Document:

EX-10.12

RESTRICTED STOCK AGREEMENT

     THIS RESTRICTED STOCK AGREEMENT (the “Agreement”) is made and entered into between
Footstar, Inc., a Delaware corporation (the “Company”), and Jonathan M. Couchman (the
“Grantee”) pursuant to the terms and conditions of the Footstar, Inc. 1996 Incentive
Compensation Plan (the “Plan”).

     THE PARTIES AGREE AS FOLLOWS:

     1. Grant of Restricted Stock. In consideration of services provided and to be
provided by Grantee pursuant to the employment agreement dated as of December 1, 2008 between the
Company and Grantee (the “Employment Agreement”), the Company hereby grants to Grantee
169,492 restricted shares of the Company’s common stock, $.01 par value (the “Stock”) on
the terms and conditions set forth in this Agreement.

     2. Issuance of Stock. The Company shall cause to be issued a certificate or
certificates representing the Stock granted pursuant to this award, registered in the name of
Grantee (or in the names of such person and his or her spouse as community property or as joint
tenants with right of survivorship). As a condition to the issuance of the Stock, Grantee shall
execute the stock power, endorsed in blank that is attached hereto, which shall permit the Company
to effect the forfeiture of the Stock as described below without further action on the part of
Grantee. Stock certificates shall be held in escrow until such time as the Stock is vested.

     3. Rights as Stockholder. On the date of this Agreement and thereafter unless and
until the Company reacquires the Stock pursuant to Section 5, Grantee shall have all the rights of
a stockholder of the Company (including, without limitation, voting, dividend and liquidation
rights) with respect to the Stock.

     4. Vesting. Except as provided below, this award shall vest (and the forfeiture
provision shall lapse) in accordance with the following schedule; provided, that,
Grantee remains continuously employed by the Company on the relevant vesting dates set forth below:

	 	 	 
	Percentage of Restricted Shares	 	Vesting Date
	50%

	 	February 28, 2009
	25%

	 	May 31, 2009
	15%

	 	August 30, 2009
	10%

	 	November 30, 2009

Notwithstanding the foregoing, if Grantee’s employment with the Company terminates due to any of
the following reasons: (i) death, (ii) Disability or (iii) termination without Cause (as such
terms are defined in the Employment Agreement), 100% of the unvested portion of the award shall
vest (and the forfeiture provision shall lapse). The provisions

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in Section 9 of the Plan (providing for accelerated vesting upon a change in control) shall not
apply to this award.

     5. Forfeiture Provision. The Company shall have the right to reacquire the Stock for
zero consideration and the holder shall be required to transfer the Stock to the Company if
Grantee’s employment with the Company terminates and the Stock has not vested as provided in
Section 4 above. The Company shall reacquire the Stock pursuant to this forfeiture provision
effective on the date employment terminates (unless prior to such date the Company provides written
notice to Grantee that it will not exercise its right to reacquire the Stock). After the date
employment terminates, the person from whom the Stock is to be acquired shall no longer have any
rights as a holder of the Stock and such Stock shall be deemed to have been reacquired by the
Company. Once a forfeiture is effected, this award shall be canceled and the Company shall have no
further obligation with respect thereto. The forfeiture provision contained in Section 7(e) of the
Plan (permitting the Company to effect certain cancellations and rescissions of awards) shall not
apply to this award.

     6. Transfer Restrictions.

          (a) General Rule. Until such time as the Stock is vested, Grantee shall not transfer,
assign, encumber or otherwise dispose of any of the Stock, except pursuant to a “permitted
transfer”. Once vested, Grantee may transfer the Stock but the Stock shall at all times that the
Company’s common stock is not registered under the Securities Act of 1933, as amended (the
“Securities Act”) be subject to a right of first offer. Grantee shall give the Company at least
thirty (30) days advance notice of any proposed transfer of the Stock. If Grantee transfers the
Stock, the terms of this Agreement shall apply to such transferee to the same extent as to Grantee
and the term “Grantee” as used in this Agreement shall refer to Grantee’s successor in interest.

          (b) Permitted Transfer. For purposes of this Agreement, a “permitted transfer” is:
(i) a transfer by beneficiary designation, will or intestate succession or (ii) a transfer for no
consideration to Grantee’s spouse, children or grandchildren (or their issue) or to a trust
established by Grantee for the benefit of Grantee or Grantee’s spouse, children or grandchildren
(or their issue), provided in either case that the transferee agrees in writing on a form
prescribed by the Company to be bound by all provisions of this Agreement.

     7. Additional Restrictions.

          (a) Compliance with Law and this Agreement. Regardless of whether the Stock is vested
or the offering and sale of Stock under the Plan have been registered under the Securities Act or
have been registered or qualified under the securities laws of any state, the Company at its
discretion may impose restrictions upon the transfer, assignment, encumbrance or other disposal of
the Stock (including the placement of appropriate legends on stock certificates or the imposition
of stop-transfer

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instructions) if, in the judgment of the Company, such restrictions are necessary or desirable
in order to achieve compliance with the Securities Act, the securities laws of any state or any
other law, or the restrictions described in this Agreement.

          (b) Grantee Undertaking. Grantee agrees to take whatever additional action and
execute whatever additional documents the Company may deem necessary or advisable to carry out or
effect one or more of the obligations or restrictions imposed on either Grantee or upon the Stock
pursuant to the provisions of this Agreement.

     8. Miscellaneous.

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

          (b) Entire Agreement. This Agreement, the Employment Agreement and the Plan
constitute the entire contract between the parties hereto with regard to the subject matter hereof.
They supersede any other agreements, representations or understandings (whether oral or written
and whether express or implied) which relate to the subject matter hereof.

          (c) Waiver. No waiver of any breach or condition of this Agreement shall be deemed to
be a waiver of any other or subsequent breach or condition whether of like or different nature.

          (d) Effective Date. This award is made and this Agreement is effective as of December
9, 2008 (the “Grant Date”).

     9. Tax Withholding.

          (a) Grantee agrees that, no later than the first to occur of (i) the date as of which the
restrictions on the Stock shall lapse with respect to all or any of the Stock covered by this
Agreement or (ii) the date required by Section 9(b) below, Grantee shall pay to the Company (in
cash or by bank check) any federal, state, or local taxes of any kind required by law to be
withheld, if any, with respect to the Stock for which restrictions shall lapse. The Company shall,
to the extent permitted by law, also have the right to deduct from any payment of any kind
otherwise due to Grantee any federal, state or local taxes of any kind required by law to be
withheld with respect to the Stock.

          (b) Grantee may elect, within thirty (30) days of the Grant Date, to include in gross income
for federal income tax purposes an amount equal to the fair market value of the Stock less the
amount, if any, paid by Grantee (other than by

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prior services) for the Stock granted hereunder pursuant to Section 83(b) of the Internal
Revenue Code of 1986, as amended. In connection with any such Section 83(b) election, Grantee shall
pay to the Company, or make such other arrangements satisfactory to the Company to pay to the
Company based on the fair market value of the Stock on the Grant Date, any federal, state or local
taxes required by law to be withheld with respect to such Stock at the time of such election. If
Grantee fails to make such payments, the Company shall, to the extent permitted by law, have the
right to deduct from any payment of any kind otherwise due to Grantee any federal, state or local
taxes required by law to be withheld with respect to such Stock.

