Document:

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                                                                    EXHIBIT 4.83

                                                                  Conformed Copy

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                          REGISTRATION RIGHTS AGREEMENT

                          Dated as of February 25, 2003

                                     between

                            Duke Energy Corporation,
                                    as Issuer

                                       and

                         Banc One Capital Markets, Inc.,
                          Deutsche Bank Securities Inc.
                                 UBS Warburg LLC
                              ABN AMRO Incorporated
                              Barclays Capital Inc.
                            CIBC World Markets Corp.
                            Scotia Capital (USA) Inc.
                            TD Securities (USA) Inc.

                              as Initial Purchasers

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                          REGISTRATION RIGHTS AGREEMENT

                  This Registration Rights Agreement (the "Agreement") is made
and entered into this 25th day of February, 2003, by and between Duke Energy
Corporation, a North Carolina corporation (the "Issuer"), and Banc One Capital
Markets, Inc., Deutsche Bank Securities Inc., UBS Warburg LLC, ABN AMRO
Incorporated, Barclays Capital Inc., CIBC World Markets Corp, Scotia Capital
(USA) Inc. and TD Securities (USA) Inc. (collectively, the "Initial
Purchasers").

                  This Agreement is made pursuant to the Purchase Agreement,
dated February 20, 2003 (the "Purchase Agreement"), between the Issuer and the
Initial Purchasers, which provides for the sale by the Issuer to the Initial
Purchasers of an aggregate of $500,000,000 principal amount of the Issuer's
First and Refunding Mortgage Bonds, 3.75% Series A due 2008 (the "Bonds"). In
order to induce the Initial Purchasers to enter into the Purchase Agreement, the
Issuer has agreed to provide to the Initial Purchasers and their direct and
indirect transferees the registration rights set forth in this Agreement. The
execution and delivery of this Agreement is a condition to the closing under the
Purchase Agreement.

                  In consideration of the foregoing, the parties hereto agree as
follows:

                  1.       Definitions. As used in this Agreement, the following
capitalized defined terms shall have the following meanings:

                  "1933 Act" shall mean the Securities Act of 1933, as amended
         from time to time.

                  "1934 Act" shall mean the Securities Exchange Act of 1934, as
         amended from time to time.

                  "Bonds" shall have the meaning set forth in the preamble to
         this Agreement.

                  "Closing Date" shall mean the Closing Time as defined in the
         Purchase Agreement.

                  "Depositary" shall mean The Depository Trust Company, or any
         other depositary appointed by the Issuer, provided, however, that such
         depositary must have an address in the Borough of Manhattan, in The
         City of New York.

                  "Exchange Bonds" shall mean the First and Refunding Mortgage
         Bonds, 3.75% Series B due 2008, issued by the Issuer under the
         Indenture containing terms identical to the Bonds, in all material
         respects (except for references to certain interest rate provisions,
         restrictions on transfers and restrictive legends), to be offered to
         Holders of Bonds in exchange for Registrable Bonds pursuant to the
         Exchange Offer.

                  "Exchange Offer" shall mean the exchange offer by the Issuer
         of Exchange Bonds for Registrable Bonds pursuant to Section 2.1 hereof.

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                  "Exchange Offer Registration" shall mean a registration under
         the 1933 Act effected pursuant to Section 2.1 hereof.

                  "Exchange Offer Registration Statement" shall mean an exchange
         offer registration statement on Form S-4 (or, if applicable, on another
         appropriate form), and all amendments and supplements to such
         registration statement, including the Prospectus contained therein, all
         exhibits thereto and all documents incorporated by reference therein.

                  "Exchange Period" shall have the meaning set forth in Section
         2.1 hereof.

                  "Holder" shall mean each of the Initial Purchasers, for so
         long as it owns any Registrable Bonds, and each of its successors,
         assigns and direct and indirect transferees who become registered
         owners of Registrable Bonds under the Indenture.

                  "Indenture" shall mean the First and Refunding Mortgage, dated
         as of December 1, 1927, by and among the Issuer and JPMorgan Chase
         Bank, as successor trustee, as amended and supplemented by various
         supplemental indentures, including the Eighty-First Supplemental
         Indenture, dated February 25, 2003, creating the Bonds and the Exchange
         Bonds.

                  "Initial Purchasers" shall have the meaning set forth in the
         preamble to this Agreement.

                  "Issuer" shall have the meaning set forth in the preamble and
         shall also include the Issuer's successors.

                  "Majority Holders" shall mean the Holders of a majority of the
         aggregate principal amount of outstanding Registrable Bonds; provided
         that whenever the consent or approval of Holders of a specified
         percentage of Registrable Bonds is required hereunder, Registrable
         Bonds held by the Issuer or any Affiliate (as defined under the 1933
         Act) of the Issuer shall be disregarded in determining whether such
         consent or approval was given by the Holders of such required
         percentage amount.

                  "Participating Broker-Dealer" shall mean Banc One Capital
         Markets, Inc., Deutsche Bank Securities Inc., UBS Warburg LLC, ABN AMRO
         Incorporated, Barclays Capital Inc., CIBC World Markets Corp, Scotia
         Capital (USA) Inc. and TD Securities (USA) Inc. and any other
         broker-dealer which makes a market in the Bonds and exchanges
         Registrable Bonds in the Exchange Offer for Exchange Bonds.

                  "Person" shall mean an individual, partnership (general or
         limited), corporation, limited liability company, trust or incorporated
         organization, or a government or agency or political subdivision
         thereof.

                  "Prospectus" shall mean the prospectus included in a
         Registration Statement, including any preliminary prospectus, and any
         such prospectus as amended or supplemented by any prospectus
         supplement, including any such prospectus supplement with respect to
         the terms of the offering of any portion of the Registrable Bonds
         covered

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         by a Shelf Registration Statement, and by all other amendments and
         supplements to a prospectus, including post-effective amendments, and
         in each case including all material incorporated by reference therein.

                  "Purchase Agreement" shall have the meaning set forth in the
         preamble.

                  "Registration Expenses" shall mean any and all expenses
         incident to performance of or compliance by the Issuer with this
         Agreement, including without limitation: (i) all SEC or National
         Association of Securities Dealers, Inc. (the "NASD") registration and
         filing fees, (ii) all reasonable fees and expenses incurred in
         connection with compliance with state securities or blue sky laws and
         compliance with the rules of the NASD (including reasonable fees and
         disbursements of counsel for any underwriters or Holders in connection
         with blue sky qualification of any of the Exchange Bonds or Registrable
         Bonds and any filings with the NASD) such fees not to exceed $7,500,
         (iii) all expenses of any Persons in preparing or assisting in
         preparing, word processing, printing and distributing any Registration
         Statement, any Prospectus, any amendments or supplements thereto, any
         underwriting agreements, securities sales agreements and other
         documents relating to the performance of and compliance with this
         Agreement, (iv) all rating agency fees, (v) the fees and disbursements
         of counsel for the Issuer and of the independent public accountants of
         the Issuer, including the expenses of any special audits or "cold
         comfort" letters required by or incident to such performance and
         compliance, (vi) the fees and expenses of the Trustee, and any escrow
         agent or custodian, (vii) the reasonable fees and expenses of the
         Initial Purchasers in connection with the Exchange Offer, including the
         reasonable fees and expenses of counsel to the Initial Purchasers in
         connection therewith, and (viii) the reasonable fees and disbursements
         traditionally borne by the Issuer in connection with registered
         security offerings as set forth in the underwriting agreement
         customarily used by the Issuer.

                  "Registrable Bonds" shall mean the Bonds of any Holder;
         provided, however, that such Bonds shall cease to be Registrable Bonds
         when (i) a Registration Statement with respect to such Bonds shall have
         been declared effective under the 1933 Act and such Bonds shall have
         been disposed of pursuant to such Registration Statement, (ii) such
         Bonds can be sold to the public pursuant to Rule 144 (or any similar
         provision then in force, but not Rule 144A) under the 1933 Act, (iii)
         such Bonds shall have ceased to be outstanding or (iv) the Exchange
         Offer is consummated (except in the case of Bonds purchased from the
         Issuer and continued to be held by the Initial Purchasers).

                  "Registration Statement" shall mean any registration statement
         of the Issuer which covers any of the Exchange Bonds or Registrable
         Bonds pursuant to the provisions of this Agreement, and all amendments
         and supplements to any such Registration Statement, including
         post-effective amendments, in each case including the Prospectus
         contained therein, all exhibits thereto and all material incorporated
         by reference therein.

                  "SEC" shall mean the United States Securities and Exchange
         Commission or any successor agency or government body performing the
         functions currently performed by the United States Securities and
         Exchange Commission.

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                  "Shelf Registration" shall mean a registration effected
         pursuant to Section 2.2 hereof.

                  "Shelf Registration Statement" shall mean a "shelf"
         registration statement of the Issuer pursuant to the provisions of
         Section 2.2 of this Agreement which covers all of the Registrable
         Bonds, on an appropriate form under Rule 415 under the 1933 Act, or any
         similar rule that may be adopted by the SEC, and all amendments and
         supplements to such registration statement, including post-effective
         amendments, in each case including the Prospectus contained therein,
         all exhibits thereto and all material incorporated by reference
         therein.

                  "Trustee" shall mean the trustee with respect to the Bonds
         under the Indenture.

                  2.       Registration Under the 1933 Act.

                  2.1.     Exchange Offer. The Issuer shall (A) prepare and, as
soon as practicable but not later than 130 calendar days following the Closing
Date, file with the SEC an Exchange Offer Registration Statement with respect to
a proposed Exchange Offer and the issuance and delivery to the Holders, in
exchange for the Registrable Bonds, a like principal amount of Exchange Bonds,
(B) use its reasonable best efforts to cause the Exchange Offer Registration
Statement to be declared effective under the 1933 Act not later than 180
calendar days following the Closing Date, (C) use its reasonable best efforts to
keep the Exchange Offer Registration Statement effective until the closing of
the Exchange Offer and (D) use its reasonable best efforts to cause the Exchange
Offer to be consummated within 210 calendar days following the Closing Date. The
Exchange Bonds will be issued under the Indenture. Upon the effectiveness of the
Exchange Offer Registration Statement, the Issuer shall promptly commence the
Exchange Offer, it being the objective of such Exchange Offer to enable each
Holder eligible and electing to exchange Registrable Bonds for Exchange Bonds
(assuming that such Holder (a) is not an affiliate of the Issuer within the
meaning of Rule 405 under the 1933 Act, (b) is not a broker-dealer tendering
Registrable Bonds acquired directly from the Issuer for its own account, (c)
acquired the Exchange Bonds in the ordinary course of such Holder's business and
(d) has no arrangements or understandings with any person to participate in the
Exchange Offer for the purpose of distributing the Exchange Bonds) to transfer
such Exchange Bonds from and after their receipt without any limitations or
restrictions under the 1933 Act and without material restrictions under the
securities laws of a substantial proportion of the several states of the United
States.

                  In connection with the Exchange Offer, the Issuer shall:

                  (a)      mail to each Holder a copy of the Prospectus forming
         part of the Exchange Offer Registration Statement together with an
         appropriate letter of transmittal and related documents;

                  (b)      keep the Exchange Offer open for acceptance for a
         period of not less than 20 business days after the date notice thereof
         is mailed to the Holders (or longer if required by applicable law)
         (such period referred to herein as the "Exchange Period");

                  (c)      utilize the services of the Depositary for the
         Exchange Offer;

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                  (d)      permit Holders to withdraw tendered Registrable Bonds
         at any time prior to 5:00 p.m. (Eastern Time) on the last business day
         of the Exchange Period, by sending to the institution specified in the
         notice, a telegram, telex, facsimile transmission or letter setting
         forth the name of such Holder, the principal amount of Registrable
         Bonds delivered for exchange, and a statement that such Holder is
         withdrawing his election to have such Bonds exchanged;

                  (e)      notify each Holder that any Registrable Bonds not
         tendered will remain outstanding and continue to accrue interest, but
         will not retain any rights under this Agreement (except in the case of
         the Initial Purchasers and Participating Broker-Dealers as provided
         herein); and

                  (f)      otherwise comply in all respects with all applicable
         laws relating to the Exchange Offer.

