AGREEMENT AND GENERAL RELEASE

         THIS AGREEMENT AND GENERAL RELEASE ("Agreement") is entered into by and
between Joe Caracappa on his/her own behalf and on behalf of his/her
representatives, attorneys, heirs, executors, administrators, successors and
assigns (hereinafter collectively, "Employee"), and Meldisco, a Division of
Footstar Corporation, on behalf of itself, Footstar, Inc., and each of their
respective subsidiaries, affiliates, divisions, officers, directors, employees,
agents, representatives, attorneys, successors and assigns (hereinafter
"Footstar" and/or "Company"). In consideration of the covenants, conditions and
obligations set forth herein the parties agree as follows:

1.   Employee's last day of work with the Company shall be February 3, 2004.

2.   Eligibility: In order to be eligible for the February 3, 2004 Reduction in
     Force Benefits, the eligibility requirements as set forth in Exhibit A must
     be met.

3.   Footstar agrees to pay Employee an amount equal to (26) weeks pay
     calculated to be $160,000.10 (One Hundred Sixty Thousand Dollars and 10
     Cents). Said payment to be paid to Employee in (13) biweekly installments
     of $12,307.70 (Twelve Thousand Three Hundred Seven Dollars and 70 Cents),
     less all required withholdings and/or deductions, provided Footstar is in
     receipt of a fully executed original of this Agreement. Employee
     acknowledges that such consideration is separate from and in addition to
     any Company compensation and/or benefits due Employee.

4.   In the event Employee is unemployed following the last payment pursuant to
     Paragraph (3) above after using reasonable efforts to secure such
     employment, and verifies such unemployment in writing, Footstar agrees to
     pay Employee an additional amount equal to (26) weeks pay calculated to be
     $160,000.10 (One Hundred Sixty Thousand Dollars and 10 Cents). Said payment
     to be paid to Employee in (13) biweekly installments of $12,307.70 (Twelve
     Thousand Three Hundred Seven Dollars and 70 Cents), less all required
     withholdings and/or deductions. Notwithstanding anything to the contrary
     contained herein, if the Employee becomes employed during this period
     Employee shall promptly notify the Company and then any additional payments
     made pursuant to this Paragraph 4 shall cease, with a final pro rata
     payment based on Employee's date of re-employment.]

5.   Footstar agrees not to contest any claim by Employee for unemployment
     benefits.





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6.   Employee Benefit Plans: During the period in which payments are being made
     pursuant to Paragraph (3) and (4) of this Agreement, Employee shall be
     permitted to continue to participate in the Medical and Dental Plans
     ("Plans" or "Plan") that were in effect for the Employee on the day
     immediately preceding Employee's separation. Notwithstanding anything to
     the contrary contained herein, it is agreed and understood that in the
     event medical and/or dental insurance coverage becomes available as a
     result of obtaining other employment, then in that event, Employee shall
     promptly notify the Company and the medical and dental insurance coverage
     described herein shall cease. It is further understood and agreed that
     Footstar, in its sole discretion, may from time to time, during the period
     following Employee's separation, increase or decrease the monthly
     contributions or change Plan provisions. If such changes are implemented,
     Employee's contributions and/or coverage will change in the same manner as
     for other active employees participating in the Plan. The medical benefit
     continuation referred to in this paragraph will be provided through COBRA.
     Employee contributions for this coverage will remain at the same level an
     active employee pays under the group plan. If medical coverage is elected
     beyond this period, the full COBRA rates will apply. Employee will not be
     entitled to participate in the Company's short term or long term disability
     plans or its life insurance program after February 3, 2004.

7.   Outplacement Services: The Company will provide Outplacement Services for
     the Employee through Right Management Consultants following Employee's last
     day of employment for a period not to exceed (12) months. Employee
     acknowledges that during the period which payments are being made pursuant
     to Paragraphs (3) and (4) above, the Company shall obtain from Right
     Management Consultants monthly progress reports describing Employee's
     efforts to secure employment. If the Employee becomes employed during this
     period, Employee shall promptly notify the Company and such placement
     services shall cease immediately.

8.   Switch to Equity Plan (STEP): If applicable, Employee shall receive 100% of
     the Employee's deferred vested shares as soon as practicable after February
     3, 2004.

9.   401 (k) Profit Sharing Plan: Employee shall not be permitted to make
     contributions to his/her 401(k) account after February 3, 2004.

