Waiver to Credit Agreement


 Exhibit 10.5 
  
 [LOGO] 
  
 MEMORANDUM 
  

	TO:	  	Footstar Syndicate Members
		
	FROM:	  	 Keith Vercauteren
 Fleet Retail Finance
Inc.

		
	DATE:	  	May 29, 2003
		
	RE:	  	Credit Agreement dated as of October 18, 2002 by and among Footstar, Inc. (the “Lead Borrower”) and Footstar Corporation (collectively, with the Lead Borrower,
the “Borrowers”), the financial institutions named as parties thereto as lenders (the “Lenders”), Fleet National Bank, as swingline lender and as administrative agent (in such capacity, the “Administrative
Agent”), Fleet Retail Finance Inc., as collateral agent, Congress Financial Corporation and Wells Fargo Retail Finance, LLC, as syndication agents, and JPMorgan Chase Bank, as documentation agent, as amended by that certain Amendment No. 1
to Credit Agreement dated as of January 3, 2003, that certain Amendment No. 2 to Credit Agreement dated as of March 21, 2003 and that certain letter agreement dated April 30, 2003 (as the same has been and may hereafter be amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”) with capitalized terms being defined therein and not defined but used herein having the meanings assigned to them in the Credit Agreement

  
 As you know, the
Borrowers, together with their independent auditors, are in the process of conducting a review of their financial statements, resulting in the restatement of the accounts payable, the retained earnings and net income of the Lead Borrower and its
Subsidiaries for prior fiscal periods through September 28, 2002 (the “Accounting Restatement Matter”). Due to the Accounting Restatement Matter, the Required Lenders have previously agreed to extend the time by which the Borrowers
have to deliver to the Administrative Agent and the Lenders their quarterly and annual financial statements and corresponding Compliance Certificates for the fiscal quarters ended September 28, 2002 and December 28, 2002, until June 2, 2003.

  
 The Borrowers have informed the Administrative Agent that the
auditors have not completed their work in connection with the Accounting Restatement Matter. Due to this, the Borrowers are requesting a further extension of time by which they will be required to deliver to the Administrative Agent (A)(i) their
annual financial statements for the fiscal year ended 






 December 28, 2002, (ii) their quarterly financial statements for the fiscal quarter ended September 28, 2002, and (iii)
the corresponding Compliance Certificates for the fiscal quarters ended September 28, 2002 and December 28,2002, respectively, until the earlier of: (i) the date by which the Lead Borrower files with the Securities and Exchange Commission its Form
10K report for the fiscal year ended December 28, 2002, or (ii) September 2, 2003; and (B) their quarterly financial statements for the fiscal quarters ended March 29,2003 and June 28, 2003, respectively, and the corresponding Compliance
Certificates for the fiscal quarters ended March 29, 2003 and June 28, 2003, respectively, until September 2,2003. 
  
 In conjunction with this further extension of time for delivery of the above-referenced financial statements and Compliance Certificates, the
Administrative Agent is recommending that the definition of Cash Control Event contained in the Credit Agreement be revised as set forth below, with the result that the Agents gain additional controls over the deposits, cash and accounts of the
Borrowers and their Subsidiaries and other Affiliates as provided more fully in Section 5 of the respective Security Agreements, each dated as of October 18, 2002, entered into by the Borrowers and by each of the Subsidiaries and other Affiliates of
the Borrowers in favor of Fleet Retail Finance Inc., as Collateral Agent for the Secured Parties named therein, and in the other Loan Documents. The Administrative Agent is recommending that such Cash Control Event definition be redefined as
follows: 
  
 “Cash Control Event”
means (a) the period from May 30, 2003 until the occurrence of the following events: (i) delivery to the Administrative Agent of the Borrowers’ (A) annual financial statements for the fiscal year ended December 28, 2002; (B) quarterly financial
statements for the fiscal quarters ended September 28, 2002, March 29, 2003 and June 28, 2003; and (C) corresponding Compliance Certificates for each of the above-referenced fiscal periods; and (ii) maintenance by Borrowers of Excess Availability in
excess of $40,000,000 for 90 consecutive days, and (b) thereafter, that Excess Availability is less than (i) $30,000,000 at any time for five consecutive Business Days, or (ii) $25,000,000 at any time. For purposes of Section 5.l(h) of the Security
Agreements, the occurrence of a Cash Control Event pursuant to clause (b) above shall be deemed permanently continuing notwithstanding that Excess Availability may thereafter exceed the thresholds specified in such clause (b). 
  
