Document:

EX-10.13

 

Exhibit 10.13

CONFIRMATION

	 	 	 
	Date:

	 	March 27, 2008
	 
	 	 
	To:

	 	PHH Corporation (“Issuer”)
	 
	 	 
	Facsimile:

	 	(856) 917-4278
	 
	 	 
	Attention:

	 	Treasurer
	 
	 	 
	From:

	 	Citibank, N.A. (“Citi”)
	 
	 	 
	Facsimile:

	 	(212) 615-8985

Transaction Reference Number:

          The purpose of this communication (this “Confirmation”) is to set forth the terms and
conditions of the above-referenced Transaction entered into on the Trade Date specified below
between you and us. This Confirmation supplements, forms a part of, and is subject to the Master
Terms and Conditions for Warrants Issued by PHH Corporation, between Citibank, N.A. and PHH
Corporation, dated as of March 27, 2008 (as amended from time to time, the “Master
Confirmation”).

          1. The definitions and provisions contained in the Definitions (as such term is defined in the
Master Confirmation) and in the Master Confirmation are incorporated into this Confirmation. In
the event of any inconsistency between those definitions and provisions and this Confirmation, this
Confirmation will govern.

          2. The particular Transaction to which this Confirmation relates shall have the following
terms:

	 	 	 
	Trade Date:

	 	March 27, 2008
	 
	 	 
	Effective Date:

	 	April 2, 2008
	 
	 	 
	Strike Price:

	 	USD 27.20
	 
	 	 
	Premium:

	 	USD 6,265,800
	 
	 	 
	Premium Payment Date:

	 	The Effective Date.
	 
	 	 
	Maximum Delivery Amount:

	 	3,246,000 Shares (as adjusted for stock splits, stock dividends,
recapitalizations and similar events)

For each Component of the Transaction, the Number of Warrants and Expiration Date are as set forth
below.

A-1

 

	 	 	 	 	 
	Component Number	 	Number of Warrants	 	Expiration Date
	1.
	 	26,829
	 	July 16, 2012
	2.
	 	26,829
	 	July 17, 2012
	3.
	 	26,829
	 	July 18, 2012
	4.
	 	26,829
	 	July 19, 2012
	5.
	 	26,829
	 	July 20, 2012
	6.
	 	26,829
	 	July 23, 2012
	7.
	 	26,829
	 	July 24, 2012
	8.
	 	26,829
	 	July 25, 2012
	9.
	 	26,829
	 	July 26, 2012
	10.
	 	26,829
	 	July 27, 2012
	11.
	 	26,829
	 	July 30, 2012
	12.
	 	26,829
	 	July 31, 2012
	13.
	 	26,829
	 	August 1, 2012
	14.
	 	26,829
	 	August 2, 2012
	15.
	 	26,829
	 	August 3, 2012
	16.
	 	26,829
	 	August 6, 2012
	17.
	 	26,829
	 	August 7, 2012
	18.
	 	26,829
	 	August 8, 2012
	19.
	 	26,829
	 	August 9, 2012
	20.
	 	26,829
	 	August 10, 2012
	21.
	 	26,829
	 	August 13, 2012
	22.
	 	26,829
	 	August 14, 2012
	23.
	 	26,829
	 	August 15, 2012
	24.
	 	26,829
	 	August 16, 2012
	25.
	 	26,829
	 	August 17, 2012
	26.
	 	26,829
	 	August 20, 2012
	27.
	 	26,829
	 	August 21, 2012
	28.
	 	26,829
	 	August 22, 2012
	29.
	 	26,829
	 	August 23, 2012
	30.
	 	26,829
	 	August 24, 2012
	31.
	 	26,829
	 	August 27, 2012
	32.
	 	26,829
	 	August 28, 2012
	33.
	 	26,829
	 	August 29, 2012
	34.
	 	26,829
	 	August 30, 2012
	35.
	 	26,829
	 	August 31, 2012
	36.
	 	26,829
	 	September 4, 2012
	37.
	 	26,829
	 	September 5, 2012
	38.
	 	26,829
	 	September 6, 2012
	39.
	 	26,829
	 	September 7, 2012
	40.
	 	26,829
	 	September 10, 2012
	41.
	 	26,829
	 	September 11, 2012
	42.
	 	26,829
	 	September 12, 2012
	43.
	 	26,829
	 	September 13, 2012
	44.
	 	26,829
	 	September 14, 2012
	45.
	 	26,829
	 	September 17, 2012
	46.
	 	26,829
	 	September 18, 2012
	47.
	 	26,829
	 	September 19, 2012
	48.
	 	26,829
	 	September 20, 2012
	49.
	 	26,829
	 	September 21, 2012
	50.
	 	26,829
	 	September 24, 2012

A-2

 

	 	 	 	 	 
	Component Number	 	Number of Warrants	 	Expiration Date
	51.
	 	26,829
	 	September 25, 2012
	52.
	 	26,829
	 	September 26, 2012
	53.
	 	26,829
	 	September 27, 2012
	54.
	 	26,829
	 	September 28, 2012
	55.
	 	26,829
	 	October 1, 2012
	56.
	 	26,829
	 	October 2, 2012
	57.
	 	26,829
	 	October 3, 2012
	58.
	 	26,829
	 	October 4, 2012
	59.
	 	26,829
	 	October 5, 2012
	60.
	 	26,829
	 	October 8, 2012
	61.
	 	26,829
	 	October 9, 2012
	62.
	 	26,829
	 	October 10, 2012
	63.
	 	26,829
	 	October 11, 2012
	64.
	 	26,829
	 	October 12, 2012
	65.
	 	26,829
	 	October 15, 2012
	66.
	 	26,829
	 	October 16, 2012
	67.
	 	26,829
	 	October 17, 2012
	68.
	 	26,829
	 	October 18, 2012
	69.
	 	26,829
	 	October 19, 2012
	70.
	 	26,829
	 	October 22, 2012
	71.
	 	26,829
	 	October 23, 2012
	72.
	 	26,829
	 	October 24, 2012
	73.
	 	26,829
	 	October 25, 2012
	74.
	 	26,829
	 	October 26, 2012
	75.
	 	26,829
	 	October 29, 2012
	76.
	 	26,829
	 	October 30, 2012
	77.
	 	26,829
	 	October 31, 2012
	78.
	 	26,829
	 	November 1, 2012
	79.
	 	26,829
	 	November 2, 2012
	80.
	 	26,829
	 	November 5, 2012
	81.
	 	26,829
	 	November 6, 2012
	82.
	 	26,829
	 	November 7, 2012
	83.
	 	26,829
	 	November 8, 2012
	84.
	 	26,829
	 	November 9, 2012
	85.
	 	26,829
	 	November 12, 2012
	86.
	 	26,829
	 	November 13, 2012
	87.
	 	26,829
	 	November 14, 2012
	88.
	 	26,829
	 	November 15, 2012
	89.
	 	26,829
	 	November 16, 2012
	90.
	 	26,829
	 	November 19, 2012
	91.
	 	26,829
	 	November 20, 2012
	92.
	 	26,829
	 	November 21, 2012
	93.
	 	26,829
	 	November 23, 2012
	94.
	 	26,829
	 	November 26, 2012
	95.
	 	26,829
	 	November 27, 2012
	96.
	 	26,829
	 	November 28, 2012
	97.
	 	26,829
	 	November 29, 2012
	98.
	 	26,829
	 	November 30, 2012
	99.
	 	26,829
	 	December 3, 2012
	100.
	 	26,829
	 	December 4, 2012
	101.
	 	26,829
	 	December 5, 2012
	102.
	 	26,829
	 	December 6, 2012
	103.
	 	26,829
	 	December 7, 2012

A-3

 

	 	 	 	 	 
	Component Number	 	Number of Warrants	 	Expiration Date
	104.
	 	26,829
	 	December 10, 2012
	105.
	 	26,829
	 	December 11, 2012
	106.
	 	26,829
	 	December 12, 2012
	107.
	 	26,829
	 	December 13, 2012
	108.
	 	26,829
	 	December 14, 2012
	109.
	 	26,829
	 	December 17, 2012
	110.
	 	26,829
	 	December 18, 2012
	111.
	 	26,829
	 	December 19, 2012
	112.
	 	26,829
	 	December 20, 2012
	113.
	 	26,829
	 	December 21, 2012
	114.
	 	26,829
	 	December 24, 2012
	115.
	 	26,829
	 	December 26, 2012
	116.
	 	26,829
	 	December 27, 2012
	117.
	 	26,829
	 	December 28, 2012
	118.
	 	26,829
	 	December 31, 2012
	119.
	 	26,829
	 	January 2, 2013
	120.
	 	26,862
	 	January 3, 2013

A-4

 

          3. Issuer hereby agrees (a) to check this Confirmation promptly upon receipt so that errors or
discrepancies can be promptly identified and rectified and (b) to confirm that the foregoing
correctly sets forth the terms of the agreement between us with respect to the particular
Transaction to which this Confirmation relates, by manually signing this Confirmation and providing
any other information requested herein or in the Master Confirmation and immediately returning an
executed copy to Confirmation Unit via 212-615-8985. Hard copies should be returned to Citibank,
N.A., 333 West 34th Street, 2nd Floor, New York, New York 10001, Attention: Confirmation Unit.

	 	 	 	 	 
	 	Yours sincerely,

CITIBANK, N.A.

 	 
	 	By:  	/s/ Jason Shrednick
 	 
	 	 	Name:  	Jason Shrednick 	 
	 	 	Title:  	Authorized Signatory 	 

	 	 	 	 	 
	Confirmed as of the date first above written:

PHH CORPORATION

 	 	 
	By:  	/s/ Mark E. Johnson
 	 	 
	 	Name:  	Mark E. Johnson 	 	 
	 	Title:  	Vice President & TreasurerEX-10.1

 

Exhibit 10.1

 

INTELLECTUAL PROPERTY PURCHASE AGREEMENT

BY AND AMONG

FOOTSTAR CORPORATION,

SEARS BRANDS LLC

AND

SEARS HOLDINGS CORPORATION

 

DATED AS OF APRIL 3, 2008

 

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	1.
	 	Purchase and Sale	 	 	1	 
	 
	 	1.1  Assets to Be Transferred	 	 	1	 
	 
	 	1.2  Specified Liabilities	 	 	1	 
	 
	 	1.3  Purchase Price	 	 	1	 
	 
	 	1.4  Closing	 	 	1	 
	 
	 	1.5  Closing Deliveries	 	 	2	 
	2.
	 	License; Use of Intellectual Property	 	 	2	 
	 
	 	2.1  License	 	 	2	 
	 
	 	2.2  Use of Intellectual Property	 	 	3	 
	3.
	 	[Reserved]	 	 	4	 
	4.
	 	Representations and Warranties of the Seller	 	 	4	 
	 
	 	4.1  Due Incorporation and Authority	 	 	4	 
	 
	 	4.2  No Conflicts	 	 	5	 
	 
	 	4.3  Material Contracts	 	 	5	 
	 
	 	4.4  Intellectual Property	 	 	6	 
	 
	 	4.5  Brokers	 	 	7	 
	5.
	 	Representations and Warranties of the Purchaser	 	 	7	 
	 
	 	5.1  Due Incorporation and Authority	 	 	7	 
	 
	 	5.2  No Conflicts	 	 	7	 
	 
	 	5.3  Condition of Purchased Assets; Independent Investigation	 	 	8	 
	 
	 	5.4  Brokers	 	 	8	 
	6.
	 	Covenants and Agreements	 	 	8	 
	 
	 	6.1  Confidentiality	 	 	8	 
	 
	 	6.2  Expenses	 	 	9	 
	 
	 	6.3  Public Announcements	 	 	9	 
	 
	 	6.4  Further Action; Transfer of Licenses	 	 	9	 
	 
	 	6.5  Books and Records; Access to Purchased Assets	 	 	10	 
	7.
	 	Indemnification	 	 	11	 
	 
	 	7.1  Indemnification by the Seller	 	 	11	 
	 
	 	7.2  Indemnification by the Purchaser	 	 	12	 
	 
	 	7.3  Notice and Procedure	 	 	12	 
	 
	 	7.4  Survival of Representations; Indemnity Periods	 	 	15	 
	 
	 	7.5  No Double Recovery	 	 	16	 
	 
	 	7.6  Tax Treatment of Indemnification Payments	 	 	16	 
	8.
	 	Miscellaneous	 	 	16	 
	 
	 	8.1  Certain Definitions	 	 	16	 
	 
	 	8.2  Consent to Jurisdiction; Service of Process; Waiver of Jury Trial	 	 	21	 
	 
	 	8.3  Notices	 	 	21	 
	 
	 	8.4  Entire Agreement	 	 	22	 
	 
	 	8.5  Waivers and Amendments	 	 	23	 
	 
	 	8.6  Governing Law	 	 	23	 
	 
	 	8.7  Binding Effect; Assignment	 	 	23	 
	 
	 	8.8  Usage	 	 	23	 

-i-

 