10.  Stock Options: Employee shall continue to vest in any outstanding stock
     options through the last day of active employment, and shall have ninety
     (90) days following the date of the last payment pursuant to Paragraph (3)
     (or (4) if applicable), to exercise such stock options pursuant to the
     terms of such options. Employee shall not be eligible for any additional
     stock option grants and shall forfeit any stock options not then vested
     and/or exercised.



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11.  It is agreed that the sums paid in accordance with Paragraphs (3) and (4)
     shall be deemed to include and shall constitute full payment for any and
     all vacation, vacation pay, incentive compensation, severance compensation,
     bonuses, commissions, draws and other forms of compensation to which
     Employee may be entitled, and whether earned or calculated on a pro rata
     basis; except for any unused, accrued 2004 vacation time which shall be
     paid at the time payments commence in accordance with Paragraph (3).

12.  In consideration for the Company's agreement to the provisions and payment
     of amounts set forth in this Agreement:

     (A)  Employee expressly releases and forever discharges the Company and its
          representatives, agents, predecessors, successors, parent companies,
          subsidiaries, affiliates, principals and insurers (and their current
          and former officers, directors, employees, agents, shareholders,
          successors and assigns), and any and all employee benefit plans (and
          any fiduciary of such plans) sponsored by any of them, and all other
          persons, firms or corporations who might be claimed to be liable by
          Employee, from any and all claims, actions, causes of action, losses,
          damages (including actual, liquidated, compensatory, punitive or other
          damages), demands, promises, agreements, obligations, costs, expenses
          and attorneys fees, known or unknown, which Employee now has or may
          later discover or which may hereafter exist against them, or any of
          them, in connection with or arising directly or indirectly out of or
          in any way related to any and all matters, transactions, events or
          other things occurring prior to the effective date of this Agreement,
          including those arising out of or in connection with Employee's
          employment with Footstar or arising out of events, facts or
          circumstances which either preceded, flowed from or followed the
          cessation of Employee's employment with Footstar, or which occurred
          during the course of Employee's employment with Footstar or incidental
          thereto, and including but not limited to any arising under Title VII
          of the Civil Rights Act of 1964, as amended; the Age Discrimination In
          Employment Act of 1967, as amended; the Civil Rights Act of 1991, as
          amended; the Employee Retirement Income Security Act of 1964, as
          amended; the Family and Medical Leave Act, as amended; 42 U.S.C.
          Sections 1981 through 1988; CEPA (N.J.S.A. 34:19-1 et .seq.) the
          Occupational Safety and Health Act; the American's with Disabilities
          Act; the Fair Credit Reporting Act; the Immigration Reform Control
          Act; the National Labor Relations Act; or under any other federal,
          state or local civil or human rights law or any other local, state or
          federal law, ordinance and regulation, or under any public policy,
          contract, tort or common law.



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     (B)  Employee affirms that Employee has not filed, caused to be filed, and
          presently is not a party to any claim, complaint or action against the
          Company in any forum or form. Employee further affirms that Employee
          has been paid and/or has received all leave (paid or unpaid),
          compensation, wages, bonuses, commissions, and/or benefits to which
          Employee may have been entitled and that no other leave (paid or
          unpaid), compensation, wages, bonuses, commissions and/or benefits are
          due to Employee. Employee furthermore affirms that Employee has not
          known workplace injuries or occupational diseases and had been
          provided and/or has not been denied any leave requested under the
          Family Medical Leave Act and/or any other federal, state or local
          leave law. Employee further affirms Employee has not complained of and
          is not aware of any fraudulent activity or any act(s) which would form
          the basis of a claim of fraudulent or illegal activity against the
          Company. In the event Employee is subject to subpoena, court order or
          otherwise compelled to testify, appear or provide information
          regarding the Company, within (3) days of Employee's receipt of said
          subpoena, court order or other notification, Employee will provide
          written notice, via facsimile transmission and mail to Footstar, One
          Crosfield Avenue, West Nyack, NY 10994 Attention: Legal Department;
          Facsimile Number (845) 727-6661 to the Company without regard to who
          brought the action, suit, cause of action or claim.

     (C)  Employee understands and agrees that the claims released and
          discharged herein are forever waived and relinquished by this
          Agreement, and that this Agreement expressly contemplates the total
          extinguishment of any and all such claims. Employee further
          understands and agrees that Employee has no right or claim to
          employment with Footstar at any time after the effective date of this
          Agreement. Employee specifically acknowledges that this provision
          applies equally to all persons and entities described in Paragraph
          12(A) above as well as to Footstar, itself.

