Trademark Assignment Agreement

Exhibit D

TRADEMARK ASSIGNMENT

          WHEREAS, Footstar Corporation, a Texas Corporation with a business address at 933 MacArthur Boulevard, Mahwah, New Jersey 07430 4570 (“Assignor”), is the owner of record of the marks “CUGA” U.S. Registration No. 1,086,050 and “HYPERFLEX” U.S. Registration No. 2,495,051;

          WHEREAS, Sears Brands, LLC, an Illinois Limited Liability Company (“Assignee”) with a business address at 3333 Beverly Road, Hoffman Estates, Illinois 60179, wishes to acquire Assignor’s entire right, title and interest in and to said marks, the registration therefor and the goodwill of the business associated therewith (the “Trademarks”);

          NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, Assignor does assign, transfer, and convey to Assignee all of Assignor’s right, title, and interest in and to the Trademarks, together with the goodwill of the business symbolized by said marks, and all right to damages and profits, due or accrued, arising out of past infringements of said marks, and the right to sue for and recover the same.

[ signature page follows ]

          Dated this                      day of March, 2008.

		FOOTSTAR CORPORATION (ASSIGNOR)
		By:
			(signature)
		Printed Name:
		Title:

Exhibit 10.2

MASTER AGREEMENT AMENDMENT

BY AND AMONG

FOOTSTAR, INC.,

KMART CORPORATION,

AFFILIATES OF KMART CORPORATION SIGNATORY HERETO

AND

SEARS HOLDINGS CORPORATION

DATED AS OF APRIL 3, 2008

TABLE OF CONTENTS

						Page
1.		Amendment of Master Agreement					1
		1.1		Employee Matters			1
		1.2		Inventory Procedures Upon Termination			5
		1.3		Access to Information			10
2.		Representations and Warranties of Footstar					11
		2.1		Due Incorporation and Authority			11
		2.2		No Conflicts			11
		2.3		Brokers			12
		2.4		Benefit Plans			12
		2.5		Employment and Labor Matters			12
		2.6		No Knowledge of Claims			13
3.		Representations and Warranties of Kmart Parties					13
		3.1		Due Incorporation and Authority			13
		3.2		No Conflicts			14
		3.3		Brokers			14
		3.4		No Knowledge of Claims			15
		3.5		Certain Parties to the Master Agreement			15
4.		Covenants and Agreements					15
		4.1		Confidentiality			15
		4.2		Expenses			15
		4.3		Public Announcements			15
		4.4		Further Action			15
		4.5		Mutual Release			15
		4.6		Kmart Website Operations			16
5.		Miscellaneous					16
		5.1		Certain Definitions			16
		5.2		Consent to Jurisdiction; Service of Process; Waiver of Jury Trial			18
		5.3		Notices			19
		5.4		Entire Agreement			20
		5.5		Waivers and Amendments			20
		5.6		Governing Law			21
		5.7		Binding Effect; Assignment			21
		5.8		Usage			21
		5.9		Articles and Sections			21
		5.10		Interpretation			21
		5.11		Severability of Provisions			21
		5.12		Counterparts			22
		5.13		No Third Party Beneficiaries			22
		5.14		Master Agreement			22

SECTIONS OF THE DISCLOSURE LETTER

1.1b-1		District Managers
1.1b-2		Store Managers
1.2a-1		Form of Certificate from Chief Financial Officer of Footstar
1.2a-2		Documentation to be Delivered by Footstar relating to Licensee Inventory Value
1.2a-3		Testing Lab Equipment
1.3		Reports
2.4(a)		Benefit Plans
2.4(e)		Acceleration
2.5(a)		Business Employees
2.5(b)		Labor Union Matters

EXHIBITS

Exhibit A		Inventory Instructions

          MASTER AGREEMENT AMENDMENT, dated as of April 3, 2008 (this “ Agreement ”), by and among Footstar, Inc., a Delaware corporation (“ Footstar ”), Kmart Corporation, a Michigan corporation (“ Kmart ”), the affiliates of Kmart signatory hereto (collectively with Kmart, “ Licensor ”) and Sears Holdings Corporation, a Delaware corporation (“ SHC ”). Capitalized terms used herein but not defined shall have the meanings ascribed to them in Section 5.1.