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	8.9  Articles and Sections	 	 	24	 
	 
	 	8.10 Interpretation	 	 	24	 
	 
	 	8.11 Severability of Provisions	 	 	24	 
	 
	 	8.12 Counterparts	 	 	24	 
	 
	 	8.13 No Third Party Beneficiaries	 	 	24	 

-ii-

 

SECTIONS OF THE DISCLOSURE LETTER

	 	 	 
	4.2(b)

	 	Seller Consents and Notices
	4.2(d)

	 	No Conflicts – Requirements of Law
	4.3(a)

	 	Material Contracts
	4.3(b)

	 	License Exceptions
	4.4(a)

	 	Intellectual Property
	4.4(b)

	 	License Consents
	6.4(b)

	 	Nunc Pro Tunc Assignments
	8.1(a)(1)

	 	Active Intellectual Property
	8.1(a)(2)

	 	Designated Intellectual Property
	8.1(a)(3)

	 	Excluded Intellectual Property
	8.1(a)(4)

	 	IP Licenses
	8.1(a)(5)

	 	Third Party IP Licenses
	8.1(a)(6)

	 	Specified Licenses

EXHIBITS

	 	 	 
	Exhibit A

	 	Form of Assignment and Assumption Agreement
	Exhibit B

	 	Form of Assignment of Intangible Property
	Exhibit C

	 	Form of Release
	Exhibit D

	 	Form of CUGA Assignment

-iii-

 

          INTELLECTUAL PROPERTY PURCHASE AGREEMENT, dated as of April 3, 2008 (this
“Agreement”), by and among Footstar Corporation, a Texas corporation (“Footstar” or
the “Seller”), Sears Brands LLC, an Illinois limited liability company (the
“Purchaser”), and Sears Holdings Corporation, a Delaware corporation (“SHC”).
Capitalized terms used herein but not defined shall have the meanings ascribed to them in Section
8.1(a).

W I T N E S S E T H:

          WHEREAS, the Purchaser desires to purchase certain intellectual property assets of the Seller
and the Seller desires to sell such assets to the Purchaser on the terms and conditions set forth
in this Agreement.

          NOW, THEREFORE, in consideration of the premises and the mutual promises herein made, and in
consideration of the representations, warranties, and covenants herein contained and for other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, agree as follows:

1. Purchase and Sale

          1.1 Assets to Be Transferred

          On the terms and subject to the conditions set forth in this Agreement, the Seller hereby
sells, assigns, transfers, conveys and delivers to the Purchaser, and the Purchaser hereby
purchases and assumes from the Seller, free and clear of all Encumbrances, all of the Seller’s
right, title and interest in and to all of the Intellectual Property, the Specified Licenses and
the Books and Records relating to the foregoing and the CUGA/HYPERFLEX Marks for the limited
purposes set forth in Section 8.4 (collectively, the “Purchased Assets”).

          1.2 Specified Liabilities

          Upon the terms and subject to the conditions hereof, the Purchaser hereby assumes from the
Seller all Liabilities arising with respect to the performance after the date hereof of the
Specified Licenses, excluding any Liability resulting from any breach thereof by the Seller prior
to the date hereof (collectively, the “Specified Liabilities”).

          1.3 Purchase Price

          The Purchase Price shall be paid by the Purchaser to Footstar simultaneous with the execution
hereof by wire transfer of immediately available funds. The “Purchase Price” shall be a
cash payment in the aggregate amount of thirteen million, six thousand two hundred and fifty
dollars ($13,006,250.00).

          1.4 Closing

          Subject to the terms and conditions of this Agreement, the sale and purchase of the Purchased
Assets and the assumption of the Specified Liabilities contemplated by this Agreement shall take
place at a closing (the “Closing”) to be held at the offices of Wachtell, Lipton, Rosen &
Katz, 51 West 52nd Street, New York, New York 10019 (or such other place as

 

 

the Seller
and Purchaser may agree), at 10:00 a.m., New York City time, on the date hereof (the “Closing
Date”).

          1.5 Closing Deliveries 

          (a) Simultaneous with the execution hereof, the Seller shall deliver or cause to be delivered
to the Purchaser:

          (i) duly executed Assignments of Intangible Property to transfer the Purchased Assets
to the Purchaser free and clear of all Encumbrances;

          (ii) duly executed counterparts of one or more applicable Assignment and Assumption
Agreements;

          (iii) duly executed release by Bank of America, N.A. (“BOA”) of encumbrances with
respect to the Purchased Assets, in substantially the form attached hereto as Exhibit C; and

          (iv) duly executed CUGA Assignment.

          (b) Simultaneous with the execution hereof, the Purchaser shall deliver or cause to be
delivered to the Seller duly executed counterparts of one or more applicable Assignment and
Assumption Agreements.

2. License; Use of Intellectual Property

          2.1 License

          Effective upon the conveyance of the Intellectual Property pursuant to Section 1.1, Purchaser
hereby grants to Seller an exclusive (other than with respect to (x) use by SHC and its Affiliates
for the purposes of ordering inventory for their stores following the Master Agreement Termination
Date and (y) the license granted pursuant to Exhibit 2.1 hereto), irrevocable non-transferable,
royalty-free license to use the Intellectual Property in connection with (i) the ordinary course
operations of the Business in a manner and at a standard of quality that is consistent with
Seller’s past practice (the “Business License”), (ii) the ordinary course operations of the
Rite Aid Business in a manner and at a standard of quality that is consistent with Seller’s past
practice (the “Rite Aid License”), and (iii) the wind-down of the Seller’s Business and the
Rite Aid Business, including the irrevocable right to sell inventory, including inventory on order;
provided, that the Business License and Rite Aid License shall cease to be exclusive upon
the occurrence of the Master Agreement Termination Date and shall thereafter be entirely
non-exclusive. The Business License includes the right to sublicense the Intellectual
Property pursuant to the IP Licenses. The Business License shall expire and be of no further
force and effect ninety (90) days following the Master Agreement Termination Date (such period, the
“Transition Period”), provided that, in the event of an early termination of the
Master Agreement under Section 4.2 thereof, Seller shall continue to have the right to use the
Intellectual Property in connection with the sale of inventory for as long as it may maintain
occupancy and possession of the Footwear Departments under Section 4.2(b) of the Master Agreement
(such period, the “Occupancy Period”). The Rite Aid License shall expire and be of

-2-

 

no further force and effect on December 31, 2009. Also effective upon the conveyance of the
Intellectual Property pursuant to Section 1.1, each of Purchaser and Seller grant the respective
licenses set forth on Exhibit 2.1 hereto.

          Seller agrees that, during such term of the Business License and Rite Aid License and
thereafter, Seller will not contest, harm, misuse, or bring into disrepute any of Purchaser’s
rights in and to the Intellectual Property, or contest the validity of these licenses. Seller
acknowledges and agrees that Purchaser would not have an adequate remedy at law and would be
irreparably harmed in the event Seller were to misuse, harm, or bring into disrepute any of the
Trademarks or if Seller were to breach any term of this Section 2.1 concerning the proper use of
the Intellectual Property. Accordingly, it is agreed that, in the event of a breach or threatened
breach of this Section 2.1 concerning the proper use of the Intellectual Property, Purchaser, in
addition to any other remedies at law or in equity, shall be entitled to equitable relief,
including but not limited to immediate injunctive relief without the requirement of posting a bond
or other security. Purchaser agrees that, during such time as the Business License and Rite Aid
License are exclusive, Purchaser shall not sell or offer for sale, directly or indirectly, any
footwear bearing one or more of the Trademarks. Seller shall not charge a royalty in respect of
the use of any Intellectual Property in connection with the Business other than in connection with
the IP Licenses.

          2.2 Use of Intellectual Property

          Following the Master Agreement Termination Date, Seller shall:

          (a) use its commercially reasonable efforts to promptly remove any Trademarks other than
Trademarks used in connection with the Rite Aid Business (the “Rite Aid Trademarks”) from
the assets of the Seller, other than merchandise inventory purchased or on order prior to the
Master Agreement Termination Date and historical business records;

          (b) remove any Trademarks other than Rite Aid Trademarks from its remaining merchandise
inventory that has not been sold as of the end of the Transition Period or the Occupancy Period, as
applicable;

          (c) as soon as reasonably practicable remove any Trademarks other than Rite Aid Trademarks
from all buildings, signs and vehicles of the Seller or any of its Affiliates and cease using any
Trademarks other than Rite Aid Trademarks in all invoices, letterhead, domain names and web sites,
advertising and promotional materials, office forms and business cards of the Seller or any of its
Affiliates;

          (d) as soon as reasonably practicable change the name of the Seller or any of its Affiliates,
to the extent applicable, to delete any references to any of the Trademarks other than Rite Aid
Trademarks; and

          (e) use its commercially reasonable efforts to provide Purchaser with a copy of, and thereby
convey title to, those style guides, logo standards or art files (x) that are currently being used
in connection with the Active Intellectual Property or (y) that are in hard copy and may be located
by Seller after conducting a reasonable search solely with respect to Trademarks (other than the
Active Intellectual Property) (collectively (x) and (y), the “Style Guides”), in each

-3-

 

case as soon as reasonably practicable following the Master Agreement Termination Date. The Style
Guides shall be transferred on an as-is, where-is basis, and Seller makes no representations or
warranties, whether under this Agreement or otherwise, expressed or implied, in connection with or
with respect to the Style Guides. Following the Master Agreement Termination Date, Seller shall
use its commercially reasonable efforts to give Purchaser reasonable prior notice before discarding
any Style Guides that are currently being used and relate to the Active Intellectual Property and a
copy of which has not been previously provided to Purchaser.

          Following December 31, 2009, Seller shall:

          (a) remove any Rite Aid Trademarks from its remaining merchandise inventory;

          (b) as soon as reasonably practicable remove any Rite Aid Trademarks from all buildings, signs
and vehicles of the Seller or any of its Affiliates and cease using any Rite Aid Trademarks in all
invoices, letterhead, domain names and web sites, advertising and promotional materials, office
forms and business cards of the Seller or any of its Affiliates; and

          (c) as soon as reasonably practicable change the name of the Seller or any of its Affiliates,
to the extent applicable, to delete any references to any of the Rite Aid Trademarks.

3. [Reserved]

4. Representations and Warranties of the Seller

          Except as set forth in the corresponding sections or subsections of the disclosure letter
delivered to the Purchaser by the Seller on the date hereof (the “Disclosure Letter”),
Seller represents and warrants to the Purchaser as of the date hereof, that:

          4.1 Due Incorporation and Authority

          Seller is a corporation duly organized, validly existing and in good standing under the laws
of its state of incorporation. Seller has all requisite corporate power and authority to enter
into this Agreement, carry out its obligations hereunder and consummate the transactions
contemplated hereby. The execution and delivery by the Seller of this Agreement, the performance
by the Seller of its obligations hereunder and the consummation by the Seller of the transactions
contemplated hereby have been duly authorized by the board of directors of the
Seller and no other corporate proceedings on the part of the board of directors of the Seller
are necessary to authorize the execution and delivery of this Agreement or to consummate the other
transactions contemplated hereby. This Agreement has been duly executed and delivered by the
Seller, and, assuming the due authorization, execution and delivery hereof by the other parties
hereto, this Agreement constitutes the legal, valid and binding obligation of the Seller,
enforceable against the Seller in accordance with its terms, except to the extent that its
enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors’ rights generally and by general principles of
equity (regardless of whether enforcement is considered in a proceeding in equity or at law).