         As soon as practicable after the close of the Exchange Offer, the
         Issuer shall:

             (i)  accept for exchange all Registrable Bonds duly tendered and
                     not validly withdrawn pursuant to the Exchange Offer in
                     accordance with the terms of the Exchange Offer
                     Registration Statement and the letter of transmittal which
                     shall be an exhibit thereto;

             (ii) deliver to the Trustee for cancellation all Registrable Bonds
                     so accepted for exchange; and

             (iii)cause the Trustee promptly to authenticate and deliver the
                     Exchange Bonds to each Holder of Registrable Bonds so
                     accepted for exchange in a principal amount equal to the
                     principal amount of the Registrable Bonds of such Holder
                     so accepted for exchange.

                  The Issuer shall use its reasonable best efforts to keep the
Exchange Offer Registration Statement effective and to amend and supplement the
Prospectus contained therein, in order to permit such Prospectus to be lawfully
delivered by all Participating Broker-Dealers subject to the prospectus delivery
requirements of the 1933 Act for such period of time as such Participating
Broker-Dealers must comply with such requirements in order to resell the
Exchange Bonds; provided, however, that (i) such period shall be the lesser of
90 days after the consummation of the Exchange Offer and the date on which all
Participating Broker-Dealers have sold all Exchange Bonds held by them (unless
such period is extended pursuant to Section 3(k) below) and (ii) the Issuer
shall make such Prospectus, and any amendment or supplement thereto, available
to any such Participating Broker-Dealer for use in connection with any resale of
any Exchange Bonds for a period of the lesser of 90 days after the consummation
of the Exchange Offer and the date on which all Participating Broker-Dealers
have sold all Exchange Bonds held by them (unless such period is extended
pursuant to Section 3(k) below).

                  Interest on the Exchange Bonds will accrue from the most
recent interest payment date to which interest has been paid on the Registrable
Bonds surrendered in exchange therefor or, if no interest has been paid on such
Registrable Bonds, from the date of original issuance. The Exchange Offer shall
not be subject to any conditions, other than (i) that the Exchange

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Offer, or the making of any exchange by a Holder, does not violate applicable
law or any applicable interpretation of the staff of the SEC, (ii) the due
tendering of Registrable Bonds in accordance with the Exchange Offer, (iii) that
each Holder of Registrable Bonds exchanged in the Exchange Offer shall have
represented that all Exchange Bonds to be received by it shall be acquired in
the ordinary course of its business and that at the time of the consummation of
the Exchange Offer it shall have no arrangement or understanding with any person
to participate in the distribution (within the meaning of the 1933 Act) of the
Exchange Bonds and shall have made such other representations as may be
reasonably necessary under applicable SEC rules, regulations or interpretations
to render the use of Form S-4 or other appropriate form under the 1933 Act
available and (iv) that no action or proceeding shall have been instituted or
threatened in any court or by or before any governmental agency with respect to
the Exchange Offer which, in the judgment of the Issuer, would reasonably be
expected to impair the ability of the Issuer to proceed with the Exchange Offer.
The Issuer shall inform the Initial Purchasers of the names and addresses of the
Holders to whom the Exchange Offer is made, and the Initial Purchasers shall
have the right to contact such Holders and otherwise facilitate the tender of
Registrable Bonds in the Exchange Offer.

                  2.2.     Shelf Registration. (i) If, because of any changes in
law, SEC rules or regulations or applicable interpretations thereof by the staff
of the SEC, the Issuer is not permitted to effect the Exchange Offer as
contemplated by Section 2.1 hereof, (ii) if for any other reason the Exchange
Offer is not consummated within 210 calendar days after the Closing Date
(provided that the Issuer is not then actively pursuing such effectiveness or
consummation, as the case may be), (iii) after consummation of the Exchange
Offer and upon the written request of the Initial Purchasers with respect to any
Registrable Bonds which it acquired directly from the Issuer then in case of
each of clauses (i) through (iii) the Issuer shall, at their cost:

                  (a)      As promptly as practicable, file with the SEC, and
         thereafter shall use its reasonable best efforts to cause to be
         declared effective as promptly as practicable but no later than 210
         calendar days after the Closing Date, except in the case of clause
         (iii) of the preceding paragraph, which shall be no later than 90 days
         following such request, a Shelf Registration Statement relating to the
         offer and sale of the Registrable Bonds by the Holders from time to
         time in accordance with the methods of distribution elected by the
         Majority Holders participating in the Shelf Registration and set forth
         in such Shelf Registration Statement.

                  (b)      Use its reasonable best efforts to keep the Shelf
         Registration Statement continuously effective in order to permit the
         prospectus forming part thereof to be usable by Holders for a period
         ending on the earliest of (i) two years from the date the Registrable
         Bonds were originally issued by the Issuer, (ii) the date on which the
         Registrable Bonds become eligible for resale without volume limitations
         pursuant to Rule 144 under the 1933 Act, or (iii) for such shorter
         period that will terminate when all Registrable Bonds covered by the
         Shelf Registration Statement have been sold pursuant to the Shelf
         Registration Statement or cease to be outstanding or otherwise to be
         Registrable Bonds.

                  (c)      Notwithstanding any other provisions hereof, use its
         best efforts to ensure that (i) any Shelf Registration Statement and
         any amendment thereto and any Prospectus

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         forming part thereof and any supplement thereto complies in all
         material respects with the 1933 Act and the rules and regulations
         thereunder, (ii) any Shelf Registration Statement and any amendment
         thereto does not, when it becomes effective, contain an untrue
         statement of a material fact or omit to state a material fact required
         to be stated therein or necessary to make the statements therein not
         misleading and (iii) any Prospectus forming part of any Shelf
         Registration Statement, and any supplement to such Prospectus (as
         amended or supplemented from time to time), does not include an untrue
         statement of a material fact or omit to state a material fact necessary
         in order to make the statements, in light of the circumstances under
         which they were made, not misleading.

                  The Issuer further agrees, if necessary, to supplement or
amend the Shelf Registration Statement, as required by Section 3(b) below, and
to furnish to the Holders of Registrable Bonds copies of any such supplement or
amendment promptly as reasonably practicable after its being used or filed with
the SEC.

                  2.3.     Expenses. The Issuer shall pay all Registration
Expenses in connection with the registration pursuant to Section 2.1 or 2.2.
Each Holder shall pay all underwriting discounts and commissions and transfer
taxes, if any, relating to the sale or disposition of such Holder's Registrable
Bonds pursuant to the Shelf Registration Statement.

                  2.4.     Effectiveness. (a) The Issuer will be deemed not to
have used its reasonable best efforts to cause the Exchange Offer Registration
Statement or the Shelf Registration Statement, as the case may be, to become, or
to remain, effective during the requisite period if the Issuer voluntarily takes
any action that would, or omits to take any action which omission would, result
in any such Registration Statement not being declared effective or in the
holders of Registrable Bonds covered thereby not being able to exchange or offer
and sell such Registrable Bonds during that period as and to the extent
contemplated hereby, unless such action is required by applicable law.

                  (b)      An Exchange Offer Registration Statement pursuant to
Section 2.1 hereof or a Shelf Registration Statement pursuant to Section 2.2
hereof will not be deemed to have become effective unless it has been declared
effective by the SEC; provided, however, that if, after it has been declared
effective, the offering of Registrable Bonds pursuant to a Shelf Registration
Statement is interfered with by any stop order, injunction or other order or
requirement of the SEC or any other governmental agency or court, such
Registration Statement will be deemed not to have become effective during the
period of such interference until the offering of Registrable Bonds pursuant to
such Registration Statement may legally resume.

                  2.5.     Interest. If the Exchange Offer is not consummated
and the Shelf Registration Statement is not declared effective on or prior to
the date that is 210 days after the Closing Date, the interest rate on the Bonds
will be increased by 0.25% per annum commencing the date that is 210 days after
the Closing Date, until the Exchange Offer is consummated or the Shelf
Registration Statement is declared effective by the SEC; provided, that in the
case of a Shelf Registration Statement, (i) if the Issuer is unable to cause
such Shelf Registration Statement to become effective because Holders of
Registrable Bonds have not provided information with respect to themselves as
required by law to be included therein pursuant to the Issuer's request as
provided herein, such 0.25% increase in the interest rate shall be payable only

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to Holders that have furnished such information required by law to be included
therein to the Issuer pursuant to its request hereunder from but excluding the
date such information is provided to the Issuer to but excluding the date the
Shelf Registration Statement is declared effective by the SEC and (ii) in the
case of a Shelf Registration Statement required under clause (iii) of the first
paragraph of Section 2.2, such interest rate increase shall commence on the date
that is 90 days following the request related to filing the Shelf Registration
Statement.

                  2.6.     Specific Enforcement. Without limiting the remedies
available to the Initial Purchasers and the Holders, the Issuer acknowledges
that any failure by the Issuer to comply with its obligations under Sections 2.1
and 2.2 hereof may result in material irreparable injury to the Initial
Purchasers or the Holders for which there is no adequate remedy at law, that it
will not be possible to measure damages for such injuries precisely and that, in
the event of any such failure, the Initial Purchasers or any Holder may obtain
such relief as may be required to specifically enforce the Issuer's obligations
under Sections 2.1 and 2.2 hereof.

                  3.       Registration Procedures. In connection with the
obligations of the Issuer with respect to Registration Statements pursuant to
Sections 2.1 and 2.2 hereof, the Issuer shall:

                  (a)      prepare and file with the SEC a Registration
         Statement, within the relevant time period specified in Section 2, on
         the appropriate form under the 1933 Act, which form (i) shall be
         selected by the Issuer, (ii) shall in the case of a Shelf Registration,
         be available for the sale of the Registrable Bonds by the selling
         Holders thereof, (iii) shall comply as to form in all material respects
         with the requirements of the applicable form and include or incorporate
         by reference all financial statements required by the SEC to be filed
         therewith or incorporated by reference therein, and (iv) shall comply
         in all respects with the requirements of Regulation S-T under the 1933
         Act, and use their best efforts to cause such Registration Statement to
         become effective and remain effective in accordance with Section 2
         hereof;

                  (b)      prepare and file with the SEC such amendments and
         post-effective amendments to each Registration Statement as may be
         necessary under applicable law to keep such Registration Statement
         effective for the applicable period; and cause each Prospectus to be
         supplemented by any required prospectus supplement, and as so
         supplemented to be filed pursuant to Rule 424 under the 1933 Act and
         comply with the provisions of the 1933 Act applicable to them with
         respect to the disposition of all securities covered by each
         Registration Statement during the applicable period in accordance with
         the intended method or methods of distribution by the selling Holders
         thereof;

                  (c)      in the case of a Shelf Registration, (i) notify each
         Holder of Registrable Bonds, at least 5 business days prior to filing,
         that a Shelf Registration Statement with respect to the Registrable
         Bonds is being filed and advising such Holders that the distribution of
         Registrable Bonds will be made in accordance with the method selected
         by the Majority Holders participating in the Shelf Registration; (ii)
         furnish to each Holder of Registrable Bonds and to each underwriter of
         an underwritten offering of Registrable Bonds, if any, without charge,
         as many copies of each Prospectus, including each preliminary
         Prospectus, and any amendment or supplement thereto and such other

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         documents as such Holder or underwriter may reasonably request,
         including financial statements and schedules and, if the Holder so
         requests, all exhibits in order to facilitate the public sale or other
         disposition of the Registrable Bonds; and (iii) hereby consent to the
         use of the Prospectus or any amendment or supplement thereto by each of
         the selling Holders of Registrable Bonds in connection with the
         offering and sale of the Registrable Bonds covered by the Prospectus or
         any amendment or supplement thereto;

                  (d)      use its best efforts to register or qualify the
         Registrable Bonds under all applicable state securities or "blue sky"
         laws of such jurisdictions as any Holder of Registrable Bonds covered
         by a Registration Statement and each underwriter of an underwritten
         offering of Registrable Bonds shall reasonably request by the time the
         applicable Registration Statement is declared effective by the SEC, and
         do any and all other acts and things which may be reasonably necessary
         or advisable to enable each such Holder and underwriter to consummate
         the disposition in each such jurisdiction of such Registrable Bonds
         owned by such Holder; provided, however, that the Issuer shall not be
         required to (i) qualify as a foreign corporation or as a dealer in
         Securities in any jurisdiction where it would not otherwise be required
         to qualify but for this Section 3(d), or (ii) take any action which
         would subject it to general service of process or taxation in any such
         jurisdiction where it is not then so subject;

