Document:

Exhibit 10.1

                             As of February 19, 2002

Ultralife Batteries, Inc.
2000 Technology Parkway
Newark, NY  14513

Ultralife Batteries (UK) Ltd.
18 Nuffield Way
Abingdon, Oxfordshire, OX 14
1TG England

         Re: Fourth Amendment to Financing Agreements ("Amendment")
             ------------------------------------------------------

Gentlemen:

      Reference is made to the Loan and Security Agreement dated June 15, 2000,
as amended, between you and the undersigned (the "Loan Agreement"). All
capitalized terms not otherwise defined herein shall have the meanings given
such terms in the Loan Agreement.

      Borrowers have requested that Lender agree to certain modifications to the
Loan Agreement. Subject to the terms and conditions hereof, the Lender agrees
with the Borrowers as follows:

      (1) Section 1.15 is amended to delete the first sentence thereof and to
replace it with the following:

            "1.15 "Eligible Inventory" shall mean Inventory consisting of
            finished goods held for resale in the ordinary course of business of
            Parent, raw materials for such finished goods and Quasi-Finished
            Goods."

      (2) Section 1.35 is deleted in its entirety and replaced with the
following:

            "1.35 "Maximum Credit" shall mean the amount of $15,000,000.00"

      (3) Section 1.41 is deleted in its entirety and replaced with the
following:

            "1.41 "Quasi-Finished Goods" shall mean sub-assembled 9 volt
            (excluding labeling, packaging, cans, etc.), and fully assembled
            5372 and 5368 batteries that are undergoing only final cure and
            testing, that satisfy the criteria for Eligible Inventory (other
            than the requirement of being only finished goods or raw materials)
            and that are otherwise acceptable to Lender."

      (4) Section 1.49 is deleted in its entirety and replaced with the
following:

<PAGE>

Ultralife Batteries, Inc.
Ultralife Batteries (UK) Ltd.
As of February 19, 2001
Page 2

            "1.49 Intentionally Omitted."

      (5) Section 2.1(a)(ii) is deleted in its entirety and replaced with the
following:

            "2.1(a)(ii) the lesser of: (A) the sum of (1) seventy (70%) percent
            of the Value of Eligible Inventory consisting of finished goods,
            plus (2) the lesser of seventy (70%) of the Value of Eligible
            Inventory consisting of Quasi-Finished Goods or $750,000, plus (3)
            thirty (30%) percent of the Value of Eligible Inventory consisting
            of raw materials or (B) $6,000,000.00, less"

      (6) Section 2.3 is deleted in its entirety and replaced with the
following:

            "2.3 Term Loans. On the date of the Fourth Amendment, a Term Loan in
            the principal amount of $2,050,000.00 was outstanding to Parent and
            a Term Loan in the principal amount of $683,333.27 was outstanding
            to Ultralife (UK). Each Term Loan is (a) evidenced by a Term
            Promissory Note in the original principal amount borrowed, (b) to be
            repaid, together with interest and other amounts, in accordance with
            this Agreement, the applicable Term Promissory Note and other
            Financing Agreements and (c) secured by all of the Collateral."

      (7) Section 9.15 of the Loan Agreement is deleted and replaced with the
following:

            "9.15 Adjusted Net Worth. Borrowers shall, at all times, maintain an
            Adjusted Net Worth of not less than $33,500,000.00." If the Borrower
            takes an asset impairment write-down prior to June 30, 2002, then
            the Adjusted Net Worth shall not be less than: (a) $33,500,000.00
            less (b) asset impairment write-down amount.

      (8) Parent has advised Lender that it may sell its 33% equity interest in
Ultralife Taiwan, Inc. ("UTI") and has requested that Lender specify the
conditions that Lender would place on its consent to such sale. Accordingly,
Lender agrees that so long as no Event of Default or event or condition which
with the passage of time or notice or both would constitute an Event of Default,
has occurred and is continuing, Lender will consent to the sale by Borrower of
its equity interest in UTI and release its security interest in such equity
interest, subject to the receipt by Lender in immediately available funds of
twenty (20%) percent of the total proceeds of such sale, which amount will be
applied to establish an Availability Reserve equal to such amount.

<PAGE>

Ultralife Batteries, Inc.
Ultralife Batteries (UK) Ltd.
As of February 19, 2001
Page 3

      (9) In addition to and without in any way limiting or substituting for the
Collateral granted by Borrowers to Lender pursuant to the Financing Agreements
and under the amendments thereto, as security for the payment and performance of
all Obligations and any and all other obligations of every type of Borrowers to
Lenders, each Borrower hereby grants to Lender a continuing security interest
and lien upon all of its property and assets of every type whatsoever, now owned
or hereafter acquired, wherever located, including without limitation all of the
following categories of property and interests in property, as defined under the
UCC presently in effect in the Commonwealth of Massachusetts or as hereafter
amended: goods (including inventory, equipment and any accessions thereto),
instruments (including promissory notes), documents, accounts (including
health-care insurance receivables), chattel paper (whether tangible or
electronic), deposit accounts, letters of credit (whether or not the letter of
credit is evidenced by a writing), banker's acceptances and similar instruments
and including all letter-of-credit rights, commercial tort claims, securities
and all other investment property, general intangibles (including payment
intangibles and software), supporting obligations and any and all products and
proceeds of any of the foregoing (collectively, the "Collateral"). For all
purposes under the Financing Agreements, each of the foregoing categories of
property shall be deemed to be included in the Collateral and the definition of
Collateral is hereby amended to include such categories. No Borrower shall
change its state of incorporation without obtaining Lender's prior written
consent, such consent to be in Lender's discretion. Borrowers promptly shall
notify Lender in writing upon any Borrower acquiring any commercial tort
claim(s). Each Borrower irrevocably and unconditionally authorizes Lender (or
its agent) to file at any time and from time to time such financing statements
with respect to the Collateral naming Lender or its designee as the secured
party and Borrowers as debtor, and including any other information with respect
to the Borrowers or otherwise required by part 5 of Article 9 of the UCC,
together with amendments and continuations with respect thereto, which
authorization shall apply to all financing statements naming Lender or its
designee as secured party and Borrowers as debtor filed on, prior to or after
the date hereof. In no event shall Borrowers file or permit or cause to be filed
any correction statement, amendment, or termination statement with respect to
any such financing statement. Borrowers shall take or cause to be taken all
action required to cause the attachment, perfection and first priority of, and
the ability of Lender to enforce the Lender's security interests and liens
including, without limitation, obtaining control agreements with respect to
deposit accounts, letter-of-credit rights, electronic, chattel paper,
instruments and investment property.

      (10) In connection with the execution and delivery of this Amendment,
Borrowers shall pay to Lender a fee of $15,000.00, which fee shall be fully
earned and non-refundable on the date hereof.

<PAGE>

Ultralife Batteries, Inc.
Ultralife Batteries (UK) Ltd.
As of February 19, 2001
Page 4

      (11) In connection with the execution and delivery of this Amendment, if
requested by Lender, the Borrowers shall furnish to the Lender certified copies
of all requisite corporate action and proceedings of the Borrowers in connection
with this Amendment.

      (12) Each Borrower confirms and agrees that (a) all representations and
warranties contained in the Loan Agreement and in the other Financing Agreements
are on the date hereof true and correct in all material respects (except for
changes that have occurred as permitted by the covenants in Section 9 of the
Loan Agreement), and (b) it is unconditionally liable for the punctual and full
payment of all Obligations, including, without limitation, all charges, fees,
expenses and costs (including attorneys' fees and expenses) under the Financing
Agreements, and that Borrowers have no defenses, counterclaims or setoffs with
respect to full, complete and timely payment of all Obligations.

      (13) Borrowers hereby agree to pay to Lender all reasonable attorney's
fees and costs which have been incurred or may in the future be incurred by
Lender in connection with the negotiation and preparation of this Amendment and
any other documents and agreements prepared in connection with this Amendment.
The undersigned confirm that the Financing Agreements remain in full force and
effect without amendment or modification of any kind, except for the amendments
explicitly set forth herein. The undersigned further confirm that after giving
effect to this Amendment, no Event of Default or events which with notice or the
passage of time or both would constitute an Event of Default have occurred and
are continuing. Except as explicitly provided herein, the execution and delivery
of this Amendment by Lender shall not be construed as a waiver by Lender of any
Event of Default under the Financing Agreements. This Amendment shall be deemed
to be a Financing Agreement and, together with the other Financing Agreements,
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior dealings, correspondence, conversations
or communications between the parties with respect to the subject matter hereof.

                  [Remainder of Page Left Intentionally Blank]

<PAGE>

Ultralife Batteries, Inc.
Ultralife Batteries (UK) Ltd.
As of February 19, 2001
Page 5

      If you accept and agree to the foregoing please sign and return the
enclosed copy of this letter. Thank you.

                                   Very truly yours,

                                   CONGRESS FINANCIAL CORPORATION
                                   (NEW ENGLAND)

                                   By:  /s/ Melissa A. Post
                                        -------------------------------------
                                        Name: Melissa A. Post
                                        Title: Assistant Vice President

                                   AGREED:

                                   ULTRALIFE BATTERIES, INC.

                                   By:  /s/ Robert W. Fishback
                                        -------------------------------------
                                        Name:  Robert W. Fishback
                                               ------------------------------
                                        Title: VP - Finance & CFO
                                               ------------------------------

                                   ULTRALIFE BATTERIES (UK) Ltd.

                                   By:  /s/ William A. Schmitz
                                        -------------------------------------
                                        Name:  William A. Schmitz
                                               ------------------------------
                                        Title: C.O.O.
                                               ------------------------------EXHIBIT 10.5(a)

                                 FOOTSTAR, INC.

