SUPPLEMENTAL RETIREMENT PLAN FOR

                           SELECT SENIOR MANAGEMENT OF

                                 FOOTSTAR, INC.



                           Effective October 14, 1996
<PAGE>

                        SUPPLEMENTAL RETIREMENT PLAN FOR
                           SELECT SENIOR MANAGEMENT OF
                                 FOOTSTAR, INC.

                               TABLE OF CONTENTS

                                                                            Page
                                                                            ----

ARTICLE 1.     Definitions ..............................................    1

ARTICLE 2.     Membership ...............................................    13

ARTICLE 3.     Amount and Payment of Supplemental Benefits ..............    14

ARTICLE 4.     Administration ...........................................    19

ARTICLE 5.     Member Obligations .......................................    20

ARTICLE 5.     General Provisions .......................................    24

ARTICLE 6.     Amendment or Termination .................................    26
<PAGE>

                        SUPPLEMENTAL RETIREMENT PLAN FOR
                           SELECT SENIOR MANAGEMENT OF
                                 FOOTSTAR, INC.


                             ARTICLE 1. DEFINITIONS


1.01 "Annual Benefit"

(a)  "Annual  Benefit"  shall mean,  subject to clauses  (b) and (c) below,  the
     amount  by which the  product  of (x) 2% times  (y) the  Member's  Years of
     Service  times (z) such  Member's  Compensation  exceeds the sum of (i) and
     (ii) where

     (i)  equals the aggregate  annualized  value of any retirement and deferred
          profit sharing benefits in respect of such Member (excluding the value
          of any benefits  attributable  to pre-tax or  after-tax  contributions
          made  by or on  behalf  of the  Member)  which  have  previously  been
          received or which such Member or any other  person has a vested  right
          to receive at the time of the commencement of payment of such Member's
          benefit  under  Section  3.04  of  the  Plan,  under  any  arrangement
          maintained  by the  Corporation  other  than the Plan  (including  any
          arrangement  which  constitutes a qualified  plan under Section 401 of
          the Internal  Revenue Code of 1986, as amended)  computed  pursuant to
          clause (d) below, and

     (ii) equals the  Annual  Benefit  used in  computing  any lump sum  payment
          previously  made  pursuant to Section  3.04 to such a Member  becoming
          entitled to a recomputation  of the Annual Benefit pursuant to Section
          3.05.

(b)  In the case of any Member whose retirement  allowance under Section 3.04 of
     the Plan  commences  to be paid on or after his  reaching  age 55 years but
     prior to his reaching age 60 years, such Member's Annual Benefit determined

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     under  clause (a) above  shall be reduced by that  percentage  which is the
     product  of 4 times the  number  of whole and  partial  years  (treating  a
     partial year as a whole year) until such  Member's  60th  birthday so that,
     for  example,  the Annual  Benefit  for a Member age 58-1/2  years would be
     reduced by 8%.

(c)  Notwithstanding  the  foregoing,  the Annual  Benefit  computed  under this
     Section 1.01 shall not be more than 50% of the Member's Compensation.

(d)  The annualized value of a Member's retirement shall be computed as follows:

     (i)  with respect to any benefit which such Member is thereupon  commencing
          to receive at the time of such  computation in the form of an annuity,
          the annual  payment to which such Member  would be entitled  under the
          terms of the plan  under  which  such  benefit is to be paid were such
          benefit  to be  paid in the  form of a  single  life  annuity  for the
          Member's life, or

     (ii) with respect to any other benefit,  the annual amount of the actuarial
          equivalent of such benefit computed as if such benefit were to be paid
          in the form of a single life annuity to such Member  commencing at the
          time of such computation. In computing such actuarial equivalents, the
          actuarial  assumptions  to be used shall be (A) the 1983 Group Annuity
          Mortality  Table  and (B) an  interest  rate  assumption  equal to the
          applicable  interest  rate  (expressed  as a  percentage)  used by the
          Pension Benefit  Guaranty  Corporation for valuing benefits for single
          employer plans that terminate on the date of such  calculation,  minus
          .5%.