 Such an extension and amendment requires the consent and approval of Required
Lenders under the Credit Agreement. As noted above, Fleet supports this request. 
  
 Nothing contained herein shall be deemed or construed as a waiver of any Default or Event of Default under Section 7.11 of the Credit Agreement or otherwise. 
  
 In connection with the foregoing, the Borrowers are agreeing to pay certain
fees to the Revolving Lenders and to the Term Lender pursuant to a letter agreement dated as of May 29, 2003. 
  
 If you have any issues with the matters described herein, please contact me by e-mail at keith_vercaurteren@fleetretailfinance.com, by facsimile at (617)
434-4339 or by phone at (617) 434-4045. 
  

 -2- 







 Please indicate your consent by signing in the space below provided for your signature and returning your
executed fax signature pages to the attention of Jan Wenning Egan, Esq. at Edwards & Angell, LLP, 101 Federal Street, Boston, MA 02110, fax: (617) 439-4170, e-mail: jegan@ealaw.com, by 4:00 p.m. (EST) TOMORROW, Friday, May 30,
2003, with five originals thereof to follow by overnight courier for delivery on Monday, June 2, 2003. The signatures of the Required Lenders and the Borrowers hereto shall be sufficient to extend the time for delivery of the financial
statements described herein and amend the definition of Cash Control Event effective as of May 30, 2003. Thank you for your prompt attention and cooperation on. 
  

** The next pages are the signature pages ** 
  

 -3- 







 Agreed to and acknowledged as of May 30, 2003 by: 
  

	FOOTSTAR, INC., as a Borrower
		
	 By:
	 	 /s/     SHEAMUS
TOAL        


	 	 	 Name:
	 	Sheamus Toal              
	 	 	 Title:
	 	Vice President & Controller              


  

	FOOTSTAR CORPORATION, as a Borrower
		
	 By:
	 	 /s/     SHEAMUS
TOAL        


	 	 	 Name:
	 	Sheamus Toal              
	 	 	 Title:
	 	Vice President & Controller              


  

	FLEET NATIONAL BANK, as Administrative Agent and as Lender
		
	 By:
	 	  


	 	 	 Name:
	 	 
	 	 	 Title:
	 	 


  

	FLEET RETAIL FINANCE INC. as Collateral Agent
		
	 By:
	 	  


	 	 	 Name:
	 	 
	 	 	 Title:
	 	 


  

	BACK BAY CAPITAL FUNDING LLC
		
	 By:
	 	  


	 	 	 Name:
	 	 
	 	 	 Title:
	 	 


  
 Signature Page
to Second Request for Extension 
  








 Agreed to and acknowledged as of May 30, 2003 by: 
  

	FOOTSTAR, INC., as a Borrower
		
	 By:
	 	  


	 	 	 Name:
	 	 
	 	 	 Title:
	 	 


  

	FOOTSTAR CORPORATION, as a Borrower
		
	 By:
	 	  


	 	 	 Name:
	 	 
	 	 	 Title:
	 	 


  

	FLEET NATIONAL BANK, as Administrative Agent and as Lender
		
	 By:
	 	 /s/    KEITH VERCAUTEREN


	 	 	 Name:
	 	Keith Vercauteren          
	 	 	 Title:
	 	Vice President              


  

	FLEET RETAIL FINANCE INC. as Collateral Agent
		
	 By:
	 	 /s/    KEITH
VERCAUTEREN      


	 	 	 Name:
	 	Keith Vercauteren
	 	 	 Title:
	 	Vice President              


  

	BACK BAY CAPITAL FUNDING LLC
		
	 By:
	 	 /s/    KRISTAN M.
O’CONNOR        


	 	 	 Name:
	 	Kristan M. O’Connor              
	 	 	 Title:
	 	Director              


  
 Signature Page
to Second Request for Extension 
  









	CONGRESS FINANCIAL CORPORATION
		
	 By:
	 	 /s/    THOMAS GRABOSKY


	 	 	 Name:
	 	Thomas Grabosky
	 	 	 Title:
	 	First Vice President
	
	WELLS FARGO RETAIL FINANCE, LLC
		
	 By:
	 	  


	 	 	 Name:
	 	 
	 	 	 Title:
	 	 
	
	JPMORGAN CHASE BANK
		
	 By:
	 	  


	 	 	 Name:
	 	 
	 	 	 Title:
	 	 
	
	THE CIT GROUP/BUSINESS CREDIT, INC.
		