-4-

 

          4.2 No Conflicts

          The execution and delivery by the Seller of this Agreement, the consummation of the
transactions contemplated hereby, and the performance by the Seller of this Agreement in accordance
with its terms will not (with or without notice or lapse of time or both):

          (a) violate the certificate of incorporation or by-laws of the Seller;

          (b) require the Seller to obtain any consents (including third party consents in connection
with the assignment to the Purchaser or its permitted assignee of the IP Licenses and Third Party
IP Licenses), approvals, authorizations or actions of, or make any filings with or give any notices
to, any Governmental Bodies or any other Person, except (i) as set forth in Section 4.2(b) of the
Disclosure Letter (the “Seller Consents and Notices”), (ii) as required in any jurisdiction
to transfer or record the transfer of any of the Intellectual Property and (iii) where the failure
to obtain any such consent would not reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect;

          (c) assuming the Seller Consents and Notices are obtained or made, violate or result in the
breach of any of the terms and conditions of, cause the termination of or give any other party the
right to terminate, or constitute (or with notice or lapse of time, or both, constitute) a default
under, any IP License or Third Party IP License except for violations, breaches, terminations or
defaults that would not reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect; or

          (d) violate any Requirement of Law to which the Seller or any of the Purchased Assets, IP
Licenses, Third Party IP Licenses or Assumed Liabilities are subject, except for violations that
would not reasonably be expected to, either individually or in the aggregate, be material and
except as set forth in Section 4.2(d) of the Disclosure Letter.

          4.3 Material Contracts

          (a) Except for the intellectual property licenses contained in Article III of the Master
Agreement, Section 4.3(a) of the Disclosure Letter sets forth a complete and accurate list as of
the date hereof of the following contracts to which Seller is party (collectively, “Material
Contracts”):

          (i) contracts granting to Seller any material right under or with respect to any
trademark, service mark, certification mark, trade name, brand name, trade dress,
logo, business or product name, slogan, or registration or application for registration
thereof used in the Business or the Rite Aid Business; and

          (ii) contracts under which Seller grants any material right under or with respect to
any Intellectual Property to another Person.

          (b) Copies of all Material Contracts have been previously provided or made available to the
Purchaser or Purchaser’s counsel, and such copies are true, complete and correct. Except as
disclosed in Section 4.3(b) of the Disclosure Letter: (A) each IP License and Third Party IP
License is a valid and binding obligation of the Seller and, to the Seller’s Knowledge,

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the other
parties thereto, and is in full force and effect, except to the extent that its enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting
the enforcement of creditors’ rights generally and by general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law); (B) the Seller has
performed all material obligations required to be performed by it to date under each IP License and
Third Party IP License and is not (with or without the lapse of time or the giving of notice, or
both) in material breach or material default thereunder; and (C) to the Seller’s Knowledge, each of
the other parties to such IP License and Third Party IP License has in all material respects
performed all obligations required to be performed by it under such IP License and Third Party IP
License and is not (with or without the lapse of time or the giving of notice, or both) in material
breach or material default thereunder.

          4.4 Intellectual Property

          (a) Section 4.4(a) of the Disclosure Letter sets forth a list of all registered Intellectual
Property as of the date hereof. Except as set forth in Section 4.4(a) of the Disclosure Letter,
the Seller owns, free and clear of all Encumbrances other than Permitted Encumbrances, all the
registered Intellectual Property. All of the Designated Intellectual Property is valid and
enforceable and, to Seller’s Knowledge, all other Active Intellectual Property is valid and
enforceable. The Seller has taken all necessary actions that are commercially reasonable to
maintain and protect each item of Designated Intellectual Property. The Seller is in compliance
with the material terms of any license to or license of (i) Designated Intellectual Property and
(ii) to Seller’s Knowledge, all of the other Intellectual Property and any intellectual property
subject to a Third Party IP License. Except as otherwise set forth in Section 4.4(a) of the
Disclosure Letter, Seller has not received any written notice that, nor does any of, the Designated
Intellectual Property or Active Intellectual Property currently infringe upon or otherwise violate
any intellectual property rights of others. Except as set forth in Section 4.4(a) of the
Disclosure Letter, to the Seller’s Knowledge, no Person is infringing upon or otherwise violating
any rights associated with the Intellectual Property. Except as otherwise set forth in Section
4.4(a) of the Disclosure Letter, no Claim is pending against the Seller or, to the Seller’s
Knowledge, is threatened, (i) contesting the right of the Seller to make, use, sell, import,
export, license or make available to any Person any of the products in the Inventory or otherwise
sold by Footstar in connection with the Business prior to the date hereof or (ii) opposing or
attempting to cancel any of the rights associated with the Active Intellectual Property. Except as
otherwise set forth in Section 4.3(a) of the Disclosure Letter, the registered Intellectual
Property is not subject to any material outstanding decree, order, judgment, settlement, agreement,
or stipulation that restricts in any manner the Seller’s use, transfer, or licensing thereof in
connection with the Business. The Intellectual Property, together with the Third Party IP Licenses and the
Master Agreement, constitutes all patents and trademarks owned or licensed by the Seller and its Affiliates
necessary for the operation of the Business in substantially the manner currently conducted by the Seller and
its Affiliates.

          (b)      Section 4.4(b)
of the Disclosure Letter sets forth those IP Licenses and Third Party IP Licenses in respect of which any
consent, license, waiver or other approval from any third party is required in connection with the assignment
of such IP License or Third Party IP License to Purchaser or its designee(s).

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          4.5 Brokers

          The Seller has not incurred, nor will it incur, directly or indirectly, any liability for
brokerage or finders’ fees or agents’ commissions or any similar charges in connection with this
Agreement or any transaction contemplated hereby.

5. Representations and Warranties of the Purchaser

          The Purchaser and SHC, jointly and severally, represent and warrant to the Seller as follows:

          5.1 Due Incorporation and Authority

          Each of the Purchaser and SHC is a corporation duly organized, validly existing and in good
standing under the laws of the State of Michigan and the State of Delaware, respectively. Each of
the Purchaser and SHC has all requisite corporate power and authority to enter into this Agreement,
carry out its obligations hereunder and consummate the transactions contemplated hereby. The
execution and delivery by the Purchaser and SHC of this Agreement, the performance by the Purchaser
and SHC of its obligations hereunder and the consummation by the Purchaser and SHC of the
transactions contemplated hereby have been duly authorized by all requisite corporate action on the
part of the Purchaser and SHC and no other corporate proceedings on the part of the Purchaser and
SHC are necessary to authorize the execution and delivery of this Agreement or to consummate the
other transactions contemplated hereby. This Agreement has been duly executed and delivered by the
Purchaser and SHC, and, assuming the due authorization, execution and delivery hereof by the
Seller, this Agreement constitutes the legal, valid and binding obligation of the Purchaser and
SHC, enforceable against the Purchaser and SHC in accordance with its terms, except to the extent
enforceability may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting
creditors’ rights generally or by general principles of equity (regardless of whether enforcement
is considered in a proceeding in equity or at law).

          5.2 No Conflicts

          The execution and delivery by the Purchaser and SHC of this Agreement, the consummation of the
transactions contemplated hereby, and the performance by the Purchaser of this Agreement in
accordance with its terms will not:

          (a) violate the certificate of incorporation or by-laws (or comparable documents) of the
Purchaser or SHC;

          (b) require the Purchaser or SHC to obtain any consents, approvals, authorizations or actions
of, or make any filings with or give any notices to, any Governmental Bodies or any other Person;

          (c) violate or result in the breach of any of the terms and conditions of, cause the
termination of or give any other contracting party the right to terminate, or constitute (or with
notice or lapse of time, or both, constitute) a material default under, any contract, lease, loan
agreement, mortgage, security agreement, guarantee, indenture or other agreement or instrument

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to which the Purchaser or SHC is a party or by or to which either the Purchaser or SHC or any of
their respective properties is or may be bound or subject; or

          (d) violate any Requirement of Law to which the Purchaser or SHC is subject;
provided, however, that each of the cases set forth in clauses (b) through (d)
above is subject to exceptions that could not have, either individually or in the aggregate, a
material adverse effect on the Purchaser.

          5.3 Condition of Purchased Assets; Independent Investigation

          (a) Each of Purchaser and SHC is an informed and sophisticated participant in the transactions
contemplated hereby. Each of Purchaser and SHC has undertaken an investigation, been provided
with, evaluated and relied upon certain documents and information to assist it in making an
informed and intelligent decision with respect to the execution of this Agreement. Each of
Purchaser and SHC acknowledges that the Seller makes no representation or warranty as to the value
of or revenues obtainable from ownership of the Purchased Assets, IP Licenses or Third Party IP
Licenses. Except for the representations set forth in Article 4 hereof, Purchaser and SHC are not
relying on any representation or warranty of any Person with respect to the transactions
contemplated hereby.

          (b) Each of Purchaser and SHC acknowledges that it and its Representatives and agents have
been permitted full and complete access to the Books and Records, facilities, equipment, contracts,
insurance policies and other properties and assets of the Seller that the Purchaser, SHC and their
Representatives and agents have desired or requested to see and/or review, and that the Purchaser,
SHC and their Representatives and agents have had a full opportunity to meet with the officers and
employees of the Seller to discuss the Purchased Assets, IP Licenses, Third Party IP Licenses and
Assumed Liabilities. Each of Purchaser and SHC acknowledges that it has conducted to its
satisfaction an independent investigation and verification of the financial condition, results of
operations, assets, liabilities, properties and projected operations of the Seller and, in making
its determination to proceed with the transactions contemplated by this Agreement, each of
Purchaser and SHC has relied on the results of its own independent investigation and verification
and the representations and warranties of the Seller expressly and specifically set forth in this
Agreement.

          5.4 Brokers

          Neither Purchaser nor SHC has incurred, nor will Purchaser or SHC incur, directly or
indirectly, any liability for brokerage or finders’ fees or agents’ commissions or any similar
charges in connection with this Agreement or any transaction contemplated hereby.

6. Covenants and Agreements

          6.1 Confidentiality

          Subject to Section 6.3, each party hereto hereby reaffirms the confidentiality letter
agreement, dated February 13, 2008 (the “Confidentiality Agreement”), between Footstar,
Inc. and SHC, and agrees to fulfill its obligations thereunder. Each of the Seller and the
Purchaser agrees to be bound by the terms of the Confidentiality Agreement as if an original party thereto.

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          6.2  Expenses

          Except as otherwise specifically provided herein, the Purchaser and SHC on the one hand and
Seller on the other hand shall bear their respective fees, costs and expenses incurred in
connection with the preparation, execution and performance of this Agreement and all related
documents contemplated hereby and the transactions contemplated hereby and thereby, including all
fees and expenses of their Representatives.

          6.3 Public Announcements

          No party to this Agreement shall make, or cause to be made, any press release or public
announcement in respect of this Agreement or the transactions contemplated hereby or otherwise
communicate with any news media in respect of this Agreement without prior approval of the other
party, which approval shall not be unreasonably withheld or delayed, unless such disclosure is
required by applicable Requirements of Law or the rules of any stock exchange or by the request of
any Governmental Body. The parties shall cooperate, using commercially reasonable efforts, as to
the timing and contents of any such announcement, including any such announcement required by
applicable law or the rules of any stock exchange.

          6.4 Further Action; Transfer of Licenses

          (a) Each party, at the request of the other party, shall execute such documents and take such
further actions as may be reasonably required to carry out the provisions hereof and give effect to
the transactions contemplated hereby. From time to time after the Closing, the Purchaser shall
prepare all documents and the Purchaser and Seller shall take all actions reasonably necessary to
further the sale and assignment of the Intellectual Property to the Purchaser hereunder, provided
that Purchaser shall use commercially reasonable efforts to prepare and provide such documents to
Seller prior to December 31, 2008. Such Intellectual Property assignments shall be in recordable
form based on the local law requirements. The Purchaser assumes responsibility for and will bear
the expenses of preparing, translating and recording such Intellectual Property assignments in all
jurisdictions. Following the Closing, the Seller shall have no obligation or responsibility for
maintaining or prosecuting any Intellectual Property transferred to the Purchaser hereunder, except
for complying with the Purchaser’s reasonable requests for information. Any further actions by the
Seller contemplated hereunder, other than executing documents, shall be conditioned on the prompt
reimbursement by Purchaser of any reasonable, documented, out-of-pocket fees, costs and expenses
incurred by Seller to comply with such requests.

