum payment equal to the
Actuarial Equivalent present value of the single life annuity payable under
paragraph (a) in accordance with the with the procedures established by
Retirement Administration Committee; provided that in no event may such election
be made later than the following date, as applicable:

          Lump sum payment election must be made by Benefit Commencement Date:  
no later than:
On or before December 31, 2006
  December 31, 2005
On or before December 31, 2007
  December 31, 2006
On or before December 31, 2008
  December 31, 2007
On or after January 1, 2009
  December 31, 2008

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Senior Management of Footstar, Inc.
Amended and Restated effective 1/1/2005

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ARTICLE 4. DEATH BENEFIT
4.01 Death After Early Retirement Date

(a)   In the event that a Participant dies

  (i)   while still an employee after attaining his or her Early Retirement Date
or Normal Retirement Date, or     (ii)   after becoming eligible to receive a
Supplemental Retirement Benefit but prior to the Benefit Commencement Date,

    his or her Beneficiary shall be entitled to receive the benefit described in
(b).   (b)   The amount of the benefit payable to the Beneficiary shall be an
annual benefit for the life of the Beneficiary in an amount equal to one-half of
the Normal Retirement Benefit or Early Retirement Benefit that would have been
payable to the Participant (determined pursuant to Section 4.02 or 4.03, as
applicable) if the Participant had retired immediately prior to the date of his
or her death, provided, that if the age difference between the Participant and
the Beneficiary is greater than 5 years, the benefit payable shall be
actuarially adjusted to reflect the differences in the life expectancy of the
Participant and the Beneficiary. Such benefit shall be payable commencing as of
the first day of the month next following the Participant’s death.   (c)   If
Participant’s Beneficiary is his or her estate, then the benefit payable such
Beneficiary shall be an immediate single lump sum payment in an amount equal to
the Actuarial Equivalent value of the one-half of the Normal Retirement Benefit
or Early Retirement Benefit that would have been payable (determined pursuant to
Section 4.02 or 4.03, as applicable) in the form of a single life annuity to the
Participant if the Participant had retired immediately prior to his or her
death.

4.02 Death Prior to Early Retirement Date

(a)   In the event that a Participant dies

  (i)   while still an employee prior to attaining his or her Early Retirement
Date, and     (ii)   the Participant is survived by his or her spouse or, the
Participant is not survived by his or her spouse but is survived by a Dependent
Child or Dependent Children,

    such spouse or Dependent Child or Children shall be entitled to receive the
benefit described in paragraph (b).   (b)   The amount of the benefit payable to
the surviving spouse shall be an annual benefit payable for the life of the
spouse amount equal to one-half of the Normal Retirement Benefit that would have
been payable to the Participant (determined pursuant to Section 4.02) if the
Participant had retired immediately prior to the date of his or her death,
reduced by 4% for each whole and partial year (treating a partial year as a
whole year) prior to the date the Participant would have reached his or her
Normal Retirement Date, and provided, that if the age difference between the
Participant and the Beneficiary is greater than 5 years, the benefit payable
shall be actuarially adjusted to reflect the differences in the life expectancy
of the Participant and the Beneficiary. Such benefit shall be payable commencing
as of the first day of the month next following the Participant’s death.

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(c)   In the event that the Participant is not survived by his or her spouse,
but is survived by a Dependent Child or Children, then an annual benefit equal
to the annual benefit that would have been payable to a surviving spouse
pursuant to paragraph (b) above, shall be paid to each such Dependent Child, in
equal shares, until the date such Dependent Child attains age 21 or, if earlier,
the date such Dependent Child dies.   (d)   For purposes of this Section 5.02,
“Dependent Child” or “Dependent Children” means each natural and/or adopted
child of a Participant who is under the age of 21.

4.03 Death After Benefit Commencement Date
In the event that a Participant dies after his or her Benefit Commencement Date,
then benefits shall be payable only in accordance with form of benefit payment
in effect on the Participant’s date of death.
4.04 Designation of Beneficiary

(a)   Each Participant may designate, in the form and manner prescribed by the
Committee, one or more persons as the Beneficiary under this Plan. A Participant
also may designate one or more persons as a contingent beneficiary in the event
that the Participant’s primary Beneficiary does not survive the Participant.  
(b)   Any Beneficiary designation made by a Participant may be changed or
revoked by the Participant at any time or from time to time prior to his or her
Benefit Commencement Date, or death, if earlier.   (c)   If no Beneficiary is
designated or survives the Participant, then the Participant’s Beneficiary shall
be his or her spouse, if living; otherwise, the Participant’s estate.