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                                                                          Page 3

1.02 "Beneficiary"  shall  mean the  person  named by the Member (i) at the time
     payments  to the  Member  commence  under  the  Plan or (ii) in the case of
     benefits  payable under Section 3.03, at the time of the Member's death, by
     written designation filed with the Retirement  Administration Committee, to
     receive  payments after the Member's death. In the absence of a beneficiary
     designation,  the  Participant's  Beneficiary  for purposes of Section 3.03
     shall be his spouse, if any, or his estate.

1.03 "Board" shall mean the Board of Directors of Footstar, Inc.

1.04 "Cause" shall mean, in connection  with an  involuntary  termination by the
     Corporation of a Member's employment, (a) the Member's willful and material
     breach of Article 5 of this Plan;  (b) the Member is  convicted of a felony
     involving  moral  turpitude;  or (c) the Member  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  Member's  part  shall  be  considered
     "willful"  if it was done or omitted  to be done by him not in good  faith,
     and  shall  not  include  any act or  failure  to act  resulting  from  any
     incapacity  of a Member.  A  termination  for Cause  shall not take  effect
     unless the  following  provisions  are complied  with.  The Member shall be
     given  written  notice by Footstar of its  intention to  terminate  him for
     Cause,  such  notice (A) 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 (B) to be given within 90 days
     of  Footstar's  learning of such act or acts or failure or failures to act.
     The Member shall have 10 days after the date that such  written  notice has
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Page 4

     been given to him in which to cure such conduct, to the extent such cure is
     possible.  If he fails to cure  such  conduct,  the  Member  shall  then be
     entitled to a hearing  before the Committee at which the Member is entitled
     to appear.  Such hearing shall be held within 15 days of such notice to the
     Member,  provided he requests  such  hearing  within 10 days of the written
     notice from  Footstar of the  intention  to  terminate  him for Cause.  If,
     within five days  following such hearing,  the Member is furnished  written
     notice by the Board confirming that, in its judgment,  grounds for Cause on
     the basis of the original  notice exist,  he shall  thereupon be terminated
     for Cause.

1.05 "Change in Control" shall mean any of the following occurrences:

(a)  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 

(b)  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
     1.05 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

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                                                                          Page 5

     merger, consolidation, sale, disposition or other similar transaction to or
     with a Member or entities  controlled  by a Member  shall not  constitute a
     Corporate Transaction; or

(c)  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 1.05, 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 Incumber Board.

(d)  Notwithstanding  the provisions set forth in  subparagraphs  (a) and (b) of
     this Section 1.05,  the following  shall not constitute a Change in Control
     for purposes of this Agreement; (1) 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  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
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                                                                          Page 6

     controlled  Footstar  immediately  prior  to such  transaction;  or (2) 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.

(e)  For purposes of this definition:

          (i)   The   terms   "Beneficial   Ownership",   "Beneficial   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).

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

          (iii) 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.

<PAGE>

1.06 "Committee" shall mean the Compensation Committee of the Board.

1.07 "Compensation"  shall mean the highest average three consecutive years of a
     Member's  annual  base pay rate plus the  Member's  Serp  Incentive  Target
     during the 10 years preceding such Member's Compensation  Measurement Date.
     A Member's  Compensation  Measurement  Date shall be the date on which such
     Member terminates employment with the Corporation for any reason, including
     retirement,  death or  disability,  unless  using  the date of a Change  in
     Control  as of which  such  Member  was a Member  would  result in a higher
     amount  in which  case the date of such  Change  in  Control  shall be such
     Member's Compensation Measurement Date.

1.08 "Corporation" shall mean Footstar 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.  References  in the Plan to  Footstar  shall be deemed to include
     successors to Footstar.

1.09 "Eligible Executive" shall mean an employee of the Corporation who occupies
     a  position  of senior  management  with the  Corporation  and who has been
     listed on Appendix A as amended from time to time by the Committee.

1.10 "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
     Member: (a) an assignment of any duties to Executive which are inconsistent
     with his status as a senior  executive  of  Footstar;  (b) any  decrease in
<PAGE>

                                                                          Page 8

     annual base pay or any  reduction in annual target  incentive  compensation
     opportunity;  (c) 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 Member that is not cured within 30 days; or
     (d) any failure to secure the  agreement of any  successor  corporation  or
     other entity to the Company to fully assume Footstar's obligations under an
     employment  agreement with the Member.  In addition,  following a Change in
     Control,  "Good  Reason"  shall  also mean a  termination  of the  Member's
     employment at his initiative following the occurrence, without the Member's
     written  consent,  of a relocation  of his  principal  place of  employment
     outside a 35-mile radius of his principal  place of employment as in effect
     immediately prior to such Change in Control.