          (b) Seller shall cause to be assigned to Purchaser, free and clear of all Encumbrances, the
registered trademarks listed in Section 6.4(b) of the Disclosure Letter.

          (c) From and after the Closing until the Master Agreement Termination Date, the Purchaser
shall (i) take all necessary actions that are commercially reasonable to maintain and protect each
item of Designated Intellectual Property and Intellectual Property used on the Inventory and the
Rite Aid Trademarks and (ii) ensure that the Intellectual Property remains free and clear of all
Encumbrances other than Permitted Encumbrances.

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          (d) Effective upon the Master Agreement Termination Date, subject to obtaining the applicable
Seller Consents and Notices and for no additional consideration, (i) Seller shall sell, assign,
transfer, convey and deliver to Purchaser, and Purchaser shall purchase and assume from the Seller,
free and clear of all Encumbrances, all of Seller’s right, title and interest in and to the IP
Licenses (other than the Specified Licenses) and the Third Party IP Licenses, (ii) Purchaser shall
assume from Seller (to the extent not already assumed) all Liabilities arising with respect to the
performance after the Master Agreement Termination Date of the IP Licenses and the Third Party IP
Licenses, excluding Liability resulting from any breach thereof by the Seller prior to the Master
Agreement Termination Date (collectively with the Specified Liabilities, the “Assumed
Liabilities”) and (iii) Seller shall deliver to Purchaser, and Purchaser shall deliver to
Seller, duly executed counterparts of an Assignment and Assumption Agreement with respect to the IP
Licenses (other than the Specified Licenses) and the Third Party IP Licenses.

          (e) From and after the date hereof, Seller shall not, nor shall it permit any affiliate to,
without the written consent of the Purchaser, which consent shall not be unreasonably withheld,
renew, amend, waive or modify in any manner any of the IP Licenses (other than the Specified
Licenses) or Third Party IP Licenses. From and after the date hereof, Seller shall, and shall
cause its applicable affiliates to, unless otherwise consented to in writing by the Purchaser, (i)
perform in all material respects in the ordinary course and as required thereunder, all of their
obligations under the IP Licenses and Third Party IP Licenses (assuming the due performance by
third parties under such licenses), and (ii) notify the Purchaser of any default by any party of
any obligation under any IP License or Third Party IP License.

          (f) The Seller hereby makes, constitutes and appoints SHC, with full power of substitution and
resubstitution, its true and lawful attorney for it and in its name, place and stead and for its
use and benefit, to sign, execute, certify, acknowledge, file and record such other agreements,
certificates, instruments or documents as may be necessary or advisable to transfer the Purchased
Assets to Purchaser free and clear of all Encumbrances. The Seller authorizes such
attorney-in-fact to take any further reasonable action which such attorney-in-fact shall reasonably
consider necessary or advisable in connection with any of the foregoing, hereby giving such
attorney-in-fact full power and authority to do and perform each and every act or thing whatsoever
requisite or advisable to be done in and about the foregoing as fully as the Seller might or could
do if personally present, and hereby ratifying and confirming all that such attorney-in-fact shall
lawfully do or cause to be done by virtue hereof. The power of attorney granted pursuant to this
Section 6.4(f), being coupled with an interest, is irrevocable.

          (g) Purchaser and Seller shall cooperate to obtain/issue the Seller Consents and Notices, each
at their own expense; provided, that in no event shall either Purchaser or Seller be
required to pay any consent fee to any counterparty to any IP License or Third Party IP License or
to any other Person.

          6.5 Books and Records; Access to Purchased Assets

          (a) The Purchaser agrees that it shall preserve and keep all Books and Records in respect of
the Purchased Assets, IP Licenses and Third Party IP Licenses, respectively, in the Purchaser’s
possession for a period of at least six (6) years from the date on which the respective

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asset is transferred. After such six-year period, if at any time the Purchaser shall desire to
dispose of any of such Books and Records, then the Purchaser shall provide written notice to the
Seller at least thirty (30) calendar days prior to such intended disposition and shall provide the
Seller with an opportunity, at the Seller’s cost and expense, to remove and retain all or any part
of such Books and Records as the Seller may select. At any time prior to such disposition,
Representatives of the Seller shall, upon reasonable notice, have reasonable access thereto during
normal business hours to examine, inspect and copy such Books and Records.

          (b) If, in order to properly prepare documents required to be filed with Governmental Bodies
or its financial statements, it is necessary that either party hereto or any successors thereto be
furnished with additional information relating to the Purchased Assets, IP Licenses, Third Party IP
Licenses or Assumed Liabilities, and such information is in the possession of the other party
hereto or any successor thereto or any of their respective Affiliates, such party agrees to use
commercially reasonable efforts to furnish or cause to be furnished such information to such other
party, at the reasonable cost and expense of the party being furnished such information.

          (c) On or after the date hereof, if the Seller or any of its Affiliates is subject to a
proceeding in respect of the Purchased Assets, IP Licenses or Third Party IP Licenses (including a
Tax audit) with any Person, Purchaser and SHC shall afford the Seller and its Affiliates and
Representatives reasonable access upon reasonable prior notice during normal business hours and in
a manner so as not to unreasonably interfere with the normal operations of Purchaser or SHC to all
employees, offices, properties, agreements, records, books and affairs of Purchaser or SHC
reasonably related to the Purchased Assets, IP Licenses and/or Third Party IP Licenses that are the
subject matter of such proceeding and provide copies of such information concerning the Purchased
Assets, IP License and/or Third Party IP Licenses as the Seller or its Affiliates may reasonably
request to enable the Seller and its Affiliates to investigate reasonably the subject matter of any
such proceeding and respond to any claims or discovery requests related thereto. Any such access
shall be conditioned on the prompt reimbursement by Seller of any reasonable, documented,
out-of-pocket fees, costs and expenses incurred by Purchaser or SHC to comply with such requests.

7. Indemnification

          7.1 Indemnification by the Seller

          From and after the Closing Date, the Seller shall indemnify, defend and hold harmless the
Purchaser’s Indemnified Persons, and each of them, from and against any Losses incurred or suffered
by the Purchaser’s Indemnified Persons as a result of or arising from:

          (a) any breach of the representations or warranties of the Seller set forth in Article 4, but,
as to the representations and warranties set forth in Section 4.4, solely in respect of the Active
Intellectual Property; or

          (b) the breach of any covenant, agreement or other obligation of the Seller set forth in this
Agreement or the Related Documents.

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          7.2 Indemnification by the Purchaser

          (a) From and after the Closing Date, the Purchaser shall indemnify, defend and hold harmless
the Seller’s Indemnified Persons, and each of them, from and against any Losses incurred or
suffered by the Seller’s Indemnified Persons as a result of or arising from:

          (i) any breach in any representation or warranty of the Purchaser or SHC set forth in
Article 5;

          (ii) the breach of any covenant, agreement or other obligation of the Purchaser or SHC
set forth in this Agreement or the Related Documents; or

          (b) From and after the Closing Date, the Purchaser shall indemnify, defend and hold harmless
the Seller’s Indemnified Persons, and each of them, from and against any Losses incurred or
suffered by the Seller’s Indemnified Persons as a result of or arising from the Specified
Liabilities.

          (c) From and after the Master Agreement Termination Date, the Purchaser shall indemnify,
defend and hold harmless the Seller’s Indemnified Persons, and each of them, from and against any
Losses incurred or suffered by the Seller’s Indemnified Persons as a result of or arising from the
Assumed Liabilities other than the Specified Liabilities.

          7.3 Notice and Procedure

          All claims for indemnification by any Indemnified Party against an Indemnifying Party under
this Article 7 shall be asserted and resolved as follows:

          (a) (i) If any claim or demand for which an Indemnifying Party is liable for Losses to
an Indemnified Party is alleged or asserted by a Person other than any of the Purchaser’s
Indemnified Persons or any of the Seller’s Indemnified Persons (a “Third Party
Claim”), the Indemnified Party shall deliver written notice (a “Claim Notice”)
promptly to the Indemnifying Party, together with a copy of all papers served, if any, and
specifying the nature of and alleged basis for the Third Party Claim and, to the extent then
feasible, the alleged amount or the estimated amount of the Third Party Claim. If the
Indemnified Party fails to deliver the Claim Notice to the Indemnifying Party within ten
(10) calendar days after the Indemnified Party receives notice of such Third Party Claim,
the Indemnifying Party will not be obligated to indemnify the Indemnified Party with respect
to such Third Party Claim if, and only to the extent that, the Indemnifying Party’s ability
to defend the Third Party Claim has been materially prejudiced by such failure;
provided, that if the failure to provide such notice causes the amount to be paid
pursuant to such indemnification to be greater than it otherwise would have been, the
Indemnifying Party shall not be obligated for any such excess amounts. The Indemnifying
Party will notify the Indemnified Party within twenty (20) calendar days after receipt of
the Claim Notice (the “Notice Period”) whether the Indemnifying Party intends, at
the sole cost and expense of the Indemnifying Party, to assume the defense of the
Indemnified Party against the Third Party Claim. Should the Indemnifying Party elect to
assume the defense of a Third Party Claim, the Indemnifying Party shall not be liable to the
Indemnified Party for any legal expenses incurred by the Indemnified
Party in connection with the defense thereof, except as provided by Section 7.3(a)(ii).

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          (ii) If the Indemnifying Party notifies the Indemnified Party within the Notice Period
that the Indemnifying Party intends to defend the Indemnified Party against the Third Party
Claim, then the Indemnifying Party will have the right and obligation to defend, at its sole
cost and expense, the Third Party Claim by all appropriate proceedings, which proceedings
will be prosecuted in good faith by the Indemnifying Party to a final conclusion or settled
at the discretion of the Indemnifying Party (with the consent of the Indemnified Party,
which consent shall not be unreasonably withheld). The Indemnifying Party will have full
control of such defense and proceedings (including the selection of legal counsel);
provided, however, that the Indemnified Party may file during the Notice
Period, at the sole cost and expense of the Indemnified Party, any motion, answer or other
pleading that the Indemnified Party may deem necessary or appropriate to protect its
interests and not prejudicial to the Indemnifying Party; provided, further,
however, that, if requested by the Indemnifying Party, the Indemnified Party shall
cooperate, at the sole cost and expense of the Indemnifying Party, with the Indemnifying
Party and its counsel in contesting any Third Party Claim that the Indemnifying Party elects
to contest or, if appropriate, in making any counterclaim or cross-claim against any Person
(other than the Indemnified Party). Such cooperation shall include the retention and (upon
the Indemnifying Party’s request) the provision to the Indemnifying Party of Books and
Records and information that are reasonably relevant to such Third Party Claim, and making
employees available on a mutually convenient basis to provide additional information and
explanation of any material provided thereunder. The Indemnified Party may participate in,
but not control, any defense or settlement of any Third Party Claim assumed by the
Indemnifying Party pursuant to this Section 7.3(a)(ii) and, except as provided in this
Section 7.3(a)(ii), the Indemnified Party will bear its own costs and expenses with respect
to such participation. Notwithstanding the foregoing, the Indemnifying Party may not assume
the defense of the Third Party Claim if (1) the Persons against whom the claim is made, or
any impleaded Persons, include both the Indemnifying Party and any Indemnified Party, and
(2) the Indemnified Party shall have been advised by counsel that there are one or more
legal or equitable defenses available to it which are different from or in addition to those
available to the Indemnifying Party and, in the reasonable opinion of the Indemnified Party,
representation of both such Persons by the same counsel would be inappropriate due to
conflicting interests between them, in which case any Indemnified Party shall have the right
to defend the Third Party Claim and to employ counsel (reasonably acceptable to the
Indemnifying Party) at the expense of the Indemnifying Party (such instance a
“Conflicted Indemnification”).