W I T N E S S E T H:

          WHEREAS, Licensor, Footstar and SHC (solely with respect to Article XX thereof) are party to that certain Amended and Restated Master Agreement, dated as of August 24, 2005 (the “ Master Agreement ”);

          WHEREAS, pursuant to the Master Agreement, Footstar operates the footwear departments in each of the Stores (as defined in the Master Agreement) of Kmart (the operation of such footwear departments, the “ Business ”); and

          WHEREAS, Licensor, SHC and Footstar desire to amend the Master Agreement in certain respects;

          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. Amendment of Master Agreement

          1.1 Employee Matters

          (a) Effective as of the date hereof, Article IV of the Master Agreement shall be amended by adding the following at the end of Section 4.1 thereof:

          (e) “Subject to the terms of this Section 4.1 (provided it being understood that to the extent of any conflict between this Section 4.1(e) and Section 4.1(d), this Section 4.1(e) shall govern), Licensor shall offer employment (effective as of the Buy-Out Date) to substantially all of the District Managers and substantially all of the Store Managers (with each such offer made to a Store Manager who is a full time employee to be an offer of employment on a full time basis), and, subject to payment by Footstar to Kmart of three hundred thousand dollars ($300,000) on or before the Buy-Out Date, Licensor will provide each Business Employee hired by Licensor with credit for years of service with Licensee and its Affiliates for purposes of employee benefit plans of the Licensor, provided that such credit shall not be provided (i) for purposes of benefit accrual under defined benefit pension plans, (ii) to the extent it would result in a duplication of benefits, or (iii) to the extent not provided under a corresponding benefit plan of Licensee. Licensee will use its commercially reasonable efforts to make the Business Employees available for interviewing and completion of Licensor’s

standard hiring procedures beginning no later than October 31, 2008; provided , that Licensee shall make all District Managers available for interviewing and completion of Licensor’s standard hiring procedures beginning no later than September 1, 2008; provided , further , that Licensee shall also make all of its quality assurance/quality control personnel based in Asia available for interviewing and completion of Licensor’s standard hiring procedures beginning no later than July 31, 2008, and shall not make an offer to hire any such quality assurance/quality control personnel before October 31, 2008 (December 31, 2008 in the case of any quality assurance/quality control personnel who are U.S. citizens). No later than October 1, 2008, Licensor will inform Licensee of any District Manager to whom it will not extend an offer and will provide Licensee with the annual base salary and target bonus contained in each offer of employment made to any District Manager. No later than December 1, 2008, Licensor will inform Licensee of any Store Manager to whom it will not make an offer. Licensee will encourage each Business Employee that is offered employment by Licensor to accept Licensor’s offer of employment, and shall take no action, including the offering of employment with Licensee, to induce such employees not to accept employment with Licensor, except for any action that Licensee is required to take pursuant to a contractual obligation in full force and effect as of the date hereof. Those Business Employees who accept Licensor’s offer of employment shall become employed by Licensor as of the Buy-Out Date (referred to in this Agreement as “ Transferred Employees ”). Nothing contained herein shall require Licensor to provide any specific form of benefit or inhibit Licensor’s ability to establish, amend or terminate any employee benefit plan of Licensor following the Buy-Out Date. Licensor’s offers of employment to Business Employees contemplated herein shall be at will and nothing in this Section 4.1 shall prevent Licensor from terminating the employment of any Transferred Employee at any time for any reason.

          (f) Except as may be required under COBRA due to the application of Treas. Regs. 54.4980B, Licensee acknowledges that Licensor shall not assume any liability related to any Benefit Plan (hereinafter defined) that is sponsored, maintained or contributed to by Licensee or any Person who would be considered a single employer with any Licensee pursuant to Section 414(b), (c), (m) or (o) of the Code (whether former or current) of Footstar. For the avoidance of doubt, except as may be required under COBRA due to the application of Treas. Regs. 54.4980B, the Licensee shall retain all liability and responsibility for any Benefit Plan. Licensee acknowledges that it shall use its commercially reasonable efforts to maintain in place until June 30, 2009 any Benefit Plan pursuant to which any Business Employees are eligible for health care continuation coverage under COBRA.