--------------------------------------------------------------------------------
                     Employment Agreement for J. M. Robinson
--------------------------------------------------------------------------------

<PAGE>

                                 FOOTSTAR, INC.

                     Employment Agreement for J. M. Robinson

                                                                           Page
                                                                           ----
1.  Definitions.........................................................     1
2.  Term of Employment..................................................     2
3.  Position, Duties and Responsibilities...............................     2
4.  Base Salary.........................................................     3
5.  Annual Incentive Awards.............................................     3
6.  Long-Term Stock Incentive Programs..................................     3
7.  Employee Benefit Programs...........................................     3
8.  Disability..........................................................     5
9.  Reimbursement of Business and Other Expenses; Perquisites...........     6
10. Termination of Employment...........................................     6
11. Confidentiality; Cooperation with Regard to Litigation..............    17
12. Non-competition.....................................................    18
13. Non-solicitation of Employees.......................................    19
14. Remedies............................................................    19
15. Resolution of Disputes..............................................    19
16. Indemnification.....................................................    20
17. Excise Tax Gross-Up.................................................    21
18. Effect of Agreement on Other Benefits...............................    22
19. Assignability; Binding Nature.......................................    23
20. Representation......................................................    23
21. Entire Agreement....................................................    23
22. Amendment or Waiver.................................................    23
23. Severability........................................................    23
24. Survivorship........................................................    24
25. Beneficiaries/References............................................    24
26. Governing Law/Jurisdiction..........................................    24
27. Notices.............................................................    24
28. Headings............................................................    25
29. Counterparts........................................................    25

<PAGE>

                              EMPLOYMENT AGREEMENT

      AGREEMENT,  made and entered into as of the 1st day of April,  2002 by and
between Footstar, Inc., a Delaware corporation (together with its successors and
assigns  permitted under this Agreement,  the "Company"),  and Mr. J.M. Robinson
(the "Executive").

                              W I T N E S S E T H:

      WHEREAS,  the  Company  desires to employ  the  Executive  pursuant  to an
agreement  embodying the terms of such  employment  (this  "Agreement")  and the
Executive  desires to enter into this  Agreement and to accept such  employment,
subject to the terms and provisions of this Agreement;

      NOW,  THEREFORE,  in  consideration  of the premises and mutual  covenants
contained herein and for other good and valuable  consideration,  the receipt of
which is mutually  acknowledged,  the Company and the Executive  (individually a
"Party" and together the "Parties") agree as follows:

      1. Definitions.

      (a)  "Approved  Early  Retirement"  shall  have the  meaning  set forth in
Section 10(f) below.

      (b) "Base Salary" shall have the meaning set forth in Section 4 below.

      (c) "Board" shall have the meaning set forth in Section 3 below.

      (d) "Cause" shall have the meaning set forth in Section 10(b) below.

      (e) "Change in Control"  shall have the meaning set forth in Section 10(c)
below.

      (f) "Confidential Information" shall have the meaning set forth in Section
11 below.

      (g)  "Constructive  Termination  Without Cause" shall have the meaning set
forth in Section 10(c) below.

      (h) "Effective Date" shall have the meaning set forth in Section 2 below.

      (i) "1996 ICP" shall have the meaning set forth in Section 5 below.

      (j) "Normal  Retirement" shall have the meaning set forth in Section 10(f)
below.

      (k)  "Extended  Term of  Employment"  shall have the  meaning set forth in
Section 2 below.

      (l) "Renewal Term" shall have the meaning set forth in Section 2 below.

      (m)  "Restriction  Period"  shall have the meaning set forth in Section 12
below.

      (n) "SERP" shall have the meaning set forth in Section 7 below.

      (o)  "Severance  Period"  shall  have the  meaning  set  forth in  Section
10(c)(ii) below.

      (p) "Subsidiary" shall have the meaning set forth in Section 11 below.

      (q) "Term of  Employment"  shall have the  meaning  set forth in Section 2
below.

                                      -1-
<PAGE>

      (r)  "Termination  Without  Cause"  shall  have the  meaning  set forth in
Section 10(c) below.

      2. Term of Employment.

      (a) The term of the  Executive's  employment  under this  Agreement  shall
commence  on  April  1,  2002  (the  "Effective  Date")  and  end on  the  fifth
anniversary of such date (the "Extended Term of Employment").  The Extended Term
of Employment shall be automatically  renewed for successive one-year terms (the
"Renewal  Terms")  unless  at least  180 days  prior  to the  expiration  of the
Extended Term of Employment or any Renewal Term, either Party notifies the other
Party in writing  that he or it is electing to terminate  this  Agreement at the
expiration of the then current Term of Employment.  "Term of  Employment"  shall
mean the Extended Term of Employment and all Renewal Terms.

      (b) In the event that this  Agreement  is not renewed  because the Company
has given the 180-day notice prescribed in the preceding  paragraph on or before
the  expiration  of the Original  Term of Employment or any Renewal Term and, in
either  case,  such  notice  would  result  in the  expiration  of the  Term  of
Employment  prior to the Executive's 60th birthday,  such  non-renewal  shall be
treated as a "Constructive  Termination Without Cause" pursuant to Section 10(c)
below.

      (c) Notwithstanding  anything in this Agreement to the contrary,  at least
one year prior to the expiration of the Original Term of Employment, the Parties
shall meet to discuss this  Agreement  and may agree in writing to modify any of
the terms of this Agreement.

      3. Position, Duties and Responsibilities.

      (a)  Generally.  Executive  shall  serve  as  Chairman  of  the  Board  of
Directors, President and Chief Executive Officer of the Company, and for so long
as he is  serving  on the  Board of  Directors  of the  Company  (the  "Board"),
Executive agrees to serve as a member of any committee of the Board if the Board
shall  elect  Executive  to such  positions.  In any and  all  such  capacities,
Executive shall report only to the Board.  Executive shall have and perform such
duties, responsibilities, and authorities as are customary for the president and
chief executive  officer of a publicly held  corporation of the size,  type, and
nature of the Company as they may exist from time to time and as are  consistent
with such position and status.  Executive shall devote  substantially all of his
business  time and  attention  (except for periods of vacation or absence due to
illness),  and his  best  efforts,  abilities,  experience,  and  talent  to the
position  of  Chairman,  President  and  Chief  Executive  Officer  and  for the
businesses of the Company.

      (b) Other  Activities.  Anything  herein to the contrary  notwithstanding,
nothing in this  Agreement  shall preclude the Executive from (i) serving on the
boards of directors of a reasonable  number of other  corporations or the boards
of a reasonable number of trade  associations  and/or charitable  organizations,
(ii) engaging in charitable activities and community affairs, and (iii) managing
his personal  investments  and affairs,  provided  that such  activities  do not
materially   interfere   with  the   proper   performance   of  his  duties  and
responsibilities under this Agreement.

      (c) Place of Employment.  Executive's  principal place of employment shall
be the corporate offices of the Company.

                                      -2-
<PAGE>

      (d) Rank of Executive  Within  Company.  As Chairman,  President and Chief
Executive  Officer  of the  Company,  Executive  shall  be  the  highest-ranking
executive of the Company.

      4. Base Salary.

      The Executive  shall be paid an annualized  salary,  payable in accordance
with the regular  payroll  practices of the Company,  of not less than $850,000,
subject to annual  review for  increase at the  discretion  of the  Compensation
Committee of the Board ("Base Salary").

      5. Annual Incentive Awards.

      The  Executive   shall   participate   in  the  Company's  1996  Incentive
Compensation  Plan  (the  "1996  ICP")  with a  target  annual  incentive  award
opportunity  of no less than 80% of Base  Salary or in a  successor  plan to the
1996 ICP that provides the Executive with an equivalent opportunity.  Payment of
annual incentive  awards shall be made at the same time that other  senior-level
executives receive their incentive awards.

      6. Long-Term Stock Incentive Programs.

      (a) General.  The  Executive  shall be eligible to  participate  in and to
receive stock incentive awards under the 1996 ICP and any successor plan.

      (b) Career Equity Program.  The Executive shall be eligible to participate
in the Company's  Career Equity Program which is currently based on a three year
rolling performance cycle with a target long term incentive award opportunity of
no less than 50% of Base Salary or in a successor  plan or program that provides
the Executive with an equivalent opportunity.

      7. Employee Benefit Programs.

      (a) General Benefits.  During the Term of Employment,  the Executive shall
be entitled to  participate in such employee  pension and welfare  benefit plans
and programs of the Company as are made available to the Company's  senior-level
executives  or to its employees  generally,  as such plans or programs may be in
effect  from  time to time,  including,  without  limitation,  health,  medical,
dental,  long-term  disability,  travel  accident and life  insurance  plans and
relocation plans.

      (b) SERP. The Executive  shall be entitled to participate in the Company's
supplemental  retirement  plan ("SERP")  providing  for,  among other things,  a
lifetime annuity benefit for the Executive equal to 2% of his average high three
of last 10 years'  salary plus actual annual bonus  (before any  deferrals)  for
each year (full and  partial) of service with the  Company,  except that,  as of
October 12, 1996,  the Executive  shall be granted 15 years of credited  service
for both  benefit  accrual  and  vesting  purposes  under  the  SERP.  Except as
expressly  provided below, the Executive's SERP benefits shall be 100% vested if
he remains employed with the Company to or beyond his 55th birthday.