          (iii) If the Indemnifying Party fails to notify the Indemnified Party within the Notice
Period that the Indemnifying Party intends to defend the Indemnified Party against the Third
Party Claim, or if the Indemnifying Party gives such notice but fails to prosecute in good
faith or settle the Third Party Claim, or if the Indemnifying Party fails to give any notice
whatsoever within the Notice Period, then the Indemnified Party will have the right (but not
the obligation) to defend, at the sole cost and expense of the Indemnifying Party (it being
understood that the Indemnifying Party shall only be liable for the reasonable, documented
fees and expenses of one counsel for the Indemnified Party), the Third Party Claim by all
appropriate proceedings, which

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proceedings will be prosecuted in good faith by the Indemnified Party to a final conclusion
or settled at the discretion of the Indemnified Party (with the consent of the Indemnifying
Party, which consent shall not be unreasonably withheld). In any such instance, the
Indemnified Party will have full control of such defense and proceedings, including any
compromise or settlement thereof; provided, however, that, if requested by
the Indemnified Party, the Indemnifying Party shall cooperate, at the sole cost and expense
of the Indemnifying Party, with the Indemnified Party and its counsel in contesting the
Third Party Claim which the Indemnified Party is contesting, or, if appropriate and related
to the Third Party Claim in question, in making any counterclaim or cross claim against any
Person (other than the Indemnifying Party).

          (iv) If the Indemnifying Party notifies the Indemnified Party that the Indemnifying
Party disputes its obligation to indemnify the Indemnified Party against the Third Party
Claim, and if such dispute is resolved in favor of the Indemnifying Party, the Indemnifying
Party will not be required to bear the costs and expenses of the Indemnified Party’s defense
pursuant to Section 7.3(a) or of the Indemnifying Party’s participation therein at the
Indemnified Party’s request, and the Indemnified Party will reimburse the Indemnifying Party
in full for all reasonably incurred costs and expenses.

          (b) In the event any Indemnified Party should have a claim against any Indemnifying Party that
is not a Third Party Claim, the Indemnified Party shall deliver a written notice (an “Indemnity
Notice”) with reasonable promptness to the Indemnifying Party specifying the nature of and
specific basis for the claim and, to the extent then feasible, the amount or the estimated amount
of the claim together with any other information reasonably requested by the Indemnifying Party.
The failure by any Indemnified Party to give timely notice referred to in the preceding sentence
shall not impair such Person’s rights hereunder except to the extent that an Indemnifying Party
demonstrates that it has been materially prejudiced thereby; provided, that if the failure
to provide such notice causes the amount to be paid pursuant to such indemnification to be greater
than it otherwise would have been, the Indemnifying Party shall not be obligated for any such
excess amounts. If the Indemnifying Party does not notify the Indemnified Party within twenty (20)
calendar days following its receipt of the Indemnity Notice that the Indemnifying Party disputes
its obligation to indemnify the Indemnified Party hereunder, the claim will be conclusively deemed
a liability of the Indemnifying Party hereunder.

          (c) If the Indemnifying Party timely disputes its liability with respect to a claim described
in a Claim Notice or an Indemnity Notice, the Indemnifying Party and the Indemnified Party shall
proceed promptly and in good faith to negotiate a resolution of such dispute within sixty (60)
calendar days following receipt of the Claim Notice or Indemnity Notice.

          (d) Except where liability is disputed pursuant to Section 7.3(a)(iv) or Section 7.3(c), the
Indemnifying Party shall pay the amount of any Losses to the Indemnified Party within thirty (30)
calendar days following the final resolution of any Third Party Claim or any such other Claim by
the Indemnified Party. In the event the Indemnified Party is not paid in full for its claim in a
timely manner after the Indemnifying Party’s obligation to indemnify and the amount thereof has
been finally determined, the amount due shall bear interest from the date that the Loss was
incurred until paid at the Discount Rate.

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          (e) Any estimated amount of a Claim submitted in a Claim Notice or an Indemnity Notice shall
not be conclusive of the final amount of such Claim, and the giving of a Claim Notice when an
Indemnity Notice is properly due, or the giving of an Indemnity Notice when a Claim Notice is
properly due, shall not impair such Indemnified Party’s rights hereunder except to the extent
otherwise specified herein.

          7.4 Survival of Representations; Indemnity Periods

          (a) The representations and warranties in this Agreement made by the Seller, the Purchaser and
SHC, respectively, will survive the Closing until the one year anniversary of the Closing Date and
the covenants and agreements to be performed by the Seller, the Purchaser and SHC, respectively,
will survive the Closing for the term specified therein, or, if no term is specified, until the one
year anniversary of the Closing Date (any such applicable period, the “Survival Period”).
All Claims for indemnification pursuant to this Article 7 must be asserted by delivering a Claim
Notice or Indemnity Notice, as applicable, in either case specifying in reasonable detail the
nature of the Claim, prior to the expiration of the Survival Period and if any such Claim is not so
made before the expiration of the Survival Period, the Indemnified Party shall not be entitled to
indemnification. Any Claim asserted prior to the expiration of the Survival Period in accordance
with this Article 7 shall survive the expiry of the Survival Period until satisfied or otherwise
resolved.

          (b) Each of Purchaser and SHC acknowledges that, except as otherwise expressly set forth in
Section 2.1 of this Agreement, its sole and exclusive remedy with respect to the subject matter of
this Agreement shall be pursuant to the indemnification provisions set forth in this Article 7 and,
solely with respect to Intellectual Property used in connection with the Inventory other than a
breach of the licenses set forth in Section 2.1, the indemnification provisions set forth in the
Master Agreement. In furtherance of the foregoing, each of Purchaser and SHC hereby waives to the
fullest extent permitted under applicable law, any and all rights, claims and causes of action it
may have against the Seller with respect to the subject matter of this Agreement arising under or
based upon any law or arising under or based upon common law or otherwise (except pursuant to the
indemnification provisions set forth in this Article 7 or in the Master Agreement).

          (c) In the event that the Seller has indemnified the Purchaser under this Article 7 for any
Loss, the Purchaser shall turn over to the Seller any recovery from any insurance policies with
respect to such Loss.

          (d) Notwithstanding any provision of this Agreement, neither the Seller on the one hand nor
the Purchaser on the other hand shall be liable to the other for, and Losses shall not include, any
consequential, incidental or indirect damages, special or punitive damages, including loss or
revenue, profits or income, diminution in value of securities or loss of business reputation or
opportunity relating to any Claim for indemnification under this Agreement (“Special
Damages”). For the avoidance of doubt, an Indemnifying Party shall be liable to an Indemnified
Party for Special Damages to the extent that the Indemnified Party must pay Special Damages to a
third party pursuant to a Third Party Claim.

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          (e) Each party shall take all reasonable steps to mitigate any of its Losses
(including incurring costs to the extent necessary to remedy the breach which gives rise to the
Losses) upon becoming aware of any event which would reasonably be expected to, or does, give rise
thereto.

          (f) Notwithstanding anything herein to the contrary, (i) no indemnification shall be available
to the Purchaser Indemnified Parties under Section 7.1(a) hereof unless and until the aggregate
amount of Losses that would otherwise be subject to indemnification under Section 7.1(a) exceeds
$75,000 and (ii) the Seller’s aggregate liability for Losses relating to their indemnification
obligations under Section 7.1(a) hereof shall not exceed $2,000,000.

          7.5 No Double Recovery 

          Notwithstanding anything herein to the contrary, (a) no Indemnified Party shall be entitled to
indemnification under any provision of this Agreement for any amount to the extent such Indemnified
Party or its Affiliate has been indemnified or reimbursed for such amount under the Master
Agreement and (b) no Indemnified Party shall be entitled to indemnification under any provision of
the Master Agreement for any amount to the extent such Indemnified Party or its Affiliate has been
indemnified or reimbursed for such amount under this Agreement.

          7.6 Tax Treatment of Indemnification Payments

          Any indemnification payments made pursuant to this Article 7 shall be treated by Purchaser and
Seller as an adjustment to the Purchase Price for tax purposes unless otherwise required by law.

8. Miscellaneous

          8.1 Certain Definitions

          (a) As used in this Agreement, the following terms have the following meanings:

          “Active Intellectual Property” means that portion of the Intellectual Property
consisting of the Trademarks listed in Section 8.1(a)(1) of the Disclosure Letter used in
connection with the Footwear Departments.

          “Affiliate” means, with respect to any specified Person, any other Person that
directly, or indirectly through one or more intermediaries, controls, is controlled by or is under
common control with such specified Person.

          “Assignment and Assumption Agreement” means an Assignment and Assumption Agreement
substantially in the form of Exhibit A hereto to be executed by the Purchaser and the
Seller on the Closing Date.

          “Assignments of Intangible Property” means the Assignments of Intangible Property
substantially in the form of Exhibit B hereto to be executed by the Seller on the Closing
Date.

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     “Books and Records” means all files, documents, instruments, papers, books and
records, including Tax books and records (whether stored or maintained in hard copy, digital or
electronic format or otherwise) used by the Seller primarily in connection with the ownership of
the Purchased Assets, including Trademark records and other Intellectual Property records.

     “Business” means the operation of the Footwear Departments (as defined in the Master
Agreement) by Footstar, Inc. and its Subsidiaries.

     “Business Day” means any day that is not a Saturday, Sunday or other day on which
banks located in New York, New York are authorized or obligated to close.

     “Claim” means a suit, claim, action, proceeding, inquiry, investigation, litigation,
demand, charge, complaint, grievance, arbitration, indictment, or grand jury subpoena.

     “CUGA Assignment” means a trademark assignment executed by Seller in favor of
Purchaser in substantially the form attached hereto as Exhibit D.

     “CUGA/HYPERFLEX Marks” means U.S. Registration No. 1,086,050 for “CUGA” and U.S.
Registration No. 2,495,051 for “HYPERFLEX.”

     “Designated Intellectual Property” means that portion of the Intellectual Property
consisting of the Trademarks listed in Section 8.1(a)(2) of the Disclosure Letter for use in the
United States.

     “Discount Rate” means the discount rate as reported in The Wall Street Journal, New
York Edition, on the Closing Date.

     “Encumbrances” means all Liens, claims, conditional sales agreements, rights of first
refusal or options.

     “Governmental Body” means a domestic or foreign national, federal, state, provincial,
or local governmental, regulatory or administrative authority, department, agency, commission,
court or tribunal.

     “Indemnified Party” means any Person entitled to indemnification under Article 7.

     “Indemnifying Party” means any Person obligated to indemnify another Person under
Article 7.

     “Intellectual Property” means all (i) patents (including design patents, industrial
designs and utility models) and patent applications (including docketed patent disclosures awaiting
filing, reissues, divisions, continuations, continuations-in-part and extensions), patent
disclosures awaiting filing determination, inventions and improvements thereto (collectively
(“Patents”), (ii) trademarks, service marks, certification marks, trade names, brand names,
trade dress, logos, business and product names, slogans, and registrations and applications for
registration thereof, including without limitation the marks “Thom McAn”, “SafeTrax”, “Texas Steer”
and “Cobbie Cuddlers” (collectively, “Trademarks”), (iii) copyrights and registrations

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thereof (collectively, “Copyrights”), and (iv) domain names, together with all
goodwill directly or indirectly associated with each of the foregoing, in each case owned by the
Seller or one of its Affiliates and used in connection with the Business and in each case arising
in or relating to any jurisdiction, domestic or foreign; provided, that Intellectual
Property (i) shall not include any (x) software, (y) websites or (z) intellectual property set
forth in Section 8.1(a)(3) of the Disclosure Letter and (ii) shall, in any event, include the
intellectual property set forth in Section 4.4(a) of the Disclosure Letter.

     “Inventory” means all merchandise inventory of the Business that is (i) located at a
Footwear Department or in transit to a Footwear Department from a Footstar (or Footstar Affiliate)
distribution center; (ii) located at a Footstar (or Footstar Affiliate) distribution center or
warehouse; (iii) in transit between Footwear Departments and Footstar (or Footstar Affiliate)
distribution centers or between distribution centers or (iv) in transit to Footstar (or Footstar
Affiliate) distribution centers and to which Purchaser has taken title.

     “IP Licenses” means any license or agreement pursuant to which Seller has licensed any
Intellectual Property to a third party and which license or agreement is listed in Section
8.1(a)(4) of the Disclosure Letter.

     “Kmart” means Kmart Corporation, a Michigan corporation.

     “Liabilities” means any direct or indirect, primary or secondary, liability,
indebtedness, obligation, penalty, cost or expense (including costs of investigation, collection
and defense), whether accrued, absolute or contingent, liquidated or unliquidated, choate or
inchoate matured or unmatured, or otherwise. Without limiting the foregoing in any manner, the
term “Liabilities” includes and refers to all liabilities and obligations for or with respect to
Taxes, including liabilities for Taxes of any Person under Treasury Regulation Section 1.1502-6 (or
any similar provision of state, local, or foreign law), as a transferee or successor, by contract,
or otherwise.