                  (e)      notify promptly each Holder of Registrable Bonds
         under a Shelf Registration or any Participating Broker-Dealer who has
         notified the Issuer that it is utilizing the Exchange Offer
         Registration Statement as provided in paragraph (f) below, and, if
         requested by such Holder or Participating Broker-Dealer, confirm such
         advice in writing promptly (i) when a Registration Statement has become
         effective and when any post-effective amendments and supplements
         thereto become effective, (ii) of any request by the SEC or any state
         securities authority for post-effective amendments and supplements to a
         Registration Statement and Prospectus or for addition information after
         the Registration Statement has become effective, (iii) of the issuance
         by the SEC or any state securities authority of any stop order
         suspending the effectiveness of a Registration Statement or the
         initiation of any proceedings for that purpose, (iv) in case of a Shelf
         Registration, if, between the effective date of a Registration
         Statement and the closing of any sale of Registrable Bonds covered
         thereby, the representations and warranties of the Issuer contained in
         any underwriting agreement, securities sales agreement or other similar
         agreement, if any, relating to the offering cease to be true and
         correct in all material respects, (v) of the happening of any event or
         the discovery of any facts during the period a Shelf Registration
         Statement is effective which makes any statement made in such
         Registration Statement or related Prospectus untrue in any material
         respect or which requires the making of any changes in such
         Registration Statement or Prospectus in order to make the statements
         therein not misleading and (vi) of the receipt by the Issuer of any
         notification with respect to the suspension of the qualification of the
         Registrable Bonds or the Exchange Bonds, as the case may be, for sale
         in any jurisdiction or the initiation or threatening of any proceeding
         for such purpose;

                  (f)      in the case of the Exchange Offer Registration
         Statement (i) include in the Exchange Offer Registration Statement a
         section entitled "Plan of Distribution" which section shall include all
         information that the Initial Purchasers may reasonably request,

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         and which shall contain a summary statement of the positions taken or
         policies made by the staff of the SEC with respect to the potential
         "underwriter" status of any broker-dealer that holds Registrable Bonds
         acquired for its own account as a result of market-making activities or
         other trading activities and that will be the beneficial owner (as
         defined in Rule 13d-3 under the 1934 Act) of Exchange Bonds to be
         received by such broker-dealer in the Exchange Offer, whether such
         positions or policies have been publicly disseminated by the staff of
         the SEC or such positions or policies, in the reasonable judgment of
         the Initial Purchasers and their counsel, represent the prevailing
         views of the staff of the SEC, including a statement that any such
         broker-dealer who receives Exchange Bonds for Registrable Bonds
         pursuant to the Exchange Offer may be deemed a statutory underwriter
         and must deliver a prospectus meeting the requirements of the 1933 Act
         in connection with any resale of such Exchange Bonds, (ii) furnish to
         each Participating Broker-Dealer who has delivered to the Issuer the
         notice referred to in Section 3(e), without charge, as many copies of
         each Prospectus included in the Exchange Offer Registration Statement,
         including any preliminary prospectus, and any amendment or supplement
         thereto, as such Participating Broker-Dealer may reasonably request,
         (iii) hereby consent to the use of the Prospectus forming part of the
         Exchange Offer Registration Statement or any amendment or supplement
         thereto, by any person subject to the prospectus delivery requirement
         of the SEC, including all Participating Broker-Dealers, in connection
         with the sale or transfer of the Exchange Bonds covered by the
         Prospectus or any amendment or supplement thereto, and (iv) include in
         the transmittal letter or similar documentation to be executed by an
         exchange offeree in order to participate in the Exchange Offer (x) the
         following provision:

                           "if the exchange offeree is a broker-dealer holding
                           Registrable Bonds acquired for its own account as a
                           result of market-making activities or other trading
                           activities, it will deliver a prospectus meeting the
                           requirements of the 1933 Act in connection with any
                           resale of Exchange Bonds received in respect of such
                           Registrable Bonds pursuant to the Exchange Offer;"
                           and

         (y) a statement to the effect that by a broker-dealer making the
         acknowledgment described in clause (x) and by delivering a Prospectus
         in connection with any resale of Exchange Bonds, the broker-dealer will
         not be deemed to admit that it is an underwriter within the meaning of
         the 1933 Act;

                  (g)      (i) in the case of an Exchange Offer, furnish counsel
         for the Initial Purchasers and (ii) in the case of a Shelf
         Registration, furnish counsel for the Holders of Registrable Bonds
         copies of any comment letters received from the SEC or any other
         request by the SEC or any state securities authority for amendments or
         supplements to a Registration Statement and Prospectus or for
         additional information;

                  (h)      make every reasonable effort to obtain the withdrawal
         of any order suspending the effectiveness of a Registration Statement
         at the earliest possible moment;

                                       10

<PAGE>

                  (i)      in the case of a Shelf Registration, furnish to each
         Holder of Registrable Bonds, and each underwriter, if any, without
         charge, at least one conformed copy of each Registration Statement and
         any post-effective amendment thereto, including financial statements
         and schedules (without documents incorporated therein by reference and
         all exhibits thereto, unless requested);

                  (j)      in the case of a Shelf Registration, cooperate with
         the selling Holders of Registrable Bonds to facilitate the timely
         preparation and delivery of certificates representing Registrable Bonds
         to be sold and not bearing any restrictive legends; and enable such
         Registrable Bonds to be in such denominations (consistent with the
         provisions of the Indenture) and registered in such names as the
         selling Holders or the underwriters, if any, may reasonably request at
         least 3 business days prior to the closing of any sale of Registrable
         Bonds;

                  (k)      in the case of a Shelf Registration, upon the
         occurrence of any event or the discovery of any facts, each as
         contemplated by Sections 3(e)(ii), (iii), (iv), (v) and (vi) hereof,
         use its best efforts to prepare a supplement or post-effective
         amendment to the Registration Statement or the related Prospectus or
         any document incorporated therein by reference or file any other
         required document, each as required in the reasonable determination of
         the Issuer so that, as thereafter delivered to the purchasers of the
         Registrable Bonds or Participating Broker-Dealers, such Prospectus will
         not contain at the time of such delivery any untrue statement of a
         material fact or omit to state a material fact necessary to make the
         statements therein, in light of the circumstances under which they were
         made, not misleading or will remain so qualified;

                  (l)      in the case of a Shelf Registration, a reasonable
         time prior to the filing of any Registration Statement, any Prospectus,
         an amendment to a Registration Statement or amendment or supplement to
         a Prospectus or any document which is to be incorporated by reference
         into a Registration Statement or a Prospectus after initial filing of a
         Registration Statement, provide copies of such document to the Initial
         Purchasers on behalf of such Holders; and make representatives of the
         Issuer as shall be reasonably requested by the Holders of Registrable
         Bonds, or the Initial Purchasers on behalf of such Holders, available
         for discussion of such document;

                  (m)      obtain a CUSIP number of all Exchange Bonds or
         Registrable Bonds, as the case may be, not later than the effective
         date of a Registration Statement, and provide the Trustee with printed
         certificates for the Exchange Bonds or the Registrable Bonds, as the
         case may be, in a form eligible for deposit with the Depositary;

                  (n)      (i) cause the Indenture to be qualified under the
         Trust Indenture Act of 1939, as amended, (the "TIA") in connection with
         the registration of the Exchange Bonds or Registrable Bonds, as the
         case may be, (ii) cooperate with the Trustee and the Holders to effect
         such changes to the Indenture as may be required for the Indenture to
         be so qualified in accordance with the terms of the TIA and (iii)
         execute, and use its best efforts to cause the Trustee to execute, all
         documents as may be required to effect such changes, and all other
         forms and documents required to be filed with the SEC to enable the
         Indenture to be so qualified in a timely manner;

                                       11

<PAGE>

                  (o)      in the case of a Shelf Registration, enter into
         agreements (including underwriting agreements) and take all other
         customary and appropriate actions in order to expedite or facilitate
         the disposition of such Registrable Bonds and in such connection
         whether or not an underwriting agreement is entered into and whether or
         not the registration is an underwritten registration:

                           (i)      make such representations and warranties to
                  the Holders of such Registrable Bonds and the underwriters, if
                  any, in form, substance and scope as are customarily made by
                  issuers to underwriters in similar underwritten offerings as
                  may be reasonably requested by them;

                           (ii)     obtain opinions of counsel to the Issuer and
                  updates thereof (which counsel and opinions (in form, scope
                  and substance) shall be reasonably satisfactory to the
                  managing underwriters, if any, and the holders of a majority
                  in principal amount of the Registrable Bonds being sold)
                  addressed to each selling Holder and the underwriters, if any,
                  covering the matters customarily covered in opinions requested
                  in sales of securities or underwritten offerings and such
                  other matters as may be reasonably requested by such Holders
                  and underwriters;

                           (iii)    obtain "cold comfort" letters and updates
                  thereof from the independent certified public accountants who
                  have certified the financial statements of the Issuer and any
                  other entity included or incorporated by reference in the
                  Registration Statement addressed to the underwriters, if any,
                  and use reasonable efforts to have such letter addressed to
                  the selling Holders of Registrable Bonds (to the extent
                  consistent with SAS 72), such letters to be in customary form
                  and covering matters of the type customarily covered in "cold
                  comfort" letters to underwriters in connection with similar
                  underwritten offerings;

                           (iv)     enter into a securities sales agreement with
                  the Holders and an agent of the Holders providing for, among
                  other things, the appointment of such agent for the selling
                  Holders for the purpose of soliciting purchases of Registrable
                  Bonds, which agreement shall be in form, substances and scope
                  customary for similar offerings;

                           (v)      if an underwriting agreement is entered
                  into, cause the same to set forth indemnification provisions
                  and procedures customarily provided by the Issuer to
                  underwriters in similar types of transactions with respect to
                  the underwriters and all other parties to be indemnified
                  pursuant to Section 4 hereof; and

                           (vi)     deliver such documents and certificates as
                  may be reasonably requested and as are customarily delivered
                  in similar offerings to the Holders of a majority in principal
                  amount of the Registrable Bonds being sold and the managing
                  underwriters, if any.

                                       12

<PAGE>

         The above shall be done at (i) the effectiveness of such Registration
         Statement (and each post-effective amendment thereof) and (ii) each
         closing under any underwriting or similar agreement as and to the
         extent required thereunder;

                  (p)      in the case of a Shelf Registration, make available
         for inspection by representatives of the Holders of the Registrable
         Bonds and any underwriters participating in any disposition pursuant to
         a Shelf Registration Statement and any counsel or accountant retained
         by such Holders or underwriters, all financial and other records,
         pertinent corporate documents and properties of the Issuer reasonably
         requested by any such persons and use its reasonable best efforts to
         cause the respective officers, directors, employees, and any other
         agents of the Issuer to supply all information reasonably requested by
         any such representative, underwriter, special counsel or accountant in
         connection with a Registration Statement, and make such representatives
         of the Issuer available for discussion of such documents as shall be
         reasonably requested by the Initial Purchasers; provided that any
         confidential or proprietary information may only be inspected subject
         to customary confidentiality agreements or procedures that the Issuer
         requires;

                  (q)      (i) in the case of an Exchange Offer Registration
         Statement, within a reasonable time prior to the filing of any Exchange
         Offer Registration Statement, any Prospectus forming a part thereof,
         any amendment to an Exchange Offer Registration Statement or amendment
         or supplement to such Prospectus, provide copies of such document to
         the Initial Purchasers and make such changes in any such document prior
         to the filing thereof as the Initial Purchasers may reasonably request
         and, except as otherwise required by applicable law, not file any such
         document in a form to which the Initial Purchasers on behalf of the
         Holders of Registrable Bonds shall reasonably object, and make the
         representatives of the Issuer available for discussion of such
         documents as shall be reasonably requested by the Initial Purchasers;
         and

                  (ii) in the case of a Shelf Registration, within a reasonable
                  time prior to filing any Shelf Registration Statement, any
                  Prospectus forming a part thereof, any amendment to such Shelf
                  Registration Statement or amendment or supplement to such
                  Prospectus, provide copies of such document to the Holders of
                  Registrable Bonds, to the Initial Purchasers, to counsel on
                  behalf of the Holders and to the underwriter or underwriters
                  of an underwritten offering of Registrable Bonds, if any, make
                  such changes in any such document prior to the filing thereof
                  as the Initial Purchasers, the counsel to the Holders or the
                  underwriter or underwriters reasonably request and not file
                  any such document in a form to which the Majority Holders or
                  the Initial Purchasers on behalf of the Holders of Registrable
                  Bonds or any underwriter may reasonably object and make the
                  representatives of the Issuer available for discussion of such
                  document as shall be reasonably requested by the Holders of
                  Registrable Bonds, the Initial Purchasers on behalf of such
                  Holders, or any underwriter.