     10. Representations and Warranties of Grantee. Grantee represents and warrants to the
Company that:

          (a) Agrees to Terms of the Plan and the Agreement. Grantee has received a copy of the
Plan and the Agreement and has read and understands the terms thereof. Grantee acknowledges that
there may be adverse tax consequences upon the vesting of Stock or disposition of the shares of
Stock once vested, and that Grantee should consult a tax advisor prior to such time.

          (b) Stock Ownership. Grantee is the record and beneficial owner of the shares of
Stock with full right and power to vote and receive dividends on such shares; provided,
that, Grantee understands that the stock certificates evidencing the Stock will bear a
legend referencing this Agreement. Any dividends which are paid in cash shall be distributed to
Grantee as soon as practicable. If any dividends are paid in Stock during an applicable period of
restriction, Grantee shall receive such shares subject to the same restrictions as the Stock with
respect to which they were issued.

     11. Adjustments. This award is subject to the adjustment provisions set forth in the
Plan.

     12. Restrictive Legends and Stop-Transfer Orders.

          (a) Legends. Grantee understands and agrees that the Company will place the legends
set forth below or similar legends on any stock certificate(s) evidencing the Stock, together with
any other legends that may be required by state or U.S. Federal securities laws, the Company’s
Certificate of Incorporation or Bylaws, any other agreement between Grantee and the Company or any
agreement between Grantee and any third party:

     THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON PUBLIC RESALE AND TRANSFER, AS SET FORTH IN A
RESTRICTED STOCK AWARD AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL
HOLDER OF THESE SHARES. SUCH PUBLIC SALE AND TRANSFER
RESTRICTIONS ARE BINDING ON TRANSFEREES OF THESE SHARES.

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          (b) Stop-Transfer Instructions. Grantee agrees that, to ensure compliance with the
restrictions imposed by this Agreement, the Company may issue appropriate “stop-transfer”
instructions to its transfer agent, if any, and if the Company transfers its own securities, it may
make appropriate notations to the same effect in its own records.

          (c) Refusal to Transfer. The Company will not be required (i) to transfer on its
books any shares of Stock that have been sold or otherwise transferred in violation of any of the
provisions of this Agreement or (ii) to treat as owner of such shares, or to accord the right to
vote or pay dividends to any purchaser or other transferee to whom such shares have been so
transferred.

     13. Modification. Except as specifically provided in the Plan, the Agreement may not
be modified except in writing signed by both parties.

     14. Interpretation. Any dispute regarding the interpretation of this Agreement shall
be submitted by Grantee or the Company to the Board of Directors of the Company (the
“Board”) for review. The resolution of such a dispute by the Board shall be final and
binding on the Company and Grantee.

[SIGNATURE PAGE FOLLOWS]

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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement.

	 	 	 
	 

	 	FOOTSTAR, INC.
	 
	 	 
	 

	 	By:                                        

Name:

Title:

     Grantee hereby accepts and agrees to be bound by all of the terms and conditions of this
Agreement and the Plan.

	 	 	 
	 

	 	                                        

Jonathan M. Couchman

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Stock Power

     FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and transfer(s) unto Footstar, Inc.
(the “Company”), ___(___) shares of the common stock, par value $.01 per
share, of the Company standing in his/her/their/its name on the books of the Company represented by
Certificate No. ___herewith and do(es) hereby irrevocably constitute and appoint
___his/her/their/its attorney-in-fact, with full power of substitution, to
transfer such shares on the books of the Company.

	 	 	 	 	 	 	 
	Dated:

	 	 
	 	Signature:
	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	Print Name and Mailing Address

	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 

			
	Instructions:	 	Please do not fill in any blanks other than the signature line and printed name and
mailing address. Please print your name exactly as you would like your name to appear on the
issued stock certificate. The purpose of this stock power is to enable the Company to
reacquire unvested stock granted to you (i.e., effect a forfeiture) in connection with an
employment termination that does not result in the vesting of your award without requiring
additional signatures on your part.

7EX-10.14

SUPPLEMENTAL RETIREMENT PLAN

FOR

SENIOR MANAGEMENT OF

FOOTSTAR, INC.

Effective October 14, 1996

Amended and Restated Effective as of January 1, 2005

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	ARTICLE 1. INTRODUCTION
	 	 	1	 
	ARTICLE 2. DEFINITIONS
	 	 	2	 
	2.01 Actuarial Equivalent
	 	 	 2	 
	2.02 Beneficiary
	 	 	 2	 
	2.03 Benefit Commencement Date
	 	 	 2	 
	2.04 Board
	 	 	 2	 
	2.05 Cause
	 	 	 2	 
	2.06 Change in Control
	 	 	 3	 
	2.07 Committee
	 	 	 4	 
	2.08 Code
	 	 	 4	 
	2.09 Compensation
	 	 	 4	 
	2.10 Corporation
	 	 	 5	 
	2.11 Early Retirement Date
	 	 	 5	 
	2.12 Footstar
	 	 	 5	 
	2.13 Normal Retirement Date
	 	 	 5	 
	2.14 Participant
	 	 	 5	 
	2.15 Plan
	 	 	 5	 
	2.16 Retiree
	 	 	 5	 
	2.17 Retirement Administration Committee
	 	 	 6	 
	2.18 Service; Year of Service
	 	 	 6	 
	2.19 Supplemental Retirement Benefit
	 	 	 6	 
	2.20 Vested Retirement Benefit
	 	 	 6	 
	ARTICLE 3. PARTICIPATION
	 	 	7	 
	3.01 Eligible Executives
	 	 	 7	 
	3.02 Participation
	 	 	 7	 
	3.03 Reclassification
	 	 	 7	 
	ARTICLE 4. SUPPLEMENTAL RETIREMENT BENEFIT
	 	 	8	 
	4.01 Eligibility for Supplemental Retirement Benefit
	 	 	 8	 
	4.02 Normal Retirement Benefit
	 	 	 8	 
	4.03 Early Retirement Benefit
	 	 	 8	 
	4.04 Benefit Commencement Date
	 	 	 8	 
	4.05 Form of Benefit Payment
	 	 	 9	 
	ARTICLE 5. DEATH BENEFIT
	 	 	10	 
	5.01 Death After Early Retirement Date
	 	 	10	 
	5.02 Death Prior to Early Retirement Date
	 	 	10	 
	5.03 Death After Benefit Commencement Date
	 	 	11	 
	5.04 Designation of Beneficiary
	 	 	11	 
	ARTICLE 6. PARTICIPANT OBLIGATIONS
	 	 	12	 
	6.01 Confidentiality; Cooperation with Regard to Litigation
	 	 	12	 
	6.02 Non-competition
	 	 	12	 
	6.03 Non-solicitation of Employees
	 	 	13	 
	6.04 Definitions
	 	 	13	 
	ARTICLE 7. CHANGE IN CONTROL
	 	 	14	 
	7.01 Applicability
	 	 	14	 
	7.02 Retirees and Beneficiaries At Time of Change in Control
	 	 	14	 
	7.03 Termination of Employment Within 24 Months Following a Change in Control
	 	 	15	 
	7.04 Termination of Employment More Than 24 Months Following a Change in Control
	 	 	16	 

Supplemental Retirement Plan for

Senior Management of Footstar, Inc.