          (g) Licensee shall be responsible for any liabilities or obligations (i) arising under the WARN Act, if any, and (ii) resulting from or precipitated by layoffs, if any, in respect of employees of Licensee whose employment was terminated on or prior to the Buy-Out Date. For the sake of clarity, and without limiting any other provision of this Article IV, the parties acknowledge and agree that, Licensor shall have no liability for the payment of any amounts due from Licensee to its current or former employees under agreements with or plans of Licensee, including termination, severance, and retention payments or, except as may be required under COBRA due to the application of Treas. Regs. 54.4980B, any obligation to provide health, disability, life, retirement, or other benefits (whether covered by insurance or not), nor shall Licensor be deemed a joint or successor employer with respect to such employees (except that Licensee may

designate Licensor as a successor employer for purposes of Licensee’s Severance Pay Plan, it being understood that this parenthetical shall in no way be construed as imposing any obligations or liabilities upon Licensor with respect to such plan or otherwise).

          (h) In addition to the agreement made under subsection 4.1(g) above as between Licensee and Licensor, Licensee shall be responsible for the payment of any severance-related pay to, or other losses and expenses relating to claims made for severance-related pay by, any Business Employee who does not receive an offer of employment from Licensor or declines an offer of employment from Licensor.

          (i) Nothing in this Section 4.1, express or implied, is intended to or shall confer upon any employee or service provider of Licensee any right, benefit or remedy of any nature whatsoever, nor should anything in this Section 4.1 be construed as an amendment to any employee benefit plan or arrangement (it being understood that nothing in this paragraph (h) shall be construed as amending or otherwise modifying any Benefit Plan).

          (j) Notwithstanding anything to the contrary herein, for a period of one (1) year after the Buy-Out Date, or in the event that this Agreement is terminated prior to such date (other than a termination on account of a default by Licensee hereunder), for a period of one (1) year following such termination, neither Licensor nor Sears shall, and neither Licensor nor Sears shall permit any of its controlled Affiliates, directly or indirectly, to solicit or employ any of the employees of Licensee who are not Transferred Employees without the prior written consent of Footstar; provided , however , that nothing contained herein shall prohibit Licensor or Sears from generally advertising for personnel in a manner that does not specifically target any employees of Licensee and employing employees of Licensee who respond to such general personnel advertisements and/or employees of Licensee who are not otherwise solicited in any manner by Licensor, Sears or any of their Affiliates.”

          (b) Effective as of the date hereof, Article II of the Master Agreement shall be amended by adding the following definitions to Section 2.1 thereof:

		“Affiliate”		shall mean, 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.
		“Benefit Plan”		shall mean any pension, retirement, savings, profit sharing, deferred compensation, stock ownership, stock purchase, stock option, incentive, severance pay, medical, dental, health, welfare, disability, life, death benefit, group insurance, bonus, vacation pay, sick pay, post-retirement medical or life or other employee benefit plan, program, agreement,

				policy or arrangement (including, without limitation, each “pension plan” as defined in Section 3(2) of ERISA, any “welfare plan” as defined in Section 3(1) of ERISA and any “multiemployer plan” as defined in Section 3(37) of ERISA), whether written or unwritten, qualified or non-qualified, funded or unfunded, maintained or contributed to by Footstar or its subsidiaries (or to which Footstar or its subsidiaries are party) for the benefit of (or with) Business Employees or other employees of Footstar and its subsidiaries.
		“Business Employee”		shall mean Licensee’s district manager level executives, store managers and store associates employed in connection with, or rendering services to, the operation of the Footwear Departments, including the District Managers and Store Managers.
		“COBRA”		shall mean the Consolidated Omnibus Budget Reconciliation Act of 1985, as described in Section 4980B of the Code, sections 601 et seq. of ERISA, each as amended, and the regulations promulgated thereunder.
		“Code”		shall mean the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.
		“District Manager”		shall mean an employee of Licensee listed on Section 1.1b-1 of the Disclosure Letter to the Master Agreement Amendment as updated from time to time by Licensee to reflect vacancies filled in the ordinary course and individuals who are no longer employees of Licensee; provided that any individual hired to fill a vacancy at the District Manager level shall receive annual compensation no greater than the compensation paid to the departing or departed employee; and provided further that the aggregate number of individuals listed on Section 1.1b-1 of the Disclosure Letter to the Master Agreement Amendment shall not at any time be greater than the number listed thereon as of the date of the Master Agreement Amendment.