                  (r)      in the case of a Shelf Registration, use their
         reasonable best efforts to cause all Registrable Bonds to be listed on
         any securities exchange on which similar debt securities issued by the
         Issuer are then listed if requested by the Majority Holders, or if

                                       13

<PAGE>

         requested by the underwriter or underwriters of an underwritten
         offering of Registrable Bonds, if any; provided, however, the Issuer
         shall not have reasonably objected to such request and, for the
         avoidance of doubt, it shall be reasonable for the Issuer to object to
         such request if at such time the Issuer does not routinely list its
         debt securities on a securities exchange;

                  (s)      in the case of a Shelf Registration, use their
         reasonable best efforts to cause the Registrable Bonds to be rated by
         the appropriate rating agencies, if so requested by the Majority
         Holders, or if requested by the underwriter or underwriters of an
         underwritten offering of Registrable Bonds, if any;

                  (t)      otherwise comply with all applicable rules and
         regulations of the SEC and make available to security holders, in
         accordance with the Issuer's Exchange Act filing obligations, an
         earnings statement covering at least 12 months which shall satisfy the
         provisions of Section 11(a) of the 1933 Act and Rule 158 thereunder;

                  (u)      cooperate and assist in any filings required to be
         made with the NASD and, in the case of a Shelf Registration, in the
         performance of any due diligence investigation by any underwriter and
         its counsel; and

                  (v)      upon consummation of an Exchange Offer, if requested
         by the Trustee, obtain a customary opinion of counsel to the Issuer
         addressed to the Trustee for the benefit of all Holders of Registrable
         Bonds participating in the Exchange Offer, and which includes an
         opinion that (i) the Issuer has duly authorized, executed and delivered
         the Exchange Bonds and the related indenture and (ii) the Exchange
         Bonds and related indenture constitute a legal, valid and binding
         obligation of the Issuer, enforceable against the Issuer in accordance
         with its respective terms (with customary exceptions).

                  In the case of a Shelf Registration Statement, the Issuer may
(as a condition to such Holder's participation in the Shelf Registration)
require each Holder of Registrable Bonds to furnish to the Issuer such
information regarding the Holder and the proposed distribution by such Holder of
such Registrable Bonds as the Issuer may from time to time reasonably request in
writing for use in connection with any Shelf Registration Statement or
Prospectus included therein, including, without limitation, information
specified in item 507 of Regulation S-K under the 1933 Act. Each Holder as to
which any Shelf Registration is being effected agrees to furnish promptly to the
Issuer all information required to be disclosed with respect to such Holder in
order to make any information with respect to such Holder previously furnished
to the Issuer by such Holder not materially misleading.

                  In the case of a Shelf Registration Statement, each Holder
agrees that, upon receipt of any notice from the Issuer of the happening of any
event or the discovery of any facts, each of the kind described in Section
3(e)(ii), (iii), (iv), (v) and (vi) hereof, such Holder will forthwith
discontinue disposition of Registrable Bonds pursuant to a Registration
Statement until such Holder's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 3(k) hereof, and, if so directed by
the Issuer, such Holder will deliver to the Issuer (at its expense) all copies
in such Holder's possession, other than permanent file copies then in such

                                       14

<PAGE>

Holder's possession, of the Prospectus covering such Registrable Bonds current
at the time of receipt of such notice.

                  If any of the Registrable Bonds covered by any Shelf
Registration Statement are to be sold in an underwritten offering, the
underwriter or underwriters and manager or managers that will manage such
offering will be selected by the Majority Holders of such Registrable Bonds
included in such offering and shall be acceptable to the Issuer. No Holder of
Registrable Bonds may participate in any underwritten registration hereunder
unless such Holder (a) agrees to sell such Holder's Registrable Bonds on the
basis provided in any underwriting arrangements approved by the persons entitled
hereunder to approve such arrangements and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting agreement.

                  4.       Indemnification; Contribution. (a) The Issuer agrees
to indemnify and hold harmless the Initial Purchasers, each Holder, each
Participating Broker-Dealer, each Person who participates as an underwriter (any
such Person being an "Underwriter") and each Person, if any, who controls any
Holder or Underwriter within the meaning of Section 15 of the 1933 Act (such
indemnified parties, the "Holders and/or Underwriters," as the case may be), as
follows:

                           (i)      against any and all loss, liability, claim,
                  damage and expense whatsoever arising out of any untrue
                  statement or alleged untrue statement of a material fact
                  contained in the Registration Statement (or any amendment
                  thereto), or the omission or alleged omission therefrom of a
                  material fact required to be stated therein or necessary to
                  make the statements therein not misleading or arising out of
                  any untrue statement or alleged untrue statement of a material
                  fact contained in any Prospectus (or any amendment or
                  supplement thereto) or the omission or alleged omission
                  therefrom of a material fact necessary in order to make the
                  statements therein, in the light of the circumstances under
                  which they were made, not misleading, unless such statement or
                  omission or such alleged statement or omission was made in
                  reliance upon and in conformity with written information
                  furnished to the Issuer by any Holder or Underwriter expressly
                  for use in the Registration Statement (or any amendment
                  thereto) or such Prospectus (or any amendment or supplement
                  thereto);

                           (ii)     against any and all loss, liability, claim,
                  damage and expense whatsoever to the extent of the aggregate
                  amount paid in settlement of any litigation, commenced or
                  threatened, or of any claim whatsoever based upon any such
                  untrue statement or omission or any such alleged untrue
                  statement or omission, if such settlement is effected with the
                  written consent of the Issuer; and

                           (iii)    against any and all expense whatsoever
                  reasonably incurred in investigating, preparing or defending
                  against any litigation, commenced or threatened, or any claim
                  whatsoever based upon any such untrue statement or omission,
                  or any such alleged untrue statement or omission, to the
                  extent that any such expense is not paid under (i) or (ii) of
                  this subsection (a) of Section 4.

                                       15

<PAGE>

In no case shall the Issuer be liable under this indemnity agreement with
respect to any claim made against any Holder or Underwriter or any such
controlling Person unless the Issuer shall be notified in writing of the nature
of the claim within a reasonable time after the assertion thereof, but failure
so to notify the Issuer shall not relieve it from any liability which it may
have otherwise than under subsections 4(a) and 4(b). The Issuer shall be
entitled to participate at its own expense in the defense, or, if it so elects,
within a reasonable time after receipt of such notice, to assume the defense of
any suit brought to enforce any such claim, but if it so elects to assume the
defense, such defense shall be conducted by counsel chosen by it and approved by
the Holder, Underwriter, Holders or Underwriters or controlling Person, or
defendant or defendants in any suit so brought, which approval shall not be
unreasonably withheld. In any such suit, any Holder or Underwriter or any such
controlling Person shall have the right to employ its own counsel, but the fees
and expenses of such counsel shall be at the expense of such Holder or
Underwriter or such controlling Person unless (i) the Issuer and such Holder or
Underwriter shall have mutually agreed to the employment of such counsel, or
(ii) the named parties to any such action (including any impleaded parties)
include both such Holder or Underwriter or such controlling Person and the
Issuer and such Holder or Underwriter or such controlling Person shall have been
advised by such counsel that a conflict of interest between the Issuer and such
Holder or Underwriter or such controlling Person may arise and for this reason
it is not desirable for the same counsel to represent both the indemnifying
party and also the indemnified party (it being understood, however, that the
Issuer shall not, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the reasonable fees
and expenses of more than one separate firm of attorneys for all such Holders
and Underwriters and all such controlling Persons, which firm shall be
designated in writing by the majority of such indemnified parties). The Issuer
agrees to notify any Holder or Underwriter within a reasonable time of the
assertion of any claim against it, any of its officers or directors or any
Person who controls the Issuer within the meaning of Section 15 of the 1933 Act,
in connection with any sale of the Bonds; provided, that the Issuer shall not be
required to notify any Holder or Underwriter if such claim relates to a
Registration Statement or Prospectus that does not name such Holder or
Underwriter.

                  (b)      Each Holder and Underwriter severally agrees that it
will indemnify and hold harmless the Issuer, each other Underwriter and each of
their respective directors and each of the officers of the Issuer who signed the
Registration Statement and each Person, if any, who controls the Issuer within
the meaning of Section 15 of the 1933 Act to the same extent as the indemnity
contained in subsection (a) of this Section 4, but only with respect to
statements or omissions made in the Registration Statement (or any amendment
thereto) or any Prospectus (or any amendment or supplement thereto) in reliance
upon and in conformity with written information furnished to the Issuer by such
Holder or Underwriter expressly for use in the Registration Statement (or any
amendment thereto) or the Prospectus (or any amendment or supplement thereto).
In case any action shall be brought against the Issuer or any person so
indemnified based on the Registration Statement (or any amendment thereto) or
the Prospectus (or any amendment or supplement thereto) and in respect of which
indemnity may be sought against any Holder or Underwriter, such Holder or
Underwriter shall have the rights and duties given to the Issuer, and the Issuer
and each person so indemnified shall have the rights and duties given to the
Holders and Underwriters, by the provisions of subsection (a) of this Section 4.

                                       16

<PAGE>

                  (c)      No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending
or threatened proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.

                  (d)      If the indemnification provided for in this Section 4
is unavailable to or insufficient to hold harmless an indemnified party in
respect of any and all loss, liability, claim, damage and expense whatsoever (or
actions in respect thereof) that would otherwise have been indemnified under the
terms of such indemnity, then each indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of such loss,
liability, claim, damage or expense (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative benefits received by the
Issuer on the one hand and the Holders or Underwriters, severally, on the other
from the sale of the Bonds. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law or if the
indemnified party failed to give the notice required above, then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Issuer on the one hand and
the Holders or Underwriters on the other in connection with the statements or
omissions which resulted in such loss, liability, claim, damage or expense (or
actions in respect thereof), as well as any other relevant equity
considerations. The relative benefits received by the Issuer on the one hand and
the Holders or Underwriters, severally, on the other shall be deemed to be in
the same proportion as the total net proceeds from the offering (before
deducting expenses) of the Bonds and any Registrable Bonds (taken together)
received by the Issuer bear to (i) the benefits of the Initial Purchasers from
the total compensation received by the Initial Purchasers in respect of the
discount as set forth in the table on the cover page of the Offering Memorandum,
dated February 20, 2003 pursuant to which the Bonds were issued, (ii) the
benefits of any Holders (including, if applicable, any Initial Purchaser who is
also a Holder) from receiving Bonds registered under the 1933 Act, or (iii) the
benefits of any Participating Broker-Dealer or Underwriter from the total
compensation received by such Participating Broker-Dealer or Underwriters in
respect of underwriting discounts and commissions received in the sales of the
Bonds which resulted in such indemnified claims. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Issuer on the one hand or
the Holders or Underwriters, severally, on the other and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Issuer and the Holders and Underwriters agree
that it would not be just and equitable if contributions pursuant to this
Section 4 were determined by pro rata allocation (even if the Holders and
Underwriters were treated as one entity for such purpose) or by any other method
of allocation which does not take account of the equitable considerations
referred to above in this Section 4. The amount paid or payable by an
indemnified party as a result of the losses, liabilities, claims, damages or
expenses (or actions in respect thereof) referred to above in this subsection
(d) of Section 4 shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 4, (i) no Holder (including, if applicable, any Initial Purchaser who is
also a Holder) shall be required to contribute any amount in excess of the
amount by which the total price at which the Bonds were sold by it

                                       17

<PAGE>

exceeds the amount of any damages which such Holder has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission and (ii) no Initial Purchaser, Participating Broker-Dealer or
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Bonds underwritten or sold on commission
by it exceeds the amount of any damages which such Initial Purchaser,
Participating Broker-Dealer or Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the 1933 Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The Holders and
Underwriters' obligations to contribute are several in proportion to the
principal amount of Bonds purchased by them and not joint.

                  5.       Miscellaneous.

                  5.1.     Rule 144 and Rule 144A. The Issuer covenants that
while any of the Registrable Bonds remain "restricted securities" within the
meaning of the 1933 Act, it will upon the request of any Holder of Registrable
Bonds make available the information specified in Rule 144A(d)(4) under the 1933
Act unless the Issuer is then subject to Section 13 or 15(d) of the 1934 Act.