Supplemental Retirement Plan for
Senior Management of Footstar, Inc.
Amended and Restated effective 1/1/2005

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ARTICLE 5. PARTICIPANT OBLIGATIONS
5.01 Confidentiality; Cooperation with Regard to Litigation

(a)   During a Participant’s employment with Footstar and thereafter, the
Participant shall not, without the prior written consent of Footstar, disclose
to anyone except in good faith in the ordinary course of business to a person
who will be advised by the member to keep such information confidential or make
use of any Confidential Information, except when required to do so by legal
process, by any governmental agency having supervisory authority over the
business of Footstar or by any administrative or legislative body (including a
committee thereof) that requires him or her to divulge, disclose or make
accessible such information. In the event that the Participant is so ordered, he
or she shall give prompt written notice to Footstar in order to allow Footstar
the opportunity to object to or otherwise resist such order.   (b)  
“Confidential Information” shall mean all information that is not known or
available to the public concerning the business of Footstar or any Subsidiary
relating to any of their products, product development, trade secrets, customer
suppliers, finances, and business plans and strategies. For this purpose,
information known or available generally within the trade or industry of
Footstar or any Subsidiary shall be deemed to be known or available to the
public. Confidential Information shall include information that is, or becomes,
known to the public as a result of a breach by the Executive of the provisions
of Section 6.01(a) above.   (c)   The Participant agrees to cooperate with
Footstar, (including following the Participant’s termination of employment for
any reason), by making himself or herself available to testify on behalf of
Footstar or any Subsidiary or affiliate of Footstar, in any action, suit, or
proceeding, whether civil, criminal, administrative, or investigative, and to
assist Footstar, or any Subsidiary or affiliate of Footstar, in any such action,
suit, or proceeding, by providing information and meeting and consulting with
the Board or its representatives or counsel, or representatives or counsel to
Footstar, or any Subsidiary or affiliate of Footstar, as requested. Footstar
agrees to reimburse the Participant, on an after-tax basis, for all expenses
actually incurred in connection with his provision of testimony or assistance.

5.02 Non-competition
During the Restriction Period (as defined below), the Participant shall not
engage in Competition with Footstar, or any Subsidiary. “Competition” shall mean
engaging in any activity, except as provided below, for a Competitor of Footstar
or any Subsidiary, whether as an employee, consultant, principal, agent,
officer, director, partner, shareholder (except as a less than one percent
shareholder of a publicly trade company) or otherwise. A “Competitor” shall mean
(i) those companies designated by Footstar and communicated to the Participant
in an Employment Agreement, Change in Control Agreement or otherwise) and any
successor or successors thereto) or (ii) the portion of any other corporation or
other entity or start-up corporation or entity that is engaged in the Discount
Retail Footwear Business within fifty (50) miles of any Discount Retail Footwear
Business outlet in the United States of Footstar or any Subsidiary, provided
that a corporation or entity described in clause (ii) above shall not be deemed
to be a Competitor if the Participant shall not either directly or indirectly
oversee or manage the activities of such corporation or entity’s division or
unit engaged in the Discount Retail Footwear Business. If the Participant
commences employment or becomes a consultant, principal, agent, officer,
director, partner, or shareholder of any entity that is not a Competitor at the
time the Participant initially becomes employed or becomes a consultant,
principal, agent, officer, director, partner, or shareholder of any entity,
future activities of such entity shall not result in a violation of this
provision unless (x) such activities
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were contemplated at the time the Participant initially became employed or
becomes a consultant, principal, agent, officer, director, partner or
shareholder of the entity (and the contemplation of such activities was known to
the Participant) or (y) the Participant commences directly or indirectly
overseeing or managing the activities of Footstar or Subsidiary so long as he or
she does not regularly participate in discussions with regard to the competing
business. For purposes of the foregoing, “Discount Retail Footwear Business”
shall mean a group of four or more stores which primarily sell discount
footwear.
5.03 Non-solicitation of Employees
During the portion of the Restriction Period following the termination of the
Participant’s employment, the Participant shall not induce employees of Footstar
or any Subsidiary to terminate their employment. During the portion of the
Restriction Period following the termination of the Participant’s employment,
the Participant shall not directly or indirectly hire any employee of Footstar
or any Subsidiary or any person who was employed by Footstar or any Subsidiary
within 180 days of such hiring.
5.04 Definitions
For purposes of this Article 6 —

(a)   “Restriction Period” shall mean the period beginning with the
Participant’s initial date of employment by Footstar and ending the date of a
Change in Control except that if the Participant has an Employment Agreement
with Footstar it shall have the meaning contained in such employment agreement.
  (b)   “Subsidiary” shall mean any corporation controlled directly or
indirectly by Footstar and any affiliate of Footstar.