      (c)  Deferral  of  Compensation.   The  Executive  shall  be  entitled  to
participate in any deferral  arrangements or programs  implemented  from time to
time by the Company,  including the Company's STEP program permitting  Executive
to elect to defer receipt, pursuant to written deferral election terms and forms
(the "Deferral Election Forms"), of all or a specified portion of (i) his annual
Base Salary and annual incentive  compensation under Sections 4 and 5, (ii) long
term  incentive  compensation  under  Section 6 and (iii)

                                      -3-
<PAGE>

shares  acquired upon exercise of options to purchase  Company common stock that
are acquired in an exercise in which  Executive  pays the exercise  price by the
surrender of previously  acquired  shares,  to the extent of the net  additional
shares otherwise issuable to Executive in such exercise; provided, however, that
such  deferrals  shall not reduce  Executive's  total cash  compensation  in any
calendar year below the sum of (i) the FICA maximum  taxable wage base plus (ii)
the amount needed,  on an after-tax  basis, to enable Executive to pay the 1.45%
medicare  tax imposed on his wages in excess of such FICA  maximum  taxable wage
base.  In addition,  the  Committee  may require  mandatory  deferral of amounts
payable as annual incentive  compensation under Section 5 or long term incentive
compensation  under Section 6, which  deferrals  will otherwise be in accordance
with this Section 7(c).

      In accordance with such duly executed Deferral Election Forms or the terms
of any  such  mandatory  deferral,  the  Company  shall  credit  to one or  more
bookkeeping  accounts maintained for Executive on the respective payment date or
dates, amounts equal to the compensation subject to deferral, such credits to be
denominated in cash if the compensation would have been paid in cash but for the
deferral or in shares if the compensation would have been paid in shares but for
the deferral.  An amount of cash equal in value to all cash-denominated  amounts
credited to  Executive's  account and a number of shares of Company common stock
equal to the number of shares credited to Executive's  account  pursuant to this
Section  7(c)  shall  be  transferred  as soon  as  practicable  following  such
crediting by the Company to, and shall be held and  invested by, an  independent
trustee  selected by the Company  and  reasonably  acceptable  to  Executive  (a
"Trustee")  pursuant to a "rabbi trust" established by the Company in connection
with  such  deferral  arrangement  and  as  to  which  the  Trustee  shall  make
investments  based on  Executive's  investment  objectives  (including  possible
investment  in publicly  traded stocks and bonds,  mutual  funds,  and insurance
vehicles). Thereafter, Executive's deferral accounts will be valued by reference
to the value of the  assets of the  "rabbi  trust";  provided,  however,  that a
portion of the assets of the "rabbi  trust" may be used to reimburse the Company
for its reasonable  cost of funds resulting from payment of taxes by the Company
relating to "rabbi  trust" assets during the period of deferral and prior to the
settlement of  Executive's  deferral  accounts.  The Company shall pay all other
costs of  administration  of the  deferral  arrangement,  without  deduction  or
reimbursement from the assets of the "rabbi trust."

      Except as otherwise provided under Section 10, in the event of Executive's
termination  of  employment  with the Company or as otherwise  determined by the
Committee in the event of hardship on the part of  Executive,  upon such date(s)
or event(s)  set forth in the Deferral  Election  Forms  (including  forms filed
after  deferral but before  settlement  in which  Executive may elect to further
defer  settlement)  or under the terms of any  mandatory  deferral,  the Company
shall  promptly  pay to  Executive  cash equal to the value of the  assets  then
credited to Executive's  deferral accounts,  less applicable  withholding taxes,
and such distribution shall be deemed to fully settle such accounts. ; provided,
however,  that the Company may instead  settle such  accounts by  directing  the
Trustee to distribute the assets of the "rabbi trust." The Company and Executive
agree that  compensation  deferred  pursuant to this Section 7(c) shall be fully
vested and nonforfeitable;  however,  Executive  acknowledges that his rights to
the deferred  compensation provided for in this Section 7(c) shall be no greater
than those of a general unsecured creditor of the Company,  and that such rights
may not be pledged, collateralized,  encumbered,  hypothecated, or liable for or

                                      -4-
<PAGE>

subject to any lien, obligation,  or liability of Executive, or be assignable or
transferable  by  Executive,  otherwise  than by will or the laws of descent and
distribution, provided that Executive may designate one or more beneficiaries to
receive any payment of such amounts in the event of his death.

      8. Disability.

      (a) During the Term of Employment,  as well as during the Severance Period
(to the extent  Executive does not receive  equivalent  disability  coverage and
benefits under the plan or program of a subsequent employer during such period),
the  Executive  shall be entitled to  disability  coverage as  described in this
Section  8(a).  In the event the  Executive  becomes  disabled,  as that term is
defined under the Company's  Long-Term  Disability  Plan, the Executive shall be
entitled  to receive  pursuant to the  Company's  Long-Term  Disability  Plan or
otherwise,  and in place of his Base Salary,  an amount equal to 60% of his Base
Salary,  at the annual  rate in effect at the  commencement  date of his Company
long-term disability benefit ("Commencement Date") for a period beginning on the
Commencement  Date and ending with the  earlier to occur of (A) the  Executive's
attainment of age 65 or (B) the  Executive's  commencement of benefits under the
SERP upon his election to receive such benefits.  If (i) the Executive ceases to
be disabled  during the Term of Employment (as determined in accordance with the
terms of the Long-Term  Disability  Plan),  (ii) his position is then vacant and
(iii) the Company requests in writing that he resume such position, he may elect
to resume such  position by written  notice to the Company  within 15 days after
the  Company  delivers  its  request.  If he  resumes  such  position,  he shall
thereafter  be  entitled  to his Base Salary at the annual rate in effect at the
Commencement  Date and, for the year he resumes his position,  a pro rata annual
incentive  award and to  participate  in any  other  employee  benefit  programs
outlined in Section 6 and 7 of this Agreement  that are in effect.  If he ceases
to be disabled and does not resume his position in accordance with the preceding
sentence,  he shall be treated as if he  voluntarily  terminated  his employment
pursuant to Section 10(e) as of the date the Executive ceases to be disabled. If
the  Executive  is not offered his  position  as  Chairman  and Chief  Executive
Officer after he ceases to be disabled  during the Term of Employment,  he shall
be treated as if his employment was terminated Without Cause pursuant to Section
10(c) as of the date the Executive ceases to be disabled.

      (b) The Executive  shall be entitled to a pro rata annual  incentive award
for the year in which the  Commencement  Date occurs based on 80% of Base Salary
paid to him during such year prior to the Commencement  Date,  payable in a lump
sum promptly after the Commencement Date. The Executive shall not be entitled to
any annual incentive award with respect to the period following the Commencement
Date. If the Executive  recommences his position as Chairman and Chief Executive
Officer in  accordance  with  Section  8(a),  he shall be entitled to a pro rata
annual incentive award for the year he resumes his position and shall thereafter
be entitled to annual incentive awards in accordance with Section 5 hereof.

      (c) During  the period the  Executive  is  receiving  disability  benefits
pursuant to Section 8(a) above,  he shall  continue to be treated as an employee
for  purposes  of  all  employee  benefits  and  entitlements  in  which  he was
participating  on the  Commencement  Date,  including  without  limitation,  the
benefits and entitlements referred to in Sections 6 and 7

                                      -5-
<PAGE>

above,  except  that the  Executive  shall not be entitled to receive any annual
salary  increases or any new stock incentive  awards  following the Commencement
Date.

      9. Reimbursement of Business and Other Expenses; Perquisites.

      The Executive is authorized to incur  reasonable  expenses in carrying out
his duties and  responsibilities  under this  Agreement,  and the Company  shall
promptly  reimburse  him  for  all  business  expenses  incurred  in  connection
therewith,  subject to  documentation  in accordance with the Company's  policy.
During the Term of  Employment,  the Company shall,  provide the  Executive,  in
accordance  with the terms adopted by the Company,  with personal  financial and
tax planning.

      10. Termination of Employment.

      (a) Termination Due to Death. In the event the Executive's employment with
the Company is terminated due to his death, his estate or his beneficiaries,  as
the case may be,  shall be  entitled  to and  their  sole  remedies  under  this
Agreement shall be:

            (i) Base Salary through the date of death,  which shall be paid in a
      single lump sum not later than 15 days following the Executive's death;

            (ii) pro  rata  annual  incentive  award  for the year in which  the
      Executive's  death occurs  assuming that the Executive would have received
      an award equal to 80% of Base Salary for such year, which shall be payable
      in a lump sum  promptly  (but in no event  later  than 15 days)  after his
      death;

            (iii)  lapse  of all  restrictions  on any  restricted  stock  award
      (including any performance-based restricted stock) outstanding at the time
      of his death;

            (iv) Company common stock, issued without restrictions, equal to any
      outstanding award of contingent shares as of the date of death,  including
      any matching  grant under the Company's  "STEP" program or award under the
      Company's "Founders Stock" program;

            (v) immediate vesting of all outstanding stock options and the right
      to exercise  such stock options for a period of one year  following  death
      (or such  longer  period as may be provided  in stock  options  granted to
      other  similarly  situated  executive  officers of the Company) or for the
      remainder of the exercise period, if less;

            (vi) immediate  vesting of all outstanding  awards under the "Career
      Equity"  program  and a pro rata  payment of such  awards  based on target
      performance,  payable in a cash lump sum  promptly  (but in no event later
      than 15 days) after his death;

            (vii) the balance of any  incentive  awards earned as of December 31
      of the prior year (but not yet paid), which shall be paid in a single lump
      sum not later than 15 days following the Executive's death;

            (viii) in the event that the Executive's  death occurs before he has
      met the age and service requirements of the SERP, the Company will provide
      his  spouse  with a 50%  survivor  annuity  as if he had met  such age and
      service  requirements at the time of his death, payable in accordance with
      the terms of the SERP but  subject  to such  other  adjustments  as may be
      provided in the SERP;

                                      -6-
<PAGE>

            (ix)  settlement  of  all  deferred  compensation   arrangements  in
      accordance with the Executive's duly executed  Deferral  Election Forms or
      the terms of any mandatory deferral; and

            (x) other or  additional  benefits  then due or earned in accordance
      with applicable plans and programs of the Company.

