Document:

Exhibit 10.1

                             PARTICIPATION AGREEMENT
                               (State Lease 19499)

     This Participation Agreement ("Agreement"), effective as of February 11,
2008 ("Effective Date") is made by and between El Paso E&P Company, L.P. ("El
Paso"), Ridgewood Energy Corporation ("Ridgewood") and LLOG Exploration
Offshore, Inc. ("LLOG"). The foregoing may be referred to individually as a
"Party" and collectively as the "Parties".

     WHEREAS, El Paso is the owner of 100% of the interest in that certain Oil
and Gas Lease designated State Lease 19499 (the "Lease"), dated effective
October 10, 2007, made by and between the State of Louisiana, as Lessor, and
Cypress Energy Corporation, as Lessee, covering portions of Blocks 213 and 293,
South Marsh Island Area, Iberia Parish, Louisiana, and containing approximately
1,359.78 acres as therein described;

     WHEREAS, El Paso has identified an exploratory prospect on the Lease and
proposes to drill the State Lease 19499 Well No. 1 (the "Test Well") to test an
exploratory objective within such prospect; and

     WHEREAS, Ridgewood and LLOG (collectively, the "Participants") have
indicated their desire to participate in the cost, risk and expense of drilling
the Test Well to earn an undivided interest in and to the Lease as herein
provided, together with a like interest in and to the Test Well, all production
therefrom and all personal property and equipment associated therewith;

     NOW, THEREFORE, for a good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:

1.   Test Well Participation

     (a) Test Well. On or before April 30, 2008, El Paso, as "Operator", will
commence, or cause to be commenced, drilling operations on the Test Well, the
estimated cost of which is described in the Authorization for Expenditure
("AFE") attached as Exhibit "A" and thereafter continuously prosecute the
drilling of the Test Well in a good and workmanlike manner to Casing Point.
"Casing Point" shall mean that point in time when the well has reached its
Objective Depth, or such other depth as may be mutually agreed by the Parties,
and all logs, cores and other tests have been completed that in the opinion of
the Operator are sufficient to make a determination concerning the running of
production casing or the plugging and abandonment of the well, and the results
thereof have been furnished to the Participants together with Operator's
recommendation. The Test Well will be drilled as a vertical well from a surface
location that is approximately 2,195 feet from the North line and 4,690 feet
from the West line of South Marsh Island Area Block 213 to (i) 16,500 feet TVD
(16,500 feet MD) or (ii) a depth sufficient to test the Rob L section, as seen
on the Array Induction-GR log of the McMoRan South Marsh Island 217 #223 Well
between the depths of 13,900' and 16,100' MD, whichever is the lesser depth (the
"Objective Depth").

Participation Agreement
(State Lease 19499)

<PAGE>

     (b) Proportionate Cost Sharing. The cost, risk and expense of the Test Well
shall be borne by the Participants as follows:

                                      Working Interest Cost Allocation
                                      --------------------------------
        Participant          Before Casing Point             After Casing Point

        Ridgewood                      45%                            30%
           LLOG                        30%                            20%

Until such time as (i) the Test Well reaches Casing Point or (ii) the actual
costs associated with the Test Well (including the costs of any Substitute Well
drilled therefor in accordance with Section 1(c)) are equal to 110% of the AFE,
whichever is sooner, Participants shall bear their Before Casing Point working
interest share of costs. Except as otherwise provided herein, after such point
in time, they shall bear their After Casing Point working interest share of
costs. In the event the Parties agree to complete, or temporarily abandon such
Well in an effort to subsequently complete it, the Participants shall pay for
and bear their After Casing Point working interest share of costs, as well as
for all future expenditures on the Lease, subject to the provisions set forth in
the Operating Agreement.

     (c) Substitute Well. If, prior to reaching the Objective Depth, the Test
Well encounters mechanical difficulties, heaving shale, rock salt, excessive
saltwater flow, practicably impenetrable formations or other conditions in the
hole that would cause a reasonably prudent operator under the same or similar
circumstances to discontinue drilling and to abandon the Test Well, El Paso
shall have the right, within one hundred twenty (120) days after the rig was
released from the last operation on the Test Well, to commence drilling of a
substitute well ("Substitute Well") at a mutually agreeable location. A proposal
to sidetrack the Test Well around an obstruction in the wellbore will not be
considered a Substitute Well but a continuation of the Test Well, unless the
targeted bottom hole location of the sidetracked well is more than 200' from the
original proposed bottom hole location. Any Substitute Well proposal shall
include the estimated costs to drill to the Test Well Objective Depth, and each
of the Participants shall have the option, but not the obligation, to
participate in such Substitute Well. If a Participant elects to not participate
in a Substitute Well, then it will forfeit all rights hereunder but will
continue to be obligated for its proportionate share of any and all costs and
liabilities incurred in connection with all prior Test Well operations in which
it participated. If El Paso elects to drill a Substitute Well, such Substitute
Well shall be considered and treated for all purposes hereof as though the same
were the Test Well.

     (d) Shallow Rights Well. In the event that the Test Well and/or any
Substitute Well fails to reach Objective Depth but is capable of producing in
paying quantities and otherwise meets all of the earning and reimbursement
requirements provided in Section 3, then Participants shall bee entitled to
receive an assignment of their respective undivided interest in and to the Lease
INSOFAR and ONLY INSOFAR as the Lease covers depths from the surface down to
100' below the base of the stratigraphic equivalent of the deepest geological
horizon that meets the criteria of 30 CFR 250.115 or 30 CFR 250.116 as being
capable of producing in commercial quantities in such shallow earning well
("Shallow Rights Well"), subject to the terms and conditions set forth in
Section 3.

Participation Agreement                2
(State Lease 19499)

<PAGE>

     (d) Additional Well. If the Test Well (including any Substitute Well
drilled therefor) is completed as a Shallow Rights Well, then the Parties,
individually and collectively, shall have the option, but not the obligation, to
maintain each of their respective right hereunder to earn an assignment pursuant
to Section 3 by commencing the actual drilling of another well ("Additional
Well") within 180 days after release of the drilling rig from the preceding
well. Such Additional Well shall be drilled to Objective Depth or deeper, and
proposed in the same manner as, and subject to the same terms and conditions
for, the Test Well. If a Participant has participated in the Additional Well to
Casing Point, and has satisfied the other conditions of Section 3, then such
Participant shall be entitled to an assignment of its undivided After Casing
Point interest in and to the Lease (SAVE AND EXCEPT the interests assigned in
the Shallow Rights Well) as otherwise provided in Section 3. Failure to commence
actual drilling operations on the Additional Well within such 180 day period
shall cause this Agreement to terminate as to all depths not previously earned
hereunder.

2.   Sunk Costs. Within five (5) business days of the execution of this
Agreement, the Participants will reimburse El Paso for their proportionate
shares of El Paso's sunk land (bonus and rental) costs ("Sunk Costs"), which
were incurred by El Paso for the acquisition of the Lease as follows:

                Ridgewood                            $1,129,977.18
                LLOG                                   $753,318.12

3.   Assignment of Record Title. Unless a Participant earns only rights in a
Shallow Rights Well pursuant to Section 1(d), and provided that it (i) is not in
default under the terms of this Agreement; (ii) has participated in the drilling
of the Test Well (or any Substitute Well drilled therefor) to Casing Point; and
(iii) has reimbursed El Paso for its share of Sunk Costs in accordance with
Section 2, such Participant shall have earned and be entitled to receive an
assignment of its undivided After Casing Point interest in and to the Lease,
effective as of the Effective Date. El Paso shall deliver such assignment to the
Participant(s) no later than thirty (30) days after earning occurs. Such
assignment shall be subject to the terms of this Agreement, the assumption of
its proportionate share of obligations pursuant to the Lease and the Operating
Agreement, and be free of all royalty and overriding royalty burdens except the
Lease Burdens described in Section 5. The assignment shall be on a mutually
agreeable form and subject to approval by the State Mineral Board of the State
of Louisiana.