     “Lien” means any security interest, mortgage, pledge, lien, encumbrance, right,
hypothecation, option, charge or claim, of any nature whatsoever.

     “Losses” means any and all damages, costs, losses, Liabilities, expenses or
obligations (including reasonable attorneys’ fees and expenses).

     “Master Agreement” means that certain Amended and Restated Master Agreement, dated as
of August 24, 2005, by and among Kmart, the Affiliates of Kmart party thereto, Footstar, Inc. and
SHC (solely with respect to Article XX thereof), as amended by that certain Master Agreement
Amendment, dated as of the date hereof, by and among Kmart, the Affiliates of Kmart party thereto,
Footstar, Inc. and SHC.

     “Master Agreement Termination Date” means the Termination Date as defined in the
Master Agreement or, if earlier, the date that the Master Agreement is otherwise terminated by the
mutual consent of the parties thereto.

     “Material Adverse Effect” means any change, event, occurrence, fact, condition, effect
or development that is materially adverse to the Purchased Assets, IP Licenses, Third Party

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IP Licenses and Assumed Liabilities, taken as a whole, but shall exclude any change, event,
occurrence, fact, condition, effect or development resulting from or arising out of: (a) any
change in any Requirements of Law or GAAP or interpretation thereof applicable to Footstar, Inc.
and its Subsidiaries; (b) any change in general economic conditions in the industries in which
Footstar, Inc. or its Subsidiaries operate or affecting United States or foreign economies in
general; (c) any outbreak or escalation of hostilities (including any declaration of war by the
United States) or act of terrorism; (d) the entry into or announcement of this Agreement and/or the
consummation of the transactions contemplated hereby or thereby; (e) the failure, in and of itself,
of Footstar, Inc. and its Subsidiaries to meet any projections, forecasts, published analyst
estimates or expectations of their revenues, earnings or other financial performance or results of
operations for any period; or (f) any actions taken, or failure to take action, in each case, to
which the Purchaser or SHC has expressly consented or requested in writing; other than, in each of
cases (a) through (c), any change, event, circumstance or development which, individually or in the
aggregate, has or is reasonably expected to have a materially disproportionate effect on Footstar,
Inc. and its Subsidiaries taken as a whole relative to other industry participants in the United
States.

     “Permitted Encumbrance” means “blanket” Liens of lenders applying to the assets of a
Person which shall be released upon the conveyance of such assets by such Person and mechanics’,
workers’, materialmen’s or other like Liens arising in the ordinary course of business with respect
to obligations that are not due or which are being contested in good faith by such Person.

     “Person” means any individual, corporation, partnership, limited liability company,
limited liability partnership, joint venture, joint-stock company, trust, Governmental Body or
other entity.

     “Purchaser’s Indemnified Persons” means the Purchaser and the Purchaser’s Affiliates,
Representatives, successors and assigns.

     “Related Documents” means any Assignment and Assumption Agreement and any Assignments
of Intangible Property.

     “Representative” means, with respect to a particular Person, any director, officer,
manager, partner, member, employee, agent, consultant, advisor or other representative of such
Person, including legal counsel, accountants, and financial advisors.

     “Requirements of Law” means any domestic, foreign, federal, state or local statute,
law, rule, regulation, order, writ, ordinance, judgment, governmental directive, injunction, decree
or other requirement of any Governmental Body.

     “Rite Aid Business” means the business of Footstar, Inc. and its Subsidiaries of
operating in Rite Aid drugstores.

     “Seller’s Indemnified Persons” means the Seller and the Seller’s Affiliates,
Representatives, successors and assigns.

     “Seller’s Knowledge” means the actual knowledge of Jonathan Couchman, Jeff
Shepard, Mike Lynch, Dennis Lee or Maureen Richards.

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     “Specified Licenses” means the licenses and agreements listed in Schedule 8.1(a)(6) of
the Disclosure Letter.

     “Subsidiaries” of a Person means any and all corporations, partnerships, limited
liability companies, trusts and other entities, whether incorporated or unincorporated, with
respect to which such Person, directly or indirectly, legally or beneficially, owns (i) a right to
a majority of the profits of such entity or (ii) securities having the power to elect a majority of
the board of directors or similar body governing the affairs of such entity.

     “Tax” or “Taxes” means all taxes, charges, fees, imposts, levies or other
assessments, including all net income, franchise, profits, gross receipts, capital, sales, use, ad
valorem, value added, transfer, transfer gains, inventory, capital stock, license, withholding,
payroll, employment, social security, unemployment, excise, severance, stamp, occupation, real or
personal property, and estimated taxes, customs duties, fees, assessments and charges of any kind
whatsoever, together with any interest and any penalties, fines, additions to tax or additional
amounts thereon, imposed by any taxing authority (federal, state, local or foreign) and shall
include any successor or transferee liability in respect of Taxes.

     “Third Party IP Licenses” means any license or agreement pursuant to which Seller has
licensed any intellectual property from a third party and which license or agreement is listed in
Section 8.1(a)(5) of the Disclosure Letter.

     (b) The following capitalized terms are defined in the following Sections of this Agreement:

	 	 	 
	Term	 	Section
	Agreement
	 	Preamble
	Assumed Liabilities
	 	6.4(d)
	Business License
	 	2.1
	Claim Notice
	 	7.3(a)(i)
	Closing
	 	1.4
	Closing Date
	 	1.4
	Confidentiality Agreement
	 	6.1
	Conflicted Indemnification
	 	7.3(a)(ii)
	Disclosure Letter
	 	4
	Footstar
	 	Preamble
	Indemnity Notice
	 	7.3(b)
	Material Contracts
	 	4.3(a)
	Notice Period
	 	7.3(a)(i)
	Purchase Price
	 	1.3
	Purchased Assets
	 	1.1
	Purchaser
	 	Preamble
	Rite Aid License
	 	2.1
	Rite Aid Trademarks
	 	2.2

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	Term	 	Section
	Seller
	 	Preamble
	Seller Consents and Notices
	 	4.2(b)
	SHC
	 	Preamble
	Special Damages
	 	7.4(d)
	Specified Liabilities
	 	1.2
	Style Guide
	 	2.2(e)
	Survival Period
	 	7.4(a)
	Third Party Claim
	 	7.3(a)(i)
	Transition Period
	 	2.1

     8.2 Consent to Jurisdiction; Service of Process; Waiver of Jury Trial

     (a) The Purchaser, SHC and the Seller irrevocably and unconditionally consent to submit to the
jurisdiction of the state and federal courts located in New York County in the State of New York
for any litigation arising out of or relating to this Agreement and the transactions contemplated
hereby (and agree not to commence any litigation relating hereto except in such courts).

     (b) Any and all service of process and any other notice in any such Claim shall be effective
against any party if given personally or by registered or certified mail, return receipt requested,
or by any other means of mail that requires a signed receipt, postage prepaid, mailed to such party
as herein provided. Nothing herein contained shall be deemed to affect the right of any party to
serve process in any manner permitted by law or to commence legal proceedings or otherwise proceed
against any other party in any other jurisdiction.

     (c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS
AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY.

     (d) EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT
OF LITIGATION, SEEK TO ENFORCE THE WAIVER IN SECTION 8.2(c), (ii) SUCH PARTY UNDERSTANDS AND HAS
CONSIDERED THE IMPLICATIONS OF SUCH WAIVER, (iii) SUCH PARTY MAKES SUCH WAIVER VOLUNTARILY AND (iv)
SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS, AGREEMENTS AND CERTIFICATIONS IN SECTION 8.2(c) AND THIS SECTION 8.2(d).

     8.3 Notices

     Any notice or other communication required or permitted hereunder shall be in

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writing and shall be deemed to have been duly given (a) on the day of delivery if delivered in person, or if
delivered by facsimile upon confirmation of receipt, (b) on the first (1st) Business Day following
the date of dispatch if delivered by a nationally recognized express courier service guaranteeing
next business day delivery, or (c) on the fifth (5th) Business Day following the date of mailing if
delivered by registered or certified mail, return receipt requested, postage prepaid. All notices
hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be
designated by notice given in accordance with this Section 8.3 by the party to receive such notice:

     (a) if to the Purchaser or to SHC, to:

Kmart Corp.

c/o Sears Holdings Corporation

3333 Beverly Road, B6-210B

Hoffman Estates, Illinois 60179

Attention: General Counsel

Facsimile: (203) 621-3006

with a copy to (which shall not constitute notice):

Wachtell, Lipton, Rosen & Katz

51 West 52nd Street

New York, NY 10019

Attention: Scott K. Charles, Esq.

Facsimile: (212) 403-1000

     (b) if to the Seller, to:

Footstar, Inc.

933 MacArthur Blvd.

Mahwah, NJ 07430

Attention: Maureen Richards

Facsimile: (201) 934-2642

with a copy to (which shall not constitute notice):

Akin Gump Strauss Hauer & Feld LLP

590 Madison Avenue

New York, NY 10022

Attention: Patrick J. Dooley, Esq.

                              Ira Rosenblatt, Esq.

Facsimile: (212) 872-1002

     8.4 Entire Agreement

     This Agreement (including any exhibits or schedules hereto), the Related Documents, the
Confidentiality Letter and any other collateral agreements executed in connection with the
consummation of the transactions contemplated hereby (but excluding the

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CUGA Assignment), contain the entire agreement among the parties with respect to the subject matter hereof and supersede all
prior agreements, written or oral, with respect thereto. Any exception or disclosure made by
Seller in the Disclosure Letter with regard to a representation of the Seller shall be deemed made
with respect to any other representation by such party to which such exception or disclosure is
reasonably apparent. The information contained in this Agreement, the Disclosure Letter, and
Exhibits is disclosed solely for purposes of this Agreement, and no information contained herein or
therein shall be deemed to be an admission by any party hereto any third party of any matter
whatsoever (including, without limitation, any violation of any Requirement of Law or breach of
contract). Any cost estimates, projections or other forward-looking statements contained or
referred to in this Agreement or in the Disclosure Letter and Exhibits hereto or in any materials
that have been provided to Purchaser or SHC by the Seller are not and shall not be deemed to be
representations or warranties of the Seller. Notwithstanding anything to the contrary herein, the
only obligations binding upon Seller with respect to the CUGA/HYPERFLEX Marks are (i) the transfer
of the CUGA/HYPERFLEX Marks under Section 1.1, (ii) the delivery of the CUGA Assignment under
Section 1.5(a)(iv), and (iii) the appointment of Purchaser as an attorney-in-fact under Section
6.4(f). Solely with respect to the CUGA/HYPERFLEX Marks, Seller shall have no other obligation of
any kind under this Agreement and no other term, condition, representation, or warranty under this
Agreement, expressed or implied, shall apply to Seller in connection with the CUGA/HYPERFLEX Marks.

     8.5 Waivers and Amendments

     This Agreement may be amended, superseded, canceled, renewed or extended, and the terms hereof
may be waived, only by a written instrument signed by the Purchaser and the Seller or, in the case
of a waiver, by the party waiving compliance. No delay on the part of any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the
part of any party of any such right, power or privilege, nor any single or partial exercise of any
such right, power or privilege, preclude any further exercise thereof or the exercise of any other
such right, power or privilege.

     8.6 Governing Law

     This Agreement and all Claims with respect thereto shall be governed by and construed in
accordance with the laws of the State of New York without regard to any conflict of laws rules
thereof that might indicate the application of the laws of any other jurisdiction.

     8.7 Binding Effect; Assignment

     This Agreement shall be binding upon and inure to the benefit of the parties and their
respective successors and assigns. This Agreement is not assignable by any party without
the prior written consent of the other parties; provided that the Purchaser, in its
sole discretion, may assign this Agreement, in whole or in part, to any Affiliate of the Purchaser;
provided, further, that the Purchaser shall not be relieved of any of its
obligations under this Agreement as a result of such assignment.

     8.8 Usage

     All pronouns and any variations thereof refer to the masculine, feminine or neuter,

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singular or plural, as the context may require. All terms defined in this Agreement in their singular or
plural forms have correlative meanings when used herein in their plural or singular forms,
respectively. Unless otherwise expressly provided, the words “include,” “includes” and “including”
do not limit the preceding words or terms and shall be deemed to be followed by the words “without
limitation.”