                  5.2.     No Inconsistent Agreements. The Issuer has not
entered into and the Issuer will not after the date of this Agreement enter into
any agreement which is inconsistent with the rights granted to the Holders of
Registrable Bonds in this Agreement or otherwise conflicts with the provisions
hereof. The rights granted to the Holders hereunder do not in any way conflict
with the rights granted to the Holders of the Issuer's other issued and
outstanding Bonds under any such agreements.

                  5.3.     Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers of consents to departures from the
provisions hereof may not be given unless the Issuer has obtained the written
consent of Holders of at least a majority in aggregate principal amount of the
outstanding Registrable Bonds affected by such amendment, modification,
supplement, waiver or departure.

                  5.4.     Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing by hand delivery,
registered first-class mail, telex, telecopier, or any courier guaranteeing
overnight delivery (a) if to a Holder, at the most current address given by such
Holder to the Issuer by means of a notice given in accordance with the
provisions of this Section 5.4, which address initially is the address set forth
in the Purchase Agreement with respect to the Initial Purchasers; and (b) if to
the Issuer initially at the Issuer's address set forth in the Purchase
Agreement, and thereafter at such other address of which notice is given in
accordance with the provisions of this Section 5.4.

                  All such notices and communications shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered; two
business days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt is

                                       18

<PAGE>

acknowledged, if telecopied; and on the next business day if timely delivered to
an air courier guaranteeing overnight delivery.

                  Copies of all such notices, demands, or other communications
shall be concurrently delivered by the person given the same to the Trustee
under the Indenture, at the address specified in such Indenture.

                  5.5.     Successor and Assigns. This Agreement shall inure to
the benefit of and be binding upon the successors, assigns and transferees of
each of the parties, including without limitation and without the need for an
express assignment, subsequent Holders; provided that nothing herein shall be
deemed to permit any assignment, transfer or other disposition of Registrable
Bonds in violation of the terms of the Purchase Agreement or the Indenture. If
any transferee of any Holder shall acquire Registrable Bonds, in any manner,
whether by operation of law or otherwise, such Registrable Bonds shall be held
subject to all of the terms of this Agreement, and by taking any holding such
Registrable Bonds such person shall be conclusively deemed to have agreed to be
bound by and to perform all of the terms and provisions of this Agreement,
including the restrictions on resale set forth in this Agreement and, if
applicable, the Purchase Agreement, and such person shall be entitled to receive
the benefits hereof.

                  5.6.     Third Party Beneficiaries. The Initial Purchasers
(even if the Initial Purchasers are not Holders of Registrable Bonds) shall be a
third party beneficiary to the agreements made hereunder between the Issuer, on
the one hand, and the Holders, on the other hand, and shall have the right to
enforce such agreements directly to the extent it deems such enforcement
necessary or advisable to protect its rights or the rights of Holders hereunder.
Each Holder of Registrable Bonds shall be a third party beneficiary to the
agreements made hereunder between the Issuer, on the one hand, and the Initial
Purchasers, on the other hand, and shall have the right to enforce such
agreements directly to the extent it deems such enforcement necessary or
advisable to protect its rights hereunder.

                  5.7.     Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.

                  5.8.     Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

                  5.9.     GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.

                  5.10.    Severability. In the event that any one or more of
the provisions contained herein, or the application thereof in any circumstance,
is held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.

                                       19

<PAGE>

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

                                    DUKE ENERGY CORPORATION
                                    as Issuer

                                  By: /s/ David L. Hauser
                                     __________________________________________
                                     Name:  David L. Hauser
                                     Title: Senior Vice President and Treasurer

Confirmed and accepted as
of the date first above written:

<TABLE>
<CAPTION>
BANC ONE CAPITAL MARKETS, INC.  DEUTSCHE BANK SECURITIES INC.  UBS WARBURG LLC
<S>                             <C>                            <C>
By: /s/ Robert Nordlinger       By: /s/ Charles W. Chigas      By: /s/ Kimberly Blue
   _________________________       _________________________      __________________________
    Name:  Robert Nordlinger        Name:  Charles W. Chigas        Name:  Kimberly Blue
    Title: Managing Director        Title: Managing Director        Title: Managing Director

                                By: /s/ Nigel Cree             By: /s/ Scott D. Whitney
                                   _________________________      __________________________
                                    Name:  Nigel Cree               Name:  Scott D. Whitney
                                    Title: Managing Director        Title: Director
</TABLE>

         Acting severally on behalf of themselves and the several Initial
Purchasers named in Schedule I to the Purchase Agreement.

                                       20<PAGE>

                                                                   EXHIBIT 10.20

                              EMPLOYMENT AGREEMENT

         THIS AGREEMENT made January 21, 2003, between FOOT LOCKER, INC., a New
York corporation with its principal office at 112 West 34 Street, New York, New
York 10120 (the "Company") and Matthew D. Serra (the "Executive").

         WHEREAS, the Executive presently serves as the President and Chief
Executive Officer of the Company, pursuant to the provisions of the Employment
Agreement between the Company and the Executive dated February 12, 2001 , as
amended (the "2001 Agreement"); and

         WHEREAS, the Company desires to continue to employ Executive as its
President and Chief Executive Officer, for the period commencing on February 2,
2003 and ending on February 4, 2006 (the "Employment Period"), and Executive is
willing to serve in such capacity during the Employment Period; and

         WHEREAS, the Company and Executive desire to set forth the terms and
conditions of such employment;

         NOW, THEREFORE, in consideration of these premises and of the mutual
covenants and agreements herein contained, the Company and Executive hereby
agree as follows:

         1.       Employment and Term. The Company hereby agrees to employ
                  Executive, and Executive hereby agrees to serve, as its
                  President and Chief Executive Officer during the Employment
                  Period, subject to the terms and conditions set forth herein.

         2.       Position and Duties. Executive shall continue to serve as the
                  President and Chief Executive Officer of the Company,
                  reporting only to the Board of Directors (the "Board").
                  Executive shall have such responsibilities, duties and
                  authority as are commensurate with his status as President and
                  Chief Executive Officer as may from time to time be determined
                  or directed by the Board. Executive shall devote substantially
                  all of his working time and efforts to the business and
                  affairs of the Company and its respective subsidiaries and
                  affiliates; provided, however, that the Executive may serve on
                  the boards of directors of other for-profit corporations, if
                  such service does not conflict with his duties hereunder or
                  his fiduciary duty to the Company. It is further understood
                  and agreed that nothing herein shall prevent the Executive
                  from managing his passive personal investments (subject to
                  applicable Company policies on permissible investments), and
                  (subject to applicable Company policies) participating in
                  charitable and civic endeavors, so long as such activities do
                  not interfere in more than a de minimis manner with the
                  Executive's performance of his duties hereunder.

<PAGE>

         3.       Place of Performance. In connection with his employment by the
                  Company, Executive shall be based at the principal executive
                  offices of the Company in the New York metropolitan area, or
                  such other place in the United States to which the Company may
                  hereafter relocate its principal executive offices. In the
                  event of such relocation outside of the New York metropolitan
                  area, the Company will pay the reasonable costs of the
                  relocation of the principal residence of Executive, and
                  provide such other relocation assistance as the Company then
                  provides to its comparably situated senior executive
                  employees.

         4.       Compensation. As full compensation for the services of
                  Executive hereunder, and subject to all of the provisions
                  hereof:

         (a)      During the Employment Period, the Company shall pay Executive
                  a base salary at such rate per year as may be fixed by the
                  Compensation Committee of the Board of Directors from time to
                  time, but in no event at a rate of less than $1,500,000 per
                  year, to be paid in substantially equal monthly installments,
                  in accordance with the normal payroll practices of the Company
                  (the "Base Salary").

         (b)      During the Employment Period, Executive shall be entitled to
                  participate in all bonus, incentive, and equity plans that are
                  maintained by the Company from time to time during the
                  Employment Period for its comparably situated senior executive
                  employees in accordance with the terms of such plans at the
                  time of participation. The Company may, during the Employment
                  Period, amend or terminate any such plan, to the extent
                  permitted by the respective plan, if such termination or
                  amendment occurs pursuant to a program applicable to all
                  comparably situated executives of the Company and does not
                  result in a proportionally greater reduction in the rights or
                  benefits of Executive as compared with any other comparably
                  situated executives of the Company. During each year of the
                  Employment Period, the annual bonus payable to Executive at
                  target shall be 100 percent of Executive's then-current Base
                  Salary. The bonus payable to Executive at target under the
                  Long-Term Incentive Compensation Plan for any three-year
                  performance period shall be 90 percent of Executive's Base
                  Salary at the beginning of such performance period.

         (c)      During the Employment Period, Executive shall be eligible to
                  participate in all pension, welfare, and fringe benefit plans,
                  as well as perquisites, maintained by the Company from time to
                  time for its comparably situated senior executive employees in
                  accordance with their respective terms as in effect from time
                  to time. These shall include (i) Company-paid life insurance
                  in the amount of Executive's annual Base Salary, (ii)
                  long-term disability insurance coverage of $25,000 per month;
                  (iii) annual out-of-pocket medical expense reimbursement of up
                  to $10,000 per year; (iv) reimbursement of financial planning
                  expense of up to $7,500 per year; (v) participation in the
                  Supplemental Executive Retirement Plan (prorated for any
                  partial plan year included in the Employment Period); (vi)
                  eligibility to participate in the Deferred Compensation Plan;
                  and (vii) annual reimbursement of dues and membership fees of
                  one private

<PAGE>

                  club of up to $20,000 per year. The Company acknowledges that
                  upon the commencement of his employment with the Company
                  Executive was treated as if he had been credited with five
                  years of service under the provisions of the Foot Locker
                  Retirement Plan, and Executive acknowledges that any increased
                  amount of pension payable to him as a result of such credit
                  may be payable from the Foot Locker Excess Cash Balance Plan
                  or a similar non-qualified plan of the Company.

         (d)      During the Employment Period, Executive shall be entitled to
                  receive reimbursement for all reasonable and customary
                  expenses incurred by him in performing services hereunder,
                  including all travel and living expenses while away from home
                  on business at the request of the Company, provided such
                  expenses are incurred and accounted for in accordance with the
                  Company's applicable policies and procedures.

         (e)      Executive shall be entitled to 20 vacation days in each
                  calendar year. Unused vacation shall be forfeited.

         (f)      During the Employment Period, Executive shall be eligible to
                  receive stock option grants as may be determined from time to
                  time by the Compensation and Management Resources Committee of
                  the Board and subject to the provisions of the applicable
                  stock option and award plan of the Company. To the extent
                  permissible under the terms of such applicable plan, all stock
                  options currently held by Executive or that may be granted to
                  Executive during the Employment Period shall become
                  immediately exercisable upon a Change in Control (as defined
                  in Attachment A hereto).

         (g)      No later than February 28, 2003, Executive shall be granted
                  240,000 shares of restricted stock (the "Restricted Stock")
                  under, and pursuant to the provisions of, the 1995 and 1998
                  Stock Option and Award Plans of the Company and the terms of a
                  restricted stock agreement essentially in the form of
                  Attachment B hereto.

         (h)      The Company shall reimburse Executive the reasonable legal
                  fees (based on hourly rates) and disbursements incurred by him
                  in connection with negotiating and preparing this employment
                  agreement, provided that in no event shall the amount of such
                  reimbursement exceed $15,000.

         (i)      The Company shall reimburse Executive the costs associated
                  with an automobile of a type to be reasonably agreed upon by
                  the Company and Executive, such costs to include monthly lease
                  payments, garaging, insurance, fuel, and maintenance;
                  provided, however, that the total amount of such payments
                  shall not exceed $30,000 per year, and the Company, at its
                  sole expense, shall provide Executive with the services of a
                  full-time driver.

<PAGE>

         5.       Termination.

         (a)      The Employment Period shall terminate upon the earliest of the
                  following:

                  (i)         the death of Executive;

                  (ii)        if, as a result of the incapacity of Executive due
                           to physical or mental illness, Executive shall have
                           been absent from his duties hereunder on a full time
                           basis for 180 days, and within 30 days after written
                           notice of termination is given (which may occur
                           before or after the end of such 180 day period) he
                           shall not have returned to the performance of his
                           duties hereunder on a full time basis; or

                  (iii)       if the Company terminates the employment of
                           Executive hereunder for Cause. For purposes of this
                           agreement, the Company shall have "Cause" to
                           terminate the employment of Executive hereunder upon
                           (A) his willful and continued failure to
                           substantially perform his duties hereunder (other
                           than any such failure resulting from his incapacity
                           due to physical or mental illness) or (B) his willful
                           engagement in misconduct that is materially injurious
                           to the Company, monetarily or otherwise.