Amended and Restated effective 1/1/2005

i

 

	 	 	 	 	 
	ARTICLE 8. FORFEITURE OF BENEFITS
	 	 	17	 
	ARTICLE 9. ADMINISTRATION
	 	 	18	 
	9.01 Powers and Duties of the Committee
	 	 	18	 
	9.02 Retirement Administration Committee
	 	 	18	 
	9.03 Delegation of Duties
	 	 	18	 
	9.04 Expenses
	 	 	18	 
	9.05 Indemnification of Retirement Administration Committee
	 	 	19	 
	9.06 Liability
	 	 	19	 
	9.07 Appeals Procedure
	 	 	19	 
	ARTICLE 10. AMENDMENT OR TERMINATION
	 	 	20	 
	ARTICLE 11. GENERAL PROVISIONS
	 	 	21	 
	11.01 Right to Withhold Taxes
	 	 	21	 
	11.02 No Right to Continued Employment
	 	 	21	 
	11.03 Benefits Non-Assignable
	 	 	21	 
	11.04 Unfunded Plan
	 	 	21	 
	11.05 Mental or Physical Incompetency
	 	 	21	 
	11.06 Governing Laws
	 	 	21	 
	11.07 Severability
	 	 	21	 

Supplemental Retirement Plan for

Senior Management of Footstar, Inc.

Amended and Restated effective 1/1/2005

ii

 

ARTICLE 1. INTRODUCTION

The Supplemental Retirement Plan for Senior Management of Footstar, Inc. is designed to provide a
benefit which, when added to the retirement income provided under other Company plans, will ensure
the payment of a competitive level of retirement income to key senior executives of Footstar, Inc.,
thereby providing an additional incentive for assuring orderly management succession.

The Plan is intended to be an unfunded plan maintained “primarily for the purpose of providing
deferred compensation for a select group of management or other highly compensated individuals”
within the meaning of the Employee Retirement Income Security Act.

Eligibility for participation in the Plan shall be limited to executives designated by the
Compensation Committee of the Board of Directors of Footstar, Inc.

This Plan became effective as of October 14, 1996. The Plan subsequently was amended and restated
effective                     , 2002.

This document sets forth the provisions of the Plan as amended and restated effective as of January
1, 2005 to comply with the requirements of Section 409A of the Internal Revenue Code.

Supplemental Retirement Plan for

Senior Management of Footstar, Inc.

Amended and Restated effective 1/1/2005

1

 

ARTICLE 1. DEFINITIONS

Wherever used herein, the following terms shall have the meanings set forth below:

1.01 Actuarial Equivalent

“Actuarial Equivalent” means a benefit which is equivalent in value to another benefit when
computed on the basis of the following actuarial assumptions:

	(a)	 	Mortality: The 1983 Group Annuity Mortality Table

	(b)	 	Interest: The Pension Benefit Guaranty Corporation rate used in the calculation of immediate
annuities applicable to the month that benefits will commence MINUS 0.5%.

1.02 Beneficiary

“Beneficiary” means the person designated by the Participant in accordance with Section 5.04 to
receive benefits in the event of the Participant’s death.

1.03 Benefit Commencement Date

“Benefit Commencement Date” means the first day on which benefits are scheduled to commence for a
Participant pursuant to Section 4.04.

1.04 Board

“Board” means the Board of Directors of Footstar, Inc.

1.05 Cause

“Cause” means, in connection with an involuntary termination by the Corporation of a Participant’s
employment, (a) the Participant’s willful and material breach of Article 6 of this Plan; (b) the
Participant is convicted of a felony involving moral turpitude; or (c) the Participant engages in
conduct that constitutes willful gross neglect or willful gross misconduct in carrying out his
duties under this Plan, resulting, in either case, in material harm to the financial condition or
reputation of Footstar. For purposes of this Plan, an act or failure to act on Participant’s part
shall be considered “willful” if it was done or omitted to be done by him or her not in good faith,
and shall not include any act or failure to act resulting from any incapacity of a Participant.

A
termination for Cause shall not take effect unless the following provisions are complied
with. The Participant shall be given written notice by Footstar of its intention to terminate him
or her or her for Cause, such notice (i) to state in detail the particular act or acts or failure
or failures to act that constitute the grounds on which the proposed termination for Cause is based
and (ii) to be given within 90 days of Footstar’s learning of such act or acts or failure or
failures to act. The Participant shall have 10 days after the date that such written notice has
been given to him or her in which to cure such conduct, to the extent such cure is possible. If he
or she fails to cure such conduct, the Participant shall then be entitled to a hearing before the
Committee at which the Participant is entitled to appear. Such hearing shall be held within 15
days of such notice to the Participant, provided he or she requests such hearing within 10 days of
the written notice from Footstar of the intention to terminate him or her or her for Cause. If,
within five days following such hearing, the Participant is furnished written notice by the Board
confirming that, in its judgment, grounds for Cause on the basis of the original notice exist, he
or she shall thereupon be terminated for Cause.

Supplemental Retirement Plan for

Senior Management of Footstar, Inc.

Amended and Restated effective 1/1/2005

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1.06 Change in Control

	(a)	 	Effective on and after January 1, 2005, “Change in Control” means (i) a change in the
ownership of Footstar as determined in accordance with Treasury Regulation section
1.409A-3(i)(5)(v), (ii) a change in effective control of Footstar as determined in accordance
with Treasury Regulation section 1.409A-3(i)(5)(vi), or (iii) a change in the
ownership of a substantial portion of the assets of Footstar as determined in accordance
with Treasury Regulation section 1.409A-3(i)(5)(vii).