		“Governmental Body”		shall mean any domestic or foreign national, federal, state, provincial, or local governmental, regulatory or administrative authority, department, agency, commission, court or tribunal.
		“Person”		shall mean any individual, corporation, partnership, limited liability company, limited liability partnership, joint venture, joint-stock company, trust, Governmental Body or other entity.
		“Store Manager”		shall mean an employee of Licensee listed on Section 1.1b-2 of the Disclosure Letter to the Master Agreement Amendment as updated from time to time by Licensee to reflect vacancies filled in the ordinary course and individuals who are no longer employees of Licensee; provided that any individual hired to fill a vacancy at the Store Manager level shall receive annual compensation no greater than the compensation paid to the departing or departed employee; and provided further that the aggregate number of individuals listed on Section 1.1b-2 of the Disclosure Letter to the Master Agreement Amendment shall not at any time be greater than the number listed thereon as of the date of the Master Agreement Amendment.

          1.2 Inventory Procedures Upon Termination

          (a) Effective as of the date hereof Article IV of the Master Agreement shall be amended by adding a new Section 4.4 and Section 4.5 as follows:

     “4.4 Inventory Purchase Procedures . In the event that the Buy-Out shall be required pursuant to Section 4.1 or the Licensor shall otherwise be required to purchase the Inventory hereunder (including pursuant to Section 4.3(d)) then in such event the following procedures shall apply with respect to the determination and payment of the Book Value of the Inventory and the additional consideration to be paid therefore, it being understood that to the extent of any conflict between this Section 4.4 and any other section of this Agreement, this Section 4.4 shall govern; provided , that in no event shall this Section 4.4 require Licensor to purchase Inventory of any type or nature that it would

not otherwise have been required to purchase pursuant to another section of this Agreement:

          (a) Prior to the Buy-Out Date, but in no event earlier than twenty-two (22) Business Days prior to the Buy-Out Date, Licensor and Licensee shall cause RGIS LLC (“ RGIS ”) or, if RGIS refuses to be retained, another mutually agreeable, qualified Third Party (the “ Count Firm ”) to conduct a physical count of the Inventory (the “ Store Count ”) (it being understood that each of Licensor and Licensee shall have the right to have a representative in attendance during any such count). The Store Count shall be taken in a manner consistent with the Inventory Instructions attached as Exhibit A to the Master Agreement Amendment, dated as of April 3, 2008, by and among Footstar, Kmart, the affiliates of Kmart signatory thereto and Sears (the “ Master Agreement Amendment ”).

          (b) Not more than five (5) Business Days after the Buy-Out Date, Licensee shall prepare, or cause to be prepared, and deliver to Licensor (i) a certificate, the form of which is set forth in Section 1.2a-1 of the Disclosure Letter to the Master Agreement Amendment, signed by the chief financial officer of Footstar setting forth in reasonable detail Footstar’s calculation (the “ Licensee’s Calculation ”) of the aggregate Inventory Value as of the close of business on the Buy-Out Date (the “ Licensee Inventory Value ”), which shall take into account (x) the Inventory Value of the Inventory accounted for by the Store Count and (y) the Inventory Value of applicable Inventory sold from each Footwear Department subject to the Store Count from the time when the physical count was conducted at such Footwear Department through the Buy-Out Date, and (ii) documentation set forth in Section 1.2a-2 of the Disclosure Letter to the Master Agreement Amendment that supports, in reasonable detail, Licensee’s determination of the Licensee Inventory Value.

          (c) The Licensee Inventory Consideration (as defined below) shall be paid by Licensor to Footstar, within five (5) Business Days of receipt by Licensor of the deliveries set forth in Section 4.4(b) above, by wire transfer of immediately available funds. The “ Licensee Inventory Consideration ” shall be the Licensee Inventory Value, plus one million three hundred fifty thousand dollars ($1,350,000), minus nine hundred and fifty thousand dollars ($950,000), minus a shrink adjustment of two hundred thousand dollars ($200,000).