4.   Operating Agreement. Concurrent with the execution of this Agreement, the
Parties shall enter into an operating agreement substantially in the form
attached as Exhibit "B" ("Operating Agreement") and designating El Paso as
Operator, the terms of which, subject to Section 1 of this Agreement, shall
govern and control all operations proposed and/or conducted upon the Lease,
including, without limitation, the drilling of the Test Well or any Substitute
Well therefor, as well as all subsequent operations conducted by the Parties.
The Test Well (including any Substitute Well therefor) drilled pursuant to this
Agreement shall be deemed to be an Exploratory Well for purposes of the
Operating Agreement. In the event of any conflict between the terms and
conditions of this Agreement and the Operating Agreement, the terms of this
Agreement shall control.

Participation Agreement                3
(State Lease 19499)

<PAGE>

5.   Lease Burdens. El Paso represents and warrants by, through and under El
Paso that the only interest burdening El Paso's interest in the Lease is the
Lessor's twenty-five percent (25%) royalty interest and certain overriding
royalty interests representing a .0258336 interest in the Lease for which Lessor
has not yet secured releases.

6.   Notices. Any notice provided or permitted to be given under this Agreement
shall be in writing, and may be sent by personal delivery, overnight courier,
facsimile or by depositing same in the United States Mail, addressed to the
Party to be notified, postage prepaid, and certified with a return receipt
requested. Notices deposited in the mail in the manner hereinabove described
shall be deemed to have been given and received upon the date of delivery as
shown on the return receipt (or upon the date of attempted delivery where
delivery is refused). Notice served in any other manner shall be deemed to have
been given and received only if and when actually received by the addressee
(confirmation of such receipt by confirmed facsimile transmission being deemed
receipt of communications sent by telecopy or other facsimile means), and when
delivered according to the receipt, if hand-delivered, sent by express courier
or delivery service. For purposes of notice, the addresses of the Parties shall
be as follows:

     If to El Paso:       El Paso E&P Company, L.P.
     -------------        1001 Louisiana Street
                          Houston, Texas 77002
                          Attention:   Casey Jones, Land Manager - GOM/SLA
                          Phone:       (713) 420-5709
                          Facsimile:   (713) 420-4419
                          Email:       doug1as.c.jones@elpaso.com

     If to Participants:  Ridgewood Energy Corporation
     -------------------  11700 Old Katy Road, Suite 280
                          Houston, Texas 77079
                          Attention:   W. Greg Tabor, Executive Vice President
                          Phone:       (281) 293-8449
                          Facsimile:   (281) 293-7391
                          Email:       gtabor@ridgewoodenergy.com

                          LLOG Exploration Offshore, Inc.
                          11700 Old Katy Road, Suite 295
                          Houston, Texas 77079
                          Attention:   K. Scott Spence, Land Manager - GOM Shelf
                          Telephone:   (281) 752-1106
                          Facsimile:   (281) 752-1190
                          Email:       scotts@llog.com

or at such other address and number as a Party shall have previously designated
by written notice given to the other Party in the manner hereinabove set forth.

Participation Agreement                4
(State Lease 19499)

<PAGE>

7.   Additional Provisions.

     (a) Further Assurances. Each of the Parties shall, from time to time and
upon reasonable request, execute, acknowledge, and deliver, or cause to be
executed, acknowledged, and delivered, such instruments, and take such other
action, as may be necessary or advisable, to carry out their respective
obligations under this Agreement.

     (b) Assignment of Agreement. Neither Party shall assign this Agreement or
any of its rights or obligations under this Agreement without obtaining the
prior written consent of the other Party, which consent shall not be
unreasonably withheld; provided, however, that, without the consent of the other
Party, either Party may, upon written notice to the other Party, assign this
Agreement to an Affiliate.

     (c) Applicable Law; Venue. The provisions of this Agreement and the
relationship of the Parties shall be governed and interpreted according to the
laws of the State of Texas without giving effect to principles of conflicts of
laws that would direct application of the laws of another jurisdiction, except
to the extent that it is mandatory that the law of the jurisdiction where the
prospect is located shall apply. Any proceedings arising from or relating to
disputes under this agreement shall be brought and maintained exclusively in the
federal or state courts located in Harris County, Texas, and each Party waives
any objection it may have to venue therein. The Parties hereby agree to a waiver
of trial by jury.

     (d) Severance of Invalid Provisions. In case of a conflict between the
provisions of this Agreement and the provisions of any applicable laws or
regulations, the provisions of the laws or regulations shall govern over the
provisions of this Agreement. If, for any reason and for so long as, any clause
or provision of this Agreement is held by a court of competent jurisdiction to
be illegal, invalid, unenforceable, or unconscionable under any present or
future law (or interpretation thereof), the remainder of this Agreement shall
not be affected by such illegality or invalidity. Any such invalid provision
shall be deemed severed from this Agreement as if this Agreement had been
executed with the invalid provision eliminated. The surviving provisions of this
Agreement shall remain in full force and effect unless the removal of the
invalid provision destroys the legitimate purposes of this Agreement, in which
event this Agreement shall be null and void. The Parties shall negotiate in good
faith for any required modifications to this Agreement.

     (e) Time of the Essence. Time is essential to this Agreement and,
accordingly, all time limits herein shall be strictly construed and enforced.

     (f) Headings for Convenience. All captions, numbering sequences, and
paragraph headings used in this Agreement are inserted for convenience only and
shall in no way define, limit, or describe the scope or intent of this Agreement
or any part thereof.

     (g) Independent Representation. Each Party has had the benefit of
independent legal representation with respect to the subject matter of this
Agreement. Both Parties have participated in the drafting of this Agreement, and
this Agreement shall not be more strictly construed against one Party than the
other on the basis of a Party's role in drafting the Agreement.

Participation Agreement                5
(State Lease 19499)

<PAGE>

     (h) Incorporation of Exhibits. Each of the exhibits attached to this
Agreement is incorporated into this Agreement by reference as fully as if the
text of each exhibit were set forth within the body of this Agreement. In the
event of any conflicts between the provisions of this Agreement or any other
agreement, including any agreement or instrument referenced herein to be
executed by the Parties hereafter or simultaneously herewith, the provisions of
this Agreement shall control.

     (i) Integrated Agreement. This Agreement, together with the attached
Exhibits, represents the final and entire agreement by and between the Parties
with respect to the subject matter hereof. This Agreement supersedes all oral
agreements and previous understandings between the Parties relating to the
subject matter hereof, and may be amended only by an instrument in writing
executed jointly by all the Parties. Each of the Parties acknowledges that no
promise, representation or warranty with respect to the subject matter hereof
has been made other than as expressly set forth herein. A waiver of any breach
or failure to enforce any of the terms or conditions of this Agreement shall not
in any way affect, limit or waive a Party's rights under this Agreement at any
time to enforce strict compliance thereafter with every term or condition of
this Agreement. All representations, warranties, covenants, and agreements
contained in this Agreement or in any exhibit, instrument, certificate, or other
document delivered pursuant to this Agreement shall survive any delivery of, and
shall not be deemed to have merged into, any assignment delivered pursuant
hereto.

