SUPPLEMENTAL RETIREMENT PLAN
FOR
SENIOR MANAGEMENT OF
FOOTSTAR, INC.
Effective October 14, 1996
Amended and Restated Effective as of January 1,
2005
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1
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2
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2.01 Actuarial
Equivalent
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2.03 Benefit
Commencement Date
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2.11 Early Retirement
Date
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2.13 Normal Retirement
Date
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5
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2.17 Retirement
Administration Committee
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2.18 Service; Year of
Service
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2.19 Supplemental
Retirement Benefit
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2.20 Vested Retirement
Benefit
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ARTICLE 4. SUPPLEMENTAL RETIREMENT
BENEFIT
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4.01 Eligibility for
Supplemental Retirement Benefit
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4.02 Normal Retirement
Benefit
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4.03 Early Retirement
Benefit
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4.04 Benefit
Commencement Date
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4.05 Form of Benefit
Payment
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5.01 Death After Early
Retirement Date
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5.02 Death Prior to
Early Retirement Date
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5.03 Death After
Benefit Commencement Date
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5.04 Designation of
Beneficiary
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ARTICLE 6. PARTICIPANT
OBLIGATIONS
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6.01 Confidentiality;
Cooperation with Regard to Litigation
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6.03 Non-solicitation
of Employees
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ARTICLE 7. CHANGE IN CONTROL
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7.02 Retirees and
Beneficiaries At Time of Change in Control
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7.03 Termination of
Employment Within 24 Months Following a Change in
Control
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7.04 Termination of
Employment More Than 24 Months Following a Change in
Control
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Supplemental Retirement Plan
for
Senior Management of Footstar, Inc.
Amended and Restated effective 1/1/2005
i
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ARTICLE 8. FORFEITURE OF
BENEFITS
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ARTICLE 9. ADMINISTRATION
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9.01 Powers and Duties
of the Committee
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9.02 Retirement
Administration Committee
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9.03 Delegation of
Duties
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9.05 Indemnification of
Retirement Administration Committee
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ARTICLE 10. AMENDMENT OR
TERMINATION
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ARTICLE 11. GENERAL PROVISIONS
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11.01 Right to Withhold
Taxes
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11.02 No Right to
Continued Employment
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11.03 Benefits
Non-Assignable
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11.05 Mental or
Physical Incompetency
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Supplemental Retirement Plan
for
Senior Management of Footstar, Inc.
Amended and Restated effective 1/1/2005
ii
The
Supplemental Retirement Plan for Senior Management of Footstar,
Inc. is designed to provide a benefit which, when added to the
retirement income provided under other Company plans, will ensure
the payment of a competitive level of retirement income to key
senior executives of Footstar, Inc., thereby providing an
additional incentive for assuring orderly management
succession.
The Plan is
intended to be an unfunded plan maintained “primarily for the
purpose of providing deferred compensation for a select group of
management or other highly compensated individuals” within
the meaning of the Employee Retirement Income Security
Act.
Eligibility for
participation in the Plan shall be limited to executives designated
by the Compensation Committee of the Board of Directors of
Footstar, Inc.
This Plan
became effective as of October 14, 1996. The Plan subsequently
was amended and restated effective
, 2002.
This document
sets forth the provisions of the Plan as amended and restated
effective as of January 1, 2005 to comply with the requirements of
Section 409A of the Internal Revenue Code.
Supplemental Retirement Plan
for
Senior Management of Footstar, Inc.
Amended and Restated effective 1/1/2005
1
Wherever used
herein, the following terms shall have the meanings set forth
below:
1.01 Actuarial
Equivalent
“Actuarial Equivalent” means a
benefit which is equivalent in value to another benefit when
computed on the basis of the following actuarial
assumptions:
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(a)
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Mortality: The 1983 Group Annuity
Mortality Table
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(b)
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Interest: The Pension Benefit
Guaranty Corporation rate used in the calculation of immediate
annuities applicable to the month that benefits will commence MINUS
0.5%.
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“Beneficiary” means the person
designated by the Participant in accordance with Section 5.04
to receive benefits in the event of the Participant’s
death.
1.03 Benefit
Commencement Date
“Benefit
Commencement Date” means the first day on which benefits are
scheduled to commence for a Participant pursuant to
Section 4.04.
“Board” means the Board of Directors
of Footstar, Inc.