          (d) If Licensor has any objections to the Licensee’s Calculation, Licensor shall deliver to Licensee, no later than thirty (30) days after receiving the Licensee’s Calculation pursuant to Section 4.4(b), a reasonably detailed statement describing Licensor’s objections, including Licensor’s calculation of the aggregate Inventory Value as of the close of business on the Buy-Out Date; provided , that, during such thirty (30) day period, Licensee shall, and shall cause its officers, employees, agents and accountants to, cooperate with Licensor in connection with its review of the accuracy of the Licensee’s Calculation. Licensor and Licensee shall use commercially reasonable efforts to resolve any such objections themselves in good faith. If Licensor and Licensee are unable to resolve their differences within fifteen (15) Business Days after Licensee has received Licensor’s statement of objections hereunder, either Licensor or Licensee

may immediately refer their remaining differences to the Independent Accountant, who shall determine, solely with respect to the remaining differences so submitted, the Licensee Inventory Consideration, including the actual aggregate Inventory Value as of the close of business on the Buy-Out Date. Licensor and Licensee shall instruct the Independent Accountant to deliver to Licensor and Licensee a written determination of the Licensee Inventory Consideration, including the actual aggregate Inventory Value as of the close of business on the Buy-Out Date, no later than the thirtieth (30th) calendar day after the referral to the Independent Accountant. Licensor and Licensee will furnish to the Independent Accountant such work papers and other documents and information relating to the Inventory Value as the Independent Accountant may reasonably request and Licensor and Licensee will be afforded the opportunity to present to the Independent Accountant any material relating to the determination and to discuss the determination with the Independent Accountant (provided that there shall be no ex parte conversations or meetings). The Independent Accountant, Licensee and Licensor will be required to enter into a customary engagement letter. The determination by the Independent Accountant will be binding and conclusive on the parties for all purposes, absent fraud or manifest error. The Independent Accountant shall address only those issues in dispute, and may not assign a value to any item greater than the greatest value for such item claimed by either party or lower than the lowest value claimed by either party. The fees and expenses of the Independent Accountant shall be borne by the party whose proposed calculation of Licensee Inventory Consideration differs most from the Licensee Inventory Consideration as determined by the Independent Accountant.

          (e) The “ Final Inventory Consideration ” shall be:

          (i) in the event that Licensor does not object to the Licensee’s Calculation in accordance with the provisions of Section 4.4(d), the Licensee Inventory Consideration calculated by using the Licensee Inventory Value set forth in the Licensee’s Calculation; and

          (ii) in the event Licensor does object to the Licensee’s Calculation in accordance with the provisions of Section 4.4(d), either

                    (A) the Licensee Inventory Consideration calculated by using the Licensee Inventory Value subsequently agreed to by Licensor and Licensee in accordance with the provisions of Section 4.4(d), or

                    (B) in the absence of such agreement, the Licensee Inventory Consideration as determined by the Independent Accountant.

          (f) As promptly as practicable, and in any event no later than two (2) Business Days following the determination of the Final Inventory Consideration: (i) if the Final Inventory Consideration is greater than the Licensee Inventory Consideration, then Licensor shall pay to Licensee an amount equal to such excess, and (ii) if the Licensee Inventory Consideration is greater than the Final Inventory Consideration, then Licensee shall pay to Licensor an amount equal to such excess. Notwithstanding

anything herein to the contrary, the parties agree that under no circumstances shall Licensor be required to pay twice for any item of Inventory.

          (g) In the event that Grant Thornton LLP refuses to be retained as the Independent Accountant for purposes of Section 4.4(d), Licensor and Licensee (or, if Licensor and Licensee are unable to so agree within two (2) Business Days of Grant Thornton LLP refusing to be so retained, Licensor’s and Licensee’s independent accounting firms) shall jointly select another independent accounting firm of recognized national standing, which firm shall be deemed to be the “ Independent Accountant ” for purposes of Section 4.4(d).

          (h) Prior to the Buy-Out Date, Licensee shall use commercially reasonable efforts to remove (at their own expense and at times and in a manner so as not to unreasonably interfere with the Store Count or the operation of the Stores by Licensor) all inventory not being transferred to Licensor hereunder (e.g., Defective Inventory and, if applicable, Seasonal Inventory) from the stores in which the applicable Footwear Departments are located; provided , that any such inventory not so transferred prior to the Buy-Out Date shall be deemed to be abandoned to Licensor at no cost to Licensor. Notwithstanding anything to the contrary in the Master Agreement, including without limitation, Section 4.1(c), at the Buy-Out Date, Licensee shall leave all fixtures, furnishings, equipment or other similar property belonging to Licensee in the stores in which the applicable Footwear Departments are located (the “ Personal Property ”) and title to such Personal Property shall transfer to Licensor at the Buy-Out Date; provided that the Personal Property shall be transferred on an as-is, where-is basis, and Licensee makes no representations or warranties, whether under this Agreement or otherwise, expressed or implied, in connection with or with respect to the Personal Property.