     (j) Binding Effect. The terms and provisions of this Agreement shall inure
to the benefit of, and shall be binding upon, the Parties, their respective
successors and permitted assigns.

     (k) Third Party Beneficiaries. This Agreement does not benefit or create
any rights in any person or entity not a Party to this Agreement.

     (l) Relationship of the Parties. The rights and obligations of the Parties
hereunder shall be individual, separate, and several and not joint and
collective. It is expressly agreed that the Parties do not intend to create, and
it is not the purpose or intention of this Agreement to create, and this
Agreement shall never be construed as creating, a joint venture, mining
partnership, or other relationship whereby any Party will be liable for the
acts, either of omission or commission, of any other Party; provided, however,
the Parties shall enter into a tax partnership in the form attached as Exhibit
"C".

     (m) Limitation on Damages. In no event shall a Party be entitled to
consequential, incidental, special, treble, exemplary or punitive damages
hereunder unless such damages are a part of third party Claims for which a Party
is entitled to indemnification hereunder.

     (n) Expenses. Each Party to this Agreement shall pay its own expenses
(including legal fees and expenses) incurred in connection with the negotiation,
execution and delivery of this Agreement.

Participation Agreement                6
(State Lease 19499)

<PAGE>

     (o) Insurance. In connection with any drilling and/or production operations
on or for the benefit of the Parties, each Party shall carry the type and amount
of insurance required by the Operating Agreement.

     (p) Confidentiality. Except for necessary disclosures to governmental
agencies, no Party shall release any geological, geophysical, or reservoir
information or any logs or other information pertaining to the progress, tests,
or results of any well drilled pursuant to this Agreement, except as provided
for in the confidentiality provisions of the Operating Agreement.

     (q) McMoRan Farmin. Should El Paso acquire a farmin from McMoRan on a
portion of State Lease 340 in SMI 213 and/or SMI 293 ("Farmin Area"), and the
working interest acquired by El Paso is at least 75%, then Ridgewood and LLOG
shall be entitled to acquire an interest in the Farmin Area, on the same basis
and terms as El Paso, equal to their After Casing Point Working Interest,
proportionately reduced to the interest initially acquired by El Paso.

     (r) Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original and all of which together shall
constitute one and the same instrument.

                            [Signature Page Follows]

Participation Agreement                7
(State Lease 19499)

<PAGE>

     IN WITNESS WHEREOF, the Parties have executed this Agreement to be
effective as of the Effective Date.

                                                                   [LEGAL DEPT.
                                                                      STAMP]

WITNESSES:                               El Paso E&P Company, L.P.

/s/ Nicholas J. Pieper                    By:   /s/ Casey Jones
----------------------                          ---------------
Printed Name: Nicholas J. Pieper          Name:  Casey Jones
              ------------------          Title: Agent and Attorney in Fact

/s/ Teresa A. Walker
--------------------
Printed Name: Teresa A. Walker
              ----------------

WITNESSES:                               Ridgewood Energy Corporation

/s/ V. Chavez                            By:    /s/ W. Greg Tabor
-------------                                   -----------------
Printed Name: V. Chavez                  Name:  W. Greg Tabor
              ---------                  Title: Executive Vice President

/s/ Michael AltoBelli
---------------------
Printed Name: Michael AltoBelli
              -----------------

WITNESSES:                               LLOG Exploration Offshore, Inc.

/s/ Michael AltoBelli                    By:    /s/ K. Scott Spence
---------------------                           -------------------
Printed Name: Michael AltoBelli          Name:  K. Scott Spence
              -----------------          Title: Land Manager

/s/ Zoe Berdie
--------------
Printed Name: Zoe Berdie
              ----------

Participation Agreement                8
(State Lease 19499)

<PAGE>
                                   EXHIBIT "A"

       Made a part of that certain Participation Agreement dated effective
    February 11, 2008, by and between El Paso E&P Company, L.P., as Operator,
       Ridgewood Energy Corporation and LLOG Exploration Offshore, Inc, as
    Non-Operators, covering State Lease No. 19499, being a portion of Blocks
             213 and 293, South Marsh Island Area, Iberia Parish LA.

[EL PASO LOGO]              Approval for Expenditure
                            ------------------------

Project Name:        SL 19499 #1 SMI 213 D & E       Project Type:   EXPDR
Operator:            EL PASO E&P COMPANY LP          Budget ID:      EXPDR
Field Name:          GENERAL OFFSHORE CENTRAL        Project No.:    127927
Property Name:       SL 19499 #1 WELL                Property No.:   10008161
Division:            GOM S LOUISIANA                 Budgeted:       Y
Requested By:        Truitt, Michael S(Mi            Requested       02/11/2008
Project Description:                                 Budget Year:    2008

This Seed AFE is requested for funds to build the location at South Marsh Island
Blk 213 SL 19499 #1 This AFE will be supplemented at a later date for the full
AFE cost to Drill & Evalute the well

The attached supplement is for funds to Drill & Evaluate the SL 19499 #1, South
Marsh Island Blk 213 to a depth of 16,500' MD / TVD
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
Working Interests
-----------------
Company Co   Company Name                          WI%          Original        Supplement              Total
----------   ------------                          ---          --------        ----------              -----
<S>          <C>                            <C>            <C>             <C>                <C>
654          El Paso E&P Company, L.P.       25.000000       $375,000.00     $4,192,175.00      $4,567,175.00
Other        Ridgewood                       45.000000       $675,000.00     $7,545,915.00      $8,220,915.00
Other        LLOG                            30.000000       $450,000.00     $5,030.610.00      $5,480,610.00
                                            100.000000     $1,500,000.00    $16,768,700.00     $18,268,700.00
-------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------
Approvers:
----------
Title                                Name                  Date                    Decision
-----------------------------------------------------------------------------------------------
Mgr, Drilling                        Shelledy, Jack D      2/13/2006  7:19:09AM    Approved
Mgr, Land                            Jones, Douglas C      2/13/2008  8:24:57AM    Approved
Mgr, Reservoir Engineering           Garza, David N        2/25/2006 12:58:04PM    Sent Back
Mgr, Reservoir Engineering           Garza, David N        2/26/2008  1:13:13PM    Approved
Mgr, Exploration                     Evans, Grant          2/26/2008  2:24:39PM    Approved
Mgr, Prod, Ops Eng Completion        Richards, Davis E     2/27/2008  3:02:50PM    Approved
VP. Gulf of Mexico                   Kelly, John P         2/28/2008  7:35:34AM    Approved
-----------------------------------------------------------------------------------------------
</TABLE>

Partner Approvals:                                 E1 Paso Approval:
------------------                                 -----------------

                Accepted & Agreed

Company:     LLOG Exploration Company, L.L.C.        /s/ John P. Kelly
             --------------------------------
Date:        3/11/108
             --------------------------------
Approved by: /s/ K. Scott Spence                     Name: Kelly, John P
             --------------------------------
Title:       Land Manager - GOM Shelf                Title VP, Gulf of Mexico
             --------------------------------

                Accepted & Agreed

Company:     Ridgewood Energy Corporation
             --------------------------------
Date:        February 26, 2008
             --------------------------------
Approved By: /s/ W. Greg Tabor
             --------------------------------
Title:       Executive Vice President
             --------------------------------

This authorization for expenditure (AFE) constitutes a contract between the
non-operator signing the AFE and the operator whereby the non-operator hereby
promises and agrees to pay the operator, within thirty (30) days after billing,
its proportionate share of all reasonable expenditures on the described
operators until such time as an operating agreement is executed.