1.11 "Lump Sum Benefit" shall mean

(a)  with respect to a Member to whom payment of benefits under Section 3.04 has
     not commenced or, if previously  commenced,  has been discontinued pursuant
     to Section  3.05,  and who has made no election  under  Section 3.04 or has
     elected a form of benefit  under  Section  3.04 making no  provision  for a
     Beneficiary, the lump sum actuarial equivalent of a single life annuity for
     the Member commencing at the date as of which such Member would have had 10
     years of Service assuming no termination of employment with the Corporation
     following a Change in Control, but not prior to such Member's attaining age
     60, (the "Presumed Starting Date"),  under which annuity the annual payment
     is equal to the Projected Annual Benefit times a fraction, the numerator of
     which  is such  Member's  actual  years  of  Service  as of  such  Member's
     Termination  of Employment  (but not more than 10) and the  denominator  of
     which is 10,

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                                                                          Page 9

(b)  with respect to (i) a Member to whom payment of benefits under Section 3.04
     has not  commenced  or,  if  previously  commenced,  has been  discontinued
     pursuant to Section  3.05 and who has  elected an optional  form of benefit
     under  Section  3.04  making  provision  for a  Beneficiary  and  (ii)  the
     Beneficiary of such Member, the lump sum actuarial  equivalent of that part
     of the benefit  described  in clause (a) to be paid to such  Member,  or to
     such  Beneficiary,  respectively,  pursuant to the optional form of benefit
     elected by such Member under Section 3.04, or

(c)  with respect to (i) a Beneficiary to whom payment of benefits under Section
     3.03 has commenced, (ii) a Member to whom payment of benefits under Section
     3.04 has commenced and has not been  discontinued  pursuant to Section 3.05
     and  (iii)  the  Beneficiary  of such a  Member,  the  lump  sum  actuarial
     equivalent  of all future  benefits,  if any,  payable to such Member or to
     such Beneficiary, as the case may be, under the Plan.

     The amount of such actuarial  equivalents  computed under this Section 1.09
     shall be  determined  by the  Committee  with  sole  discretion  using  the
     actuarial assumptions described in Section 1.01(d).

1.12 "Member"  shall mean any person  included in the  membership of the Plan as
     provided in Article 2.

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                                                                         Page 10

1.13 "Plan"  shall  mean the  Supplemental  Retirement  Plan for  Select  Senior
     Management of Footstar, Inc., as described herein or as hereafter amended.

1.14 "Projected Annual Benefit" shall mean

 (a)     with respect to a Member of the Plan at the time of a Change in Control
         to whom payment of benefits under Section 3.04 has not  commenced,  the
         amount by which the product of (x) 2% times (y) the  Member's  Years of
         Service times (z) such Member's Compensation exceeds the sum of 

     (i)  the aggregate  annualized  value of any retirement and deferred profit
          sharing benefits in respect of such Member (excluding the value of any
          benefits attributable to pre-tax or after-tax contributions made by or
          on behalf of a Member)  which have  previously  been received or which
          such Member or any other  person has a vested  right to receive at the
          time of such Member's  termination of employment under any arrangement
          maintained  by the  Corporation,  other than the Plan  (including  any
          arrangement which constitutes a qualified plan under Section 401(a) of
          the Internal Revenue Code of 1986, as amended)  computed in the manner
          described in Section  1.01(d),  assuming payment of such benefits will
          commence  at such  Member's  Presumed  Starting  Date,  as  defined in
          Section 1.11(a),

     (ii) the  Projected  Annual  Benefit used in computing any Lump Sum Benefit
          payment previously made to such Member pursuant to Section 3.06, and

     (iii)the Annual  Benefit used in computing any lump sum payment  previously
          made to such Member pursuant to Section 3.05; or

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                                                                         Page 11

(b)  with  respect to a Member of the Plan at the time of a Change in Control to
     whom payment of benefits  under Section 3.04 has  previously  commenced but
     who has been  restored  to  employment  with the  Corporation,  the  amount
     computed  pursuant  to (a) above,  but in no event less than such  Member's
     Annual Benefit computed pursuant to Section 3.05 as if such Member had then
     terminated employment with the Corporation.