      (b) Termination by the Company for Cause.

            (i) "Cause" shall mean:

                  (A)   the Executive's  willful and material breach of Sections
                        11, 12 or 13 of this Agreement;

                  (B)   the Executive is convicted of a felony  involving  moral
                        turpitude; or

                  (C)   the  Executive   engages  in  conduct  that  constitutes
                        willful  gross  neglect or willful  gross  misconduct in
                        carrying out his duties under this Agreement, resulting,
                        in  either  case,  in  material  harm  to the  financial
                        condition or reputation of the Company.

      For purposes of this  Agreement,  an act or failure to act on  Executive'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 Executive.

            (ii) A  termination  for Cause  shall  not take  effect  unless  the
      provisions of this paragraph  (ii) are complied with. The Executive  shall
      be given  written  notice by the Company 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 the  Company's  learning  of such act or acts or failure or failures to
      act.  The  Executive  shall have 10 days after the date that such  written
      notice has 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  Executive
      shall then be entitled to a hearing before the  Compensation  Committee of
      the Board at which the Executive is entitled to appear. Such hearing shall
      be held  within  15 days of such  notice  to the  Executive,  provided  he
      requests  such  hearing  within  10 days of the  written  notice  from the
      Company of the intention to terminate him for Cause.  If, within five days
      following such hearing,  the Executive 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.
      Such  hearing  shall  not  limit  any  other  review  as set forth in this
      Agreement on a de novo basis. Such hearing shall be limited to the grounds
      set forth in the termination notice.

            (iii) In the event the Company terminates the Executive's employment
      for  Cause,  he shall be  entitled  to and his sole  remedies  under  this
      Agreement shall be:

                  (A)   Base Salary  through the date of the  termination of his
                        employment  for Cause,  which  shall be paid in a single
                        lump  sum  not  later   than  15  days   following   the
                        Executive's termination of employment;

                                      -7-
<PAGE>

                  (B)   any  incentive  awards  earned as of  December 31 of the
                        prior year (but not yet paid),  which shall be paid in a
                        single  lump sum not later  than 15 days  following  the
                        Executive's termination of employment;

                  (C)   settlement of all deferred compensation  arrangements in
                        accordance with the Executive's  duly executed  Deferral
                        Election  Form or the terms of any  mandatory  deferral;
                        and

                  (D)   other  or  additional  benefits  then due or  earned  in
                        accordance  with  applicable  plans or  programs  of the
                        Company including but not limited to the SERP.

                  (c)   Termination  Without Cause or  Constructive  Termination
                        Without  Cause Prior to Change in Control.  In the event
                        the   Executive's   employment   with  the   Company  is
                        terminated  without  Cause (which  termination  shall be
                        effective  as of the date  specified by the Company in a
                        written  notice  to the  Executive),  other  than due to
                        death,   or  in  the  event  there  is  a   Constructive
                        Termination  Without Cause (as defined below), in either
                        case prior to a Change in Control (as defined below) the
                        Executive  shall be  entitled  to and his sole  remedies
                        under this Agreement shall be:

            (i) Base Salary through the date of  termination of the  Executive's
      employment,  which  shall be paid in a single  lump sum not later  than 15
      days following the Executive's termination of employment;

            (ii) Base Salary,  at the  annualized  rate in effect on the date of
      termination of the Executive's  employment (or in the event a reduction in
      Base Salary is the basis for a  Constructive  Termination  Without  Cause,
      then the Base Salary in effect immediately prior to such reduction), for a
      period of 36 months following such  termination (the "Severance  Period");
      provided  that  the  Company   shall,   within  30  days   following  such
      termination,  contribute  to a "rabbi trust" an amount equal to any unpaid
      severance  benefits due under this Section 10(c)(ii) and Section 10(c)(iv)
      and direct the Trustee  thereof to make the remaining  severance  payments
      required  hereunder when such payments are due unless the Company,  in its
      sole discretion,  directs the Trustee to return unpaid severance  benefits
      to the Company  because the Executive  has breached  Sections 11, 12 or 13
      hereunder;  provided  further that the salary  continuation  payment under
      this  Section  10(c)(ii)  and  Section  10(c)(iv)  shall be in lieu of any
      salary continuation  arrangements under any other severance program of the
      Company or any other agreement between the Executive and the Company;

            (iii)  pro  rata  annual  incentive  award  for the  year  in  which
      termination  occurs  assuming  that the  Executive  would have received an
      award  equal to 80% of Base  Salary for such  year,  payable in a lump sum
      promptly (but in no event later than 15 days) following termination;

            (iv) an amount equal to 80% of Base Salary  multiplied  by three (3)
      payable in equal monthly payments over the Severance Period;

            (v)  lapse  of  all  restrictions  on  any  restricted  stock  award
      (including any performance-based restricted stock) outstanding at the time
      of such termination of employment;

                                      -8-
<PAGE>

            (vi) Company common stock, issued without restrictions, equal to any
      outstanding  award of  contingent  shares  as of the date of  termination,
      including any matching  grant under the Company's  "STEP" program or award
      under the Company's "Founders Stock" program;

            (vii)  immediate  vesting of all  outstanding  stock options and the
      right to exercise  such stock options  during the Severance  Period or for
      the remainder of the exercise period, if less;

            (viii) immediate vesting of all outstanding awards under the "Career
      Equity"  program  and a pro rata  payment of such  awards  based on target
      performance,  payable in a cash lump sum  promptly  (but in no event later
      than 15 days) following the Executive's termination of employment;

            (ix) the balance of any incentive awards earned as of December 31 of
      the prior year (but not yet paid),  which  shall be paid in a single  lump
      sum not  later  than 15 days  following  the  Executive's  termination  of
      employment;

            (x) immediate  vesting of benefits under the SERP and two additional
      years of age and service credit thereunder,  with payment of such benefits
      to be made in accordance  with the terms and  conditions of the SERP as in
      effect at the date of the  Executive's  termination (or in accordance with
      the terms of any subsequent  amendment to the SERP which is more favorable
      to the Executive or his beneficiary);

            (xi)  settlement  of  all  deferred  compensation   arrangements  in
      accordance with the Executive's duly executed  Deferral  Election Forms or
      the terms of any mandatory deferral;

            (xii)  continued  participation  in all  medical,  health  and  life
      insurance plans at the same benefit level at which he was participating on
      the date of the termination of his employment until the earlier of:

                  (A)   the end of the Severance Period; or

                  (B)   the date, or dates, he receives  equivalent coverage and
                        benefits  under the plans and  programs of a  subsequent
                        employer (such coverage and benefits to be determined on
                        a coverage-by-coverage,  or benefit-by-benefit,  basis);
                        provided  that (1) if the  Executive is  precluded  from
                        continuing  his  participation  in any employee  benefit
                        plan or program as provided in this clause (xii) of this
                        Section  10(c),  he shall receive cash payments equal on
                        an after-tax  basis to the cost to him of obtaining  the
                        benefits  provided under the plan or program in which he
                        is unable to  participate  for the period  specified  in
                        this clause (xii) of this Section  10(c),  (2) such cost
                        shall be deemed to be the  lowest  reasonable  cost that
                        would be incurred by the  Executive  in  obtaining  such
                        benefit himself on an individual  basis, and (3) payment
                        of such amounts shall be made quarterly in advance; and

            (xiii) other or additional benefits then due or earned in accordance
      with applicable plans and programs of the Company.

                                      -9-
<PAGE>

      "Termination  Without  Cause"  shall mean the  Executive's  employment  is
terminated by the Company for any reason other than Cause (as defined in Section
10 (b)) or due to death.

      "Constructive  Termination  Without Cause" shall mean a termination of the
Executive's  employment  at his  initiative  as provided in this  Section  10(c)
following the occurrence,  without the Executive's  written  consent,  of one or
more of the following events (except as a result of a prior termination):

                  (A)   a material change, adverse to Executive,  in Executive's
                        positions,  titles,  or  offices as set forth in Section
                        3(a),  status,  rank,  nature  of  responsibilities,  or
                        authority within the Company,  or a removal of Executive
                        from or any failure to elect or re-elect or, as the case
                        may be,  nominate  Executive  to any such  positions  or
                        offices, including as a member of the Board;

                  (B)   an  assignment  of any  duties  to  Executive  which are
                        inconsistent  with his  status  as  President  and Chief
                        Executive  Officer of the  Company  and other  positions
                        held under Section 3(a);

                  (C)   a  decrease  in  annual  Base  Salary,   target   annual
                        incentive award  opportunity below 80% of Base Salary or
                        target long term incentive award  opportunity  below 50%
                        of Base Salary;

                  (D)   any other failure by the Company to perform any material
                        obligation  under,  or  breach  by  the  Company  of any
                        material  provision of, this Agreement that is not cured
                        within 30 days;

                  (E)   a  relocation  of the  corporate  offices of the Company
                        outside a 35-mile radius of Mahwah, New Jersey; or

                  (F)   any  failure to secure the  agreement  of any  successor
                        corporation  or other  entity  to the  Company  to fully
                        assume the Company's obligations under this Agreement.