	 By:
	 	  


	 	 	 Name:
	 	 
	 	 	 Title:
	 	 
	
	UPS CAPITAL CORPORATION
		
	 By:
	 	  


	 	 	 Name:
	 	 
	 	 	 Title:
	 	 
	
	AMSOUTH BANK
		
	 By:
	 	

	 	 	 Name:
	 	 
	 	 	 Title:
	 	 


  
 Signature Page
to Second Request for Extension 







	CONGRESS FINANCIAL CORPORATION
		
	 By:
	 	  


	 	 	 Name:
	 	 
	 	 	 Title:
	 	 
	
	WELLS FARGO RETAIL FINANCE, LLC
		
	 By:
	 	 /s/    EUNNIE KIM


	 	 	 Name:
	 	Eunnie Kim
	 	 	 Title:
	 	Asst. Vice President
	
	JPMORGAN CHASE BANK
		
	 By:
	 	  


	 	 	 Name:
	 	 
	 	 	 Title:
	 	 
	
	THE CIT GROUP/BUSINESS CREDIT, INC.
		
	 By:
	 	  


	 	 	 Name:
	 	 
	 	 	 Title:
	 	 
	
	UPS CAPITAL CORPORATION
		
	 By:
	 	  


	 	 	 Name:
	 	 
	 	 	 Title:
	 	 
	
	AMSOUTH BANK
		
	 By:
	 	  


	 	 	 Name:
	 	 
	 	 	 Title:
	 	 


  
 Signature Page
to Second Request for Extension 







	CONGRESS FINANCIAL CORPORATION
		
	 By:
	 	  


	 	 	 Name:
	 	 
	 	 	 Title:
	 	 
	
	WELLS FARGO RETAIL FINANCE, LLC
		
	 By:
	 	

	 	 	 Name:
	 	 
	 	 	 Title:
	 	 
	
	JPMORGAN CHASE BANK
		
	 By:
	 	 /s/    DALE A. PENSGEN


	 	 	 Name:
	 	Dale A. Pensgen
	 	 	 Title:
	 	Vice President
	
	THE CIT GROUP/BUSINESS CREDIT, INC.
		
	 By:
	 	  


	 	 	 Name:
	 	 
	 	 	 Title:
	 	 
	
	UPS CAPITAL CORPORATION
		
	 By:
	 	  


	 	 	 Name:
	 	 
	 	 	 Title:
	 	 
	
	AMSOUTH BANK
		
	 By:
	 	  


	 	 	 Name:
	 	 
	 	 	 Title:
	 	 


  
 Signature Page
to Second Request for Extension 







	CONGRESS FINANCIAL CORPORATION
		
	 By:
	 	  


	 	 	 Name:
	 	 
	 	 	 Title:
	 	 
	
	WELLS FARGO RETAIL FINANCE, LLC
		
	 By:
	 	  


	 	 	 Name:
	 	 
	 	 	 Title:
	 	 
	
	JPMORGAN CHASE BANK
		
	 By:
	 	

	 	 	 Name:
	 	 
	 	 	 Title:
	 	 
	
	THE CIT GROUP/BUSINESS CREDIT, INC.
		
	 By:
	 	 /s/    MICHAEL FORTE


	 	 	 Name:
	 	Michael Forte
	 	 	 Title:
	 	Assistant Vice President
	
	UPS CAPITAL CORPORATION
		
	 By:
	 	

	 	 	 Name:
	 	 
	 	 	 Title:
	 	 
	
	AMSOUTH BANK
		
	 By:
	 	

	 	 	 Name:
	 	 
	 	 	 Title:
	 	 


  
 Signature Page
to Second Request for Extension 







	CONGRESS FINANCIAL CORPORATION
		
	 By:
	 	  


	 	 	 Name:
	 	 
	 	 	 Title:
	 	 
	
	WELLS FARGO RETAIL FINANCE, LLC
		
	 By:
	 	  


	 	 	 Name:
	 	 
	 	 	 Title:
	 	 
	
	JPMORGAN CHASE BANK
		
	 By:
	 	  


	 	 	 Name:
	 	 
	 	 	 Title:
	 	 
	
	THE CIT GROUP/BUSINESS CREDIT, INC.
		