“Cause” means, in connection with an
involuntary termination by the Corporation of a Participant’s
employment, (a) the Participant’s willful and material
breach of Article 6 of this Plan; (b) the Participant is
convicted of a felony involving moral turpitude; or (c) the
Participant engages in conduct that constitutes willful gross
neglect or willful gross misconduct in carrying out his duties
under this Plan, resulting, in either case, in material harm to the
financial condition or reputation of Footstar. For purposes of this
Plan, an act or failure to act on Participant’s part shall be
considered “willful” if it was done or omitted to be
done by him or her not in good faith, and shall not include any act
or failure to act resulting from any incapacity of a
Participant.
A termination
for Cause shall not take effect unless the following
provisions are complied with. The Participant shall be given
written notice by Footstar of its intention to terminate him or her
or her for Cause, such notice (i) to state in detail the
particular act or acts or failure or failures to act that
constitute the grounds on which the proposed termination for Cause
is based and (ii) to be given within 90 days of
Footstar’s learning of such act or acts or failure or
failures to act. The Participant shall have 10 days after the
date that such written notice has been given to him or her in which
to cure such conduct, to the extent such cure is possible. If he or
she fails to cure such conduct, the Participant shall then be
entitled to a hearing before the Committee at which the Participant
is entitled to appear. Such hearing shall be held within 15 days of
such notice to the Participant, provided he or she requests such
hearing within 10 days of the written notice from Footstar of
the intention to terminate him or her or her for Cause. If, within
five days following such hearing, the Participant is furnished
written notice by the Board confirming that, in its judgment,
grounds for Cause on the basis of the original notice exist, he or
she shall thereupon be terminated for Cause.
Supplemental Retirement Plan
for
Senior Management of Footstar, Inc.
Amended and Restated effective 1/1/2005
2
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(a)
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Effective on and after
January 1, 2005, “Change in Control” means
(i) a change in the ownership of Footstar as determined in
accordance with Treasury Regulation section 1.409A-3(i)(5)(v),
(ii) a change in effective control of Footstar as determined
in accordance with Treasury Regulation section 1.409A-3(i)(5)(vi),
or (iii) a change in the ownership of a substantial portion of
the assets of Footstar as determined in accordance with Treasury
Regulation section 1.409A-3(i)(5)(vii).
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(b)
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Effective prior to January 1,
2005, “Change in Control” means any of the following
occurrences:
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(i)
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An
acquisition by any Person of Beneficial Ownership of the shares of
common stock of Footstar then outstanding (the “Footstar
Common Stock Outstanding”) or the voting securities of
Footstar then outstanding entitled to vote generally in the
election of directors (the “Footstar Voting Securities
Outstanding”), if such acquisition of Beneficial Ownership
results in the Person’s Beneficially Owning 25% or more of
Footstar Common Stock Outstanding or 25% or more of the combined
voting power of Footstar Voting Securities Outstanding;
or
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(ii)
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The
approval by the stockholders of Footstar of a reorganization,
merger, consolidation, complete liquidation or dissolution of
Footstar, the sale or disposition of all or substantially all of
the assets of Footstar or similar corporate transaction (in each
case referred to in this Section 2.06(b) as a
(“Corporate Transaction”) or, if consummation of such
Corporate Transaction is subject, at the time of such approval by
stockholders, to the consent of any government or governmental
agency, the obtaining of such consent (either explicitly or
implicitly); provided however, that any merger, consolidation,
sale, disposition or other similar transaction to or with a
Participant or entities controlled by a Participant shall not
constitute a Corporate Transaction; or
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(iii)
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A
change in the composition of the Board such that the individuals
who, as of the Effective Date, constitute the Board (such Board
shall be hereinafter referred to as the “Incumbent
Board”) cease for any reason to constitute at least a
majority of the Board; provided however, for purposes of this
Section 2.06(b), that any individual who becomes a member of
the Board subsequent to the Effective Date whose election, or
nomination for election by Footstar’s stockholders, was
approved by a vote of at least a majority of those individuals who
are members of the Board and who were also members of the Incumbent
Board (or deemed to be such pursuant to this proviso) shall be
considered as though such individual were a member of the Incumbent
Board; and provided, further, that any such individual whose
initial assumption of office occurs as a result of either an actual
or threatened election contest (as such terms are used in
Rule 14a-11 of Regulation 14A under the Exchange Act,
including any successor to such Rule) or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person
other than the Board shall in no event be considered as a member of
the Incumbent Board.
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(iv)
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Notwithstanding the provisions set
forth in paragraphs (a) and (b) above, the following
shall not constitute a Change in Control for purposes of this
Section 2.06(b):
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(A)
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Any
acquisition by or consummation of a Corporate Transaction with any
entity that was a subsidiary of Footstar immediately prior to the
transaction or an
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Supplemental Retirement Plan
for
Senior Management of Footstar, Inc.