      A "Change in Control" shall be deemed to have occurred if:

(i) A "Change in Control" shall be deemed to have occurred upon:

      (A) An acquisition by any Person of Beneficial  Ownership of the shares of
common  stock  of the  Company  then  outstanding  (the  "Company  Common  Stock
Outstanding") or the voting securities of the Company then outstanding  entitled
to vote generally in the election of directors (the "Company  Voting  Securities
Outstanding"),  if such  acquisition  of  Beneficial  Ownership  results  in the
Person's Beneficially Owning 25% or more of the Company Common Stock Outstanding
or 25% or more of the  combined  voting power of the Company  Voting  Securities
Outstanding.  In this regard, if, as a result of the acquisition of Common Stock
or Voting  Securities  by the Company  which,  by reducing the number of Company
Common Stock Outstanding or Company Voting Securities Outstanding, increases the
proportional  number of shares  Beneficially  Owned by any Person (the  "Subject
Person"), such that the Subject Person has Beneficial Ownership of more than 25%
of  the  Company  Common  Stock   Outstanding   or  Company  Voting   Securities
Outstanding,  then such proportional  increase in Beneficial  Ownership shall be

                                      -10-
<PAGE>

deemed an  "acquisition"  by the  Subject  Person  within  the  meaning  of this
subsection (A). Further, if the acquisition  described in this subsection (A) is
an acquisition  by Executive or an entity in which  Executive has an interest of
10% or more (by vote or value), a Change in Control shall not occur; or

      (B) The approval by the  stockholders of the Company of a  reorganization,
merger,  consolidation,  complete liquidation or dissolution of the Company, the
sale or disposition of all or substantially  all of the assets of the Company or
similar corporate transaction, or the issuance of shares of stock of the Company
in  connection  with any of the  foregoing,  (in each case  referred  to in this
Section  10(c)  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
Executive  or an entity in which  Executive  has an  interest of 10% or more (by
vote or value) 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,  or  following  a  Corporate
Transaction,  the  Board of the  ultimate  Parent  Corporation  (as  hereinafter
defined);  provided,  however,  for  purposes of this  Section  10(c),  that any
individual  who becomes a member of the Board  subsequent to the Effective  Date
whose election,  or nomination for election by the Companys  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 an actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the  Board (a  "Proxy  Contest"),  including  by  reason  of any  agreement
intended to avoid or settle any Proxy Contest shall in no event be considered as
a member of the Incumbent Board.

            (ii) Notwithstanding the provisions set forth in subparagraph (i) of
this Section 10(c), the following shall not constitute a Change in  Control  for
purposes of this Agreement:

      (A) any acquisition by or consummation of a Corporate Transaction with any
entity that was a subsidiary of the Company immediately prior to the transaction
or an employee  benefit plan (or related  trust)  sponsored or maintained by the
Company or an entity that was a subsidiary of the Company  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 the Company immediately prior to such transaction; or

                                      -11-
<PAGE>

      (B) any acquisition or consummation of a Corporate  Transaction  following
which:

            (1) more than 50% of,  respectively,  the shares then outstanding of
common stock of the  corporation  resulting  from such  acquisition or Corporate
Transaction (the "Surviving Corporation"),  or if more than 50% of the Surviving
Corporation  is  Beneficially   Owned,   directly  or  indirectly,   by  another
corporation  (a  "Parent  Corporation"),  or if  there  is  one or  more  Parent
Corporations,  the ultimate Parent Corporation, and the combined voting power of
the voting securities then outstanding of the Surviving  Corporation,  Parent or
ultimate Parent  Corporation,  as applicable,  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  Company  Common  Stock  Outstanding  and  Company  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 Company
Common Stock Outstanding and Company Voting Securities Outstanding,  as the case
may be.;

            (2)  the  individuals  who  were  members  of  the  Incumbent  Board
immediately prior to the execution of the agreement  providing for the Corporate
Transaction  constitute  at least a  majority  of the  members  of the  board of
directors  of, (x) the  Surviving  Corporation,  if 50% or more of the  combined
voting  power  of the  then  outstanding  voting  securities  of  the  Surviving
Corporation  is not  Beneficially  Owned,  directly  or  indirectly  by a Parent
Corporation, or (y) if there is one or more Parent Corporations, by the ultimate
Parent Corporation; and

            (3) no Person  (other  than (x) the  Company or another  corporation
that is a party to the agreement formalizing the Corporate Transaction,  (y) any
corporation  or other  Person of which a  majority  of its  voting  power or its
voting equity securities or equity interest is owned, directly or indirectly, by
the  Company,  or (z) any  employee  benefit  plan (or any trust  forming a part
thereof) that, immediately prior to the Corporate Transaction, was maintained by
the  Company,  or any  corporation  or other  Person of which a majority  of its
voting  power or its  voting  equity  securities  or equity  interest  is owned,
directly or indirectly,  by the Company) has Beneficial  Ownership,  directly or
indirectly,  of 25% or more of the  combined  voting  power  of the  outstanding
voting  securities or common stock of (I) the Surviving  Corporation,  if 50% or
more of the combined voting power of the then outstanding  voting  securities of
the Surviving Corporation is not Beneficially Owned, directly or indirectly by a
Parent Corporation, or (II) if there is one or more Parent Corporations,  by the
ultimate Parent Corporation.

            (iii) For purposes of this definition:

                 (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).

                                      -12-
<PAGE>

                 (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.

      (d) Voluntary Termination.  In the event of a termination of employment by
the Executive on his own  initiative  after delivery of 10 business days advance
written  notice,   other  than  a  termination  due  to  death,  a  Constructive
Termination  Without Cause,  or Approved Early  Retirement or Normal  Retirement
pursuant to Section 10(f) below, the Executive shall have the same  entitlements
as provided in Section  10(b)(iii)  above for a termination for Cause,  provided
that at the Company's election,  furnished in writing to the Executive within 30
days following such notice of termination, the Company shall in addition pay the
Executive  50% of his Base  Salary  for a period  of 18  months  following  such
termination in exchange for the Executive not to engage in competition  with the
Company or any  Subsidiary as set forth in Section 12(a) below.  Notwithstanding
any  implication  to the  contrary,  the  Executive  shall not have the right to
terminate his employment  with the Company during the Term of Employment  except
in the  event  of a  Constructive  Termination  Without  Cause,  Approved  Early
Retirement or Normal  Retirement,  and any voluntary  termination  of employment
during the Term of Employment in violation of this Agreement shall be considered
a material breach. In the event the Executive becomes disabled,  as that term is
defined  under  the  Company's  Long  Term  Disability   Plan,  the  Executive's
termination  of  employment  shall be governed by the terms of Section 7 of this
Agreement.

      (e) Termination  Without Cause or Constructive  Termination  Without Cause
Following  Change in Control.  In the event the Executive's  employment with the
Company is terminated  without Cause (which termination shall be effective as of
the date specified by the Company in a written notice to the  Executive),  other
than due to death, or in the event there is a Constructive  Termination  Without
Cause (as defined above),  in either case within two years following a Change in
Control  (as defined  above),  the  Executive  shall be entitled to and his sole
remedies under this Agreement shall be:

            (i) Base Salary through the date of  termination of the  Executive's
      employment,  which  shall be paid in a single  lump sum not later  than 15
      days following the Executive's termination of employment;

            (ii) an amount equal to 2.99 times the Executive's  Base Salary,  at
      the  annualized  rate  in  effect  on  the  date  of  termination  of  the
      Executive's  employment (or in the event a reduction in Base Salary is the
      basis for a Constructive  Termination  Without Cause, then the Base Salary
      in effect immediately prior to such reduction), payable in a cash lump sum
      promptly (but in no event later than 15 days)  following  the  Executive's
      termination of employment;

            (iii)  pro  rata  annual  incentive  award  for the  year  in  which
      termination  occurs  assuming  that the  Executive  would have received an
      award  equal to 80% of Base

                                      -13-
<PAGE>

      Salary for such year, payable in a cash lump sum promptly (but in no event
      later than 15 days) following the Executive's termination of employment;

            (iv) an amount equal to 80% of such Base Salary  multiplied by 2.99,
      payable in a cash lump sum  promptly  (but in no event later than 15 days)
      following the Executive's termination of employment;

            (v)  lapse  of  all  restrictions  on  any  restricted  stock  award
      (including any performance-based restricted stock) outstanding at the time
      of termination of employment;

            (vi) Company common stock, issued without restrictions, equal to any
      outstanding  award of  contingent  shares  as of the date of  termination,
      including any matching  grant under the Company's  "STEP" program or award
      under the Company's "Founders Stock" program;

            (vii)  immediate  vesting of all  outstanding  stock options and the
      right to exercise  such stock options  during the Severance  Period or for
      the remainder of the exercise period, if less;

            (viii) immediate vesting of all outstanding awards under the "Career
      Equity"  program  and a pro rata  payment of such  awards  based on target
      performance,  payable in a cash lump sum  promptly  (but in no event later
      than 15 days) following the Executive's termination of employment;

            (ix) the balance of any incentive awards earned as of December 31 of
      the prior year (but not yet paid),  which  shall be paid in a single  lump
      sum not  later  than 15 days  following  the  Executive's  termination  of
      employment;

            (x) immediate  vesting of benefits under the SERP and two additional
      years of age and service credit thereunder,  with payment of such benefits
      to be made in accordance  with the terms and  conditions of the SERP as in
      effect at the date of the  Executive's  termination (or in accordance with
      the terms of any subsequent  amendment to the SERP which is more favorable
      to the Executive or his beneficiary);

            (xi)  settlement  of  all  deferred  compensation   arrangements  in
      accordance with Executive's duly executed  Deferral  Election Forms or the
      terms of any mandatory deferral;

            (xii)  continued  participation  in all  medical,  health  and  life
      insurance plans at the same benefit level at which he was participating on
      the date of the termination of his employment until the earlier of:

                  (A)   the end of the Severance Period; or

                  (B)   the date, or dates, he receives  equivalent coverage and
                        benefits  under the plans and  programs of a  subsequent
                        employer (such coverage and benefits to be determined on
                        a coverage-by-coverage,  or benefit-by-benefit,  basis);
                        provided  that (1) if the  Executive is  precluded  from
                        continuing  his  participation  in any employee  benefit
                        plan or program as provided in this clause (xii) of this
                        Section  10(e),  he shall receive cash payments equal on
                        an after-tax  basis to the cost to him of obtaining  the
                        benefits  provided under the plan or program in which he
                        is unable to

                                      -14-
<PAGE>

                        participate  for the  period  specified  in this  clause
                        (xii) of this  Section  10(e),  (2) such  cost  shall be
                        deemed to be the  lowest  reasonable  cost that would be
                        incurred by the  Executive  in  obtaining  such  benefit
                        himself on an individual  basis, and (3) payment of such
                        amounts shall be made quarterly in advance; and

            (xiii) other or additional benefits then due or earned in accordance
      with applicable plans and programs of the Company

      (f) Approved Early Retirement or Normal  Retirement.  Upon the Executive's
Approved Early Retirement or Normal Retirement (as defined below), the Executive
shall be entitled to and his sole remedies under this Agreement shall be:

            (i) Base Salary through the date of  termination of the  Executive's
      employment,  which  shall be paid in a single  lump sum not later  than 15
      days following the Executive's termination of employment;

            (ii)  pro  rata  annual  incentive  award  for  the  year  in  which
      termination occurs, based on performance valuation at the end of such year
      and  payable in a cash lump sum  promptly  (but in no event  later than 15
      days) thereafter;

            (iii)  lapse  of all  restrictions  on any  restricted  stock  award
      (including any performance-based restricted stock) outstanding at the time
      of his termination of employment;

            (iv) continued vesting (as if the Executive remained employed by the
      Company) of any outstanding  award of contingent  shares as of the date of
      termination  of  employment,   including  any  matching  grant  under  the
      Company's  "STEP"  program or award under the Company's  "Founders  Stock"
      program;

            (v) continued vesting of all outstanding stock options and the right
      to  exercise  such stock  options for a period of one year  following  the
      Executive's  termination  of  employment  (or such longer period as may be
      provided in stock options  granted to other similarly  situated  executive
      officers of the Company) or for the remainder of the exercise  period,  if
      less;

            (vi)  continued  vesting (as if Executive  remained  employed by the
      Company) of all outstanding awards under the "Career Equity" program and a
      payment of such awards based on  valuation  at the end of the  performance
      period, payable in a cash lump sum promptly (but in no event later than 15
      days) thereafter;

            (vii) the balance of any  incentive  awards earned as of December 31
      of the prior year (but not yet paid), which shall be paid in a single lump
      sum not  later  than 15 days  following  the  Executive's  termination  of
      employment;

            (viii) immediate  vesting of benefits under the Company's SERP, with
      payment  of such  benefits  to be made in  accordance  with the  terms and
      conditions  of the  SERP  as in  effect  at the  date  of the  Executive's
      termination (or in accordance  with the terms of any subsequent  amendment
      to the SERP which is more favorable to the Executive or his beneficiary);

                                      -15-
<PAGE>

            (ix)  settlement  of  all  deferred  compensation   arrangements  in
      accordance with the Executive's duly executed  Deferral  Election Forms or
      the terms of any mandatory deferral;

            (x)  continued   participation  in  all  medical,  health  and  life
      insurance plans at the same benefit level at which he was participating on
      the date of the termination of his employment until the earlier of:

                  (A)   the Executive's attainment of age 60; or

                  (B)   the date, or dates, he receives substantially equivalent
                        coverage and benefits  under the plans and programs of a
                        subsequent  employer  (such  coverage and benefits to be
                        determined     on     a     coverage-by-coverage,     or
                        benefit-by-benefit,  basis);  provided  that  (1) if the
                        Executive is precluded from continuing his participation
                        in any  employee  benefit plan or program as provided in
                        this clause (x) of this Section 10(f),  he shall receive
                        cash payments equal on an after-tax basis to the cost to
                        him of obtaining the benefits provided under the plan or
                        program  in which he is  unable to  participate  for the
                        period  specified  in this  clause  (x) of this  Section
                        10(f),  (2) such cost  shall be deemed to be the  lowest
                        cost  that  would  be  incurred  by  the   Executive  in
                        obtaining such benefit  himself on an individual  basis,
                        and (3) payment of such amounts shall be made  quarterly
                        in advance; and

            (xi) other or  additional  benefits then due or earned in accordance
      with applicable plans and programs of the Company.

            "Approved Early  Retirement"  shall mean the  Executive's  voluntary
      termination  of employment  with the Company at or after  attaining age 55
      but prior to attaining age 60, if such  termination is approved in advance
      by the Compensation Committee.

            "Normal Retirement" shall mean the Executive's voluntary termination
      of employment with the Company at or after attaining age 60.

      (g)  No  Mitigation;  No  Offset.  In the  event  of  any  termination  of
employment  under this Section 10, the Executive shall be under no obligation to
seek other employment;  amounts due the Executive under this Agreement shall not
be offset by any remuneration  attributable to any subsequent employment that he
may obtain.

      (h) Nature of  Payments.  Any amounts due under this Section 10 are in the
nature of severance payments  considered to be reasonable by the Company and are
not in the nature of a penalty.

      (i) Exclusivity of Severance Payments. Upon termination of the Executive's
employment  during  the Term of  Employment,  he shall  not be  entitled  to any
severance payments or severance benefits from the Company or any payments by the
Company on account of any claim by him of wrongful termination, including claims
under any federal,  state or local human and civil  rights or labor laws,  other
than the payments and benefits provided in this Section 10.

      (j) Release of Employment  Claims. The Executive agrees, as a condition to
receipt of the  termination  payments and benefits  provided for in this Section
10, that he will execute

                                      -16-
<PAGE>

a release agreement, in a form reasonably satisfactory to the Company, releasing
any and  all  claims  arising  out of the  Executive's  employment  (other  than
enforcement of this Agreement, the Executive's rights under any of the Company's
incentive  compensation  and employee  benefit plans and programs to which he is
entitled under this  Agreement,  and any claim for any tort for personal  injury
not arising out of or related to his termination of employment).

      11. Confidentiality; Cooperation with Regard to Litigation.

      (a) During the Term of Employment and thereafter, the Executive shall not,
without the prior written  consent of the Company,  disclose to anyone except in
good faith in the ordinary course of business to a person who will be advised by
the  Executive  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 the
Company 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 Executive is so ordered, he shall give prompt
written  notice to the Company in order to allow the Company the  opportunity to
object to or otherwise resist such order.

      (b) During the Term of  Employment  and  thereafter,  Executive  shall not
disclose the existence or contents of this Agreement beyond what is disclosed in
the proxy  statement or documents  filed with the  government  unless and to the
extent such  disclosure is required by law, by a  governmental  agency,  or in a
document required by law to be filed with a governmental agency or in connection
with  enforcement  of  his  rights  under  this  Agreement.  In the  event  that
disclosure is so required, the Executive shall give prompt written notice to the
Company in order to allow the Company the  opportunity to object to or otherwise
resist such requirement.  This restriction shall not apply to such disclosure by
him to members of his immediate  family,  his tax, legal or financial  advisors,
any lender,  or tax authorities,  or to potential future employers to the extent
necessary, each of whom shall be advised not to disclose such information.

      (c)  "Confidential  Information"  shall mean all  information  that is not
known or available to the public  concerning  the business of the Company 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 the  Company  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 11(a) above.

      (d)  "Subsidiary"  shall  mean  any  corporation  controlled  directly  or
indirectly by the Company and any affiliate of the Company.

      (e) The Executive agrees to cooperate with the Company, during the Term of
Employment and thereafter  (including  following the Executive's  termination of
employment for any reason),  by making himself 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 such
action, suit, or proceeding, by

                                      -17-
<PAGE>

providing  information  and  meeting  and  consulting  with  the  Board  or  its
representatives or counsel, or representatives or counsel to the Company, or any
Subsidiary  or affiliate of the Company,  as  requested.  The Company  agrees to
reimburse  the  Executive,  on an after-tax  basis,  for all  expenses  actually
incurred in connection with his provision of testimony or assistance.

      12. Non-competition.

      (a) During the Restriction Period (as defined in Section 12(b) below), the
Executive  shall not engage in Competition  with the Company or any  Subsidiary.
"Competition" shall mean engaging in any activity, except as provided below, for
a  Competitor  of  the  Company  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 traded company) or otherwise.
A  "Competitor"  shall mean (i)  Venator,  Footlocker,  Lady  Footlocker,  Kids'
Footlocker,  Finish Line,  Genesco,  Sports  Authority,  Famous  Footwear,  Shoe
Carnival, Shoe Department,  Designer Shoe Warehouse,  Brown Shoe, KMart, Target,
Payless Shoe Source,  WalMart,  Kohl's Montgomery Ward, J.C. Penny or Sears (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,  Value/Moderate Priced or Athletic Retail Footwear Business within
fifty (50)  miles of any  Discount,  Value/Moderate  Priced or  Athletic  Retail
Footwear  Business outlet in the United States of the Company or any Subsidiary,
provided that a corporation  or entity  described in clause (ii) above shall not
be deemed to be a  Competitor  if the  Executive  shall not either  directly  or
indirectly  oversee or manage the  activities  of such  corporation  or entity's
division  or unit  engaged in the  Discount,  Value/Moderate  Priced or Athletic
Retail Footwear  Business.  If the Executive  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  Executive  initially  becomes
employed or becomes a consultant,  principal, agent, officer, director, partner,
or shareholder of the 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  Executive  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  Executive) or (y) the
Executive commences directly or indirectly overseeing or managing the activities
which are  competitive  with the  activities of the Company or  Subsidiary.  The
Executive shall not be deemed  indirectly  overseeing or managing the activities
which are  competitive  with the activities of the Company or Subsidiary so long
as he does not regularly participate in discussions with regard to the competing
business.  For purposes of the foregoing,  "Discount,  Value/Moderate  Priced or
Athletic Retail Footwear Business" shall mean a group of stores or an e-commerce
or catalog  business  which sells  Discount,  Value/Moderate  Priced or Athletic
footwear.