1.15 "Retiree"  shall  mean a Member  who has 10 or more  years of  Service  and
     terminates  employment  with the  Corporation  at or  after  age 55 for any
     reason,  including  disability but excluding a termination  for Cause or by
     reason of death,  provided,  however, that if such Member shall be eligible
     upon such termination of employment to commence to receive payments under a
     defined benefit  retirement  plan in which he is a participant,  if any, he
     shall not be a Retiree  unless he commences to receive such  payments  upon
     such termination of employment.

1.16 "Retirement  Administration  Committee"  shall  mean the  Committee  of the
     Starfund  401(k)  Profit  Sharing  Plan of Footstar,  Inc.  and  Affiliated
     Companies.

1.17 "Serp  Incentive  Target"  shall  mean  the  Member's  full  target  annual
     incentive  compensation  award as last in effect  immediately prior to such
     Member's Compensation Measurement Date (as defined in Section 1.07).

1.18 "Service"  shall mean with respect to a Member the sum of (a) the period of
     such  Member's  active  employment  with the  Corporation,  as an  Eligible
     Executive,  excluding,  unless  otherwise  provided by the  Committee,  any
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                                                                         Page 12

     period  during  which the Member (i) was  engaged as a  consultant  or (ii)
     received  salary  continuance  or  severance  payments  and (b) any Service
     credited to such Member by the Committee  pursuant to Article 4. A "Year of
     Service" shall mean a period of 12 consecutive months of Service.

1.19 "Termination  of Employment"  shall mean (a) termination by the Corporation
     of a Member's  employment  with the  Corporation  for any reason other than
     Cause  and  (b) any  voluntary  termination  by the  Member  of a  Member's
     employment with the Corporation for Good Reason,  which in each case occurs
     coincident  with or within the  twenty-four  (24) month period  immediately
     following the occurrence of a Change in Control.

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                                                                         Page 13

                              ARTICLE 2. MEMBERSHIP

2.01 Every  Eligible  Executive in the employ of the  Corporation on October 14,
     1996 shall become a Member of the Plan on October 14, 1996.

2.02 Any other  employee of the  Corporation  who becomes an Eligible  Executive
     shall on such date become a Member of the Plan.

2.03 Any Member who becomes a Retiree shall  continue to be a Member of the Plan
     until  the  later  of (a) the  termination  of his  employment  and (b) the
     payment of all benefits in respect of such Retiree under the Plan.

2.04 The membership under the Plan of an Eligible Executive who is not a Retiree
     shall  terminate  if his  employment  with the  Corporation  as an Eligible
     Executive  terminates unless at the time of such termination,  or within 60
     days  thereafter,  he  becomes a Retiree or within 60 days  thereafter,  he
     becomes a Retiree,  or unless  upon such  termination  he  continues  to be
     entitled to a benefit  hereunder  pursuant to Section  3.06, in which event
     his membership shall cease upon the payment of all Plan benefits.

2.05 A Member whose  membership in the Plan terminates  pursuant to Section 2.03
     or Section 2.04 shall be restored to membership in the Plan at such time as
     he is restored to employment as an Eligible Executive of the Corporation.

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             ARTICLE 3. AMOUNT AND PAYMENT OF SUPPLEMENTAL BENEFITS

3.01 Except as provided in Section 3.06,  benefits under this Article 3 shall be
     payable by the Corporation only with respect to Members who are Retirees or
     become Retirees or, as provided in Section 3.03, to Beneficiaries.

3.02 Except as  provided  in  Section  3.06,  a  Retiree  shall be  entitled  to
     commencement of payment of benefits hereunder pursuant to Section 3.04 upon
     the first of the month  following his  termination  of employment  with the
     Corporation.