	(b)	 	Effective prior to January 1, 2005, “Change in Control” means any of the following
occurrences:

	 	(i)	 	An acquisition by any Person of Beneficial Ownership of the shares of common
stock of Footstar then outstanding (the “Footstar Common Stock Outstanding”) or the
voting securities of Footstar then outstanding entitled to vote generally in the
election of directors (the “Footstar Voting Securities Outstanding”), if such
acquisition of Beneficial Ownership results in the Person’s Beneficially Owning 25% or
more of Footstar Common Stock Outstanding or 25% or more of the combined voting power
of Footstar Voting Securities Outstanding; or

	 	(ii)	 	The approval by the stockholders of Footstar of a reorganization, merger,
consolidation, complete liquidation or dissolution of Footstar, the sale or
disposition of all or substantially all of the assets of Footstar or similar corporate
transaction (in each case referred to in this Section 2.06(b) as a (“Corporate
Transaction”) or, if consummation of such Corporate Transaction is subject, at the
time of such approval by stockholders, to the consent of any government or
governmental agency, the obtaining of such consent (either explicitly or implicitly);
provided however, that any merger, consolidation, sale, disposition or other similar
transaction to or with a Participant or entities controlled by a Participant shall not
constitute a Corporate Transaction; or

	 	(iii)	 	A change in the composition of the Board such that the individuals who, as
of the Effective Date, constitute the Board (such Board shall be hereinafter referred
to as the “Incumbent Board”) cease for any reason to constitute at least a majority of
the Board; provided however, for purposes of this Section 2.06(b), that any individual
who becomes a member of the Board subsequent to the Effective Date whose election, or
nomination for election by Footstar’s stockholders, was approved by a vote of at least
a majority of those individuals who are members of the Board and who were also members
of the Incumbent Board (or deemed to be such pursuant to this proviso) shall be
considered as though such individual were a member of the Incumbent Board; and
provided, further, that any such individual whose initial assumption of office occurs
as a result of either an actual or threatened election contest (as such terms are used
in Rule 14a-11 of Regulation 14A under the Exchange Act, including any successor to
such Rule) or other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board shall in no event be considered as a member of
the Incumbent Board.

	 	(iv)	 	Notwithstanding the provisions set forth in paragraphs (a) and (b) above, the
following shall not constitute a Change in Control for purposes of this Section
2.06(b):

	 	(A)	 	Any acquisition by or consummation of a Corporate Transaction
with any entity that was a subsidiary of Footstar immediately prior to the
transaction or an

Supplemental Retirement Plan for

Senior Management of Footstar, Inc.

Amended and Restated effective 1/1/2005

3

 

	 	 	 	employee benefit plan (or related trust) sponsored or
maintained by Footstar or an entity that was a subsidiary of Footstar
immediately prior to the transaction if, immediately after such
transaction (including consummation of all related transactions), the
surviving entity is controlled by no Person other than such employee
benefit plan (or related trust) and/or other Persons who controlled
Footstar immediately prior to such transactions; or

	 	(B)	 	Any acquisition or consummation of a Corporate Transaction
following which more than 50% of, respectively, the shares then outstanding of
common stock of the corporation resulting from such acquisition or Corporate
Transaction and the combined voting power of the voting securities then
outstanding of such corporation entitled to vote generally in the election of
directors is then Beneficially Owned, directly or indirectly, by all or
substantially all of the individuals and entities who were Beneficial Owners,
respectively, of the Footstar Common Stock Outstanding and Footstar Voting
Securities Outstanding immediately prior to such acquisition or Corporate
Transaction in substantially the same proportions as their ownership,
immediately prior to such acquisition or Corporate Transaction, of the
Footstar Common Stock Outstanding and Footstar Voting Securities Outstanding,
as the case may be.

	 	(v)	 	For purposes of this Section 2.06(b),

	 	(A)	 	The terms “Beneficial Ownership”, “Beneficially Owning”,
“Beneficially Owned” and “Beneficial Owners” shall have the meanings ascribed
to such terms in Rule 13d-3 under the Exchange Act (including any successor to
such rule).

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

	 	(C)	 	The term “Person” shall have the meaning ascribed to such
term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and
14(d) thereof, including “group” as defined in Section 13(d) thereof.

1.07 Committee

“Committee” means the Compensation Committee of the Board.

1.08 Code

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

1.09 Compensation

“Compensation” means the sum of:

	(a)	 	The average of the Participant’s annual rate of base pay for the highest three (3) years out
of the last ten (10) years ending with the year in which the Participant’s Compensation
Measurement Date occurs; plus

	(b)	 	The Participant’s full target annual incentive compensation award in effect for the year in
which the Participant’s Compensation Measurement Date occurs.

Supplemental Retirement Plan for

Senior Management of Footstar, Inc.

Amended and Restated effective 1/1/2005

4

 

“Compensation Measurement Date” means (i) the date on which the Participant terminates employment
with the Corporation for any reason; or (ii) in the event of a Change in Control, the date of the
Change in Control if such date would result in a higher amount of Compensation for the Participant.

1.10 Corporation

	(a)	 	On and after January 1, 2005, “Corporation” means Footstar and any corporation which is a
member of a controlled group of corporations (as defined in Code Section 414(b) but applying
such section using a fifty percent (50%) ownership threshold instead of eighty percent (80%))
which includes Footstar and any trade or business (whether or not incorporated) which is under
common control (as defined in Code Section 414(c) but applying such section using a fifty
percent (50%) ownership threshold instead of eighty percent (80%)) with Footstar.

	(b)	 	Prior to January 1, 2005, “Corporation” means Footstar, Inc. and any subsidiary or other
entity at any time at which 50% or more of the voting power or beneficial interest of such
subsidiary or other entity, is owned directly or indirectly, by Footstar.

1.11 Early Retirement Date

“Early Retirement Date” means the date on which the Participant completes 10 Years of Service and
attains age 55. A Participant whose employment terminates for any reason within 60 days of the
date on which he or she would have satisfied both of the conditions set forth in the preceding
sentence shall be deemed to have reached his or her Early Retirement Date.

1.12 Footstar

“Footstar” means Footstar, Inc. and any successor to all or a substantial portion of its assets or
business which assumes the obligations of Footstar.

1.13 Normal Retirement Date

“Normal Retirement Date” means the date on which the Participant completes 10 Years of Service and
attains age 60. A Participant whose employment terminates for any reason within 60 days of the
date on which he or she would have satisfied both of the conditions set forth in the preceding
sentence shall be deemed to have reached his or her Normal Retirement Date.

1.14 Participant

“Participant” means any employee who is participating in the Plan pursuant to Article 3.

1.15 Plan

“Plan” means the Supplemental Retirement Plan for Senior Management of Footstar, Inc. as set forth
herein, and any amendments thereto.

1.16 Retiree

     “Retiree” means a Participant who has terminated employment and is eligible to receive, or is
receiving, a Supplemental Retirement Benefit pursuant to Article 4.

Supplemental Retirement Plan for

Senior Management of Footstar, Inc.

Amended and Restated effective 1/1/2005

5

 

1.17 Retirement Administration Committee

“Retirement Administration Committee means the Committee of the Starfund 401(k) Profit Sharing Plan
of Footstar, Inc. and Affiliated Companies.

1.18 Service; Year of Service

“Service” means a Participant’s period of active employment with the Corporation while a
Participant, but excluding, unless otherwise provided by the Committee, any period during which the
Participant was (a) engaged as a consultant or (b) receiving salary continuance or severance
payments. “Service” also shall include any additional periods that may be credited to a
Participant by the Committee in its sole discretion.

“Year of Service” means a period of 12 consecutive months of Service.