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ARTICLE 6. CHANGE IN CONTROL
6.01 Applicability
This Article 7 shall apply in the event of a “Change in Control”.
6.02 Retirees and Beneficiaries At Time of Change in Control
The following rules shall apply to the payment of benefits to individuals who
are Retirees or Beneficiaries of deceased Participants at the time a Change in
Control occurs:

(a)   Retirees.

      Status of benefits at time of Change     in Control   Effect of Change in
Control
Single Life Annuity

If receiving payment of benefits in the form of a single life annuity

-OR-

If Retiree has not elected the joint and survivor annuity option pursuant to
Section 4.05(b)(i) and payments have not yet begun
  Retiree to receive immediate lump sum payment equal to Actuarial Equivalent of
future benefits in lieu of annuity payments.
 
   
Joint and Survivor Annuity

If receiving payment of benefits in the form of a joint and survivor annuity

-OR-

If Retiree has elected the joint and survivor annuity option pursuant to
Section 4.05(b)(i) and payments have not yet begun
  Retiree and Beneficiary to receive immediate lump sum payments equal to
Actuarial Equivalent of respective portions of future benefits in lieu of
annuity payments.

(b)   Beneficiaries of Deceased Participants.

      Status of benefits at time     of Change in Control   Effect of Change in
Control
Payment of benefits has begun
  Beneficiary to receive immediate lump sum payment equal to Actuarial
Equivalent of future benefits in lieu of annuity payments.
 
   
Payment of benefits has not yet begun
  Beneficiary to receive immediate lump sum payment equal to Actuarial
Equivalent of the death benefit determined pursuant to Article 5 in lieu of
annuity payments.

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6.03 Termination of Employment Within 24 Months Following a Change in Control

(a)   Participants. A Participant shall be entitled to benefits under this
Section 7.03 if during the 24-month period following a Change in Control

  (i)   the Participant’s employment is terminated by the Corporation for any
reason other than Cause, or     (ii)   the Participant terminates employment for
“Good Reason” (as defined below).

      Status of at time of     employment termination   Effect of Change in
Control
Termination occurs at or after reaching Normal Retirement Date
  Participant to receive immediate lump sum payment equal to Actuarial
Equivalent of Participant’s Normal Retirement Benefit.
 
   
Termination occurs prior to Normal Retirement Date but after 10 Years of Service
  Participant to receive immediate lump sum payment equal to Actuarial
Equivalent of Participant’s Normal Retirement Benefit payable in the form of a
single life annuity commencing as of the date on which the Participant would
have reached his or her Normal Retirement Date if he or she had continued in
employment.
 
   
Termination occurs prior to completing 10 Years of Service
  Participant to receive immediate lump sum payment equal to Actuarial
Equivalent of the benefit determined pursuant to the following formula payable
in the form of a single life annuity commencing as of the date on which the
Participant would have reached his or her Normal Retirement Date if he or she
had continued in employment.

 
  Participant’s Normal Retirement Benefit

TIMES

 
  Years of Service as of date of employment termination
 
  10

(b)   Beneficiaries. In the event that a Participant dies while employed during
the 24-month period following a Change in Control, then his or her Beneficiary
shall be entitled to receive immediate lump sum payment equal to Actuarial
Equivalent of the death benefit determined pursuant to Article 5 in lieu of
annuity payments.   (c)   Good Reason. For purposes of this Section 7.03, “Good
Reason” means any of the following which occur after the occurrence of a Change
in Control without the express written consent of the affected Participant:

  (i)   An assignment of any duties to the Participant which are inconsistent
with his or her status as a senior executive of Footstar.

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  (ii)   Any decrease in annual base pay or any reduction in annual target
incentive compensation opportunity.     (iii)   Any other failure by Footstar to
perform any material obligation under, or breach by Footstar of any material
provision of an employment agreement with the Participant that is not cured
within 30 days.     (iv)   Any failure to secure the agreement of any successor
corporation or other entity to the Corporation to fully assume Footstar’s
obligations under an employment agreement with the Participant.     (v)   A
relocation of the Participant’s principal place of employment outside a 35-mile
radius of his or her principal place of employment as in effect immediately
prior to such Change in Control.