<PAGE>
<TABLE>
<CAPTION>
                       AUTHORIZATION FOR EXPENDITURE - ID#                     25990

Well or Project Name:                  SL 19499 #1 SMI 213 D & E                     Project Type Code:    EXPDR
Operator:                              EL PASO E&P COMPANY LP                        Budget ID Code:       EXPDR
Country:                               UNITED STATES                                 Project(AFE) No.:     127927
County:                                IBERIA                                        Supplement No.:
State:                                 LOUISIANA                                     Company No.:          654
Sec-Tsp-Rge/Survey/Blk:                                                              Property No.:         10008161
Field Name/Area:                       GENERAL OFFSHORE CENTRAL                      Budgeted Y/N:         Yes
Division:                              GOM S LOUISIANA                               Prepared By/Dept:     Truitt, Michael S(Mike)
                                                                                     Date Prepared:        02/11/2008
------------------------------------------------------------------------------------------------------------------------------------
CostCode Cost Description                      Drill DrillSupplement  Completio CompSupplem   Facilities  FacSupplement        Total
-------- ----------------                      ----- ---------------  --------- -----------   ----------  -------------        -----
<S>      <C>                           <C>             <C>                <C>       <C>             <C>         <C>    <C>
105      Land and Legal Services               $0.00     $150.000.00      $0.00     $0.00           $0.00       $0.00    $150.000.00
111      Location Preparation          $1,500,000.00           $0.00      $0.00     $0.00           $0.00       $0.00  $1,500,000.00
112      Location Restoration                  $0.00     $100,000.00      $0.00     $0.00           $0.00       $0.00    $100,000.00
115      Mobilization                          $0.00     $300,000.00      $0.00     $0.00           $0.00       $0.00    $300,000.00
116      INTLONLY-Import/Export                $0.00           $0.00      $0.00     $0.00           $0.00       $0.00          $0.00
         Duties
117      INTLONLY-Nonrec Value                 $0.00           $0.00      $0.00     $0.00           $0.00       $0.00          $0.00
         added taxes (VAT)
118      INTLONLY-Recoupable Value             $0.00           $0.00      $0.00     $0.00           $0.00       $0.00          $0.00
         added taxes (VAT)
121      Footage/Turnkey                       $0.00           $0.00      $0.00     $0.00           $0.00       $0.00          $0.00
122      Heater/Boiler                         $0.00           $0.00      $0.00     $0.00           $0.00       $0.00          $0.00
123      Camp and Catering                     $0.00      $38,500.00      $0.00     $0.00           $0.00       $0.00     $38,500.00
125      Contract Drilling - Dayrate           $0.00   $3,696,000.00      $0.00     $0.00           $0.00       $0.00  $3,696,000.00
126      Coil Tubing                           $0.00           $0.00      $0.00     $0.00           $0.00       $0.00          $0.00
127      Snubbing Unit                         $0.00           $0.00      $0.00     $0.00           $0.00       $0.00          $0.00
131      Fuel                                  $0.00     $770,000.00      $0.00     $0.00           $0.00       $0.00    $770,000.00
132      Offsite Disposal                      $0.00     $400,000.00      $0.00     $0.00           $0.00       $0.00    $400,000.00
133      Water                                 $0.00       $7,700.00      $0.00     $0.00           $0.00       $0.00      $7,700.00
134      Frac Tanks                            $0.00           $0.00      $0.00     $0.00           $0.00       $0.00          $0.00
141      Mud and Chemicals                     $0.00   $1,275,000.00      $0.00     $0.00           $0.00       $0.00  $1,275,000.00
142      Solids Control Rental                 $0.00     $269,500.00      $0.00     $0.00           $0.00       $0.00    $269,500.00
         Equipment
143      Shaker Screens                        $0.00           $0.00      $0.00     $0.00           $0.00       $0.00          $0.00
151      Drillstring/Workstring Rental         $0.00     $192,500.00      $0.00     $0.00           $0.00       $0.00    $192,500.00
         Equipment
152      Directional Tools and Services        $0.00     $275,300.00      $0.00     $0.00           $0.00       $0.00    $275,300.00
153      Fishing Tools and Services            $0.00           $0.00      $0.00     $0.00           $0.00       $0.00          $0.00
154      Well Control Rentals                  $0.00     $126,200.00      $0.00     $0.00           $0.00       $0.00    $126,200.00
155      Office, Sewage and Misc               $0.00      $50,100.00      $0.00     $0.00           $0.00       $0.00     $50,100.00
         Rentals
156      Monitoring Equipment                  $0.00      $30,800.00      $0.00     $0.00           $0.00       $0.00     $30,800,00
157      Safety/Medical                        $0.00      $23,100.00      $0.00     $0.00           $0.00       $0.00     $23,100.00
161      Cement and Services                   $0.00     $584,400.00      $0.00     $0.00           $0.00       $0.00    $584,400.00
162      Pumping Services                      $0.00           $0.00      $0.00     $0.00           $0.00       $0.00          $0.00
163      Plugs and Packets                     $0.00      $30,000.00      $0.00     $0.00           $0.00       $0.00     $30,000,00
171      Bits                                  $0.00     $318,800.00      $0.00     $0.00           $0.00       $0.00    $318,800.00
172      Stabilizers and Reamers               $0.00     $212,500.00      $0.00     $0.00           $0.00       $0.00    $212.500,00
181      Open Hole Logging (Incl. SW           $0.00     $550,000.00      $0.00     $0.00           $0.00       $0.00    $550,000.00
         Cores & RFTs)
182      LWD Services                          $0.00     $490,500.00      $0.00     $0.00           $0.00       $0.00    $490,500.00
</TABLE>

                                   Page 1 of 3
<PAGE>
<TABLE>
<CAPTION>
                       AUTHORIZATION FOR EXPENDITURE - ID#                     25990