3.03 (a) In the event that a Member dies,  after  attaining age 55 with at least
     10 years of service,  prior to becoming a Retiree, or dies after becoming a
     Retiree but prior to commencing to receive payments  hereunder  pursuant to
     Section  3.04,  his   Beneficiary   shall  be  entitled  to  the  immediate
     commencement  of a single life  annuity,  with an annual  payment  equal to
     one-half  of the Annual  Benefit,  if any,  computed  under  Section  1.01,
     including any reduction under  subsection (b) thereof,  if applicable,  for
     such  Member as if the Member was a Retiree  and had  commenced  to receive
     payment of benefits under Section 3.04  immediately  prior to his death. In
     the event the age  difference  between  the Member and his  Beneficiary  is
     greater  than 5 years,  the benefit  payable  pursuant to this Section 3.03
     shall be  actuarially  adjusted  to  reflect  the  differences  in the life
     expectancy of the Participant and the Beneficiary.

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                                                                         Page 15

     Notwithstanding  any Plan  provisions  to the  contrary,  in the  event the
     Participant's  Beneficiary  is his estate,  the benefit  otherwise  payable
     under this Section 3.03 shall be commuted  into a single lump sum amount of
     actuarial  equivalent  value,  which amount shall be determined by assuming
     the  Beneficiary  had been a person  of the same age as the  Member  at the
     Member's date of death. The amount of such actuarial  equivalents  computed
     under this  Section 3.03 shall be  determined  by the  Committee  with sole
     discretion  using the actuarial  assumptions  described in Section 1.01(d).

     (b) In the event  that a Member  dies at a time when no  benefit is payable
     under  Section  3.03(a),  but such  Member is  survived  by a spouse,  such
     surviving  spouse shall receive a benefit  calculated as if Section 3.03(a)
     applies and such surviving spouse is the Member's beneficiary. In the event
     such  Member is not  survived  by a spouse but is  survived  by an eligible
     child or eligible children, then the benefit that would have been paid to a
     surviving spouse shall be paid to the eligible child, or, if more than one,
     in equal shares to such  eligible  children with payments to any such child
     ceasing  when such child  attains the age of 21 or dies,  if  earlier.  For
     purposes of this Section  3.03(b),  eligible  child shall mean a child of a
     Member so long as such child has not  attained  age 21,  including  a child
     legally adopted by a Member prior to the Member's death.

3.04 Except as  provided  in Section  3.06 and  subject  to the next  succeeding
     sentence, the benefit payable under the Plan to a Retiree shall be a single
     life annuity for the life of the Retiree, with annual payments equal to the
     Annual  Benefit  computed under Section 1.01 for such Member at the time of
     the  commencement  of payment of benefits under this Section 3.04. A Member
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                                                                         Page 16

     may make an  irrevocable  election  in writing  filed  with the  Retirement
     Administration  Committee  at  least  12  months  prior  to the date of the
     commencement of benefits hereunder  requesting to receive such benefits (a)
     in a joint and  survivor  annuity  form which  provides  a reduced  benefit
     payable to the Member during his life,  and after his death  providing that
     100% or 50% of the reduced benefit will continue to be paid during the life
     of and to his Beneficiary or (b) in a lump sum; provided,  however,  that a
     Member may not elect an optional  form of benefit  providing for a deferred
     commencement  date.  Any such optional form of benefit or lump sum shall be
     the  actuarial  equivalent  of such single life annuity using the actuarial
     assumptions  described  in  Section  1.01(c)  and shall be  subject  to the
     approval of the Committee.

3.05 If a Retiree who has terminated employment with the Corporation is restored
     to employment  after  commencing to receive  payments under Section 3.04 of
     the Plan,  the  payment of  benefits  under the Plan shall be  discontinued
     (unless all such  benefits  have been  previously  paid in a lump sum) and,
     upon  such  Member's   subsequent   termination  of  employment   with  the
     Corporation for any reason, including retirement,  death or disability, the
     Member's  Annual  Benefit under the Plan shall  thereafter be recomputed in
     accordance with Section 1.01,  Section 3.03 or Section 3.04, as applicable,
     and  shall be  payable  in  accordance  with the  provisions  of the  Plan,
     provided,  however,  that such recomputation shall be based upon the higher
     of (i) such Member's  Compensation at the time of such previous termination
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                                                                         Page 17

     of  employment  and (ii)  such  Member's  Compensation  at the time of such
     subsequent termination of employment.