	 By:
	 	  


	 	 	 Name:
	 	 
	 	 	 Title:
	 	 
	
	UPS CAPITAL CORPORATION
		
	 By:
	 	 /s/    CHARLES JOHNSON


	 	 	 Name:
	 	Charles Johnson
	 	 	 Title:
	 	Senior Vice President
	
	AMSOUTH BANK
		
	 By:
	 	  


	 	 	 Name:
	 	 
	 	 	 Title:
	 	 


  
 Signature Page
to Second Request for Extension 
  







	CONGRESS FINANCIAL CORPORATION
		
	 By:
	 	  


	 	 	 Name:
	 	 
	 	 	 Title:
	 	 
	
	WELLS FARGO RETAIL FINANCE, LLC
		
	 By:
	 	  


	 	 	 Name:
	 	 
	 	 	 Title:
	 	 
	
	JPMORGAN CHASE BANK
		
	 By:
	 	

	 	 	 Name:
	 	 
	 	 	 Title:
	 	 
	
	THE CIT GROUP/BUSINESS CREDIT, INC.
		
	 By:
	 	

	 	 	 Name:
	 	 
	 	 	 Title:
	 	 
	
	UPS CAPITAL CORPORATION
		
	 By:
	 	

	 	 	 Name:
	 	 
	 	 	 Title:
	 	 
	
	AMSOUTH BANK
		
	 By:
	 	 KEVIN R. ROGERS


	 	 	 Name:
	 	Kevin R. Rogers
	 	 	 Title:
	 	Attorney-In-Fact


  
 Signature Page
to Second Request for Extension 







	NATIONAL CITY BANK
		
	 By:
	 	 /s/    THOMAS J. McDONNELL
  


	 	 	 Name:
	 	Thomas J. McDonnell
	 	 	 Title:
	 	Senior Vice President
	
	ORIX FINANCIAL SERVICES, INC.
		
	 By:
	 	

	 	 	 Name:
	 	 
	 	 	 Title:
	 	 
	
	SIEMENS FINANCIAL SERVICES, INC.
		
	 By:
	 	  


	 	 	 Name:
	 	 
	 	 	 Title:
	 	 


  
 Signature Page
to Second Request for Extension 







	NATIONAL CITY BANK
		
	 By:
	 	  


	 	 	 Name:

	 	 	 Title:



  

	ORIX FINANCIAL SERVICES, INC.
		
	 By:
	 	 /s/     ANDREW KOSOWSKY


	 	 	 Name:
	 	Andrew Kosowsky        
	 	 	 Title:
	 	Vice President        


  

	SIEMENS FINANCIAL SERVICES, INC.
		
	 By:
	 	  


	 	 	 Name:

	 	 	 Title:



  
 Signature Page
to Second Request for Extension 







	NATIONAL CITY BANK
		
	 By:
	 	  


	 	 	 Name:

	 	 	 Title:



  

	ORIX FINANCIAL SERVICES, INC.
		
	 By:
	 	  


	 	 	 Name:

	 	 	 Title:



  

	SIEMENS FINANCIAL SERVICES, INC.
		
	 By:
	 	 /s/     MICHAEL COILEY


	 	 	 Name:
	 	Michael Coiley        
	 	 	 Title:
	 	Senior Vice President        


  
 Signature Page
to Second Request for Extension 






 ACKNOWLEDGEMENT AND CONSENT BY GUARANTORS 
  
 Each of the undersigned Guarantors does hereby acknowledge and consent to the
execution, delivery and performance of the within foregoing Second Request for Extension, confirms the continuing effect of such Guarantor’s guarantee of the Obligations after giving effect to the foregoing Second Request for Extension, and
agrees to the provisions of the within and foregoing Second Request for Extension. 
  
 Accepted and agreed to as of May 30, 2003 by the Facility Guarantors: 
  

	 FOOTSTAR CENTER, INC.
 FOOTACTION CENTER, INC.
 ATHLETIC CENTER, INC.
 FA HC, INC.
 FEET HC, INC.
 FWS I,
INC.
 FWS II, INC.
 STELLAR WHOLESALING, INC.
 FEET CENTER, INC.
 MELDISCO H.C., INC.
 APACHE-MINNESOTA THOM MCAN, INC.
 MILES SHOES MELDISCO LAKEWOOD, COLORADO, INC.
 MALL OF AMERICA FAN CLUB, INC.
 NEVADA FEET, INC.
 FEET OF COLORADO,
INC.
 LFD I, INC.
 LFD II,
INC.
 LFD OPERATING, INC.
 FOOTSTAR HQ, LLC
 SHOE ZONE CENTER, INC.
 LFD TODAY, INC.
 ATHLETIC
ATTIC OF TEXAS, INC.
 and each of the other Facility
Guarantors

		
	 By:
	 	 Authorized Signatory


	 	 	 Duly Authorized Signatory as to all