CostCode Cost Description                      Drill DrillSupplement  Completio CompSupplem  Facilities  FacSupplement         Total
-------- ----------------                      ----- ---------------  --------- -----------  ----------  -------------         -----
<S>      <C>                           <C>             <C>                <C>       <C>             <C>         <C>   <C>
183      Mud Logging                           $0.00     $108,000.00      $0.00     $0.00           $0.00       $0.00    $108,000.00
184      Conventional Coring and DSTs          $0.00           $0.00      $0.00     $0.00           $0.00       $0.00          $0.00
185      Contract Geo/Paleo                    $0.00           $0.00      $0.00     $0.00           $0.00       $0.00          $0.00
186      Dull Stem Test Equip                  $0.00           $0.00      $0.00     $0.00           $0.00       $0.00          $0.00
191      Cased Hole Logging                    $0.00           $0.00      $0.00     $0.00           $0.00       $0.00          $0.00
192      Perforating                           $0.00           $0.00      $0.00     $0.00           $0.00       $0.00          $0.00
193      Stimulation (Acid./Frac./             $0.00           $0.00      $0.00     $0.00           $0.00       $0.00          $0.00
         Grav. Pk)
194      Slickline Work                        $0.00           $0.00      $0.00     $0.00           $0.00       $0.00          $0.00
195      Prod. Well Testing Equip./            $0.00           $0.00      $0.00     $0.00           $0.00       $0.00          $0.00
         Service
201      Land Transportation                   $0.00     $154,000.00      $0.00     $0.00           $0.00       $0.00    $154,000.00
202      Marine Transportation                 $0.00   $1,386,000.00      $0.00     $0.00           $0.00       $0.00  $1,386,000.00
203      Air Transportation                    $0.00           $0.00      $0.00     $0.00           $0.00       $0.00          $0.00
211      Supervision - Company                 $0.00           $0.00      $0.00     $0.00           $0.00       $0.00          $0.00
212      Supervision Contract                  $0.00     $231,000.00      $0.00     $0.00           $0.00       $0.00    $231,000.00
214      Shore Base Expense                    $0.00      $57,800.00      $0.00     $0.00           $0.00       $0.00     $57,800.00
215      Divers                                $0.00           $0.00      $0.00     $0.00           $0.00       $0.00          $0.00
221      Insurance                             $0.00           $0.00      $0.00     $0.00           $0.00       $0.00          $0.00
231      Capitalized Overhead                  $0.00           $0.00      $0.00     $0.00           $0.00       $0.00          $0.00
241      Other Contract Labor                  $0.00      $34,700.00      $0.00     $0.00           $0.00       $0.00     $34,700.00
242      BOP/Wellhead Testing                  $0.00           $0.00      $0.00     $0.00           $0.00       $0.00          $0.00
251      Casing Crews & Equip & Tong           $0.00     $140,000.00      $0.00     $0.00           $0.00       $0.00    $140,000.00
         Services
252      Laydown/Pickup Services               $0.00           $0.00      $0.00     $0.00           $0.00       $0.00          $0.00
253      Tubular Testing. Inspection           $0.00           $0.00      $0.00     $0.00           $0.00       $0.00          $0.00
254      Drillstring/Workstring                $0.00      $50,000.00      $0.00     $0.00           $0.00       $0.00     $50,000.00
         Inspection
255      Communication                         $0.00      $25,400.00      $0.00     $0.00           $0.00       $0.00     $25,400.00
262      Purchased supplies                    $0.00      $15,400.00      $0.00     $0.00           $0.00       $0.00     $15,400.00
271      ABAND EXP/Bundler Services            $0.00           $0.00      $0.00     $0.00           $0.00       $0.00          $0.00
282      Pipeline Installation                 $0.00           $0.00      $0.00     $0.00           $0.00       $0.00          $0.00
285      Construction Supervision,             $0.00           $0.00      $0.00     $0.00           $0.00       $0.00          $0.00
         Inspection & Testing
         Total Intangibles             $1,500,000.00  $12,093,200.00      $0.00     $0.00           $0.00       $0.00 $13,593,200.00
263      Gas Gathering Materials               $0.00           $0.00      $0.00     $0.00           $0.00       $0.00          $0.00
264      Gas Gathering Labor                   $0.00           $0.00      $0.00     $0.00           $0.00       $0.00          $0.00
265      Water Gathering Materials             $0.00           $0.00      $0.00     $0.00           $0.00       $0.00          $0.00
266      Water Gathering Labor                 $0.00           $0.00      $0.00     $0.00           $0.00       $0.00          $0.00
291      Casing Sub-Total:                     $0.00   $2,008,100.00      $0.00     $0.00           $0.00       $0.00  $2,008,100.00
         Conductor                             $0.00      $87,100.00      $0.00     $0.00           $0.00       $0.00     $87,100.00
         Conductor #2                          $0.00           $0.00      $0.00     $0.00           $0.00       $0.00          $0.00
         Surface                               $0.00     $489,400.00      $0.00     $0.00           $0.00       $0.00    $489,400.00
         Intermediate #1                       $0.00   $1,262,300.00      $0.00     $0.00           $0.00       $0.00  $1,262,300.00
         Intermediate #2                       $0.00           $0.00      $0.00     $0.00           $0.00       $0.00
         Liner #1                              $0.00     $169,300.00      $0.00     $0.00           $0.00       $0.00    $169,300.00
         Liner #2                              $0.00           $0.00      $0.00     $0.00           $0.00       $0.00          $0.00
         Production Casing                     $0.00           $0.00      $0.00     $0.00           $0.00       $0.00          $0.00
         Production Liner                      $0.00           $0.00      $0.00     $0.00           $0.00       $0.00          $0.00
301      Tubing Sub-Total:                     $0.00           $0.00      $0.00     $0.00           $0.00       $0.00          $0.00
         Tubing 1                              $0.00           $0.00      $0.00     $0.00           $0.00       $0.00          $0.00
         Tubing 2                              $0.00           $0.00      $0.00     $0.00           $0.00       $0.00          $0.00
311      Cementing Equipment                   $0.00      $31,900.00      $0.00     $0.00           $0.00       $0.00     $31,900.00
</TABLE>

                                   Page 2 of 3
<PAGE>
<TABLE>
<CAPTION>
                       AUTHORIZATION FOR EXPENDITURE - ID#                     25990

CostCode Cost Description                      Drill DrillSupplement  Completio CompSupplem  Facilities  FacSupplement         Total
-------- ----------------                      ----- ---------------  --------- -----------  ----------  -------------         -----
<S>      <C>                           <C>            <C>                 <C>       <C>             <C>         <C>   <C>
321      Wellhead Equipment                    $0.00      $90,300.00      $0.00     $0.00           $0.00       $0.00     $90,300.00
331      Artificial Lift Equipment             $0.00           $0.00      $0.00     $0.00           $0.00       $0.00          $0.00
341      Subsurface Equipment                  $0.00     $185,900.00      $0.00     $0.00           $0.00       $0.00    $185,900.00
351      Onshore Prod Equip and                $0.00           $0.00      $0.00     $0.00           $0.00       $0.00          $0.00
         Piping install - Labor and
352      Tank Equipment                        $0.00           $0.00      $0.00     $0.00           $0.00       $0.00          $0.00
333      Compressor Equipment                  $0.00           $0.00      S0.00     $0.00           $0.00       $0.00          $0.00
354      Pipeline Materials                    $0.00           $0.00      $0.00     $0.00           $0.00       $0.00          $0.00
355      Production Equipment                  $0.00           $0.00      $0.00     $0.00           $0.00       $0.00          $0.00
356      Engine and Starter                    $0.00           $0.00      $0,00     $0.00           $0.00       $0.00          $0.00
         Total Tangibles                       $0.00   $2,316,200.00      $0.00     $0.00           $0.00       $0.00  $2,316,200.00
         Subtotal Tangibles &          $1,500,000.00  $14,409,400.00      $0.00     $0.00           $0.00       $0.00 $15,909,400.00
         Intangibles
         Contingency                           $0.00   $2,359,300.00      $0.00     $0.00           $0.00       $0.00  $2,359,300.00
         Total Cost Estimate           $1,500,000.00  $16,768,700.00      $0.00     $0.00           $0.00       $0.00 $18,268,700.00
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                   Page 3 of 3ex10_1.htm