1.19 Supplemental Retirement Benefit

“Supplemental Retirement Benefit” means the retirement benefit payable to a Retiree as determined
pursuant to Article 4.

1.20 Vested Retirement Benefit

“Vested Retirement Benefit” means the aggregate annualized value of any benefits in respect of a
Participant under any pension, retirement, or deferred profit sharing plan maintained by the
Corporation (other than this Plan) that either have been paid prior to the Participant’s Benefit
Commencement Date or are vested as of the Participant’s Benefit Commencement Date. For this
purpose,

	(a)	 	Any elective pre-tax or after-tax contributions made by or on behalf of the Participant, and
any earnings attributable to such contributions, shall not be taken into account; and

	(b)	 	The aggregated annualized value of such benefits shall be computed in the form of a single
life annuity for the Participant’s life in accordance with the Actuarial Equivalent
assumptions set forth in Section 2.01.

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ARTICLE 2. PARTICIPATION

2.01 Eligible Executives

Participation in this Plan shall be limited to such employees of the Corporation as selected by the
Committee who, in the opinion of the Committee, occupy a position of senior management with the
Corporation.

2.02 Participation

An executive shall become a Participant in the Plan only if the executive is individually selected
by, and specifically named by, the Committee for inclusion in the Plan. In addition, the Committee
shall have the complete discretionary authority to impose such conditions upon initial
participation by an executive or continuing participation by an executive who is already a
Participant, as the Committee, in its sole discretion, determines appropriate, including the
execution by the Participant of such documents and agreements, which may include restrictive
covenants and other conditions, that the Committee requires.

2.03 Reclassification

If a Participant is reclassified to a responsibility which, in the opinion of the Committee, is not
a senior management position at any time prior to becoming eligible for benefits in accordance with
Article 4, the Participant’s continuing eligibility will be subject to the approval of the
Committee.

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ARTICLE 3. SUPPLEMENTAL RETIREMENT BENEFIT

3.01 Eligibility for Supplemental Retirement Benefit

	(a)	 	A Participant shall be eligible to receive the Supplemental Retirement Benefit under this
Plan if he or she terminates employment for any reason other than death or termination by the
Corporation for Cause after attaining his or her Early Retirement Date or Normal Retirement
Date.

	(b)	 	Except as otherwise provided pursuant to Article 7, a Participant shall not be eligible to
receive the Supplemental Retirement Benefit under this Plan if he or she does not meet the
conditions set forth in this Section 4.01.

3.02 Normal Retirement Benefit

The amount of the Supplemental Retirement Benefit payable to a Participant who terminates
employment at or after reaching his or her Normal Retirement Date shall be an annual benefit
payable for the life of the Participant equal to the lesser of (a) or (b):

	(a)	 	the excess, if any, of

	 	(i)	 	2% of the Participant’s Compensation multiplied by his or her Years of
Service;

	 	 	 	REDUCED BY

	 	(ii)	 	the Actuarial Equivalent value of the Participant’s Vested Retirement
Benefits determined as of his or her employment termination date.

	(b)	 	50% of the Participant’s Compensation.

3.03 Early Retirement Benefit

The amount of the Supplemental Retirement Benefit payable to a Participant who terminates
employment after reaching his or her Early Retirement Date but prior to his or her Normal
Retirement Date shall be an annual benefit payable for the life of the Participant equal to the
Normal Retirement Benefit determined under Section 4.02 reduced by 4% for each whole and partial
year (treating a partial year as a whole year) prior to the date the Participant would have reached
his or her Normal Retirement Date.

3.04 Benefit Commencement Date

Payment of a Participant’s Supplemental Retirement Benefit shall commence as of the first day of
the month next following the Participant’s employment termination date.

Notwithstanding the foregoing, in no event shall payment to a Participant who is a “specified
employee” within the meaning of Code Section 409A on his or her employment termination date,
commence earlier than the first day following the end of the six (6) month period following such
termination date.

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3.05 Form of Benefit Payment

	(a)	 	Single Life Annuity. A Participant’s Supplemental Retirement Benefit shall be payable in the
form of a single life annuity for the life of the Participant
unless he or she elects
an optional form of payment pursuant to paragraph (b) or (c).

	(b)	 	Optional Annuity Forms of Payment. A Participant may elect to have his or her Supplemental
Retirement Benefit paid in the form of an annuity payable for the life of the Participant with
a survivor annuity continuing for the life of his or her Beneficiary. The amount of the
annuity continued to the Beneficiary shall be 50% or 100% of the amount payable to the
Participant. The amount of such benefit shall be equal to the Actuarial Equivalent value of
the single life annuity payable under paragraph (a).
An election of an optional annuity form of payment must be made at least 12 months prior to
the Participant’s Benefit Commencement Date in accordance with the procedures established
by Retirement Administration Committee.

	(c)	 	Lump Sum Payment Option. A Participant may elect to have his or her Supplemental Retirement
Benefit paid in a single lump sum payment equal to the Actuarial Equivalent present value of
the single life annuity payable under paragraph (a) in accordance with the with the procedures
established by Retirement Administration Committee; provided that in no event may such
election be made later than the following date, as applicable:

	 	 	 
	 	 	Lump sum payment election must be made by
	Benefit Commencement Date:	 	no later than:
	On or before December 31, 2006

	 	December 31, 2005
	On or before December 31, 2007

	 	December 31, 2006
	On or before December 31, 2008

	 	December 31, 2007
	On or after January 1, 2009

	 	December 31, 2008

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ARTICLE 4. DEATH BENEFIT

4.01 Death After Early Retirement Date

	(a)	 	In the event that a Participant dies

	 	(i)	 	while still an employee after attaining his or her Early Retirement Date or
Normal Retirement Date, or
	 
	 	(ii)	 	after becoming eligible to receive a Supplemental Retirement Benefit but prior
to the Benefit Commencement Date,

	 	 	his or her Beneficiary shall be entitled to receive the benefit described in (b).
	 
	(b)	 	The amount of the benefit payable to the Beneficiary shall be an annual benefit for the life
of the Beneficiary in an amount equal to one-half of the Normal Retirement Benefit or Early
Retirement Benefit that would have been payable to the Participant (determined pursuant to
Section 4.02 or 4.03, as applicable) if the Participant had retired immediately prior to the
date of his or her death, provided, that if the age difference between the Participant
and the Beneficiary is greater than 5 years, the benefit payable shall be actuarially adjusted
to reflect the differences in the life expectancy of the Participant and the Beneficiary.
Such benefit shall be payable commencing as of the first day of the month next following the
Participant’s death.
	 
	(c)	 	If Participant’s Beneficiary is his or her estate, then the benefit payable such Beneficiary
shall be an immediate single lump sum payment in an amount equal to the Actuarial Equivalent
value of the one-half of the Normal Retirement Benefit or Early Retirement Benefit that would
have been payable (determined pursuant to Section 4.02 or 4.03, as applicable) in the form of
a single life annuity to the Participant if the Participant had retired immediately prior to
his or her death.