      (b) For the purposes of this Section 12 and Section 13 below, "Restriction
Period" shall mean the period beginning with the Effective Date and ending with:

            (i) in the  case  of a  termination  of the  Executive's  employment
      without Cause or a Constructive  Termination Without Cause, in either case
      prior to a Change in Control,  the earlier of (1) the end of the Severance
      Period and (2) the occurrence of a Change in Control;

                                      -18-
<PAGE>

            (ii) in the case of a termination of the Executive's  employment for
      Cause, the first anniversary of such termination;

            (iii)  in the case of a  voluntary  termination  of the  Executive's
      employment  pursuant  to Section  10(d) above  followed  by the  Company's
      election to pay the  Executive  (and subject to the payment of) 50% of his
      Base Salary,  as provided in Section 10(d) above,  the end of the 18-month
      period following such termination;

            (iv)  in the  case of a  voluntary  termination  of the  Executive's
      employment  pursuant to Section  10(d) above which is not  followed by the
      Company's  election to pay the Executive such 50% of Base Salary, the date
      of such termination;

            (v) in the case of Approved  Early  Retirement or Normal  Retirement
      pursuant to Section 10(f) above,  the remainder of the Term of Employment;
      or

            (vi) in the  case of a  termination  of the  Executive's  employment
      without Cause or a Constructive  Termination Without Cause, in either case
      following  a Change  in  Control,  immediately  upon such  termination  of
      employment.

      13. Non-solicitation of Employees.

      During the portion of the Restriction  Period following the termination of
the  Executive's  employment,  the Executive  shall not induce  employees of the
Company or any Subsidiary to terminate their  employment.  During the portion of
the Restriction Period following the termination of the Executive's  employment,
the Executive  shall not directly or indirectly hire any employee of the Company
or any  Subsidiary  or any  person  who  was  employed  by  the  Company  or any
Subsidiary within 180 days of such hiring.

      14. Remedies.

      In addition to whatever  other rights and remedies the Company may have at
equity or in law, if the Executive  breaches any of the provisions  contained in
Sections 11, 12 or 13 above, the Company (a) shall have the right to immediately
terminate all payments and benefits due under this  Agreement and (b) shall have
the right to seek  injunctive  relief.  The Executive  acknowledges  that such a
breach would cause  irreparable  injury and that money damages would not provide
an adequate remedy for the Company.

      15. Resolution of Disputes.

      Any disputes  arising under or in connection  with this  Agreement,  other
than seeking  injunctive  relief under  Section 14, shall be resolved by binding
arbitration,  to be held at an office closest to the Company's principal offices
in  accordance  with  the  rules  and  procedures  of the  American  Arbitration
Association,  except that disputes  arising under or in connection with Sections
11, 12 and 13 above shall be  submitted  to the  federal or state  courts in the
State of New Jersey.  Judgment upon the award rendered by the  arbitrator(s) may
be entered in any court having jurisdiction  thereof.  Pending the resolution of
any arbitration or court  proceeding,  the Company shall continue payment of all
amounts and benefits due the  Executive  under this  Agreement.  All  reasonable
costs and expenses (including fees and disbursements of counsel) incurred by the
Executive in seeking to enforce rights  pursuant to this Agreement shall be paid
on behalf of or reimbursed to the Executive promptly by the Company,  whether or
not the  Executive is successful in asserting  such rights;  provided,  however,
that  no  reimbursement   shall  be  made  of  such

                                      -19-
<PAGE>

expenses  relating to any unsuccessful  assertion of rights if and to the extent
that the Executive's assertion of such rights was in bad faith or frivolous.

      16. Indemnification.

      (a) Company Indemnity.  The Company agrees that if the Executive is made a
party, or is threatened to be made a party,  to any action,  suit or proceeding,
whether civil,  criminal,  administrative or investigative (a "Proceeding"),  by
reason of the fact that he is or was a  director,  officer  or  employee  of the
Company or any  Subsidiary or is or was serving at the request of the Company or
any  Subsidiary  as a director,  officer,  member,  employee or agent of another
corporation,  partnership,  joint venture, trust or other enterprise,  including
service with respect to employee benefit plans, whether or not the basis of such
Proceeding  is the  Executive's  alleged  action in an official  capacity  while
serving as a director,  officer,  member, employee or agent, the Executive shall
be  indemnified  and held harmless by the Company to the fullest  extent legally
permitted or authorized by the Company's  certificate of incorporation or bylaws
or resolutions of the Company's  Board of Directors or, if greater,  by the laws
of the  State  of  Delaware,  against  all  cost,  expense,  liability  and loss
(including, without limitation,  attorney's fees, judgments, fines, ERISA excise
taxes or  penalties  and amounts  paid or to be paid in  settlement)  reasonably
incurred  or  suffered  by the  Executive  in  connection  therewith,  and  such
indemnification shall continue as to the Executive even if he has ceased to be a
director,  member, officer, employee or agent of the Company or other entity and
shall  inure  to  the  benefit  of  the   Executive's   heirs,   executors   and
administrators.  The Company shall advance to the Executive all reasonable costs
and expenses  incurred by him in  connection  with a  Proceeding  within 20 days
after receipt by the Company of a written request for such advance. Such request
shall  include  an  undertaking  by the  Executive  to repay the  amount of such
advance if it shall  ultimately  be  determined  that he is not  entitled  to be
indemnified against such costs and expenses.

      (b) No Presumption  Regarding Standard of Conduct.  Neither the failure of
the Company  (including  its board of  directors,  independent  legal counsel or
stockholders)  to have made a  determination  prior to the  commencement  of any
proceeding  concerning payment of amounts claimed by the Executive under Section
16(a) above that  indemnification  of the Executive is proper because he has met
the  applicable  standard  of  conduct,  nor  a  determination  by  the  Company
(including its board of directors,  independent  legal counsel or  stockholders)
that the Executive has not met such applicable standard of conduct, shall create
a presumption that the Executive has not met the applicable standard of conduct.

      (c)  Liability  Insurance.  The Company  agrees to continue and maintain a
directors and officers' liability insurance policy covering the Executive to the
extent the Company provides such coverage for its other executive officers.

      17. Excise Tax Gross-Up.

      If the  Executive  becomes  entitled  to  one or  more  payments  (with  a
"payment"  including,  without  limitation,  the  vesting  of an option or other
non-cash  benefit or property),  whether pursuant to the terms of this Agreement
or any other plan, arrangement,  or agreement with the Company or any affiliated
company (the "Total  Payments"),  which are or become subject to the tax imposed
by Section  4999 of the Internal  Revenue Code of 1986,  as amended (the "Code")
(or any similar tax that may  hereafter  be imposed)  (the

                                      -20-
<PAGE>

"Excise  Tax"),  the Company  shall pay to the  Executive at the time  specified
below an  additional  amount (the  "Gross-up  Payment")  (which  shall  include,
without limitation, reimbursement for any penalties and interest that may accrue
in  respect  of such  Excise  Tax)  such  that the net  amount  retained  by the
Executive,  after  reduction  for any Excise Tax  (including  any  penalties  or
interest thereon) on the Total Payments and any federal,  state and local income
or employment  tax and Excise Tax on the Gross-up  Payment  provided for by this
Section 17, but before  reduction  for any  federal,  state,  or local income or
employment tax on the Total Payments, shall be equal to the sum of (a) the Total
Payments,  and (b) an amount equal to the product of any  deductions  disallowed
for federal, state, or local income tax purposes because of the inclusion of the
Gross-up  Payment in the  Executive's  adjusted  gross income  multiplied by the
highest  applicable  marginal rate of federal,  state, or local income taxation,
respectively, for the calendar year in which the Gross-up Payment is to be made.

      For  purposes of  determining  whether any of the Total  Payments  will be
subject to the Excise Tax and the amount of such Excise Tax:

            (i) The Total  Payments  shall be  treated as  "parachute  payments"
      within the  meaning of Section  280G(b)(2)  of the Code,  and all  "excess
      parachute  payments" within the meaning of Section  280G(b)(1) of the Code
      shall be treated as subject to the Excise Tax,  unless,  and except to the
      extent  that,  in  the  written   opinion  of   independent   compensation
      consultants,   counsel  or  auditors  of  nationally  recognized  standing
      ("Independent Advisors") selected by the Company and reasonably acceptable
      to the  Executive,  the  Total  Payments  (in  whole  or in  part)  do not
      constitute parachute payments, or such excess parachute payments (in whole
      or in  part)  represent  reasonable  compensation  for  services  actually
      rendered within the meaning of Section 280G(b)(4) of the Code in excess of
      the base amount  within the meaning of Section  280G(b)(3)  of the Code or
      are otherwise not subject to the Excise Tax;

            (ii) The  amount of the Total  Payments  which  shall be  treated as
      subject  to the  Excise  Tax shall be equal to the lesser of (A) the total
      amount of the Total  Payments or (B) the total amount of excess  parachute
      payments  within  the  meaning of Section  280G(b)(1)  of the Code  (after
      applying clause (i) above); and

            (iii) The value of any non-cash  benefits or any deferred payment or
      benefit shall be determined by the Independent Advisors in accordance with
      the principles of Sections 280G(d)(3) and (4) of the Code.