  
    Exhibit
10.1

    

    FIRST
AMENDMENT TO AN

    AMENDED
AND RESTATED EXIT CREDIT AGREEMENT

    

    

    This FIRST AMENDMENT TO AN AMENDED AND RESTATED EXIT
CREDIT AGREEMENT,
dated as of May 9, 2008 (this “Amendment”), by and
among FOOTSTAR, INC.,
(“Footstar”)
and FOOTSTAR CORPORATION
(“Footstar
Corp.” and, together with Footstar, the “Borrowers”), the
lenders from time to time party thereto (the “Lenders”), BANK OF AMERICA, N.A., as
administrative agent for itself and the Lenders (in such capacity, the “Administrative
Agent”), as swingline lender, as issuing bank and as collateral agent,
modifies certain provisions of the Amended and Restated Exit Credit Agreement,
dated as of February 7, 2006 (as amended and in effect from time to time, the
“Credit
Agreement”), by and among the Borrowers, the Lenders, the Administrative
Agent  and GENERAL
ELECTRIC CAPITAL CORPORATION, as syndication agent.  Terms not
otherwise defined herein which are defined in the Credit Agreement shall have
the same respective meanings herein as therein.

    

    WHEREAS, the Borrowers have
requested that the Administrative Agent and the Lenders extend the Maturity Date
of the Credit Agreement to December 31, 2008 and reduce the Lenders’ Commitment;
and

    

    WHEREAS, the Administrative
Agent and the Lenders have agreed to such extension and reduction as provided
more fully herein below;

    

    WHEREAS, the Borrowers have
informed the Administrative Agent and the Lenders that they would like to
declare and pay a dividend or distribution in favor of their equity holders and
the Lenders have agreed to such declaration and payment provided that no further
dividends or distributions shall be permitted as provided more fully herein
below;

    

    WHEREAS, the Borrowers have
requested certain other amendments to the Credit Agreement and the Lenders agree
to the same as more fully described below, subject to the conditions set forth
below;

    

    NOW THEREFORE, in
consideration of the mutual agreements contained in the Credit Agreement and
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

    

    1.1.           Amendment
to §1.1 of the Credit Agreement (Defined Terms).  §1.1 of the
Credit Agreement is hereby amended by deleting the definition of “Appraisal
Percentage” in its entirety and substituting in lieu thereof the following
definition: “”Appraisal Percentage” shall mean (a) 50%, or (b) if an Inventory
appraisal, conducted by an independent appraiser mutually acceptable to the
Administrative Agent and Borrower, in form and substance similar to the most
recent Inventory appraisal and satisfactory to the Administrative Agent, is
conducted on or after May 7, 2008, then 85% after the date of such
appraisal.”

     

    1.2.           Amendment
to §1.1 of the Credit Agreement (Defined Terms).  §1.1 of the
Credit Agreement is hereby amended by deleting clause (ii) of the definition of
“Borrowing Base” in its entirety and substituting in lieu thereof the
following:  “(ii)  the Appraisal Percentage times the sum of
the Appraised
Value of Eligible Inventory (other than Eligible L/C Inventory) and the
Appraised Value of Eligible In-Transit Inventory (and net of applicable
Inventory Reserves); plus”

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    1.3.           Amendment
to §1.1 of the Credit Agreement (Defined Terms).  §1.1 of the
Credit Agreement is hereby amended by deleting the definition of “Inventory
Advance Rate” in its entirety.

     

    1.4.           Amendment
to §1.1 of the Credit Agreement (Defined Terms).  §1.1 of the
Credit Agreement is hereby amended by deleting the definition of “Maturity Date”
in its entirety and substituting in lieu thereof the following definition:
“”Maturity Date” means the earlier to occur of (a) the termination of the Kmart
Agreement in accordance with Article 4.2 of the Kmart Agreement and (b) December
31, 2008.”

     

    1.5.           Amendment
to §1.1 of the Credit Agreement (Defined Terms).  §1.1 of the Credit Agreement is hereby
amended by deleting the definition of “Required Lenders” in its entirety and
substituting in lieu thereof the following definition: “”Required Lenders”
means, at any time, Lenders having Commitments in excess of 50% of the Total
Commitments, or if the Commitments have been terminated, Lenders whose
percentage of the outstanding Credit Extensions aggregate (after settlement and
repayment of all Swingline Loans by the Lenders and taking into account each
Lender’s Commitment Percentage of the Letter of Credit Outstandings) in excess
of 50% of all such Credit Extensions.”

     

    1.6.           Amendment
to §1.1 of the Credit Agreement (Defined Terms).  Pursuant to §2.15 of the Credit
Agreement, each of the Borrowers, the Agent and each Lender hereby (a) agrees to
the reduction of the Total Commitment from $100,000,000 to $50,000,000 (b)
waives the requirement that the Borrowers provide prior written notice thereof
as set forth in §2.15 of the Credit Agreement, (c) agrees to the pro-rata
reduction of each Lender’s Commitment, and (d) confirms that all fees and
amounts owing under §2.15 on the date hereof equal $29,105.01.  To
give effect to the reduction of the Total Commitment,  §1.1 of the
Credit Agreement is hereby amended by deleting the definition of “Total
Commitment” in its entirety and substituting in lieu thereof the following
definition: “”Total Commitment” means the sum of the Commitments of the Lenders
to make Loans in an aggregate amount not to exceed
$50,000,000.”

     

    1.7.           Amendment
to §2.6(a)(i) of the Credit Agreement (Letters of Credit).  §2.6(a)(i) of the Credit Agreement is
hereby amended by (a) deleting the word “$40,000,000” and (b) replacing it with
the word “$25,000,000”.

     

    1.8.           Amendment
to §6.1(e) of the Credit Agreement (Financial Statements and Other
Information).  §6.1(e) of the
Credit Agreement is hereby amended by (a) deleting each reference to the word
“$40,000,000” and (b) replacing each such reference with the words “twenty
percent (20%) of the Borrowing Base”.

     

    1.9.           Amendment
to §7.5 of the Credit Agreement (Asset Sales; Blocked Sales;
Transfers).  §7.5 of the
Credit Agreement is hereby amended by (i) adding the word “and” at the end of
clause (g) in such section 7.5 and (ii) inserting the following new clause (h)
following existing clause (g): “(h)  the sale or disposition of any
assets of any Loan Party on the Maturity Date, provided that (i) all
Obligations under the Loan Documents have been paid in full in cash and all Loan
Documents and Commitments thereunder have been terminated before the Maturity
Date or simultaneously with such sale or disposition on the Maturity Date and in
a manner acceptable to the Administrative Agent, and (ii) all Letters of Credit
have been terminated or fully cash collateralized in a manner acceptable to the
issuer thereof.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    1.10.           Amendment
to §7.6 of the Credit Agreement (Restricted Payments).  §7.6 of the
Credit Agreement is hereby amended by deleting clause (a)(iv) thereof in its
entirety and substituting in lieu thereof the following:

     

    “(iv) the
Lead Borrower may declare and pay a dividend or distribution to its shareholders
(1) consisting solely of the net proceeds of a sale of the Borrowers’ corporate
office located at 933 MacArthur Boulevard, Mahwah, NJ, or (2) with the prior
written consent of the Administrative Agent at any time and from time to time,
in each case provided that (w) such
dividend or distribution may not be paid using the proceeds of any Loan or other
extension of credit under the Loan Documents, (x) no Default or Event of Default
shall exist on the date that such dividend or distribution is paid or shall
result after giving effect thereto, (y) the Lead Borrower is solvent both before
and after giving effect to such dividend or distribution, and (z) the Lead
Borrower delivers to the Agent an officer’s certificate which certifies the
amount of net proceeds received from such sale, the amount of the dividend or
distribution that will be paid under §7.6(a)(iv) and that such dividend or
distribution is being paid in compliance with this §7.6(a)(iv) (including
clauses (w) through (y) of this proviso);”

     

    1.11.           Amendment
to §7.12 of the Credit Agreement (Fixed Charge Coverage Ratio).  §7.12 of the
Credit Agreement is hereby amended by (a) deleting the words “twenty percent
(20%)” and (b) replacing them with the words “ten percent (10%)”.