     8.9 Articles and Sections

     All references herein to Articles and Sections shall be deemed references to such parts of
this Agreement, unless the context shall otherwise require. The Article and Section headings in
this Agreement are for reference only and shall not affect the interpretation of this Agreement.

     8.10 Interpretation

     The parties acknowledge and agree that (a) each party and its counsel reviewed and negotiated
the terms and provisions of this Agreement and have contributed to its revision, (b) the rule of
construction to the effect that any ambiguities are resolved against the drafting party shall not
be employed in the interpretation of this Agreement, and (c) the terms and provisions of this
Agreement shall be construed fairly as to all parties, regardless of which party was generally
responsible for the preparation of this Agreement.

     8.11 Severability of Provisions

     If any provision or any portion of any provision of this Agreement shall be held invalid or
unenforceable, the remaining portion of such provision and the remaining provisions of this
Agreement shall not be affected thereby. If the application of any provision or any portion of any
provision of this Agreement to any Person or circumstance shall be held invalid or unenforceable,
the application of such provision or portion of such provision to Persons or circumstances other
than those as to which it is held invalid or unenforceable shall not be affected thereby.

     8.12 Counterparts

     This Agreement may be executed by the parties hereto in separate counterparts, each of which
when so executed and delivered shall be an original, but all such counterparts together shall
constitute one and the same instrument. Each counterpart may consist of a number of copies hereof
each signed by less than all, but together signed by all, of the parties hereto.

     8.13 No Third Party Beneficiaries

     Except as otherwise set forth in Article 7, no provision of this Agreement is intended to, or
shall, confer any third party beneficiary or other rights or remedies upon any Person other than
the parties hereto.

[Remainder of Page Intentionally Left Blank]

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

	 	 	 	 	 
	 	SEARS BRANDS LLC

 	 
	 	By:  	/s/ Sumeet Kanwar
 	 
	 	 	Name:  	Sumeet Kanwar 	 
	 	 	Title:  	President 	 
	 
	 	SEARS HOLDINGS CORPORATION

 	 
	 	By:  	/s/ William R. Harker
 	 
	 	 	Name:  	William R. Harker 	 
	 	 	Title:  	Senior Vice President, General Counsel
and Corporate Secretary 	 
	 
	 	FOOTSTAR CORPORATION

 	 
	 	By:  	/s/ Jeffrey A. Shepard
 	 
	 	 	Name:  	Jeffrey A. Shepard 	 
	 	 	Title:  	President 	 

 

 

	 	 	 	 	 

Exhibit 2.1

Each of the Purchaser and SHC hereby acknowledge that Bank of America, N.A. (including its
successors and assigns, agents, representatives and designees (including Footstar and any of its
agents), “Bank of America”) in its capacity as collateral agent and administrative agent under the
Amended and Restated Exit Credit Agreement dated as of February 7, 2006 among, inter alias, Bank of
America and Footstar (together with any related loan documents, collectively, the “Credit
Agreement”) holds a security interest in inventory of the Seller. Each of the Purchaser and SHC,
with respect to Intellectual Property, and the Purchaser, SHC, and Seller, with respect to Third
Party IP Licenses (solely to the extent such grant does not violate or result in the breach of any
of the terms and conditions or cause the termination of or constitute a default under any of the
Third Party IP Licenses) hereby grant to Bank of America a limited, royalty free, non-exclusive
license and right to use, upon the occurrence of a default or event of default under the Credit
Agreement, the Intellectual Property and Third Party IP Licenses, as applicable, necessary to
enforce Bank of America’s rights under the Credit Agreement with respect to such inventory,
including the right to complete, remove, import, offer to sell or sell, collect and otherwise
transfer any collateral securing the obligations under the Credit Agreement in any lawful manner.

The parties to the Agreement agree that the license and rights described above (i) will be binding
on any successor of Purchaser and/or SHC or any assignee of the Purchased Assets (or any of them),
and (ii) shall terminate upon the disposition of all of the inventory by or on behalf of Bank of
America.

Notwithstanding anything in this Agreement to the contrary (including Article 2.2 or 8.13 hereof),
Article 2.1, as supplemented by this Exhibit 2.1, shall be binding upon each party to this
Agreement and its respective successors and assigns and the parties hereby agree that they intend
the benefits of Article 2.1 with respect to the disposition of the inventory, including inventory
on order, as supplemented by this Exhibit 2.1, to inure to Bank of America on the terms and to the
extent provided for herein and that this Exhibit or any rights described herein or in the Agreement
inuring to the benefit of Bank of America shall not be amended or otherwise modified without the
written consent of Bank of America, N.A.

 

 

Exhibit A

Form of Assignment and Assumption Agreement 

     ASSIGNMENT AND ASSUMPTION AGREEMENT, dated as of April ___, 2008 (this “Agreement”), by and
between Footstar Corporation, a Texas corporation (“Seller”) and Sears Brands LLC, an Illinois
limited liability company (“Purchaser”).

W I T N E S S E T H

     WHEREAS, Seller, Purchaser and Sears Holdings Corporation are parties to an Intellectual
Property Purchase Agreement, dated as of April ___, 2008, (the “IP Purchase Agreement”), providing
for, among other things, the sale by Seller to Purchaser of the Purchased Assets;

     NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound hereby, agree as follows:

     1. Definitions. Except as otherwise provided herein, all capitalized terms not
defined herein shall have the meanings ascribed to such terms in the IP Purchase Agreement.

     2. Assignment. Seller hereby sells, assigns, transfers, conveys and delivers
(collectively, the “Assignment”) to Purchaser all of Seller’s legal, beneficial and other right,
title, benefit, privileges and interest in and to each of the Assumed Liabilities in accordance
with the terms and conditions of the IP Purchase Agreement.

     3. Acceptance and Assumption. Purchaser hereby accepts the Assignment and agrees to
assume and be responsible for, and shall pay, honor, perform and discharge as and when due, the
Assumed Liabilities.

     4. Terms of IP Purchase Agreement. The scope, nature, and extent of the Assumed
Liabilities are expressly set forth in the IP Purchase Agreement. Nothing contained herein will
itself change, amend, extend, or alter (nor should it be deemed or construed as changing, amending,
extending, or altering) the terms or conditions of the IP Purchase Agreement in any manner
whatsoever. This instrument does not create, establish or expand rights, liabilities or
obligations not otherwise created or existing under or pursuant to the IP Purchase Agreement. In
the event of any conflict or inconsistency between the terms of the IP Purchase Agreement and the
terms of this Agreement, the terms of the IP Purchase Agreement will govern.

     5. Parties in Interest. This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and permitted assigns.

 

 

     6. Counterparts. This Agreement may be executed simultaneously in counterparts, each
of which shall be deemed an original, but all of which together shall constitute one and the same
instrument.

     7. Governing Law. This Agreement and any claim related directly or indirectly to this
Agreement shall be governed by and construed in accordance with the laws of the State of New York,
without regard to the principles of conflicts of law thereof.

     8. Interpretation. The article and section headings contained in this Agreement are
solely for the purpose of reference, are not part of the agreement of the parties and shall not in
any way affect the meaning or interpretation of this Agreement.

[SIGNATURE PAGE FOLLOWS]

 

 

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

	 	 	 	 	 
	 	FOOTSTAR CORPORATION

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	SEARS BRANDS LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

 

Exhibit B

CONFIRMATORY TRADEMARK AND DOMAIN NAME ASSIGNMENT

     This Assignment, effective as of April ___, 2008, is made and entered into by and
between Footstar Corporation, a Texas Corporation located at 933 MacArthur Blvd. Mahwah, New Jersey
07430 (“ASSIGNOR”), and Sears Brands, LLC, an Illinois Limited Liability Company located at 3333
Beverly Road, Hoffman Estates, Illinois 60179 (“ASSIGNEE”).

     WHEREAS, ASSIGNOR and ASSIGNEE entered into an Intellectual Property Purchase Agreement
(hereafter “Agreement”) in which ASSIGNOR transferred certain assets to ASSIGNEE, including all of
ASSIGNOR’s right, title and interest in the trademarks listed on Attachment A, all of ASSIGNOR’s
common law rights, pending trademark applications and trademark registrations associated therewith
        , and all of ASSIGNOR’S rights related thereto, together with the goodwill of the business
associated with the trademarks, and the domain names listed on Attachment B (hereinafter, “the
Trademarks”);

     WHEREAS, pursuant to the Agreement, ASSIGNOR wishes to confirm assignment of the
Trademarks and ASSIGNEE’s right, title and interest thereto, and permit recordation of the
Assignment throughout the world and to effect the transfer of the domain names;

     NOW, THEREFORE, for good and valuable consideration, the receipt of which is
hereby acknowledged, ASSIGNOR hereby confirms the assignment to ASSIGNEE, of all of ASSIGNOR’S
right, title and interest in and to the Trademarks, free and clear of all encumbrances other than
the IP Licenses set forth in Schedule 8.1(a)(4) to the Agreement, together with the goodwill of the
business associated with the Trademarks.

     ASSIGNOR further confirms the assignment to ASSIGNEE of all claims for damages for past
infringement of the Trademarks, and consents to recordation of the Assignment of the Trademarks in
the name of ASSIGNEE in all jurisdictions listed in Attachment A, and the transfer by the
registrars of the domain names listed in Attachment B to ASSIGNEE.

[signature page follows]

 

 

	 	 	 	 	 
	ASSIGNOR:	 	 
	 
	 	 	 	 
	FOOTSTAR CORPORATION	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	Name:
	 	 	 	 
	 
	 	 	 	 
	Title:
	 	 	 	 
	 
	 	 	 	 
	Date:
	 	 	 	 

 

 

PATENT ASSIGNMENT

     Pursuant to the Intellectual Property Purchase Agreement by and among Footstar Corporation,
Sears Brands, L.L.C., and Sears Holding Corporation dated April ___, 2008, Footstar Corporation
(ASSIGNOR), hereby sells, transfers and assigns to Sears Brands, L.L.C., (“Assignee”), an Illinois
limited liability company, having its principal place of business at 3333 Beverly Road, Hoffman
Estates, Illinois 60179, U.S.A., ASSIGNOR’s entire right, title, and interest in and to the U.S.
and foreign patents and patent applications listed on Exhibit A attached hereto.

     ASSIGNOR also assigns to ASSIGNEE any and all of ASSIGNOR’s right, title and interest to
reissued and reexamined patents granted relating to the patents listed on Exhibit A, all
divisional, continuation, and continuation in part applications relating to the patents and
applications listed on Exhibit A, and all foreign counterparts of any U.S. patents and applications
listed on Exhibit A. ASSIGNOR further assigns the subject-matter of any and all claims which may
be obtained in every such patent, and the right to apply for and obtain patents and Utility Model
Registrations which may be granted thereon in such foreign countries, and authorize and request the
Commissioner of Patents and Trademarks of the United States, and any official of any other country
or countries foreign to the United States whose duty it is to issue patents, to issue said Letters
Patent or Utility Model Registrations to the said ASSIGNEE, its successor, assigns, nominees, or
other legal representatives, as assignee of the entire interest herein assigned, and the right to
sue for and collect damages for any past, present, or future infringement of the patents and
applications assigned herein.

[signature page follows]

 

 

Executed this                      day of April, 2008 at                                         .

	 	 	 	 	 	 	 
	 	 	FOOTSTAR CORPORATION (ASSIGNOR)	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

(signature)
	 	 
	 
	 	 	 	 	 	 
	 	 	Printed Name: 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 

SUBSCRIBED and SWORN

to before me this                      day

of                                         , 200                    .

	 	 	 
	 

Notary Public

	 	 

Executed this                      day of April, 2008 at                                        .

	 	 	 	 	 	 	 
	 	 	SEARS BRANDS LLC (ASSIGNEE)	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

(signature)
	 	 
	 
	 	 	 	 	 	 
	 	 	Printed Name: 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 

SUBSCRIBED and SWORN

to before me this                      day

of                                         , 200                    .