6.04 Termination of Employment More Than 24 Months Following a Change in Control

(a)   Participants. The following rules shall apply to a Participant whose
employment is terminated by the Corporation for any reason other than Cause
after the end of the 24-month period following a Change in Control:

      Status of at time of     employment termination   Effect of Change in
Control
Termination occurs after Participant reaches his or her Early Retirement Date or
Normal Retirement Date
  Benefits payable in accordance with Article 4.
 
   
Termination occurs prior to Participant reaching his or her Early Retirement
Date
  Participant shall receive the benefit determined pursuant to the following
formula commencing as of the date on which the Participant would have reached
his or her Normal Retirement Date if he or she had continued in employment.

 
  Participant’s Normal Retirement Benefit

TIMES

Years of Service as of date of the Change in Control

10

The benefit will be payable in one of the payment forms described in
Section 4.05.

(b)   Beneficiaries. In the event that a Participant dies after end of the
24-month period following a Change in Control, then his or her Beneficiary shall
be entitled to receive death benefits in accordance with Article 5.

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ARTICLE 7. FORFEITURE OF BENEFITS
Notwithstanding any other provision of the Plan, future payment of benefits
hereunder to a Participant or Beneficiary will, at the discretion of the
Committee, be discontinued and forfeited, and the Corporation will have no
further obligation hereunder to such Participant or Beneficiary, if any of the
following circumstances occur:

(a)   The Participant is discharged from employment with the Corporation for
Cause;   (b)   The Participant at any time violates any of the provisions of
Article 6; or   (c)   The Participant is convicted of a crime involving
dishonesty or fraud on the part of such Participant in his relationship with the
Corporation.

The Committee shall have sole discretion with respect to the application of the
provisions of this paragraph and such exercise of discretion shall be conclusive
and binding upon the Participant, his or her Beneficiary and all other persons.
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ARTICLE 8. ADMINISTRATION
8.01 Powers and Duties of the Committee
The Committee shall have the sole discretion and authority:

(a)   To determine the eligibility of employees to participate in the Plan;  
(b)   To credit a Participant with additional Service; and   (c)   To waive any
or all of the requirements set forth in this Plan with respect to any
Participant.

The Committee’s exercise of its discretion under this Plan with respect to any
Participant will not create a precedent for any other Participant.
8.02 Retirement Administration Committee
The Plan shall be administered by the Retirement Administration Committee.
Except as otherwise provided in Section 9.01, the Retirement Administration
Committee shall have full authority and power to administer and construe the
Plan, subject to applicable requirements of law. Without limiting the generality
of the foregoing, the Retirement Administration Committee shall have the
following powers and duties:

(a)   To make and enforce such rules and regulations as it deems necessary or
proper for the efficient administration of the Plan;   (b)   To interpret the
Plan, its interpretation thereof in good faith to be final and conclusive on all
persons claiming benefits under the Plan;   (c)   To decide all questions
concerning the Plan; and   (d)   To appoint such agents, counsel, accountants,
consultants and other persons as may be required to assist in administering the
Plan.

All decisions made by the Retirement Administration Committee pursuant to the
provisions of the Plan shall be made in its sole discretion and shall be final,
conclusive, and binding upon all parties.
8.03 Delegation of Duties
The Retirement Administration Committee may delegate such of its duties and may
engage such experts and other persons as it deems appropriate in connection with
administering the Plan. The Retirement Administration Committee shall be
entitled to rely conclusively upon, and shall be fully protected in any action
taken by the Retirement Administration Committee in good faith in reliance upon
any opinions or reports furnished them by any such experts or other persons.
8.04 Expenses
All expenses incurred prior to the termination of the Plan that shall arise in
connection with the administration of the Plan, including, without limitation,
administrative expenses and compensation and other expenses and charges of any
actuary, counsel, accountant, specialist or other person who shall be
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employed by the Retirement Administration Committee in connection with the
administration of the plan, shall be paid by the Corporation.
8.05 Indemnification of Retirement Administration Committee
Footstar agrees to indemnify and to defend to the fullest extent permitted by
law any person serving as a member of the Retirement Administration Committee,
and each employee of the Corporation or any of its affiliates appointed by the
Retirement Administration Committee to carry out duties under this Plan, against
all liabilities, damages, costs and expenses (including attorneys’ fees and
amounts paid in settlement of any claims approved by Footstar) occasioned by any
act or omission to act in connection with the Plan, if such act or omission is
in good faith.
8.06 Liability
To the extent permitted by law, neither the Retirement Administration Committee
nor any other person shall incur any liability for any acts or for any failure
to act except for liability arising out of such person’s own willful misconduct
or willful breach of the Plan.
8.07 Appeals Procedure