          (i) Licensor and Licensee shall share evenly the costs of the Store Count.

          (j) At Licensee’s option (such option to be exercised no later than September 30, 2008), the Inventory to be transferred to Licensor on the Buy-Out Date shall include Seasonal Inventory (the “ Seasonal Inventory Election ”). In the event of a Seasonal Inventory Election:

          (i) the term “Inventory” shall be deemed to include Seasonal Inventory and the “Inventory Value” of Seasonal Inventory shall be calculated as 40.0% of the otherwise applicable “Inventory Value” of such Seasonal Inventory; and

          (ii) the Licensee Inventory Consideration and the Final Inventory Consideration shall be reduced by one million dollars ($1,000,000).

          (k) As of the Buy-Out Date, Licensee shall have satisfied any and all outstanding payables owed in connection with the Inventory or reserved and set aside amounts adequate to satisfy any and all payables owed in connection with the Inventory.

          (l) In the event that Licensor is in breach of its obligations under this Section 4.4 to pay the Licensee Inventory Consideration or the Final Inventory

Consideration, as applicable, when due (the “ Due Date ”), then, in addition to any other remedies available at law or in equity, the Licensor shall pay to Licensee interest on the unpaid amount of Licensee Inventory Consideration or Final Inventory Consideration, as applicable, at a rate equal to the lesser of (i) 18% annually and (ii) the maximum nonusurious annual interest rate that may be contracted for, charged, received, or collected on such amount under applicable law from the period commencing on the Due Date and ending on the date when the Licensee Inventory Consideration or Final Inventory Consideration, as applicable, has been fully paid.

          4.5 Testing Lab Equipment . As additional consideration for the payments made to Footstar pursuant to Section 4.4(c), Footstar shall sell, assign, transfer, convey and deliver to Kmart or its designated permitted assigns, and Kmart or its designated permitted assigns shall purchase and assume from Footstar, free and clear of all encumbrances of any nature, all of Footstar’s right, title and interest in and to all of the properties, assets, and rights of every nature, kind and description, to all equipment located in Footstar’s Mahwah, New Jersey facility as of the date of the Master Agreement Amendment set forth on Section 1.2a-3 of the Disclosure Letter to the Master Agreement Amendment (such equipment, the “ Testing Lab Equipment ” and such transaction, the “ Testing Lab Sale ”). The Testing Lab Sale shall occur on a date mutually acceptable to Footstar and Kmart that is within thirty (30) days of Footstar’s written notice to Kmart that such equipment is ready to be sold, but in any event no later than July 31, 2008. Within five (5) Business Days of the date of such closing, Kmart shall cause the Testing Lab Equipment to be removed from the Mahwah, New Jersey facility. From and after the date of the Master Agreement Amendment through such closing date, Footstar shall maintain (but will be under no obligation to replace or undertake repairs of) the Testing Lab Equipment in the ordinary course of business consistent with past practice, subject to ordinary wear and tear, and shall not sell or convey or otherwise further encumber any of the Testing Lab Equipment or any interests therein without the prior written consent of Kmart. Subject to the foregoing, Footstar shall sell and Kmart shall purchase the Testing Lab Equipment on an as-is, where-is basis, and Footstar makes no representations or warranties, under this Agreement or otherwise, express or implied, in connection with or with respect to the Testing Lab Equipment.”

          (b) Effective as of the date hereof, Article II of the Master Agreement shall be amended by adding the following definitions to Section 2.1 thereof:

		“Defect”		shall mean any defect, fault or imperfection (including mis-mated and near-mated shoes) which causes a product not to be salable in the ordinary course of business at the everyday retail price. Display merchandise shall not be presumed to have a Defect. Notwithstanding the foregoing, products which have minor wear, minor soiling, minor stains, minor dents or minor scratches that Licensor and Licensee or their respective representatives reasonably determine do not effect the salability of the