     

    1.12.           Amendment
to §8.1(o) of the Credit Agreement (Events of Default).  §8.1(o) of the
Credit Agreement is hereby amended by inserting the following proviso at the end
of clause (o): “, provided that any
vote by any Loan Party’s board of directors to adopt a plan of liquidation for
the purposes of satisfying Section 331 of the Internal Revenue Code of 1986 (as
amended) shall not constitute a Default or Event of Default hereunder so long as
such plan contemplates the satisfaction in full of the Obligations (and
appropriate reserves in connection therewith) prior to the dissolution of any
Loan Party or the final liquidating distribution by any Loan Party to its equity
holders (it being hereby agreed and understood that this provision shall in no
way be construed as consenting to, authorizing or permitting any Loan Party to
take any action not otherwise permitted under the Loan Documents in furtherance
of such plan of liquidation);”

     

    1.13.           Amendment
to Schedule 1.1(a) of the Credit Agreement (Pricing Grid - Revolving
Loans).   Schedule 1.1(a) of the
Credit Agreement is hereby amended by deleting the pricing grid set forth
thereon in its entirety and substituting in lieu thereof the following pricing
grid:

     

    
      	
               

              Level

            	
               

              Average
      Excess Availability

            	
              Applicable
      Margin for 

              Eurodollar
      Loans

            	
              Applicable
      Margin for 

              Base
      Rate Loans

            
	
              I

            	
              Greater
      than or equal to $25,000,000

            	
              1.75%

            	
              0.0%

            
	
              II

            	
              Greater
      than or equal to $17,500,000 and less than $25,000,000

            	
              2.00%

            	
              0.25%

            
	
              III

            	
              Greater
      than or equal to $10,000,000 and less than $17,500,000

            	
              2.25%

            	
              0.50%

            
	
              IV

            	
              Less
      than $10,000,000

            	
              2.50%

            	
              0.50%

            

    

     

    1.14.           Consent.  Notwithstanding
any provision of the Credit Agreement or the Credit Agreement as amended by this
Amendment to the contrary and in reliance on the representations and warranties
contained herein, the Agent and each Lender hereby consent to the declaration
and payment of a dividend or distribution by the Lead Borrower to its
shareholders in an amount less than or equal to $1.00 per
share of common stock of Footstar, Inc., provided that such dividend or
distribution is paid within 60 days of the date hereof, and provided further that (1) such
dividend or distribution may not be paid using the proceeds of any Loan or other
extension of credit under the Loan Documents, (2) no Default or Event of Default
shall exist on the date that such dividend or distribution is paid or shall
result after giving effect thereto, (3) the Lead Borrower is solvent both before
and after giving effect to such dividend or distribution and (4) the Lead
Borrower delivers to the Agent an officer’s certificate which certifies that
such dividend or distribution is being paid in compliance with this §1.14
(including clauses (1) through (3) of this proviso).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    1.15.           Conditions
to Effectiveness.  This Amendment
shall be deemed to be effective upon the Administrative Agent's confirmation of
receipt of the following:

     

    
      	
               
      

            	
              a)

            	
              a
      counterpart signature page to this Amendment duly executed and delivered
      by each Loan Party and each Lender under the Credit
    Agreement;

            

    

     

    
      	
               
      

            	
              b)

            	
              good
      standing certificates from each of the Borrowers and the other Loan
      Parties;

            

    

     

    
      	
               
      

            	
              c)

            	
              certificates
      of the secretary or assistant secretary of each Loan Party certifying as
      to (i) the legal existence of each Loan Party, (ii) resolutions
      authorizing the amendments contemplated herein, and (ii) confirmation that
      there have been no changes to the charter or bylaws of such Loan Party
      since February 7, 2006 and such charters and bylaws remain in full force
      and effect, or an Exhibit to such certificate evidencing any such
      changes;

            

    

     

    
      	
               
      

            	
              d)

            	
              payment
      of fees and amounts owing (i) pursuant to §2.15 of the Credit Agreement in
      the aggregate amount of $29,105.01, and  (ii) any other fees and
      expenses payable on or before the effective date
  hereof;

            

    

     

    
      	
               
      

            	
              e)

            	
              a
      favorable written opinion (addressed to the Agent and each Lender and
      dated the date hereof) of Day Pitney LLP, with respect to (i) the
      enforceability of this Amendment, the Credit Agreement as amended hereby,
      and confirming that the security interests granted by the Loan Parties in
      favor of the Collateral Agent and the Lenders under the Loan Documents is
      continuing after giving effect to this Amendment, and (ii) with respect to
      each Loan Party, corporate status, authority, due authorization and no
      conflicts as well as due execution and delivery of this Amendment;
      and

            

    

     

    
      	
               
      

            	
              f)

            	
              a
      favorable written opinion (addressed to the Agent and each Lender and
      dated the date hereof) of Maureen Richards, Corporate Counsel of Footstar,
      Inc., with respect to Meldisco K-M Cranston, R.I., Inc.’s corporate
      authority, due authorization and lack of
  conflicts.

            

    

     

    1.16.           Conditions
Subsequent.  The agreement by
the Administrative Agent and Lender evidenced hereby is expressly conditioned
upon receipt by the Administrative Agent of a favorable written opinion
(addressed to the Agent and the Lender and dated the date hereof and in form and
substance satisfactory to the Administrative Agent) of Texas counsel (choice of
such counsel to be reasonably acceptable to the Administrative Agent) with
respect to Footstar Corporation’s corporate authority, due authorization and
lack of conflicts, by May 16, 2008.  Failure to comply with this
condition subsequent shall render the Administrative Agent’s and Lender’s
agreement hereto ineffective and shall render this Amendment null and
void.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    1.17.           Borrower
Representations and Warranties.  Each of the
Borrowers hereby represents and warrants to the Administrative Agent and the
Lenders as follows:

     

      
(a)                      Representations
and Warranties in the Credit Agreement.  The
representations and warranties of each of the Borrowers contained in the Credit
Agreement were true and correct in all material respects as of the date when
made and are true and correct in all material respects on and as of the date
hereof, except to the extent of changes resulting from transactions or events
contemplated or permitted by the Credit Agreement and the other Loan Documents
and changes occurring in the ordinary course of business that singly or in the
aggregate are not reasonably expected to have a Material Adverse Effect, or to
the extent that such representations and warranties relate expressly to an
earlier date.