4.02 Death Prior to Early Retirement Date

	(a)	 	In the event that a Participant dies

	 	(i)	 	while still an employee prior to attaining his or her Early Retirement Date,
and
	 
	 	(ii)	 	the Participant is survived by his or her spouse or, the Participant is not
survived by his or her spouse but is survived by a Dependent Child or Dependent
Children,

	 	 	such spouse or Dependent Child or Children shall be entitled to receive the benefit
described in paragraph (b).
	 
	(b)	 	The amount of the benefit payable to the surviving spouse shall be an annual benefit payable
for the life of the spouse amount equal to one-half of the Normal Retirement Benefit that
would have been payable to the Participant (determined pursuant to Section 4.02) if the
Participant had retired immediately prior to the date of his or her death, reduced by 4% for
each whole and partial year (treating a partial year as a whole year) prior to the date the
Participant would have reached his or her Normal Retirement Date, and provided, that
if the age difference between the Participant and the Beneficiary is greater than 5 years, the
benefit payable shall be actuarially adjusted to reflect the differences in the life
expectancy of the Participant and the Beneficiary. Such benefit shall be payable commencing
as of the first day of the month next following the Participant’s death.

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	(c)	 	In the event that the Participant is not survived by his or her spouse, but is survived by a
Dependent Child or Children, then an annual benefit equal to the annual benefit that would
have been payable to a surviving spouse pursuant to paragraph (b) above, shall be paid to each
such Dependent Child, in equal shares, until the date such Dependent Child attains age 21 or,
if earlier, the date such Dependent Child dies.
	 
	(d)	 	For purposes of this Section 5.02, “Dependent Child” or “Dependent Children” means each
natural and/or adopted child of a Participant who is under the age of 21.

4.03 Death After Benefit Commencement Date

In the event that a Participant dies after his or her Benefit Commencement Date, then benefits
shall be payable only in accordance with form of benefit payment in effect on the Participant’s
date of death.

4.04 Designation of Beneficiary

	(a)	 	Each Participant may designate, in the form and manner prescribed by the Committee, one or
more persons as the Beneficiary under this Plan. A Participant also may designate one or more
persons as a contingent beneficiary in the event that the Participant’s primary Beneficiary
does not survive the Participant.
	 
	(b)	 	Any Beneficiary designation made by a Participant may be changed or revoked by the
Participant at any time or from time to time prior to his or her Benefit Commencement Date, or
death, if earlier.
	 
	(c)	 	If no Beneficiary is designated or survives the Participant, then the Participant’s
Beneficiary shall be his or her spouse, if living; otherwise, the Participant’s estate.

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ARTICLE 5. PARTICIPANT OBLIGATIONS

5.01 Confidentiality; Cooperation with Regard to Litigation

	(a)	 	During a Participant’s employment with Footstar and thereafter, the Participant shall not,
without the prior written consent of Footstar, disclose to anyone except in good faith in the
ordinary course of business to a person who will be advised by the member to keep such
information confidential or make use of any Confidential Information, except when required to
do so by legal process, by any governmental agency having supervisory authority over the
business of Footstar or by any administrative or legislative body (including a committee
thereof) that requires him or her to divulge, disclose or make accessible such information.
In the event that the Participant is so ordered, he or she shall give prompt written notice to
Footstar in order to allow Footstar the opportunity to object to or otherwise resist such
order.
	 
	(b)	 	“Confidential Information” shall mean all information that is not known or available to the
public concerning the business of Footstar or any Subsidiary relating to any of their
products, product development, trade secrets, customer suppliers, finances, and business plans
and strategies. For this purpose, information known or available generally within the trade
or industry of Footstar or any Subsidiary shall be deemed to be known or available to the
public. Confidential Information shall include information that is, or becomes, known to the
public as a result of a breach by the Executive of the provisions of Section 6.01(a) above.
	 
	(c)	 	The Participant agrees to cooperate with Footstar, (including following the Participant’s
termination of employment for any reason), by making himself or herself available to testify
on behalf of Footstar or any Subsidiary or affiliate of Footstar, in any action, suit, or
proceeding, whether civil, criminal, administrative, or investigative, and to assist Footstar,
or any Subsidiary or affiliate of Footstar, in any such action, suit, or proceeding, by
providing information and meeting and consulting with the Board or its representatives or
counsel, or representatives or counsel to Footstar, or any Subsidiary or affiliate of
Footstar, as requested. Footstar agrees to reimburse the Participant, on an after-tax basis,
for all expenses actually incurred in connection with his provision of testimony or
assistance.

5.02 Non-competition

During the Restriction Period (as defined below), the Participant shall not engage in Competition
with Footstar, or any Subsidiary. “Competition” shall mean engaging in any activity, except as
provided below, for a Competitor of Footstar or any Subsidiary, whether as an employee, consultant,
principal, agent, officer, director, partner, shareholder (except as a less than one percent
shareholder of a publicly trade company) or otherwise. A “Competitor” shall mean (i) those
companies designated by Footstar and communicated to the Participant in an Employment Agreement,
Change in Control Agreement or otherwise) and any successor or successors thereto) or (ii) the
portion of any other corporation or other entity or start-up corporation or entity that is engaged
in the Discount Retail Footwear Business within fifty (50) miles of any Discount Retail Footwear
Business outlet in the United States of Footstar or any Subsidiary, provided that a corporation or
entity described in clause (ii) above shall not be deemed to be a Competitor if the Participant
shall not either directly or indirectly oversee or manage the activities of such corporation or
entity’s division or unit engaged in the Discount Retail Footwear Business. If the Participant
commences employment or becomes a consultant, principal, agent, officer, director, partner, or
shareholder of any entity that is not a Competitor at the time the Participant initially becomes
employed or becomes a consultant, principal, agent, officer, director, partner, or shareholder of
any entity, future activities of such entity shall not result in a violation of this provision
unless (x) such activities

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were contemplated at the time the Participant initially became employed or becomes a consultant,
principal, agent, officer, director, partner or shareholder of the entity (and the contemplation of
such activities was known to the Participant) or (y) the Participant commences directly or
indirectly overseeing or managing the activities of Footstar or Subsidiary so long as he or she
does not regularly participate in discussions with regard to the competing business. For purposes
of the foregoing, “Discount Retail Footwear Business” shall mean a group of four or more stores
which primarily sell discount footwear.

5.03 Non-solicitation of Employees

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

5.04 Definitions

For purposes of this Article 6 —

	(a)	 	“Restriction Period” shall mean the period beginning with the Participant’s initial date of
employment by Footstar and ending the date of a Change in Control except that if the
Participant has an Employment Agreement with Footstar it shall have the meaning contained in
such employment agreement.
	 
	(b)	 	“Subsidiary” shall mean any corporation controlled directly or indirectly by Footstar and any
affiliate of Footstar.

Supplemental Retirement Plan for

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ARTICLE 6. CHANGE IN CONTROL

6.01 Applicability

This Article 7 shall apply in the event of a “Change in Control”.