				goods in the ordinary course of business at the everyday retail price shall not be considered to have a Defect.
		“Defective Inventory”		shall mean any Inventory with a Defect.
		“Inventory”		shall mean all merchandise inventory of the Business that is located at a Footwear Department; provided that in no event shall the Inventory include any merchandise inventory that is Defective Inventory or, subject to Section 4.4(j), any Seasonal Inventory.
		“Inventory Value”		shall mean the book value of all (or, as the context may require, less than all) Inventory, calculated in accordance with GAAP, applied on a consistent basis (but not taking into account any reserves), but in any event, and giving effect to all markdowns of any type whatsoever, excluding (i) distribution and delivery costs incurred by Licensee and/or its Affiliates after receipt of such Inventory from suppliers at a Footstar (or Footstar Affiliate) distribution center, and (ii) any intercompany royalty or other intercompany charges between and among Footstar and its Affiliates (other than changes that reflect any out-of-pocket cost incurred by Footstar or an Affiliate and that do not result in a book value with respect to the applicable item of Inventory greater than the book value of such Inventory that would have existed had Footstar and its Affiliates been consolidated as a single entity).”

          1.3 Access to Information

          Effective as of the date hereof, Article X of the Master Agreement shall be amended by adding a new Section 10.4 as follows:

          “10.4 Access to Information . During the Term: (a) Footstar will provide to Kmart or its designated agent (i) reports in the form set forth in Section 1.3 of the Disclosure Letter to the Master Agreement Amendment, on a monthly basis, (ii) business analysis and category analysis (line review forms), for the Fall of 2008 promptly after such analysis is completed and (iii) an aged inventory report, on a monthly basis beginning in August 2008 (collectively, the information in clauses (i)-(iii), the

“ Information ”); and (b) at the request of Kmart, representatives of Kmart and Footstar shall meet on a monthly basis to discuss the Information, at a mutually acceptable time during normal business hours, and at a mutually acceptable place, or via teleconference.”

2. Representations and Warranties of Footstar

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

          2.1 Due Incorporation and Authority

          Footstar is a corporation duly organized, validly existing and in good standing under the laws of its state of incorporation. Footstar 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 Footstar of this Agreement, the performance by Footstar of its obligations hereunder and the consummation by Footstar of the transactions contemplated hereby have been duly authorized by the board of directors of Footstar and no other corporate proceedings on the part of the board of directors of Footstar 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 Footstar, and, assuming the due authorization, execution and delivery hereof by the Licensor and SHC, this Agreement constitutes the legal, valid and binding obligation of Footstar, enforceable against Footstar 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).

          2.2 No Conflicts

          The execution and delivery by Footstar of this Agreement, the consummation of the transactions contemplated hereby, and the performance by Footstar 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 Footstar;

          (b) require Footstar 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, except where the failure to obtain any such consent, make any such filing or give such notice would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect;

          (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 default under, any contract, lease, loan agreement, mortgage, security agreement, guarantee, indenture or other agreement or instrument to which Licensee is a party or by or to which Licensee or any of its properties is or may be bound or subject, except for 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 Footstar is subject, except for violations that would not reasonably be expected to, either individually or in the aggregate, be material.

          2.3 Brokers

          Footstar 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.

          2.4 Benefit Plans

          (a) Section 2.4(a) of the Disclosure Letter contains a complete and accurate list of all Benefit Plans in which any Business Employee participates or to which any Business Employee is subject or party, and Footstar has made available to the Licensor or the Licensor’s counsel a copy of each such Benefit Plan and, if applicable, a copy of the most recent summary plan description.

          (b) There does not now exist, nor do any circumstances exist that would reasonably be expected to result in, any liabilities under (i) Title IV of ERISA, (ii) Section 302 of ERISA, or (iii) Sections 412 and 4971 of the Code, in each case, that would reasonably be expected to be a liability of Kmart following the Buy-Out Date.

          (c) Each Benefit Plan, the administrator and fiduciaries of each Benefit Plan, and Footstar has complied with the applicable requirements of ERISA (including, but not limited to, the fiduciary responsibilities imposed by Part 4 of Title I, Subtitle B of ERISA), the Code and any other applicable rules and regulations governing each Benefit Plan, except for such noncompliance as is not likely to have a Material Adverse Effect; and each Benefit Plan has at all times been properly administered in substantial compliance with its terms and in accordance with all such rules and regulations, except for such impropriety as is not likely to have a Material Adverse Effect.

          (d) No Benefit Plan requires or obligates the Licensor to assume the benefits or to have any liability thereunder except as required under COBRA or other Requirements of Law.

&