	 	 	 
	 

Notary Public

	 	 

 

 

	 	 	 	 	 
	ASSIGNOR:
	 	 	 	 
	 
	 	 	 	 
	FOOTSTAR CORPORATION	 	 

	 	 	 	 	 
	By:

	 

	 	 
	 
	 	 	 	 
	Name:
	 	 	 	 
	 
	 	 	 	 
	Title:
	 	 	 	 
	 
	 	 	 	 
	Date:
	 	 	 	 

 

CONFIRMATORY COPYRIGHT ASSIGNMENT

     This Assignment, effective as of April ___, 2008, is made and entered into by and between
Footstar Corporation, a Texas Corporation, whose business address is 933 MacArthur Blvd. Mahwah,
New Jersey 07430 (“ASSIGNOR”), and Sears Brands, LLC, an Illinois Limited Liability Company, whose
business address is 3333 Beverly Road, Hoffman Estates, Illinois 60179 (“ASSIGNEE”).

     WHEREAS, the ASSIGNOR holds the complete and undivided copyright interest to the works listed
in Attachment A (hereinafter “the Works”);

     WHEREAS, ASSIGNOR and ASSIGNEE entered into an Intellectual Property Purchase Agreement
(hereafter “Agreement”) in which ASSIGNOR transferred certain assets to ASSIGNEE, including the
Works, and all of ASSIGNOR’s rights related thereto;

     WHEREAS, pursuant to the Agreement, Assignor wishes to confirm assignment of the Works and
Assignee’s right, title and interest thereto, and permit recordation of the Assignment throughout
the world;

     NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, ASSIGNOR does hereby confirm the sale, assignment, and transfer to ASSIGNEE,
its successors and assigns, of ASSIGNOR’s entire right, title and interest in and to the copyright
in the Works, free and clear of all encumbrances, including any moral rights, any registrations and
copyright applications relating thereto, and any renewals and extensions thereof, and all income,
royalties, damages, claims and payments now or hereafter due or payable with respect thereto, and
in and to all causes of action, either in law or in equity for past, present, or future
infringement based on the Works, including past damages.

[signature page follows]

 

 

ASSIGNOR:

	 	 	 	 	 
	FOOTSTAR CORPORATION	 	 
	 

By:
	 	 	 	 
	 

	 	 

	 	 
	
Name:       

	 	      	 	 
	 
	Title:      

	 	                               
	 	                                       
	 
	Date:       

	 	                    	 	 

 

 

Exhibit C

TERMINATION AND RELEASE OF SECURITY INTERESTS

     Reference is made to that certain Amended and Restated Exit Credit Agreement dated as of
February 7, 2006 (the “Credit Agreement”) 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 (in
such capacity, the “Collateral Agent”). All capitalized terms not defined herein shall
have the meaning ascribed to them in the Credit Agreement.

     Reference is also made to (i) that certain Amended and Restated Security Agreement (Copyrights
and Trademarks) dated as of February 7, 2006 by and among the Grantor, as defined therein, and the
Collateral Agent (the “C/T Security Agreement”), (ii) that certain Amended and Restated
Security Agreement (Patents) dated as of February 7, 2006 by and among the Grantor, as defined
therein, and the Collateral Agent (the “Patent Security Agreement”), and (iii) that certain
Amended, Restated and Consolidated Security Agreement dated as of February 7, 2006 by and among the
Grantors, as defined therein, and the Collateral Agent (the “Security Agreement”).

     WHEREAS, the Lenders have consented to the sale of the Purchased Assets (as defined below),
such sale to be consummated on April ___, 2008 (the “Effective Time”), pursuant to a
Consent in Respect of Amended and Restated Exit Credit Agreement dated March 21, 2008 (the
“Consent”); and

     WHEREAS, the Collateral Agent is required to release its security interest in certain assets
of the Borrowers pledged to the Collateral Agent as security for the Obligations of the Borrowers
under the Loan Documents pursuant to and on terms and conditions set forth in the Consent;

     NOW THEREFORE, BANK OF AMERICA, N.A., as Collateral Agent under the Credit Agreement, hereby
releases, on behalf of itself and the Lenders, its security interest in certain assets of the
Borrowers pledged to the Collateral Agent as security for the Obligations of the Borrowers under
the Credit Agreement, as more fully described below.

     1. Release of Security Interest.

     As of the Effective Time, and subject to the terms hereof, the Collateral Agent, on behalf of
itself and the Lenders, hereby:

     (a) releases and discharges any and all security interests, liens, mortgages, charges and any
other encumbrances granted by the Borrowers to the Collateral Agent for the benefit of the Lenders
in the Copyrights, Marks and Mark Applications (each as defined in the C/T Security Agreement) (and
any service marks, trade names and trademarks issued as a result of the Mark Applications) and the
goodwill associated therewith, to the extent, and only to the extent, that the same constitute
Purchased Assets;

     (b) releases and discharges any and all security interests, liens, mortgages, charges and any
other encumbrances granted by the Borrowers to the Collateral Agent for the benefit of the Lenders
in the U.S. Patents and Patent Applications (each as defined in the Patent Security

 

 

Agreement) and in any patents issued as a result of the Patent Applications, to the extent,
and only to the extent, that the same constitute Purchased Assets; and

     (c) releases and discharges any and all security interests, liens, mortgages, charges and any
other encumbrances granted by the Borrowers to the Collateral Agent for the benefit of the Lenders
in (a) the Purchased Assets, and (b) those assets listed on Exhibit A hereto, from the
Liens imposed thereon pursuant to the Security Agreement or any other Security Document.

     2. For the purposes hereof:

     “Books and Records” means all files, documents, instruments, papers, books and
records, including Tax books and records (whether stored or maintained in hard copy, digital or
electronic format or otherwise) used by Footstar Corp. primarily in connection with the ownership
of the Purchased Assets, including Trademark records and other Intellectual Property records.

     “CUGA/HYPERFLEX Marks” means U.S. Registration No. 1,086,050 for “CUGA” and U.S.
Registration No. 2,495,051 for “HYPERFLEX”.

     “Intellectual Property” means all (i) patents (including design patents, industrial
designs and utility models) and patent applications (including docketed patent disclosures awaiting
filing, reissues, divisions, continuations, continuations-in-part and extensions), patent
disclosures awaiting filing determination, inventions and improvements thereto (collectively
(“Patents”), (ii) trademarks, service marks, certification marks, trade names, brand names,
trade dress, logos, business and product names, slogans, and registrations and applications for
registration thereof, including without limitation the marks “Thom McAn”, “SafeTrax”, “Texas Steer”
and “Cobbie Cuddlers” (collectively, “Trademarks”), (iii) copyrights and registrations
thereof (collectively, “Copyrights”), and (iv) domain names, together with all goodwill
directly or indirectly associated with each of the foregoing, in each case owned by Footstar Corp.
or one of its Affiliates and used in connection with the Business and in each case arising in or
relating to any jurisdiction, domestic or foreign; provided, that Intellectual Property (i) shall
not include any (x) software, (y) websites or (z) the intellectual property set forth on
Schedule 1 and (ii) shall, in any event, include the intellectual property set forth on
Schedule 2.

     “Purchased Assets” means all of Footstar Corp.’s right title and interest in and to
all of the Intellectual Property, the Specified Licenses, the Books and Records and the
CUGA/HYPERFLEX Marks.

     “Specified Licenses” means the licenses and agreements set forth on Schedule
3.

     3. Authorization to Effectuate and Evidence Termination.

     The Collateral Agent agrees to provide to the Borrowers, and hereby authorizes the Borrowers
to file, at the Borrowers’ sole cost and expense, as soon as practicable after the Effective Time,
all documents (which shall be in form and substance satisfactory to Administrative Agent and as to
which the Administrative Agent shall have approved prior to the filing thereof) necessary to
effectuate or evidence the release or reconveyance, as applicable, of all security interests filed
by (or transfers effected in favor of) the Collateral Agent with (i) the United States Patent and
Trademark Office or the United States Copyright Office, or (ii) any applicable UCC filing office.
At the request of the Borrowers, the Collateral Agent shall execute such documents and take such
further actions as may be reasonably required to carry out the provisions hereof and give effect to
the release and discharge of the Purchased Assets, as contemplated hereby. In the event the
Borrowers are no longer in existence or the Borrowers fail to request such further action from the
Collateral Agent within fifteen (15) Business Days

 

 

following a written request from Sears Brands LLC, an Illinois limited liability company (the
“Purchaser”) to the Borrowers (with a copy to the Collateral Agent), then at the request
and sole expense of the Purchaser, and provided that the Purchaser is not legally permitted, does
not have access to the necessary supporting documentation, or is not otherwise able to take such
action individually, the Collateral Agent shall execute such documents and take such further
actions as may be reasonably required to carry out the provisions hereof and give effect to the
release and discharge of the Purchased Assets, as contemplated hereby.

     4. No Other Modification; Indemnification.

     Except as expressly provided in this Termination and Release of Security Interests, all of the
terms and conditions of the Credit Agreement and the other Loan Documents remain in full force and
effect. Nothing contained in this Termination and Release of Security Interests shall (a) be
construed to imply a willingness on the part of the Administrative Agent, the Collateral 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, the Collateral Agent, any Lender or
any Borrower, or (c) in any way prejudice, impair or effect any rights or remedies of the
Administrative Agent, the Collateral Agent or the Lenders under the Credit Agreement or the other
Loan Documents.

     Without limitation of its indemnification obligations under the other Loan Documents, each
Borrower jointly and severally agrees to indemnify the Agents and the Lenders and any Related Party
thereof against, and hold each of them harmless from, any and all losses, claims, damages,
liabilities and related expenses, including reasonable and documented fees, disbursements and other
charges of counsel, incurred by or asserted against any of them arising out of, in any way
connected with, or as a result of, the execution, delivery or performance of this Termination and
Release of Security Interests or under the C/T Security Agreement or the Patent Security Agreement,
or any claim, litigation, investigation or proceeding relating hereto or to the Collateral released
as contemplated herein, whether or not any indemnitee is a party thereto; provided that such
indemnity shall not, as to any indemnitee, be available to the extent that such losses, claims,
damages, liabilities or related expenses have resulted from the gross negligence, bad faith or
willful misconduct of any indemnitee or any Affiliate of such indemnitee (or of any officer,
director, employee, advisor or agent of such indemnitee or any such indemnitee’s Affiliates).

     5. Continuing Security Interests.

     Notwithstanding anything to the contrary contained herein, this Termination and Release of
Security Interests shall not in any way alter, amend or terminate any security interests granted to
Bank of America, N.A., as Collateral Agent for the benefit of itself and the Lenders, or any of the
other Agents or Lenders except to the extent expressly provided for herein.

     6. Survivorship.

     Notwithstanding anything to the contrary contained in this Termination and Release of Security
Interests, all obligations and duties of the Borrowers which, by their terms, specifically survive
the repayment of the Obligations and/or termination of the Loan Documents, shall not be deemed to
have been terminated or released pursuant to this Termination and Release of Security Interests,
shall survive as so specified in such agreements without prejudice and shall remain in full force
and effect.

     7. Governing Law.

 

 

     This Termination and Release of Security Interests shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to principals of conflicts
or choice of laws.

     8. Counterparts.

     This Termination and Release of Security Interests may be executed in one or more counterparts
each of which will be deemed an original but all of which together shall constitute one agreement.
Delivery of a counterpart of this Termination and Release of Security Interests by facsimile or by
electronic transmission (such as a .pdf file sent by email) shall be as effective as delivery of a
manually executed counterpart of this Termination and Release of Security Interests.

     9. Successors.

     This Termination and Release of Security Interests shall be binding upon and inure to the
benefit of the Borrowers, the Lender and the Collateral Agent, the Administrative Agent and their
respective successors and assigns.

     10. Third Party Beneficiaries.

     No provision in this Termination and Release of Security Interests is intended to, or shall,
confer any third party beneficiary or other rights or remedies upon any person other than the
parties hereto, except as otherwise provided in Section 3 hereof.

[Remainder of page intentionally left blank.]

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their
respective officers thereunto duly authorized, as of the date first set forth above.

	 	 	 	 	 
	 	BANK OF AMERICA, N.A.,

as Collateral Agent and Administrative Agent

 	 
	 	By:  	 	 
	 	Its Duly Authorized Signatory 	 
	 	 	 	 
	 

 

 

Acknowledged and agreed:

	 	 	 	 	 
	 	FOOTSTAR, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	FOOTSTAR CORPORATION

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:

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