     

      
(b)                      Ratification,
Etc.  Except as expressly amended, modified or waived hereby,
the Credit Agreement and the other Loan Documents, and all documents,
instruments and agreements related thereto, are hereby ratified and confirmed in
all respects and shall continue in full force and effect.  The Credit
Agreement shall, together with this Amendment, be read and construed as a single
agreement.  All references to the Credit Agreement in the Credit
Agreement, the Loan Documents or any related agreement or instrument shall
hereafter refer to the Credit Agreement subject to this
Amendment.

     

      
(c)                      Authority,
Etc.  The execution and delivery by each of the Borrowers of
this Amendment and the performance by such Person of all of its agreements and
obligations under the Credit Agreement subject to this Amendment are within the
corporate, limited partnership or limited liability company authority, as
applicable, of such Person and have been duly authorized by all necessary entity
proceedings on the part of such Person.

     

      
(d)                      Enforceability
of Obligations.  This Amendment and the Credit Agreement
subject hereto constitute the legal, valid and binding obligations of each of
the Borrowers enforceable against such Person in accordance with their terms,
except as enforceability is limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting generally the enforcement of,
creditors' rights and except to the extent that availability of the remedy of
specific performance or injunctive relief is subject to the discretion of the
court before which any proceeding therefore may be brought.

     

       (e)                      Solvency.  The
Lead Borrower is solvent on the date hereof and will be solvent both before and
after giving effect to the distribution contemplated by §1.14 (Consent)
hereof.

     

      
(f)                      No
Default.  No Default or Event of Default has occurred and is
continuing as of the date hereof or will occur after giving effect to the
provisions hereof.

     

    1.18.           No
Other Consents or Amendments.  Each
Loan Party hereby agrees that, except as expressly provided in this Amendment,
all of the terms and conditions of the Credit Agreement and the other Loan
Documents, expressly including but not limited to the Facility Guaranty or any
other Guaranty securing any obligations arising under the Loan Documents, remain
in full force and effect.  Nothing contained in this Amendment shall
(a) be construed to imply a willingness on the part of the Administrative Agent
or the Lenders to grant any similar or other future amendment, waiver or consent
of any of the terms and conditions of the Credit Agreement or the other Loan
Documents, (b) establish a custom or a course of dealing or conduct among the
Administrative Agent, any Lender or any Borrower, or (c) in any way prejudice,
impair or effect any rights or remedies of the Administrative Agent or the
Lenders under the Credit Agreement or the other Loan Documents.  The
Facility Guarantors hereby affirm
their agreement to secure the Obligations (as defined in the Facility Guaranty)
pursuant to the Facility Guaranty, after giving effect to this
Amendment.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    1.19.           Authorization
to Take Further Action.  Each Lender hereby agrees that the
Administrative Agent and the Collateral Agent are hereby authorized to take such
further action and shall execute and deliver such additional documents and
instruments as the Administrative Agent may reasonably determine in its sole
discretion are necessary or appropriate to effectuate the terms of this
Amendment.  Each Lender also agrees that each of them shall take such
further action and shall execute and deliver such additional documents and
instruments as the Administrative Agent may reasonably request to effectuate the
same.

     

    1.20.           Execution
in Counterparts.  This Amendment may be executed in any number
of counterparts, each of which shall be deemed an original, but which together
shall constitute one instrument.  In proving this Amendment, it shall
not be necessary to produce or account for more than one such counterpart signed
by the party against whom enforcement is sought.  Delivery of an
executed signature page of this Amendment by facsimile or other electronic
transmission shall be effective as delivery of a manually executed counterpart
thereof.

     

    1.21.           Expenses.  Pursuant
to §10.3 of the Credit Agreement, all reasonable out of pocket costs and
expenses incurred by the Administrative Agent in connection with this Amendment,
including the reasonable fees, charges and disbursements of legal counsel for
the Administrative Agent in producing, reproducing and negotiating this
Amendment, will be for the account of the Borrowers whether or not the
transactions contemplated by this Amendment are consummated.

     

    1.22.           Miscellaneous.
THIS
AMENDMENT IS
A CONTRACT UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL FOR ALL PURPOSES BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID STATE OF NEW YORK
(EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF
LAW).    The captions in this Amendment are for
convenience of reference only and shall not define or limit the provisions
hereof.

     

    

    [signature
pages follow]

     

     

     

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the
parties hereto have executed this Amendment as a document under seal as of the
date first above written.

    

    
      
        	 	
                FOOTSTAR,
      INC.,

                as
      Lead Borrower and as Borrower

              	 
	 	 	 	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/
      Vincent Zanna 	 
	 	 	Name: Vincent Zanna 	 
	 	 	Title: Treasurer	 
	 	 	 	 

      

    

    
      

      
        
          	 	
                        
                    FOOTSTAR
      CORPORATION,

                  

                  as
      Borrower

                	 
	 	 	 	 
	 	 	 	 
	
                   

                	
                  By:
      

                	/s/ Vincent Zanna 	 
	 	 	Name: Vincent Zanna 	 
	 	 	Title: Treasurer	 
	 	 

        

         

         

        IN WITNESS WHEREOF, the
Facility Guarantors have hereby acknowledged this document under seal as of the
date first written above for the purposes set forth in the last sentence of
§1.18 hereof.

         

        
          

          
            
              	 	
                      
                        FOOTSTAR HQ,
      LLC,

                        as
      Facility Guarantor

                        By:
      Footstar Corporation, the sole member

                      

                    	 
	 	 	 	 
	 	 	 	 
	
                       

                    	
                      By:
      

                    	/s/ Vincent Zanna 	 
	 	 	Name: Vincent Zanna 	 
	 	 	Title: Treasurer	 
	 	 

               

               

              
 

              
                
                  	 	
                          
                            MELDISCO
      K-M CRANSTON, R.I., INC.

                            as
      Facility Guarantor

                          

                        	 
	 	 	 	 
	 	 	 	 
	
                           

                        	
                          By:
      

                        	/s/ Vincent Zanna 	 
	 	 	Name: Vincent Zanna 	 
	 	 	Title: Treasurer	 
	 	 

                

              

            

          

        

      

    

    
 

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      

      
        
          	 	
                  BANK OF AMERICA,
      N.A.,
as Administrative Agent, as Swingline Lender
      and as Issuing Bank

                	 
	 	 	 	 
	 	 	 	 
	
                   

                	
                  By:
      

                	/s/ Keith Vercauteren	 
	 	 	Name: Keith
      Vercauteren	 
	 	 	Title: Managing
      Director	 
	 	 	 	 

        

      

      
         

        
 

        
          
            	 	
                    BANK OF AMERICA,
      N.A.,

                    
                      as
      Collateral Agent

                    

                  	 
	 	 	 	 
	 	 	 	 
	
                     

                  	
                    By:
      

                  	/s/ Keith Vercauteren	 
	 	 	Name: Keith
      Vercauteren	 
	 	 	Title: Managing
      Director	 
	 	 

          

           

           

          

          
            
              	 	
                      
                        BANK OF AMERICA,
      N.A.,

                        as
      a Lender

                      

                    	 
	 	 	 	 
	 	 	 	 
	
                       

                    	
                      By:
      

                    	/s/ Keith Vercauteren	 
	 	 	Name: Keith
      Vercauteren	 
	 	 	Title: Managing
      Director

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