      For  purposes  of  determining  the amount of the  Gross-up  Payment,  the
Executive  shall be  deemed  (A) to pay  federal  income  taxes  at the  highest
marginal  rate of federal  income  taxation for the  calendar  year in which the
Gross-up Payment is to be made; (B) to pay any applicable state and local income
taxes at the highest  marginal  rate of taxation for the calendar  year in which
the  Gross-up  Payment is to be made,  net of the maximum  reduction  in federal
income  taxes  which could be obtained  from  deduction  of such state and local
taxes  if paid  in such  year  (determined  without  regard  to  limitations  on
deductions based upon the amount of the Executive's  adjusted gross income); and
(C) to have otherwise allowable deductions for federal,  state, and local income
tax purposes at least equal to those disallowed  because of the inclusion of the
Gross-up Payment in the Executive's adjusted gross income. In the event that the
Excise Tax is  subsequently  determined  to be

                                      -21-
<PAGE>

less than the  amount  taken into  account  hereunder  at the time the  Gross-up
Payment is made,  the Executive  shall repay to the Company at the time that the
amount of such reduction in Excise Tax is finally determined (but, if previously
paid to the  taxing  authorities,  not  prior  to the time  the  amount  of such
reduction is refunded to the Executive or otherwise realized as a benefit by the
Executive) the portion of the Gross-up  Payment that would not have been paid if
such Excise Tax had been applied in initially  calculating the Gross-up Payment,
plus  interest on the amount of such  repayment at the rate  provided in Section
1274(b)(2)(B)  of the Code.  In the event that the Excise Tax is  determined  to
exceed the amount taken into account  hereunder at the time the Gross-up Payment
is made  (including  by reason of any payment the  existence  or amount of which
cannot be  determined  at the time of the Gross-up  Payment),  the Company shall
make an additional Gross-up Payment in respect of such excess (plus any interest
and  penalties  payable with respect to such excess) at the time that the amount
of such excess is finally determined.

      The Gross-up  Payment provided for above shall be paid on the 30th day (or
such  earlier  date as the  Excise  Tax  becomes  due and  payable to the taxing
authorities)  after  it has been  determined  that the  Total  Payments  (or any
portion thereof) are subject to the Excise Tax; provided,  however,  that if the
amount of such Gross-up Payment or portion thereof cannot be finally  determined
on or before such day,  the Company  shall pay to the  Executive  on such day an
estimate,  as determined by the Independent  Advisors,  of the minimum amount of
such  payments  and shall pay the  remainder  of such  payments  (together  with
interest at the rate provided in Section  1274(b)(2)(B) of the Code), as soon as
the  amount  thereof  can be  determined.  In the event  that the  amount of the
estimated payments exceeds the amount subsequently  determined to have been due,
such excess shall constitute a loan by the Company to the Executive,  payable on
the fifth day after demand by the Company  (together  with  interest at the rate
provided  in  Section  1274(b)(2)(B)  of the  Code).  If more than one  Gross-up
Payment is made, the amount of each Gross-up Payment shall be computed so as not
to duplicate  any prior  Gross-up  Payment.  The Company shall have the right to
control all  proceedings  with the  Internal  Revenue  Service that may arise in
connection with the  determination  and assessment of any Excise Tax and, at its
sole  option,  the  Company  may  pursue  or forego  any and all  administrative
appeals,  proceedings,  hearings,  and conferences  with any taxing authority in
respect of such  Excise Tax  (including  any  interest  or  penalties  thereon);
provided, however, that the Company's control over any such proceedings shall be
limited to issues  with  respect to which a  Gross-up  Payment  would be payable
hereunder,  and the  Executive  shall be entitled to settle or contest any other
issue raised by the Internal Revenue Service or any other taxing authority.  The
Executive shall  cooperate with the Company in any  proceedings  relating to the
determination  and  assessment of any Excise Tax and shall not take any position
or action that would  materially  increase  the amount of any  Gross-Up  Payment
hereunder.

      18. Effect of Agreement on Other Benefits.

      Except as specifically  provided in this Agreement,  the existence of this
Agreement  shall not be  interpreted  to  preclude,  prohibit  or  restrict  the
Executive's  participation  in any  other  employee  benefit  or other  plans or
programs in which he currently participates.

                                      -22-
<PAGE>

      19. Assignability; Binding Nature.

      This  Agreement  shall be  binding  upon and inure to the  benefit  of the
Parties and their  respective  successors,  heirs (in the case of the Executive)
and  permitted  assigns.  No rights or  obligations  of the  Company  under this
Agreement may be assigned or  transferred by the Company except that such rights
or obligations  may be assigned or  transferred  in connection  with the sale or
transfer of all or substantially all of the assets of the Company, provided that
the assignee or transferee is the successor to all or  substantially  all of the
assets of the Company and such assignee or transferee  assumes the  liabilities,
obligations and duties of the Company,  as contained in this  Agreement,  either
contractually  or as a matter of law. The Company  further  agrees that,  in the
event of a sale or transfer of assets as described in the preceding sentence, it
shall take  whatever  action it legally  can in order to cause such  assignee or
transferee to expressly  assume the  liabilities,  obligations and duties of the
Company  hereunder.  No  rights  or  obligations  of the  Executive  under  this
Agreement may be assigned or transferred by the Executive  other than his rights
to compensation and benefits, which may be transferred only by will or operation
of law, except as provided in Section 24 below.

      20. Representation.

      The  Company  represents  and  warrants  that it is fully  authorized  and
empowered  to  enter  into  this  Agreement  and  that  the  performance  of its
obligations  under this Agreement will not violate any agreement  between it and
any other person, firm or organization.

      21. Entire Agreement.

      This Agreement contains the entire understanding and agreement between the
Parties   concerning   the  subject  matter  hereof  and  supersedes  all  prior
agreements, understandings,  discussions, negotiations and undertakings, whether
written or oral, between the Parties with respect thereto.

      22. Amendment or Waiver.

      No provision in this  Agreement  may be amended  unless such  amendment is
agreed to in writing and signed by the Executive  and an  authorized  officer of
the  Company.  No waiver by either Party of any breach by the other Party of any
condition or provision contained in this Agreement to be performed by such other
Party shall be deemed a waiver of a similar or dissimilar condition or provision
at the same or any prior or subsequent  time.  Any waiver must be in writing and
signed by the Executive or an authorized officer of the Company, as the case may
be.

      23. Severability.

      In the event that any  provision  or portion  of this  Agreement  shall be
determined to be invalid or unenforceable  for any reason,  in whole or in part,
the remaining provisions of this Agreement shall be unaffected thereby and shall
remain in full force and effect to the fullest extent permitted by law.

                                      -23-
<PAGE>

      24. Survivorship.

      The  respective  rights and  obligations  of the Parties  hereunder  shall
survive any termination of the Executive's employment to the extent necessary to
the intended preservation of such rights and obligations.

      25. Beneficiaries/References.

      The  Executive  shall be  entitled,  to the  extent  permitted  under  any
applicable law, to select and change a beneficiary or  beneficiaries  to receive
any compensation or benefit payable hereunder following the Executive's death by
giving the Company written notice thereof. In the event of the Executive's death
or a judicial determination of his incompetence,  reference in this Agreement to
the Executive shall be deemed,  where appropriate,  to refer to his beneficiary,
estate or other legal representative.

      26. Governing Law/Jurisdiction.

      This  Agreement  shall be governed by and  construed  and  interpreted  in
accordance with the laws of New York without reference to principles of conflict
of laws,  except insofar as the Delaware  General  Corporation Law, federal laws
and  regulations  may be applicable.  Subject to Section 15, the Company and the
Executive  hereby  consent to the  jurisdiction  of any or all of the  following
courts for  purposes of  resolving  any dispute  under this  Agreement:  (i) the
United States  District Court for New York,  (ii) any of the courts of the State
of New York, or (iii) any other court having  jurisdiction.  The Company and the
Executive  further agree that any service of process or notice  requirements  in
any such  proceeding  shall be  satisfied  if the rules of such  court  relating
thereto have been substantially  satisfied. The Company and the Executive hereby
waive, to the fullest extent permitted by applicable law, any objection which it
or he may now or  hereafter  have  to  such  jurisdiction  and  any  defense  of
inconvenient forum.

      27. Notices.

      Any notice  given to a Party  shall be in  writing  and shall be deemed to
have been given when  delivered  personally  or sent by certified or  registered
mail,  postage prepaid,  return receipt  requested,  duly addressed to the Party
concerned  at the address  indicated  below or to such  changed  address as such
Party may subsequently give such notice of:

If to the Company:                   Footstar, Inc.
                                     One Crosfield Avenue West Nyack, NY 10994
Attention:                           General Counsel

If to the Executive:                 Mr. J.M. Robinson
                                     6 Rockwood Lane
                                     Greenwich, Connecticut 06830

                                      -24-
<PAGE>

      28. Headings.

      The  headings  of  the  sections  contained  in  this  Agreement  are  for
convenience  only and shall not be deemed to control  or affect  the  meaning or
construction of any provision of this Agreement.

      29. Counterparts.

      This Agreement may be executed in two or more counterparts.

      IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first written above.

ATTEST TO:                                           FOOTSTAR, Inc.

By: /s/ Terry R. Lautenbach                  By: /s/ Maureen Richards
   ------------------------                  -----------------------------
Terry R. Lautenbach                          Name: Maureen Richards
                                             Title: Senior Vice President,
                                             General Counsel and
                                             Corporate Secretary

                                             EXECUTIVE

                                             By: /s/ J.M. Robinson
                                                --------------------------
                                                   Mr. J.M. Robinson

                                      -25-

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