         (b)      If the Company shall terminate the employment of Executive
                  pursuant to the provisions of paragraph (a) above, it shall
                  have no further liability or obligation hereunder except (i)
                  to pay promptly to Executive his then-current Base Salary
                  through the effective date of such termination, and (ii)
                  Executive shall receive benefits, if any, and have the rights
                  afforded by the Company, under its then-existing policies, to
                  employees whose employment is terminated for death,
                  disability, or cause, as the case may be, or under the
                  specific terms of any welfare, fringe benefit, or incentive
                  plan.

         (c)      (i) If the employment of Executive is terminated by the
                  Company for any other reason during the Employment Period, or
                  if the Company breaches any material provision of this
                  agreement, which breach is not corrected within 30 days
                  following written notice to the Company, and Executive
                  thereupon elects to terminate his employment hereunder, the
                  Restricted Stock and any of the restricted stock granted
                  pursuant to the 2001 Agreement (the "2001 Restricted Stock")
                  not previously vested shall become fully vested as of the date
                  of the termination of Executive's employment and the Company
                  shall make the following payments and provide the following
                  benefits to Executive: Until the earliest of (i) the end of
                  the Employment Period (ii) his death, or (iii) his breach of
                  the provisions of Section 8 hereof, (A) the Company shall make
                  payments to Executive, no less frequently than monthly,
                  calculated at his then-applicable annual rate of Base Salary;
                  (B) the Company shall pay to Executive (at the same time as
                  other annual bonuses are paid), with respect to the fiscal
                  year in which

<PAGE>

                  such termination occurs, the annual bonus that Executive would
                  otherwise have earned under the annual bonus plan applicable
                  to Executive if such termination had not occurred, prorated as
                  of the date of the termination of Executive's employment; (C)
                  with respect to the performance period under the Long-Term
                  Incentive Compensation Plan that ends on the last day of the
                  fiscal year in which the employment of Executive is
                  terminated, the Company shall pay to Executive the payment
                  under the Long-Term Incentive Compensation Plan that Executive
                  would otherwise have earned with respect to such performance
                  period if such termination had not occurred, prorated as of
                  the date of the termination of Executive's employment, payment
                  of such amount to be made at the same time and in the same
                  manner as other awards are paid for such period; and (D) the
                  Company shall provide Executive for a period of one year
                  following such termination of employment, at no cost to
                  Executive, with out-placement at a level commensurate with
                  that provided by the Company to other comparably situated
                  executives. Executive shall not be required to mitigate the
                  amount of any payment provided for in the preceding sentence
                  by seeking other employment, nor shall any amounts to be
                  received by Executive hereunder be reduced by any other
                  compensation earned. (ii) On the earlier to occur of (A)
                  February 1, 2004 and (B) the date thirty (30) days following
                  the day on which J. Carter Bacot ceases, for any reason, to
                  serve as Chairman of the Board of the Company, if Executive
                  has not been elected Chairman of the Board of the Company (in
                  addition to continuing as Chief Executive Officer), Executive
                  may, during the 30-day period commencing on such date, give
                  written notice to the Company of his election to resign his
                  position as President and Chief Executive Officer and
                  terminate this agreement. If Executive gives such notice,
                  Executive's resignation as President and Chief Executive
                  Officer shall be effective 30 days following the date on which
                  such notice is given, this agreement shall terminate 30 days
                  following the date on which such notice is given, and
                  Executive shall be entitled to receive the payments, and shall
                  have such other rights, provided for in Section 5(c)(i)
                  hereof, except that, with regard to the Restricted Stock and
                  the 2001 Restricted Stock, the Executive shall become vested
                  in 120,000 shares of the Restricted Stock and any of the 2001
                  Restricted Stock not previously vested, and the balance of the
                  Restricted Stock shall be cancelled.

         (d)      Notwithstanding anything herein to the contrary, in the event
                  of a Change in Control, as defined in Attachment A hereto, the
                  Executive shall have the right to terminate the Employment
                  Period by written notice given within the 30 day period
                  following three months after such Change in Control. The
                  Employment Period shall cease upon the giving of such notice.
                  In such event, or in the event that the Company shall
                  terminate the Executive's employment without Cause or the
                  Executive shall terminate his employment for Good Reason
                  during the two year period after the Change in Control, the
                  amount payable to Executive under paragraph (c) (A) through
                  (D) above shall be not less than 1.5 times the sum of his Base
                  Salary and annual bonus at target, such amount to be paid in a
                  lump sum within 10 days following such termination of the
                  employment of Executive, and all of the Restricted Stock, any

<PAGE>

                  2001 Restricted Stock not previously vested, and any stock
                  options granted to Executive on or after February 12, 2001 not
                  previously vested shall immediately become fully vested. For
                  purposes of this paragraph, (i) "Change in Control" shall have
                  the meaning specified in Attachment A hereto and (ii) "Good
                  Reason" shall mean (A) any material demotion of Executive or
                  any material reduction in Executive's authority or
                  responsibility, except in each case in connection with the
                  termination of Executive's employment for Cause or disability
                  or as a result of Executive's death, or temporarily as a
                  result of Executive's illness or other absence; (B) any
                  reduction in Executive's rate of Base Salary as payable from
                  time to time; (C) a reduction in Executive's annual bonus
                  classification level other than in connection with a redesign
                  of the applicable bonus plan that affects all employees at
                  Executive's bonus level; (D) a failure of the Company to
                  continue in effect the benefits applicable to, or the
                  Company's reduction of the benefits applicable to, Executive
                  under any benefit plan or arrangement (including without
                  limitation, any pension, life insurance, health or disability
                  plan) in which Executive participates as of the date of the
                  Change in Control without implementation of a substitute
                  plan(s) providing materially similar benefits in the aggregate
                  to those discontinued or reduced, except for a discontinuance
                  of, or reduction under, any such plan or arrangement that is
                  legally required or generally applies to all executives of the
                  Company of a similar level, provided that in either such event
                  the Company provides similar benefits (or the economic effect
                  thereof) to Executive in any manner determined by the Company;
                  or (E) failure of any successor to the Company to assume in
                  writing the obligations hereunder, or (F) a breach of any
                  other material provision of this Employment Agreement, which
                  breach is not corrected within 30 days following written
                  notice to the Company.

         6.       Gross-up. (a) In the event that Executive shall become
                  entitled to the payments and/or benefits provided by Section 5
                  or any other amounts (whether pursuant to the terms of this
                  Employment Agreement or any other plan, arrangement or
                  agreement with (i) the Company, (ii) any person whose actions
                  result in a change of ownership covered by Section 280G(b)(2)
                  of the Internal Revenue Code of 1986, as amended (the "Code")
                  or (iii) any person affiliated with the Company or such
                  person) as a result of a Change in Control as defined in
                  Attachment A (collectively the "Company Payments"), and such
                  Company Payments will be subject to the tax (the "Excise Tax")
                  imposed by Section 4999 of the Code (and any similar tax that
                  may hereafter be imposed), the Company shall pay to Executive
                  at the time specified in paragraph (d) below an additional
                  amount (the "Gross-up Payment") such that the net amount (of
                  the Company Payments and the Gross-up Payment) retained by
                  Executive, after deduction of any Excise Tax on the Company
                  Payments and any federal, state and local income tax and
                  Excise Tax upon the Gross-up Payment provided for by this
                  paragraph (a), but before deduction for any federal, state or
                  local income tax on the Company Payments, shall be equal to
                  the Company Payments.

         (b)      For purposes of determining whether any of the Company
                  Payments and Gross-up Payments

<PAGE>

                  (collectively the "Total Payments") will be subject to the
                  Excise Tax and the amount of such Excise Tax, (a) the Total
                  Payments shall be treated as "parachute payments" within the
                  meaning of Section 280G(b)(2) of the Code, and all "parachute
                  payments" in excess of the "base amount" (as defined under
                  Section 280G(b)(3) of the Code) shall be treated as subject to
                  the Excise Tax, unless and except to the extent that, in the
                  opinion of the Company's independent certified public
                  accountants appointed prior to any change in ownership (as
                  defined under Code Section 280G(b)(2)) or tax counsel selected
                  by such accountants (the "Accountants") such Total Payments
                  (in whole or in part) either do not constitute "parachute
                  payments," represent reasonable compensation for services
                  actually rendered within the meaning of Section 280G(b)(2) of
                  the Code in excess of the "base amount" or are otherwise not
                  subject to the Excise Tax, and (b) the value of any non-cash
                  benefits or any deferred payment or benefit shall be
                  determined by the Accountants in accordance with the
                  principles of Section 280G of the Code.

         (c)      For purposes of determining the amount of the Gross-up
                  Payment, Executive shall be deemed to pay federal income taxes
                  at the highest marginal rate of federal income taxation in the
                  calendar year in which the Gross-up Payment is to be made and
                  state and local income taxes at the highest marginal rate of
                  taxation in the state and locality of Executive's residence
                  for the calendar year in which the Company 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. In the event that the Excise tax
                  is subsequently determined by the Accountants to be less than
                  the amount taken into account hereunder at the time the
                  Gross-up payment is made, Executive shall repay to the
                  Company, at the time that the amount of such reduction in
                  Excise Tax is finally determined, the portion of the prior
                  Gross-up Payment attributable to such reduction (plus the
                  portion of the Gross-up Payment attributable to the Excise tax
                  and federal and state and local income tax imposed on the
                  portion of the Gross-up Payment being repaid by Executive if
                  such repayment results in a reduction in Excise Tax or a
                  federal and state and local income tax deduction), plus
                  interest on the amount of such repayment at the rate provided
                  in Section 1274(b)(2)(B) of the Code. Notwithstanding the
                  foregoing, in the event any portion of the Gross-up Payment to
                  be refunded to the Company has been paid to any federal, state
                  or local tax authority, repayment thereof (and related
                  amounts) shall not be required until actual refund or credit
                  of such portion has been made to Executive, and interest
                  payable to the Company shall not be required until actual
                  refund or credit of such portion has been made to Executive,
                  and interest payable to the Company shall not exceed the
                  interest received or credited to Executive by such tax
                  authority for the period it held such portion. Executive and
                  the Company shall mutually agree upon the course of action to
                  be pursued (and the method of allocating the expense thereof)
                  if Executive's claim for refund or credit is denied. In the
                  event that the Excise Tax is later determined by the
                  Accountants or the Internal Revenue Service to exceed the
                  amount taken into account hereunder at the time the Gross-

<PAGE>

                  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
                  or penalties payable with respect to such excess) at the time
                  that the amount of such excess is finally determined.

         (d)      The Gross-up Payment or portion thereof provided for in
                  paragraph (c) above shall be paid not later than the thirtieth
                  day following an event occurring which subjects Executive 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
                  Executive on such day an estimate, as determined in good faith
                  by the Accountants, of the minimum amount of such payments and
                  the Company shall pay the remainder of such payments or the
                  Executive shall reimburse the Company for the amount of any
                  over-payment (together with interest at the rate provided in
                  Section 1274(b)(2)(B) of the Code), subject to further
                  payments pursuant to paragraph (c) hereof, as soon as the
                  amount thereof can reasonably be determined, but in no event
                  later than the ninetieth day after the occurrence of the event
                  subjecting Executive to the Excise Tax.

         (e)      The Company shall be responsible for all charges of the
                  Accountants.

7.       Indemnification. The Company agrees that the Executive shall be
entitled to the benefits of the indemnity provisions set forth in the
Certificate of Incorporation and the By-laws from time to time in accordance
with their terms both during his employment and thereafter with regard to his
actions as an officer or director of the Company. In addition, the Company
agrees to continue in effect for the benefit of the Executive during the
Employment Period directors' and officers' liability insurance of the type and
in the amount currently maintained by the Company to the extent such insurance
is available at a premium cost which the Company considers reasonable and,
thereafter, with regard to his prior activities as an officer or director, such
insurance as is maintained for active directors and officers.