3.06 Notwithstanding  the  provisions  of Section  3.01 and Section  3.02,  if a
     Change in Control occurs

(a)  each Member who is then a Retiree and each Beneficiary entitled to benefits
     under  Section  3.03 or  Section  3.04  shall be  entitled  to  receive  an
     immediate payment in cash of such Retiree's or such  Beneficiary's Lump Sum
     Benefit,

(b)  Each  Member  at the time of such  Change  in  Control  who  experiences  a
     Termination  of  Employment,  each  Beneficiary  of such a  Member  who has
     elected an optional  form of benefit  under Section 3.04 making a provision
     for such Beneficiary,  and each Beneficiary of a Member at the time of such
     Change in Control who dies within 2 years  following such Change in Control
     without having received a Lump Sum Benefit, shall, upon such Termination of
     Employment  or  death,  as the case  may be,  be  entitled  to  receive  an
     immediate payment in cash of such Member's,  or such Beneficiary's Lump Sum
     Benefit.

(c)  Each Member at the time of such Change in Control who neither dies within 2
     years  following  such Change in Control nor  experiences a Termination  of
     Employment  shall,  upon such Member's later termination of employment with
     the Corporation for any reason other than Cause or death,  without becoming
     a Retiree  and,  with  respect  to each such  Member  who later  dies,  the
     Beneficiary of such Member if such Beneficiary is not otherwise entitled to
     a benefit under Section 3.03,  shall  nevertheless be entitled to a Benefit
     commencing at the Presumed  Starting Date in the form  specified in Section
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                                                                         Page 18

     3.04 or Section 3.03, as the case may be,  provided that in computing  such
     benefit there shall be  substituted  for the term Annual Benefit in Section
     3.04 or Section  3.03,  as the case may be, the  following:  the  Projected
     Annual  Benefit  times a fraction,  the numerator of which is such Member's
     years of  Service as of such  Change in Control  (but not more than 10) and
     the denominator of which is 10.

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                                                                         Page 19

                            ARTICLE 4. ADMINISTRATION

4.01 The Committee  shall select which employees who occupy a position of senior
     management  with  the  Corporation  shall  be  designated  as  an  Eligible
     Executive.

4.02 The  Committee  shall have  discretion  to grant  credit for Service to any
     Eligible Executive.

4.03 Except as  provided in Section  6.01 and 6.02,  the  administration  of the
     Plan,  the  exclusive  power to interpret  it, and the  responsibility  for
     carrying out its  provisions  are vested in the  Retirement  Administration
     Committee.

4.04 The  provisions of Article VIII of the Starfund  401(k) Profit Sharing Plan
     of  Footstar,   Inc.  and  Affiliated   Companies   concerning   Retirement
     Administration Committee membership,  meetings,  maintenance of records and
     Retirement  Administration Committee powers shall apply under the Plan. The
     expenses of the Retirement  Administration Committee incurred in connection
     with the Plan shall be paid directly by the Corporation.

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                                                                         Page 20

                          ARTICLE 5. MEMBER OBLIGATIONS

5.01 Confidentiality; Cooperation with Regard to Litigation

(a)  During a Member's employment with Footstar and thereafter, the Member 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 to divulge,  disclose or
     make  accessible  such  information.  In the  event  that the  Member is so
     ordered,  he 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, customers, 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 5.01(a) above.

(c)  "Subsidiary" shall mean any corporation  controlled  directly or indirectly
     by Footstar and any affiliate of Footstar.

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                                                                         Page 21

(d)  The Member  agrees to cooperate  with  Footstar,  (including  following the
     Member's  termination  of  employment  for any reason),  by making  himself
     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 Member,  on an after-tax  basis,  for all expenses  actually
     incurred in connection with his provision of testimony or assistance.  

5.02 Non-competition.  

(a)  During the Restriction  Period (as defined in Section  5.02(b) below),  the
     Member 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 those  companies
     designated  by Footstar and  communicated  to the Member (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 Member shall not either
     directly or indirectly oversee or manage the activities of
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                                                                         Page 22

     such  corporation  or  entity's  division or unit  engaged in the  Discount
     Retail Footwear Business.  If the Member 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  Member  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  were  contemplated  at the time  the  Member  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 Member) or (y) the Member commences directly or
     indirectly  overseeing or managing the activities of Footstar or Subsidiary
     so long as he 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  sells  discount  footwear.  