13.  Employee covenants and agrees that on Employee's last day of work Employee
     shall return any and all property, including all copies or duplicates
     thereof belonging to the Company, including but not limited to keys,
     security cards, equipment, documents, supplies, customer lists, and
     customer information, confidential documents, etc. A breach of this
     provision shall be considered a material breach of this Agreement.

14.  Employee agrees to cooperate with the Company by making himself/herself
     available to testify on behalf of the Company or any subsidiary or
     affiliate of the Company, in any action, suit or proceeding whether civil,
     criminal, administrative or investigative, and to assist the Company or any
     subsidiary, or affiliate of the Company, in any action, suit or proceeding
     by providing information and meeting and consulting with Company
     representatives or counsel or any subsidiary or affiliate of the Company as
     requested. A breach of this provision will be considered a material breach
     of this Agreement.



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15.  Employee represents and agrees that Employee will keep confidential the
     terms and execution of this Agreement. The sole exceptions to this
     confidentiality provision are for communications to Employee's immediate
     family, personal attorney (and attorney's employees), accountant or
     financial advisor, or as required by law and then, only on the condition
     that Employee shall advise such person or entity that the terms of the
     Agreement are confidential and further disclosure is prohibited. A breach
     of this provision shall be considered a material breach of this Agreement.

16.  Applicable Data: Attached hereto as Exhibit B is a list of the job titles
     and ages of all individuals in Employee's organization unit who are
     eligible for the February 3, 2004 Reduction in Force Benefits as well as a
     list of the ages of all individuals in Employee's organizational unit who
     are ineligible for the February 3, 2004 Reduction in Force Benefits.

17.  Employee agrees that Employee will make no statements or remarks to anyone,
     including any of Employee's potential employers or to the Company
     suppliers, vendors or customers, about Footstar or any of the entities and
     persons described in Paragraph 12 (A) above, that are disparaging,
     derogatory or defamatory to them. A breach of this provision shall be
     considered a material breach of this Agreement.

18.  Employee agrees that in Employee's position as Senior Vice President -
     Wal-Mart Account, Employee has been made privy to certain confidential
     information, proprietary property and trade secrets of the Company and that
     disclosure or use by Employee of such information, property or trade
     secrets would damage the Company. Employee agrees that he will hold in
     confidence and will not, without the Company's prior written permission,
     use, disclose or disseminate (or act so as to cause the use, disclosure or
     dissemination of) any such confidential information, property or trade
     secrets. The obligations set forth in this provision shall not apply to any
     confidential information, property or trade secrets, which have become
     generally known to the public through no act or limitation upon the
     Employee.

19.  Employee covenants and agrees that through August 3, 2004, Employee will
     not directly or indirectly, hire or engage on behalf of Employee any other
     person or entity or any person known to Employee to be a current employee
     or representative of the Company. Employee further agrees that he/she will
     not, directly or indirectly, during such period intentionally suggest,
     assist or influence the engagement or hiring by any other person or entity




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     of any person known to Employee to be a current employee or representative
     of the Company, nor will Employee directly or indirectly intentionally
     encourage or induce any person or entity or any person known to Employee to
     be a current employee, distributor, source, supplier, customer or
     contractor of the Company to sever his, her or its relationship with the
     Company or intentionally do anything else which would be adverse in any
     material or substantial respect to the interests of the Company.

20.  Employee agrees that in the event Employee materially breaches or violates
     any provision of this Agreement then the Company, in addition to any other
     rights or remedies it may have, shall have no obligation to make any
     further payments otherwise due Employee pursuant to this Agreement and the
     Company shall be entitled to recover from Employee any sums paid or
     expenses incurred by the Company on behalf of the Employee pursuant to this
     Agreement without reinstatement of any claim or demand Employee has settled
     through this Agreement; provided, however, this provision does not apply to
     any claims brought pursuant to the Age Discrimination in Employment Act or
     the Older Worker's Benefits Protection Act.

21.  Nothing contained in this Agreement, or the fact the parties have signed
     the Agreement and exchanged the consideration provided hereunder, should be
     construed to be an admission of liability of wrongdoing on the part of
     either party. Moreover, neither this Agreement or anything herein shall be
     admissible in any proceedings as evidence of, or an admission by, the
     Company of any violation of any federal, state or local laws, or of their
     own policies or procedures. This Agreement shall not be admissible in any
     forum except to secure enforcement of its terms and conditions, or as
     required by law.