8.       Confidential Information and Non-Competition.

         (a)      Executive agrees that during the Employment Period and
                  thereafter he shall not disclose, at any time, to any person,
                  or use for his own account, nonpublic information of any kind
                  concerning the Company or any of its subsidiaries or
                  affiliates, including, but not limited to, nonpublic
                  information concerning finances, financial plans, accounting
                  methods, strategic plans, operations, personnel,
                  organizational structure, methods of distribution, suppliers,
                  customers, client relationships, marketing strategies, store
                  lists, real estate strategies, or the like ("Confidential
                  Information"). During such period, Executive shall not,
                  without the prior written consent of the Company, unless
                  compelled pursuant to the order of a court or other body
                  having jurisdiction over such matter and unless required by
                  lawful process or subpoena, communicate or

<PAGE>

                  divulge any Confidential Information to anyone other than the
                  Company and those designated by the Company. Executive agrees
                  that during the Employment Period he will not breach his
                  obligations to comply with the provisions of the Code of
                  Corporate Conduct of the Company, as in effect on the date
                  hereof and as may be amended from time to time.

         (b)      Executive recognizes that Confidential Information has been
                  developed by the Company and its affiliates at substantial
                  cost and constitute valuable and unique property of the
                  Company. Executive acknowledges that the foregoing makes it
                  reasonably necessary for the protection of the Company's
                  interests that Executive not compete with the Company or its
                  affiliates during the Employment Period and for a reasonable
                  and limited period thereafter. Therefore, Executive agrees
                  that during the term of this agreement and for a period of two
                  years thereafter, Executive shall not engage in Competition.
                  As used herein, "Competition" shall mean (i) participating,
                  directly or indirectly, as an individual proprietor,
                  stockholder, officer, employee, director, joint venturer,
                  investor, lender, consultant, or in any capacity whatsoever
                  (within the United States of America, or in any country where
                  the Company or any of its subsidiaries or affiliates does
                  business) in (A) a business in competition with the retail,
                  catalog, or on-line sale of athletic footwear, athletic
                  apparel, and sporting goods conducted by the Company or any of
                  its subsidiaries or affiliates (the "Athletic Business") or
                  (B) a business that in the prior fiscal year supplied product
                  to the Company or any of its subsidiaries or affiliates for
                  the Athletic Business having a value of $20 million or more at
                  cost to the Company or any of its subsidiaries or affiliates;
                  provided, however, that (X) such participation shall not
                  include the mere ownership of not more than 1 percent of the
                  total outstanding stock of a publicly traded company and (Y) a
                  department store or general or merchandise store shall not be
                  a business in competition with any business conducted by the
                  Company; or (ii) the intentional recruiting, soliciting or
                  inducing of any employee or employees of the Company or any of
                  its subsidiaries or affiliates to terminate their employment
                  with, or otherwise cease their relationship with, the Company
                  or any of its subsidiaries or affiliates where such employee
                  or employees do in fact so terminate their employment.

         (c)      Executive agrees (i) that his services are special and
                  extraordinary, (ii) that a violation of his commitment not to
                  disclose Confidential Information or otherwise to engage in
                  acts of Competition would immediately and irreparably harm the
                  Company, and (iii) that such harm would be incapable of
                  adequate remediation by money damages. Accordingly, Executive
                  agrees that this paragraph 8 may be enforced by injunction,
                  and that he will interpose no objection or defense to such
                  enforcement. Enforcement by injunction shall not bar the
                  Company from any other legal or equitable remedies to which it
                  may be entitled for such violation. If any restriction set
                  forth with regard to Competition is found by any court of
                  competent jurisdiction to be unenforceable because it extends
                  for too long a period of time or over too great a range of
                  activities or in too broad a geographic area, it is the
                  intention of the parties that the court should interpret and
                  enforce such restriction to its fullest lawful extent.

<PAGE>

         9.       2001 Agreement. The 2001 Agreement is hereby terminated,
                  effective as of February 1, 2003, without further obligation
                  of either party to the other, and shall thereafter be of no
                  force and effect. Notwithstanding the foregoing, the parties
                  acknowledge that they are parties to a Restricted Stock
                  Agreement dated March 4, 2001; Stock Option Agreements dated
                  September 21, 1998, February 12, 2001, and April 18, 2002; and
                  an Indemnification Agreement dated February 9, 2000, which
                  agreements shall remain in full force and effect in accordance
                  with their terms.

         10.      Assignment. This agreement shall be binding upon and inure to
                  the benefit of the parties hereto and their respective
                  successors, heirs, and permitted assigns. This agreement is
                  personal to Executive and neither this agreement or any rights
                  hereunder may be assigned by him. 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 pursuant to a
                  merger or consolidation in which the Company is not the
                  continuing entity, or pursuant to a sale 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.

         11.      Arbitration. Any controversy or claim arising out of or
                  relating to this agreement, or the breach thereof, shall be
                  settled by arbitration in the City of New York, in accordance
                  with the rules of the American Arbitration Association (the
                  "AAA"); provided, however, that this Section shall not apply
                  to Section 8 herein. The decision of the arbitrator(s) shall
                  be final and binding on the parties hereto and judgment upon
                  the award rendered by the arbitrator(s) may be entered in any
                  court having jurisdiction thereof. The costs assessed by the
                  AAA for arbitration shall be borne equally by both parties.

         12.      Notice. Any notice to either party hereunder shall be in
                  writing, and shall be deemed to be sufficiently given to or
                  served on such party, for all purposes, if the same shall be
                  personally delivered to such party, or sent to such party by
                  registered mail, postage prepaid, in the case of Executive, at
                  his principal residence address as shown in the records of the
                  Company, and in the case of the Company, to the General
                  Counsel, Foot Locker, Inc., 112 West 34 Street, New York, New
                  York 10120. Either party hereto may change the address to
                  which notices are to be sent to such party hereunder by
                  written notice of such new address given to the other party
                  hereto. Notices shall be deemed given when received if
                  delivered personally or three (3) days after mailing if mailed
                  as aforesaid.

<PAGE>

         13.      Applicable Law. This agreement shall be governed by and
                  construed and enforced in accordance with the laws of the
                  State of New York applicable to contracts between residents of
                  such state to be performed therein.

         14.      Miscellaneous.

                  (a)      This agreement represents the entire understanding of
                           the parties hereto, supersedes any prior
                           understandings or agreements between the parties, and
                           the terms and provisions of this agreement may not be
                           modified or amended except in a writing signed by
                           both parties.

                  (b)      No waiver by either party of any breach by the other
                           party of any condition or provision contained in this
                           agreement to be fulfilled or 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. Except to the extent
                           otherwise specifically provided herein, any waiver
                           must be in writing and signed by you or an authorized
                           officer of the Company, as the case may be.

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Employment Agreement as of the day and year first above written.

                                        FOOT LOCKER, INC.

                                  By:    /s/ Laurie J. Petrucci
                                        ----------------------------------------
                                        Laurie J. Petrucci
                                        Sr. Vice President - Human Resources

                                         /s/ Matthew D. Serra
                                        ----------------------------------------
                                        Matthew D. Serra

<PAGE>

                                  Attachment A

                                Change in Control

         A Change in Control shall mean any of the following: (i) (A) the making
of a tender or exchange offer by any person or entity or group of associated
persons or entities (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934) (a "Person") (other than the Company or its
Affiliates) for shares of common stock pursuant to which purchases are made of
securities representing at least twenty percent (20%) of the total combined
voting power of the Company's then issued and outstanding voting securities; (B)
the merger or consolidation of the Company with, or the sale or disposition of
all or substantially all of the assets of the Company to, any Person other than
(a) a merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving or parent entity) fifty percent (50%) or more of the combined voting
power of the voting securities of the Company or such surviving or parent entity
outstanding immediately after such merger or consolidation; or (b) a merger or
capitalization effected to implement a recapitalization of the Company (or
similar transaction) in which no Person is or becomes the beneficial owner,
directly or indirectly (as determined under Rule 13d-3 promulgated under the
Securities Exchange Act of 1934), of securities representing more than the
amounts set forth in (C) below; (C) the acquisition of direct or indirect
beneficial ownership (as determined under Rule 13d-3 promulgated under the
Securities Exchange Act of 1934), in the aggregate, of securities of the Company
representing twenty percent (20%) or more of the total combined voting power of
the Company's then issued and outstanding voting securities by any Person acting
in concert as of the date of this Agreement; provided, however, that the Board
may at any time and from time to time and in the sole discretion of the Board,
as the case may be, increase the voting security ownership percentage threshold
of this item (C) to an amount not exceeding forty percent (40%); or (D) the
approval by the shareholders of the Company of any plan or proposal for the
complete liquidation or dissolution of the Company or for the sale of all or
substantially all of the assets of the Company; or (ii) during any period of not
more than two (2) consecutive years, individuals who at the beginning of such
period constitute the Board, any new director (other than a director designated
by a person who has entered into agreement with the Company to effect a
transaction described in clause (i)) whose election by the Board or nomination
for election by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were directors
at the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute at least a majority
thereof.

<PAGE>

                                  Attachment B

                        RESTRICTED STOCK AWARD AGREEMENT

         This Restricted Stock Award Agreement (the "Agreement") made as of
February 2, 2003 by and between Foot Locker, Inc. , a New York corporation with
its principal office located at 112 West 34th Street, New York, New York 10120
(the "Company") and Matthew D. Serra (the "Executive").

         On November 20, 2002, the Compensation and Management Resources
Committee of the Board of Directors of the Company approved the grant to the
Executive effective February 2, 2003 (the "Date of Grant") of an award of
240,000 shares of Restricted Stock, 140,000 shares granted under the 1995 Stock
Option and Award Plan (the "1995 Plan") and 100,000 shares granted under the
1998 Stock Option and Award Plan (the "1998 Plan"; the 1995 Plan and the 1998
Plan being hereinafter referred to as the "Plans") , subject to the terms of the
Plans and the restrictions set forth in this Agreement.

1.       Grant of Shares

         The Company is transferring to the Executive 240,000 shares of validly
issued Common Stock of the Company, par value $.01 per share (the "Restricted
Stock"). Such shares are fully paid and nonassessable and upon transfer shall be
validly issued and outstanding. The shares are subject to certain restrictions
pursuant to Section 3 hereof, which restrictions shall expire as provided in
Section 3.3 hereof.

2.       Restrictions on Transfer

         The Employee shall not sell, transfer, pledge, hypothecate, assign or
otherwise dispose of the Restricted Stock, except as set forth in this
Agreement. Any attempted sale, transfer, pledge, hypothecation, assignment or
other disposition of the shares in violation of this Agreement shall be void and
of no effect and the Company shall have the right to disregard the same on its
books and records and to issue "stop transfer" instructions to its transfer
agent.

3.       Restricted Stock

         3.1      Deposit of Certificates. The Executive will deposit with and
deliver to the Company the stock certificate or certificates representing the
Restricted Stock, each duly endorsed in blank or accompanied by stock powers
duly executed in blank. In the event the Executive receives a stock dividend on
the Restricted Stock or the Restricted Stock is split or the Executive receives
any other shares, securities, monies, or property representing a dividend on the
Restricted Stock (other than regular cash dividends on and after the date of
this Agreement) or representing a distribution or return of capital upon or in
respect of the Restricted Stock or any part thereof, or resulting from a
split-up, reclassification or other like changes of the Restricted Stock, or
otherwise received in exchange therefor, and any warrants, rights or options
issued to the Executive in respect of the Restricted Stock (collectively the "RS
Property"), the Executive will also immediately deposit with and deliver to the
Company any of such RS Property, including any certificates representing shares
duly endorsed in blank or accompanied by stock powers duly executed in blank,
and such RS Property shall be subject to the same restrictions, including that
of this Section 3.1, as the Restricted Stock with regard to which they are
issued and shall herein be encompassed within the term "Restricted Stock."

         3.2      Rights with Regard to the Restricted Stock. The Restricted
Stock has been transferred from either the Company's treasury or newly issued
stock and, therefore, upon delivery to the Executive will constitute issued and
outstanding shares of Common Stock for all corporate purposes. From and after
the date of transfer, the Executive will have the right to vote the Restricted
Stock, to receive and retain all regular cash dividends payable to record
holders of Common Stock on and after the transfer of the Restricted Stock
(although such dividends shall be treated, to the extent required by law, as
additional compensation for tax purposes if paid on Restricted Stock), and to
exercise all other rights, powers and privileges of a holder of Common Stock
with respect to the Restricted Stock, with the exceptions that (i) the Executive
will not be entitled to delivery of the stock certificate or certificates
representing the Restricted Stock until the restriction period shall have
expired and unless all other vesting requirements with respect thereto shall
have been

<PAGE>

fulfilled, (ii) the Company will retain custody of the stock certificate or
certificates representing the Restricted Stock and the other RS Property during
the restriction period, (iii) no RS Property shall bear interest or be
segregated in separate accounts during the restriction period and (iv) the
Executive may not sell, assign, transfer, pledge, exchange, encumber or dispose
of the Restricted Stock during the restriction period.