Amended and Restated effective 1/1/2005
3
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employee benefit plan (or related
trust) sponsored or maintained by Footstar or an entity that was a
subsidiary of Footstar immediately prior to the transaction if,
immediately after such transaction (including consummation of all
related transactions), the surviving entity is controlled by no
Person other than such employee benefit plan (or related trust)
and/or other Persons who controlled Footstar immediately prior to
such transactions; or
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(B)
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Any
acquisition or consummation of a Corporate Transaction following
which more than 50% of, respectively, the shares then outstanding
of common stock of the corporation resulting from such acquisition
or Corporate Transaction and the combined voting power of the
voting securities then outstanding of such corporation entitled to
vote generally in the election of directors is then Beneficially
Owned, directly or indirectly, by all or substantially all of the
individuals and entities who were Beneficial Owners, respectively,
of the Footstar Common Stock Outstanding and Footstar Voting
Securities Outstanding immediately prior to such acquisition or
Corporate Transaction in substantially the same proportions as
their ownership, immediately prior to such acquisition or Corporate
Transaction, of the Footstar Common Stock Outstanding and Footstar
Voting Securities Outstanding, as the case may be.
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(v)
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For
purposes of this Section 2.06(b),
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(A)
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The
terms “Beneficial Ownership”, “Beneficially
Owning”, “Beneficially Owned” and
“Beneficial Owners” shall have the meanings ascribed to
such terms in Rule 13d-3 under the Exchange Act (including any
successor to such rule).
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(B)
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The
term “Exchange Act” means the Securities Exchange Act
of 1934, as amended from time to time, or any successor act
thereto.
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(C)
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The
term “Person” shall have the meaning ascribed to such
term in Section 3(a)(9) of the Exchange Act and used in
Sections 13(d) and 14(d) thereof, including “group” as
defined in Section 13(d) thereof.
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“Committee” means the Compensation
Committee of the Board.
“Code” means the Internal Revenue
Code of 1986, as amended from time to time.
“Compensation” means the sum
of:
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(a)
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The
average of the Participant’s annual rate of base pay for the
highest three (3) years out of the last ten (10) years
ending with the year in which the Participant’s Compensation
Measurement Date occurs; plus
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(b)
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The
Participant’s full target annual incentive compensation award
in effect for the year in which the Participant’s
Compensation Measurement Date occurs.
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Supplemental Retirement Plan
for
Senior Management of Footstar, Inc.
Amended and Restated effective 1/1/2005
4
“Compensation Measurement Date”
means (i) the date on which the Participant terminates
employment with the Corporation for any reason; or (ii) in the
event of a Change in Control, the date of the Change in Control if
such date would result in a higher amount of Compensation for the
Participant.
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(a)
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On
and after January 1, 2005, “Corporation” means
Footstar and any corporation which is a member of a controlled
group of corporations (as defined in Code Section 414(b) but
applying such section using a fifty percent (50%) ownership
threshold instead of eighty percent (80%)) which includes Footstar
and any trade or business (whether or not incorporated) which is
under common control (as defined in Code Section 414(c) but
applying such section using a fifty percent (50%) ownership
threshold instead of eighty percent (80%)) with
Footstar.
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(b)
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Prior to January 1, 2005,
“Corporation” means Footstar, Inc. and any subsidiary
or other entity at any time at which 50% or more of the voting
power or beneficial interest of such subsidiary or other entity, is
owned directly or indirectly, by Footstar.
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1.11 Early Retirement
Date
“Early
Retirement Date” means the date on which the Participant
completes 10 Years of Service and attains age 55. A Participant
whose employment terminates for any reason within 60 days of
the date on which he or she would have satisfied both of the
conditions set forth in the preceding sentence shall be deemed to
have reached his or her Early Retirement Date.
“Footstar” means Footstar, Inc. and
any successor to all or a substantial portion of its assets or
business which assumes the obligations of Footstar.
1.13 Normal Retirement
Date
“Normal
Retirement Date” means the date on which the Participant
completes 10 Years of Service and attains age 60. A Participant
whose employment terminates for any reason within 60 days of
the date on which he or she would have satisfied both of the
conditions set forth in the preceding sentence shall be deemed to
have reached his or her Normal Retirement Date.
“Participant” means any employee who
is participating in the Plan pursuant to Article 3.
“Plan” means the Supplemental
Retirement Plan for Senior Management of Footstar, Inc. as set
forth herein, and any amendments thereto.
“Retiree”
means a Participant who has terminated employment and is eligible
to receive, or is receiving, a Supplemental Retirement Benefit
pursuant to Article 4.
Supplemental Retirement Plan
for
Senior Management of Footstar, Inc.