22.  No waiver of any breach of any term or conditions of this Agreement shall
     be or shall be construed to be a waiver of any other breach of this
     Agreement. No waiver shall be binding under this Agreement unless in
     writing and signed by the party waiving such breach.

23.  This Agreement shall be construed according to and governed by the laws of
     the State of New Jersey and all disputes governing this Agreement shall be
     brought in a court of competent jurisdiction in the State of New Jersey.

24.  If any of the provisions, terms, clauses or waivers or releases of claims
     or rights contained in this Agreement are declared illegal, unenforceable,
     or ineffective in a legal forum, all other provisions, terms, clauses and
     waivers and releases of claims and rights contained in the Agreement shall
     remain valid and binding upon both parties, and the Court shall have the
     power to modify the invalid and unenforceable provisions in a manner which
     most closely fulfills the intent and terms of this Agreement as herein set
     forth.



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25.  This Agreement may not be changed, altered and/or modified except by a
     writing signed by Employee and the Company.

26.  The parties agree that this Agreement may be executed in counterparts, each
     of which shall be deemed to constitute an executed original.

27.  In the event it shall be determined that there is ambiguity contained in
     this Agreement, said ambiguities shall not be construed against any party
     hereto as a result of such party's preparation of this Agreement, but shall
     be construed in favor or against either of the parties hereto in light of
     all the facts, circumstances and intentions of the parties at the time this
     Agreement goes into effect.

28.  Employee acknowledges that Employee has been provided with, and has read a
     copy of the Agreement. Employee further acknowledges that Employee has had
     a period of forty five (45) days to examine the terms and conditions
     contained in this Agreement and has been advised to consult with an
     attorney before signing this Agreement and Employee has used as much of the
     aforesaid forty five (45) day period as he/she desired before entering into
     this Agreement. Employee further acknowledges that Employee has executed
     this Agreement freely and voluntarily, without fraud, duress or undue
     influence of any kind or nature whatsoever.

29.  Notwithstanding anything to the contrary contained in this Agreement
     Employee shall have the right to revoke this Agreement for a period of
     seven (7) days following execution of the Agreement by both parties. It is
     agreed and understood that this Agreement will not become effective until
     the expiration of the seven (7) day period. In the event Employee elects to
     revoke this Agreement, upon revocation, this Agreement shall be deemed null
     and void and Employee shall not receive payment hereunder. Revocation
     should be made by providing notice to the Company in accordance with
     Paragraph 30 below, which notice must be received by Footstar no later than
     the close of business on the seventh (7th) day after the date upon which
     the Agreement is executed by both parties.

30.  All notices or other communications shall be deemed to be given if
     delivered by hand, sent via overnight delivery (for which a receipt is
     obtained), or mailed (certified or registered mail), with postage prepaid
     as follows:



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     To Employee: 99 Franklin Turnpike, Allendale, New Jersey 07401, or to such
     other person and/or place as Employee may designate in writing to the
     Company.

     To Company: 933 MacArthur Blvd., Mahwah, NJ 07430 Attn: Director- Human
     Resources, or such other persons and/places as the Company may designate in
     writing to Employee.

31.  This Agreement shall be binding and shall inure to the benefit of the
     parties and their respective heirs, legal representatives, successors and
     assigns.

EMPLOYEE ACKNOWLEDGES AND AGREES THAT EMPLOYEE HAS READ AND UNDERSTANDS THIS
AGREEMENT, AND THAT EMPLOYEE HAS SIGNED THIS AGREEMENT VOLUNTARILY FOR THE
PURPOSES OF RECEIVING ADDITIONAL BENEFITS FROM THE COMPANY BEYOND THOSE PROVIDED
BY COMPANY POLICY.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement
consisting of [8] pages including this signature page.

FOOTSTAR:                                        EMPLOYEE:


By:      ___________________________             By: ___________________________
         Mark Morrison                               Joe Caracappa
         Sr. Vice President Human Resources
         Footstar

Sworn and subscribed                                 Sworn and subscribed
before me on this                                             before me on this
___ day of ________________, 2004           ___ day of ________________, 2004

--------------------------------            --------------------------------
Notary Public                                        Notary Public
My Commission Expires: _____________         My Commission Expires: ____________






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