6.02 Retirees and Beneficiaries At Time of Change in Control

The following rules shall apply to the payment of benefits to individuals who are Retirees or
Beneficiaries of deceased Participants at the time a Change in Control occurs:

	(a)	 	Retirees.

	 	 	 
	Status of benefits at time of Change	 	 
	in Control	 	Effect of Change in Control
	Single Life Annuity

If receiving payment of benefits in
the form of a single life annuity

-OR-

If Retiree has not elected the
joint and survivor annuity option
pursuant to Section 4.05(b)(i) and
payments have not yet begun

	 	Retiree to receive immediate lump
sum payment equal to Actuarial
Equivalent of future benefits in
lieu of annuity payments.
	 
	 	 
	Joint and Survivor Annuity

If receiving payment of benefits in
the form of a joint and survivor
annuity

-OR-

If Retiree has elected the joint
and survivor annuity option
pursuant to Section 4.05(b)(i) and
payments have not yet begun

	 	Retiree and Beneficiary to receive
immediate lump sum payments equal to
Actuarial Equivalent of respective
portions of future benefits in lieu
of annuity payments.

	(b)	 	Beneficiaries of Deceased Participants.

	 	 	 
	Status of benefits at time	 	 
	of Change in Control	 	Effect of Change in Control
	Payment of benefits has begun

	 	Beneficiary to receive immediate lump
sum payment equal to Actuarial
Equivalent of future benefits in lieu
of annuity payments.
	 
	 	 
	Payment of benefits has not yet
begun

	 	Beneficiary to receive immediate lump
sum payment equal to Actuarial
Equivalent of the death benefit
determined pursuant to Article 5 in
lieu of annuity payments.

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6.03 Termination of Employment Within 24 Months Following a Change in Control

	(a)	 	Participants. A Participant shall be entitled to benefits under this Section 7.03 if during
the 24-month period following a Change in Control

	 	(i)	 	the Participant’s employment is terminated by the Corporation for any reason
other than Cause, or
	 
	 	(ii)	 	the Participant terminates employment for “Good Reason” (as defined below).

	 	 	 
	Status of at time of	 	 
	employment termination	 	Effect of Change in Control
	Termination occurs
at or after reaching Normal Retirement Date

	 	Participant to receive immediate lump sum payment
equal to Actuarial Equivalent of Participant’s
Normal Retirement Benefit.
	 
	 	 
	Termination occurs
prior to Normal
Retirement Date but
after 10 Years of
Service

	 	Participant to receive immediate lump sum payment
equal to Actuarial Equivalent of Participant’s
Normal Retirement Benefit payable in the form of a
single life annuity commencing as of the date on
which the Participant would have reached his or her
Normal Retirement Date if he or she had continued in
employment.
	 
	 	 
	Termination occurs
prior to completing
10 Years of Service

	 	Participant to receive immediate lump sum payment
equal to Actuarial Equivalent of the benefit
determined pursuant to the following formula payable
in the form of a single life annuity commencing as
of the date on which the Participant would have
reached his or her Normal Retirement Date if he or
she had continued in employment.

	 

	 	Participant’s Normal Retirement Benefit

TIMES

	 

	 	Years of Service as of date of employment termination
	 

	 	10

	(b)	 	Beneficiaries. In the event that a Participant dies while employed during the 24-month
period following a Change in Control, then his or her Beneficiary shall be entitled to receive
immediate lump sum payment equal to Actuarial Equivalent of the death benefit determined
pursuant to Article 5 in lieu of annuity payments.
	 
	(c)	 	Good Reason. For purposes of this Section 7.03, “Good Reason” means any of the following
which occur after the occurrence of a Change in Control without the express written consent of
the affected Participant:

	 	(i)	 	An assignment of any duties to the Participant which are inconsistent with his
or her status as a senior executive of Footstar.

Supplemental Retirement Plan for

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	 	(ii)	 	Any decrease in annual base pay or any reduction in annual target incentive
compensation opportunity.
	 
	 	(iii)	 	Any other failure by Footstar to perform any material obligation under, or
breach by Footstar of any material provision of an employment agreement with the
Participant that is not cured within 30 days.
	 
	 	(iv)	 	Any failure to secure the agreement of any successor corporation or other
entity to the Corporation to fully assume Footstar’s obligations under an employment
agreement with the Participant.
	 
	 	(v)	 	A relocation of the Participant’s principal place of employment outside a
35-mile radius of his or her principal place of employment as in effect immediately
prior to such Change in Control.

6.04 Termination of Employment More Than 24 Months Following a Change in Control

	(a)	 	Participants. The following rules shall apply to a Participant whose employment is
terminated by the Corporation for any reason other than Cause after the end of the 24-month
period following a Change in Control:

	 	 	 
	Status of at time of	 	 
	employment termination	 	Effect of Change in Control
	Termination occurs after Participant reaches his or her
Early Retirement Date or Normal Retirement Date

	 	Benefits payable in accordance with Article 4.
	 
	 	 
	Termination occurs
prior to Participant
reaching his or her
Early Retirement
Date

	 	Participant shall receive the benefit determined
pursuant to the following formula commencing as of
the date on which the Participant would have reached
his or her Normal Retirement Date if he or she had
continued in employment.

	 

	 	Participant’s Normal Retirement Benefit

TIMES

Years of Service as of date of the Change in Control

10

The benefit will be payable in one of the payment
forms described in Section 4.05.

	(b)	 	Beneficiaries. In the event that a Participant dies after end of the 24-month period
following a Change in Control, then his or her Beneficiary shall be entitled to receive death
benefits in accordance with Article 5.

Supplemental Retirement Plan for

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Amended and Restated effective 1/1/2005

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ARTICLE 7. FORFEITURE OF BENEFITS

Notwithstanding any other provision of the Plan, future payment of benefits hereunder to a
Participant or Beneficiary will, at the discretion of the Committee, be discontinued and forfeited,
and the Corporation will have no further obligation hereunder to such Participant or Beneficiary,
if any of the following circumstances occur:

	(a)	 	The Participant is discharged from employment with the Corporation for Cause;
	 
	(b)	 	The Participant at any time violates any of the provisions of Article 6; or
	 
	(c)	 	The Participant is convicted of a crime involving dishonesty or fraud on the part of such
Participant in his relationship with the Corporation.

The Committee shall have sole discretion with respect to the application of the provisions of this
paragraph and such exercise of discretion shall be conclusive and binding upon the Participant, his
or her Beneficiary and all other persons.

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ARTICLE 8. ADMINISTRATION

8.01 Powers and Duties of the Committee

The Committee shall have the sole discretion and authority:

	(a)	 	To determine the eligibility of employees to participate in the Plan;
	 
	(b)	 	To credit a Participant with additional Service; and
	 
	(c)	 	To waive any or all of the requirements set forth in this Plan with respect to any
Participant.

The Committee’s exercise of its discretion under this Plan with respect to any Participant will not
create a precedent for any other Participant.