(b)  For the purposes of this Section 5.02 and Section 5.03 below,  "Restriction
     Period" shall mean the period  beginning with the Member's  initial date of
     employment  by Footstar  and ending the date of a Change in Control  except
     that if the Member has an Employment  Agreement with Footstar it shall have
     the meaning contained in such employment agreement.

5.03 Non-solicitation of Employees.

     During the portion of the Restriction  Period  following the termination of
     the Member's employment,  the Member 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 Member's  employment,
     the Member shall not directly or indirectly hire any employee of Footstar

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                                                                         Page 23

     or any  Subsidiary  or any  person  who was  employed  by  Footstar  or any
     Subsidiary within 180 days of such hiring.

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                                                                         Page 24

                          ARTICLE 6. GENERAL PROVISIONS

6.01 The  establishment  of the Plan shall not be  construed as  conferring  any
     legal rights upon any Eligible Executive or other person for a continuation
     of  employment,  nor shall such  actions  interfere  with the rights of the
     Corporation to discharge or demote any Eligible  Executive and to treat him
     without regard to the effect which such treatment  might have upon him as a
     Member of the Plan.

6.02 In the event that the Retirement Administration Committee shall find that a
     Member is unable to care for his  affairs  because of illness or  accident,
     the Retirement Administration Committee may direct that any benefit payment
     due him,  unless  claim shall have been made  therefor by a duly  appointed
     legal  representative,  be paid to his spouse,  a child,  a parent or other
     blood relative,  or to a person with whom he resides,  and any such payment
     so made  shall  be a  complete  discharge  of the  liabilities  of the Plan
     therefor.

6.03 The Corporation shall have the right to deduct from each payment to be made
     under the Plan any required withholding taxes.

6.04 Subject to any  applicable  law, no benefit under the Plan shall be subject
     in any manner to  anticipation,  alienation,  sale,  transfer,  assignment,
     pledge,  encumbrance or charge, and any attempt so to do shall be void, nor
     shall any such benefit be in any manner liable for or subject to the debts,
     contracts, liabilities, engagements or torts of the Retiree or the Member.

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                                                                         Page 25

6.05 Notwithstanding  any other  provision of the Plan to the  contrary,  in the
     event that a Member or Retiree shall at any time violate the  provisions of
     Article 5 or be convicted of a crime  involving  dishonesty or fraud on the
     part of such Member in his relationship with the Corporation,  all benefits
     which would otherwise be payable to him under the Plan shall be forfeited.

6.06 The rights of any Member or Retiree to benefits under the Plan prior to the
     actual  receipt  of such  benefits  shall be  limited to those of a general
     unsecured creditor of the Corporation.

6.07 The Plan shall be construed,  regulated and administered  under the laws of
     the State of New  Jersey to the  extent  such  laws are not  superseded  by
     applicable federal law.

6.08 The masculine pronoun shall mean the feminine wherever appropriate.

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                                                                         Page 26

                       ARTICLE 7 AMENDMENT OR TERMINATION

The Committee  reserves the right to modify or to amend, in whole or in part, or
to terminate,  this Supplemental Retirement Plan for Select Senior Management of
Footstar,  Inc.  at any  time;  provided,  however,  that no such  modification,
amendment or termination  shall adversely affect the right of any Member (or the
Beneficiary  of such  Member)  to  receive  the  benefits  such  Member  (or the
Beneficiary of such Member) 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 such Member's  Service and age at the time of such Member's  actual
termination  of  employment  with  the  Corporation  for any  reason,  including
retirement, death or disability.

<PAGE>

                                   Appendix A
                                   ----------

                                 Carlos Alberini
                                 Charles Albert
                                Joseph Caracappa
                                  James De Veau
                                  Glenn Mathieu
                                   Ralph Parks
                                Randall Proffitt
                                Maureen Richards
                                  Donald Roach
                                  J.M. Robinson
                                  Jeff Shepard