         3.3      Vesting.

                  The Restricted Stock shall become 100% vested and cease to be
Restricted Stock (but still subject to the other terms of the Plan and this
Agreement) on February 3, 2006 if the Executive has been continuously employed
by the Company or its subsidiaries within the meaning of Section 424 of the
Internal Revenue Code of 1986, as amended (the "Control Group") until such date.

         Other than as may be provided for under Section 3.4 hereof, there shall
be no proportionate or partial vesting in the periods prior to the appropriate
vesting date and all vesting shall occur only on the appropriate vesting date.

         When any Restricted Stock becomes vested, the Company shall promptly
issue and deliver to the Executive a new stock certificate registered in the
name of the Executive for such shares without the legend set forth in Section 4
hereof and deliver to the Executive any related other RS Property.

         In addition, all shares of Restricted Stock shall become immediately
vested and cease to be Restricted Stock upon any Change in Control as defined in
Appendix A hereto.

         3.4      Forfeiture. In the event of the Executive's death, disability,
or resignation, the Executive shall forfeit to the Company, without
compensation, all unvested shares of Restricted Stock; provided that (i) in the
event of the death or disability of the Executive, or (ii) in the event that the
Executive ceases to be employed by the Company or any subsidiary or affiliate of
the Company as a result of the closing, sale, spin-off or other divestiture of
any operation of the Company, the Compensation and Management Resources
Committee of the Board of Directors of the Company may, in its sole discretion,
but shall not be obligated to, fully vest and not forfeit all or any portion of
the Executive's Restricted Stock; and provided further that (A) in the event
that the employment of the Executive by the Company is terminated in a manner
that gives rise to the payments provided for in Section 5(c)(i) of the
Employment Agreement between Executive and the Company dated January 21, 2003
(the "Employment Agreement"), the Restricted Stock shall become fully vested as
of the date of the termination of his employment, and (B) in the event that
Executive elects to terminate his employment with the Company under the
provisions of Section 5(c)(ii) of the Employment Agreement, 50,000 shares of the
Restricted Stock shall become fully vested as of the date of the termination of
his employment.

         3.5      Adjustments. In the event of any stock dividend, split up,
split-off, spin-off, distribution, recapitalization, combination or exchange of
shares, merger, consolidation, reorganization or liquidation or the like, the
Restricted Stock shall, where appropriate in the sole discretion of the
Compensation and Management Resources Committee of the Board of Directors of the
Company, receive the same distributions as other shares of Common Stock or on
some other basis as determined by the Compensation and Management Resources
Committee of the Board of Directors. In any such event, the Compensation and
Management Resources Committee of the Board of Directors may, in its sole
discretion, determine to award additional Restricted Stock in lieu of the
distribution or adjustment being made with respect to other shares of Common
Stock. In any such event, the determination made by the Compensation and
Management Resources Committee of the Board of Directors shall be conclusive.
The Compensation and Management Resources Committee of the Board of Directors
may, in its sole discretion, at any time fully vest and not forfeit all or any
portion of the Executive's Restricted Stock.

         3.6      Withholding. The Employee agrees that, subject to subsection
3.7 below,

                  (a)      No later than the date on which any Restricted Stock
shall have become vested, the Executive will pay to the Company, or make
arrangements satisfactory to the Company regarding payment of, any federal,
state or local taxes of any kind required by law to be withheld with respect to
any Restricted Stock which shall have become so vested; and

<PAGE>

                  (b)      The Company shall, to the extent permitted by law,
have the right to deduct from any payment of any kind otherwise due to the
Executive any federal, state or local taxes of any kind required by law to be
withheld with respect to any Restricted Stock which shall have become so vested.

         3.7      Section 83(b). If the Executive properly elects (as required
by Section 83(b) of the Internal Revenue Code of 1986, as amended) within thirty
(30) days after the issuance of the Restricted Stock to include in gross income
for federal income tax purposes in the year of issuance the fair market value of
such Restricted Stock, the Executive shall pay to the Company or make
arrangements satisfactory to the Company to pay to the Company upon such
election, any federal, state or local taxes required to be withheld with respect
to such Restricted Stock. If the Executive shall fail to make such payment, the
Company shall, to the extent permitted by law, have the right to deduct from any
payment of any kind otherwise due to the Executive any federal, state or local
taxes of any kind required by law to be withheld with respect to such Restricted
Stock, as well as the rights set forth in Section 3.6(c) hereof. The Executive
acknowledges that it is his sole responsibility, and not the Company's, to file
timely the election under Section 83(b) of the Internal Revenue Code of 1986, as
amended, and any corresponding provisions of state tax laws if he elects to
utilize such election.

         3.8      Special Incentive Compensation. The Executive agrees that the
award of the Restricted Stock hereunder is special incentive compensation and
that it, any dividends paid thereon (even if treated as compensation for tax
purposes) and any other RS Property will not be taken into account as "salary"
or "compensation" or "bonus" in determining the amount of any payment under any
pension, retirement or profit-sharing plan of the Company or any life insurance,
disability or other benefit plan of the Company.

         3.9      Delivery Delay. The delivery of any certificate representing
Restricted Stock or other RS Property may be postponed by the Company for such
period as may be required for it to comply with any applicable federal or state
securities law, or any national securities exchange listing requirements and the
Company is not obligated to issue or deliver any securities if, in the opinion
of counsel for the Company, the issuance of such shares shall constitute a
violation by the Executive or the Company of any provisions of any law or of any
regulations of any governmental authority or any national securities exchange.

         4.       Legend. All certificates representing shares of Restricted
Stock shall have endorsed thereon a legend referring to the terms, conditions
and restrictions applicable to such Restricted Stock, substantially in the
following form:

                  "The anticipation, alienation, attachment, sale, transfer,
assignment, pledge, encumbrance or charge of the shares of stock represented
hereby are subject to the terms and conditions (including forfeiture) of the
Foot Locker (the "Company") [1995/1998] Stock Option and Award Plan and an
Agreement entered into between the registered owner and the Company dated as of
February 2, 2003. Copies of such Plan and Agreement are on file at the principal
office of the Company."

         5.       Not an Employment Agreement. The issuance of the shares of
Restricted Stock hereunder does not constitute an agreement by the Company to
continue to employ the Executive during the entire, or any portion of the, term
of this Agreement, including but not limited to any period during which the
Restricted Stock is outstanding.

         6.       Power of Attorney. The Company, its successors and assigns, is
hereby appointed the attorney-in-fact, with full power of substitution, of the
Executive for the purpose of carrying out the provisions of this Agreement and
taking any action and executing any instruments which such attorney-in-fact may
deem necessary or advisable to accomplish the purposes hereof, which appointment
as attorney-in-fact is irrevocable and coupled with an interest. The Company, as
attorney-in-fact for the Executive, may, in the name and stead of the Executive,
make and execute all conveyances, assignments and transfers of the Restricted
Stock, Shares and property provided for herein, and the Executive hereby
ratifies and confirms all that the Company, as said attorney-in-fact, shall do
by virtue hereof. Nevertheless, the Executive shall, if so requested by the
Company, execute and deliver to the Company all such instruments as may, in the
judgment of the Company, be advisable for the purpose.

<PAGE>

         7.       Miscellaneous.

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

         7.2      This Agreement constitutes the entire agreement between the
parties and cannot be changed or terminated orally. No modification or waiver of
any of the provisions hereof shall be effective unless in writing and signed by
the party against whom it is sought to be enforced.

         7.3      This Agreement may be executed in one or more counterparts,
all of which taken together shall constitute one contract.

         7.4      The failure of any party hereto at any time to require
performance by another party of any provision of this Agreement shall not affect
the right of such party to require performance of that provision, and any waiver
by any party of any breach of any provision of this Agreement shall not be
construed as a waiver of any continuing or succeeding breach of such provision,
a waiver of the provision itself, or a waiver of any right under this Agreement.

         7.5      This Agreement is subject, in all respects, to the provisions
of the Plan, and to the extent any provision of this Agreement contravenes or is
inconsistent with any provision of the Plan, the provisions of the Plan shall
govern.

         7.6      The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall in no way restrict or
modify any of the terms or provisions hereof.

         7.7      All notices, consents, requests, approvals, instructions and
other communications provided for herein shall be in writing and validly given
or made when delivered, or on the second succeeding business day after being
mailed by registered or certified mail, whichever is earlier, to the persons
entitled or required to receive the same, at, in the case of the Company, the
address set forth at the heading of this Agreement and, in the case of the
Executive, his principal residence address as shown in the records of the
Company, or to such other address as either party may designate by like notice.
Notices to the Company shall be addressed to the Chairman of the Compensation
and Management Resources Committee with a copy similarly sent to the General
Counsel.

         7.8      This Agreement shall be governed and construed and the legal
relationships of the parties determined in accordance with the internal laws of
the State of New York.

         7.9      To indicate your acceptance of the terms of this Restricted
Stock Award Agreement, you must sign and deliver or mail not later than 30 days
from the date hereof, a copy of this Agreement to the General Counsel of the
Company at the address provided in the heading of this Agreement.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.

                                                 FOOT LOCKER, INC.

                                                 By: ___________________________
                                                     Senior Vice President

                                                     ___________________________
                                                     Matthew D. Serra

<PAGE>

                                 ACKNOWLEDGMENT

STATE OF _______________________________ )

                                              ) s.s.:
COUNTY OF ______________________________ )

         On this ___________day of___________2003, before me personally appeared
Matthew D. Serra , to me known to be the person described in and who executed
the foregoing agreement, and acknowledged that he executed the same as his free
act and deed.

                                                   _____________________________
                                                            Notary Public

<PAGE>

                                   APPENDIX A

                                CHANGE IN CONTROL

         A Change in Control shall mean any of the following: (i) (A) the making
of a tender or exchange offer by any person or entity or group of associated
persons or entities (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934) (a "Person") (other than the Company or its
Affiliates) for shares of Common Stock pursuant to which purchases are made of
securities representing at least twenty percent (20%) of the total combined
voting power of the Company's then issued and outstanding voting securities; (B)
the merger or consolidation of the Company with, or the sale or disposition of
all or substantially all of the assets of the Company to, any Person other than
(a) a merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving or parent entity) fifty percent (50%) or more of the combined voting
power of the voting securities of the Company or such surviving or parent entity
outstanding immediately after such merger or consolidation; or (b) a merger or
capitalization effected to implement a recapitalization of the Company (or
similar transaction) in which no Person is or becomes the beneficial owner,
directly or indirectly (as determined under Rule 13d-3 promulgated under the
Securities Exchange Act of 1934), of securities representing more than the
amounts set forth in (C) below; (C) the acquisition of direct or indirect
beneficial ownership (as determined under Rule 13d-3 promulgated under the
Securities Exchange Act of 1934), in the aggregate, of securities of the Company
representing twenty percent (20%) or more of the total combined voting power of
the Company's then issued and outstanding voting securities by any Person acting
in concert as of the date of this Agreement; provided, however, that the Board
of Directors of the Company (referred to herein as the "Board") may at any time
and from time to time and in the sole discretion of the Board, as the case may
be, increase the voting security ownership percentage threshold of this item (C)
to an amount not exceeding forty percent (40%); or (D) the approval by the
shareholders of the Company of any plan or proposal for the complete liquidation
or dissolution of the Company or for the sale of all or substantially all of the
assets of the Company; or (ii) during any period of not more than two (2)
consecutive years, individuals who at the beginning of such period constitute
the Board, and any new director (other than a director designated by a person
who has entered into agreement with the Company to effect a transaction
described in clause (i)) whose election by the Board or nomination for election
by the Company's shareholders was approved by a vote of at least two-thirds (")
of the directors then still in office who either were directors at the beginning
of the period or whose election or nomination for election was previously so
approved, cease for any reason to constitute at least a majority thereof.

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