Foot Locker (FL)

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Position. We have an agreement with Mr. Serra in his position as Chairman of the Board, President and Chief Executive Officer.

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Term. The term of this agreement began on October 1, 2006 and ends on January 30, 2010.

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Base Salary and Bonus. We pay Mr. Serra an annual base salary of not less than $1.5 million during the term of the agreement. Mr. Serra’s annual bonus at target is 125 percent of his base salary, and his bonus at target under the long-term bonus plan for any three-year performance period is 90 percent of his base salary at the beginning of the performance period. If Mr. Serra remains employed by Foot Locker through the end of his contract term, he will be eligible for a pro-rata payout under the Long-Term Bonus Plan for the 2008-2010 and 2009-2011 performance periods, provided the performance goals are met.

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Benefit Plans and Perquisites. Mr. Serra is entitled to participate in all bonus, incentive, and equity plans offered to senior executives. He is also eligible to participate in all pension, welfare, and fringe benefit plans and perquisites offered to senior executives. The benefits and perquisites available to Mr. Serra include:

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Company-paid life insurance in the amount of his annual base salary;

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Long-term disability insurance coverage of $25,000 per month;

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Annual out-of-pocket medical expense reimbursement of up to $20,000;

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Financial planning expenses of up to $7,500 annually;

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Reimbursement of dues and membership fees of one private club of up to $20,000 annually;

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Automobile expense allowance of up to $40,000 annually and the services of a driver;

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Non-Compete Provision. Mr. Serra’s agreement provides that he may not compete with Foot Locker or solicit our employees for two years following the termination of his employment agreement.

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Certain Defined Terms in the Agreement:

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willfully and continuously fails to perform his duties;

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willfully takes part in misconduct that significantly harms the Company;

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willfully breaches his employment agreement and does not correct the breach; or

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is convicted of a felony (other than a traffic violation).

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a person or group makes a tender offer to purchase at least 20 percent of the Company’s outstanding stock;

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the Company merges with another company or sells all (or substantially all) of its assets. This event would exclude, for example, mergers (or similar transactions) in which no one becomes the beneficial owner of more than 20 percent of the stock outstanding;

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the acquisition of 20 percent or more of the outstanding stock. (The Board may, however, increase this threshold up to 40 percent);

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shareholder approval of a plan of liquidation, dissolution, or sale of substantially all of the assets of the Company; or

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during any period of two consecutive years, the directors at the start of the period, plus any new director whose election or nomination for election was approved by at least two-thirds of the directors then remaining on the Board who either were directors at the beginning of the period or whose election or nomination was approved in this manner, do not comprise at least a majority of the Board.

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Mr. Serra is incapacitated due to physical or mental illness and, as a result, has not performed his duties on a full-time basis for six months and does not return to perform his duties after the Company gives him notice.

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a material demotion or reduction in Mr. Serra’s authority or responsibility (except temporarily because of illness or other absence);

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a decrease in his base salary rate;

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a reduction in his annual bonus classification level;

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failure to continue the benefit plans and programs that apply to him, or the reduction of his benefits, without providing substitute comparable plans, programs and benefits;

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failure by a successor company to confirm in writing that it will assume the Company’s obligations under the agreement; or

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the Company breaches a material provision of the agreement and does not correct the breach.