8.02 Retirement Administration Committee

The Plan shall be administered by the Retirement Administration Committee. Except as otherwise
provided in Section 9.01, the Retirement Administration Committee shall have full authority and
power to administer and construe the Plan, subject to applicable requirements of law. Without
limiting the generality of the foregoing, the Retirement Administration Committee shall have the
following powers and duties:

	(a)	 	To make and enforce such rules and regulations as it deems necessary or proper for the
efficient administration of the Plan;
	 
	(b)	 	To interpret the Plan, its interpretation thereof in good faith to be final and conclusive on
all persons claiming benefits under the Plan;
	 
	(c)	 	To decide all questions concerning the Plan; and
	 
	(d)	 	To appoint such agents, counsel, accountants, consultants and other persons as may be
required to assist in administering the Plan.

All decisions made by the Retirement Administration Committee pursuant to the provisions of the
Plan shall be made in its sole discretion and shall be final, conclusive, and binding upon all
parties.

8.03 Delegation of Duties

The Retirement Administration Committee may delegate such of its duties and may engage such experts
and other persons as it deems appropriate in connection with administering the Plan. The
Retirement Administration Committee shall be entitled to rely conclusively upon, and shall be fully
protected in any action taken by the Retirement Administration Committee in good faith in reliance
upon any opinions or reports furnished them by any such experts or other persons.

8.04 Expenses

All expenses incurred prior to the termination of the Plan that shall arise in connection with the
administration of the Plan, including, without limitation, administrative expenses and compensation
and other expenses and charges of any actuary, counsel, accountant, specialist or other person who
shall be

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employed by the Retirement Administration Committee in connection with the administration of the
plan, shall be paid by the Corporation.

8.05 Indemnification of Retirement Administration Committee

Footstar agrees to indemnify and to defend to the fullest extent permitted by law any person
serving as a member of the Retirement Administration Committee, and each employee of the
Corporation or any of its affiliates appointed by the Retirement Administration Committee to carry
out duties under this Plan, against all liabilities, damages, costs and expenses (including
attorneys’ fees and amounts paid in settlement of any claims approved by Footstar) occasioned by
any act or omission to act in connection with the Plan, if such act or omission is in good faith.

8.06 Liability

To the extent permitted by law, neither the Retirement Administration Committee nor any other
person shall incur any liability for any acts or for any failure to act except for liability
arising out of such person’s own willful misconduct or willful breach of the Plan.

8.07 Appeals Procedure

	(a)	 	The Retirement Administration Committee shall approve or wholly or partially deny all claims
for benefits under the Plan within a reasonable period of time after all required
documentation has been furnished to the Retirement Administration Committee.
	 
	(b)	 	If a claim is wholly or partially denied, the Retirement Administration Committee shall
provide the claimant with written notice setting forth the specific reasons for the denial,
making reference to the pertinent provisions of the Plan or the Plan documents on which the
denial is based; describe any additional material or information that should be received
before the claim may be acted upon favorably, and explain why such material or information, if
any, is needed; and inform the person making the claim of his right pursuant to this Section
to request review of the decision by the Retirement Administration Committee.
	 
	(c)	 	A claimant shall have the right to request a review of the decision denying the claim. Such
request must be made by filing a written application for review with the Retirement
Administration Committee no later than sixty (60) days after receipt by the claimant of
written notice of the denial of his claim. The claimant may review pertinent Plan documents
and shall submit such written comments and other information which he wishes the Retirement
Administration Committee to consider in connection with his claim.
	 
	(d)	 	The Retirement Administration Committee may hold any hearing or conduct any independent
investigation which it deems necessary to render its decision on review. Such decision shall
be made as soon as practicable after the Retirement Administration Committee receives the
request for review. Written notice of the decision on review shall be promptly furnished to
the claimant and shall include specific reasons for the decision.
	 
	(e)	 	For all purposes under the Plan, decisions on claims (where no review is requested) and
decisions on review (where review is requested) shall be final, binding and conclusive on all
interested persons.

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ARTICLE 9. AMENDMENT OR TERMINATION

The Committee reserves the right to modify or amend, in whole or in part, or to terminate, this
Plan at any time; provided, however, that no such modification, amendment or termination
shall adversely affect the right of any Participant (or Beneficiary) to receive the benefits of
such Participant (or Beneficiary) should have received under the Plan upon termination of
employment with the Corporation for any reason, including retirement, death or disability had the
Plan not been so modified, amended or terminated, taking into account the Participant’s Service and
age at the time of such Participant’s actual termination of employment with the Corporation for any
reason including retirement, death or disability.

Supplemental Retirement Plan for

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ARTICLE 10. GENERAL PROVISIONS

10.01 Right to Withhold Taxes

The Corporation shall have the right to withhold such amounts from any payment under this Plan as
it determines necessary to fulfill any federal, state, or local wage or compensation withholding
requirements.

10.02 No Right to Continued Employment

Neither the Plan, nor any action taken under the Plan, shall confer upon any Participant any right
to continuance of employment by the Corporation nor shall it interfere in any way with the right of
the Corporation to terminate any Participant’s employment at any time.

10.03 Benefits Non-Assignable

Benefits under the Plan may not be anticipated, assigned or alienated, and will not be subject to
claims of his creditors by any process whatsoever, except as specifically provided in this Plan or
by the Retirement Administration Committee in its sole discretion.

10.04 Unfunded Plan

Nothing in this Plan shall be construed as giving any Participant or his or her legal
representative, or designated beneficiary, any claim against any specific assets of the Corporation
or as imposing any trustee relationship upon the Corporation in respect of the Participant. The
Corporation shall not be required to segregate any assets in order to provide for the satisfaction
of the obligations hereunder. If and to the extent that the Participant or his or her legal
representative or designated beneficiary acquires a right to receive any payment pursuant to this
Plan, such right shall be no greater than the right of an unsecured general creditor of the
Corporation.

10.05 Mental or Physical Incompetency

If the Retirement Administration Committee determines that any person entitled to payments under
the Plan is incompetent by reason of physical or mental disability, as established by a court of
competent jurisdiction, the Retirement Administration Committee may cause all payments thereafter
becoming due to such person to be made to any other person for his benefit, without responsibility
to follow the application of amounts so paid. Payments made pursuant to this Section shall
completely discharge the Retirement Administration Committee and the Corporation.

10.06 Governing Laws

The provisions of the Plan shall be construed, administered and enforced according to applicable
Federal law and the laws of the State of New York.

10.07 Severability

The provisions of the Plan are severable. If any provision of the Plan is deemed legally or
factually invalid or unenforceable to any extent or in any application, then the remainder of the
provision and the Plan, except to such extent or in such application, shall not be affected, and
each and every provision of

Supplemental Retirement Plan for

Senior Management of Footstar, Inc.

Amended and Restated effective 1/1/2005

21

 

the Plan shall be valid and enforceable to the fullest extent and in the broadest application
permitted by law.

Supplemental Retirement Plan for

Senior Management of Footstar, Inc.

Amended and Restated effective 1/1/2005

22

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