(a)   The Retirement Administration Committee shall approve or wholly or
partially deny all claims for benefits under the Plan within a reasonable period
of time after all required documentation has been furnished to the Retirement
Administration Committee.   (b)   If a claim is wholly or partially denied, the
Retirement Administration Committee shall provide the claimant with written
notice setting forth the specific reasons for the denial, making reference to
the pertinent provisions of the Plan or the Plan documents on which the denial
is based; describe any additional material or information that should be
received before the claim may be acted upon favorably, and explain why such
material or information, if any, is needed; and inform the person making the
claim of his right pursuant to this Section to request review of the decision by
the Retirement Administration Committee.   (c)   A claimant shall have the right
to request a review of the decision denying the claim. Such request must be made
by filing a written application for review with the Retirement Administration
Committee no later than sixty (60) days after receipt by the claimant of written
notice of the denial of his claim. The claimant may review pertinent Plan
documents and shall submit such written comments and other information which he
wishes the Retirement Administration Committee to consider in connection with
his claim.   (d)   The Retirement Administration Committee may hold any hearing
or conduct any independent investigation which it deems necessary to render its
decision on review. Such decision shall be made as soon as practicable after the
Retirement Administration Committee receives the request for review. Written
notice of the decision on review shall be promptly furnished to the claimant and
shall include specific reasons for the decision.   (e)   For all purposes under
the Plan, decisions on claims (where no review is requested) and decisions on
review (where review is requested) shall be final, binding and conclusive on all
interested persons.

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Senior Management of Footstar, Inc.
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ARTICLE 9. AMENDMENT OR TERMINATION
The Committee reserves the right to modify or amend, in whole or in part, or to
terminate, this Plan at any time; provided, however, that no such modification,
amendment or termination shall adversely affect the right of any Participant (or
Beneficiary) to receive the benefits of such Participant (or Beneficiary) should
have received under the Plan upon termination of employment with the Corporation
for any reason, including retirement, death or disability had the Plan not been
so modified, amended or terminated, taking into account the Participant’s
Service and age at the time of such Participant’s actual termination of
employment with the Corporation for any reason including retirement, death or
disability.
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Senior Management of Footstar, Inc.
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ARTICLE 10. GENERAL PROVISIONS
10.01 Right to Withhold Taxes
The Corporation shall have the right to withhold such amounts from any payment
under this Plan as it determines necessary to fulfill any federal, state, or
local wage or compensation withholding requirements.
10.02 No Right to Continued Employment
Neither the Plan, nor any action taken under the Plan, shall confer upon any
Participant any right to continuance of employment by the Corporation nor shall
it interfere in any way with the right of the Corporation to terminate any
Participant’s employment at any time.
10.03 Benefits Non-Assignable
Benefits under the Plan may not be anticipated, assigned or alienated, and will
not be subject to claims of his creditors by any process whatsoever, except as
specifically provided in this Plan or by the Retirement Administration Committee
in its sole discretion.
10.04 Unfunded Plan
Nothing in this Plan shall be construed as giving any Participant or his or her
legal representative, or designated beneficiary, any claim against any specific
assets of the Corporation or as imposing any trustee relationship upon the
Corporation in respect of the Participant. The Corporation shall not be required
to segregate any assets in order to provide for the satisfaction of the
obligations hereunder. If and to the extent that the Participant or his or her
legal representative or designated beneficiary acquires a right to receive any
payment pursuant to this Plan, such right shall be no greater than the right of
an unsecured general creditor of the Corporation.
10.05 Mental or Physical Incompetency
If the Retirement Administration Committee determines that any person entitled
to payments under the Plan is incompetent by reason of physical or mental
disability, as established by a court of competent jurisdiction, the Retirement
Administration Committee may cause all payments thereafter becoming due to such
person to be made to any other person for his benefit, without responsibility to
follow the application of amounts so paid. Payments made pursuant to this
Section shall completely discharge the Retirement Administration Committee and
the Corporation.
10.06 Governing Laws
The provisions of the Plan shall be construed, administered and enforced
according to applicable Federal law and the laws of the State of New York.
10.07 Severability
The provisions of the Plan are severable. If any provision of the Plan is deemed
legally or factually invalid or unenforceable to any extent or in any
application, then the remainder of the provision and the Plan, except to such
extent or in such application, shall not be affected, and each and every
provision of
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Senior Management of Footstar, Inc.
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the Plan shall be valid and enforceable to the fullest extent and in the
broadest application permitted by law.
Supplemental Retirement Plan for
Senior Management of Footstar, Inc.
Amended and Restated effective 1/1/2005

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