Amended and Restated effective 1/1/2005
5
1.17 Retirement
Administration Committee
“Retirement Administration Committee means
the Committee of the Starfund 401(k) Profit Sharing Plan of
Footstar, Inc. and Affiliated Companies.
1.18 Service; Year of
Service
“Service” means a
Participant’s period of active employment with the
Corporation while a Participant, but excluding, unless otherwise
provided by the Committee, any period during which the Participant
was (a) engaged as a consultant or (b) receiving salary
continuance or severance payments. “Service” also shall
include any additional periods that may be credited to a
Participant by the Committee in its sole discretion.
“Year of
Service” means a period of 12 consecutive months of
Service.
1.19 Supplemental
Retirement Benefit
“Supplemental Retirement Benefit”
means the retirement benefit payable to a Retiree as determined
pursuant to Article 4.
1.20 Vested Retirement
Benefit
“Vested
Retirement Benefit” means the aggregate annualized value of
any benefits in respect of a Participant under any pension,
retirement, or deferred profit sharing plan maintained by the
Corporation (other than this Plan) that either have been paid prior
to the Participant’s Benefit Commencement Date or are vested
as of the Participant’s Benefit Commencement Date. For this
purpose,
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(a)
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Any
elective pre-tax or after-tax contributions made by or on behalf of
the Participant, and any earnings attributable to such
contributions, shall not be taken into account; and
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(b)
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The
aggregated annualized value of such benefits shall be computed in
the form of a single life annuity for the Participant’s life
in accordance with the Actuarial Equivalent assumptions set forth
in Section 2.01.
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Supplemental Retirement Plan
for
Senior Management of Footstar, Inc.
Amended and Restated effective 1/1/2005
6
Participation
in this Plan shall be limited to such employees of the Corporation
as selected by the Committee who, in the opinion of the Committee,
occupy a position of senior management with the
Corporation.
An executive
shall become a Participant in the Plan only if the executive is
individually selected by, and specifically named by, the Committee
for inclusion in the Plan. In addition, the Committee shall have
the complete discretionary authority to impose such conditions upon
initial participation by an executive or continuing participation
by an executive who is already a Participant, as the Committee, in
its sole discretion, determines appropriate, including the
execution by the Participant of such documents and agreements,
which may include restrictive covenants and other conditions, that
the Committee requires.
If a
Participant is reclassified to a responsibility which, in the
opinion of the Committee, is not a senior management position at
any time prior to becoming eligible for benefits in accordance with
Article 4, the Participant’s continuing eligibility will
be subject to the approval of the Committee.
Supplemental Retirement Plan
for
Senior Management of Footstar, Inc.
Amended and Restated effective 1/1/2005
7
ARTICLE 3. SUPPLEMENTAL
RETIREMENT BENEFIT
3.01 Eligibility for
Supplemental Retirement Benefit
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(a)
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A
Participant shall be eligible to receive the Supplemental
Retirement Benefit under this Plan if he or she terminates
employment for any reason other than death or termination by the
Corporation for Cause after attaining his or her Early Retirement
Date or Normal Retirement Date.
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(b)
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Except as otherwise provided
pursuant to Article 7, a Participant shall not be eligible to
receive the Supplemental Retirement Benefit under this Plan if he
or she does not meet the conditions set forth in this
Section 4.01.
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3.02 Normal Retirement
Benefit
The amount of
the Supplemental Retirement Benefit payable to a Participant who
terminates employment at or after reaching his or her Normal
Retirement Date shall be an annual benefit payable for the life of
the Participant equal to the lesser of (a) or (b):
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(a)
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the
excess, if any, of
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(i)
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2%
of the Participant’s Compensation multiplied by his or her
Years of Service;
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(ii)
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the
Actuarial Equivalent value of the Participant’s Vested
Retirement Benefits determined as of his or her employment
termination date.
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(b)
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50%
of the Participant’s Compensation.
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3.03 Early Retirement
Benefit
The amount of
the Supplemental Retirement Benefit payable to a Participant who
terminates employment after reaching his or her Early Retirement
Date but prior to his or her Normal Retirement Date shall be an
annual benefit payable for the life of the Participant equal to the
Normal Retirement Benefit determined under Section 4.02
reduced by 4% for each whole and partial year (treating a partial
year as a whole year) prior to the date the Participant would have
reached his or her Normal Retirement Date.
3.04 Benefit
Commencement Date
Payment of a
Participant’s Supplemental Retirement Benefit shall commence
as of the first day of the month next following the
Participant’s employment termination date.
Notwithstanding
the foregoing, in no event shall payment to a Participant who is a
“specified employee” within the meaning of Code
Section 409A on his or her employment termination date,
commence earlier than the first day following the en
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