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					CONTROL                                                                       Policy 3-001


SUBJECT: Petty Cash

POLICY:

Petty Cash expenditures are for store related services and products only upon approval of the
Store Manager. The District Manager must approve all Petty Cash expenditures over $20.00.
This approval can be obtained verbally over the phone and noted on the slip. The District
Manager must review and sign the P.O.S. generated petty cash slip upon their next visit.


PROCEDURE:

Petty cash functions available through the POS system:

CODE:                                                    EXAMPLE OF USE:

Compensation of non-Stride Rite temporary                Temporary inventory help
employees (under $600 per individual, per year)          Temporary peak season help
                                                         Temporary help

Payroll advance                                          Paychecks have not arrived by 4PM on
                                                         Friday

Store Supplies                                           District Manager approved supplies only

Postage                                                  Stamps

Pay off NSF check                                        Bad check payback

Other                                                    District Manager approved items

Contests                                                 Home Office approved contests

Push Money                                               Home Office approved Push Money
                                                         events

Store Maintenance                                        Window cleaning

Storage Rental                                           District Manager approved offsite
                                                         storage space

Gumball                                                  Gumball deposits in Outlets only
CONTROL                                                                         Policy 3-001

SUBJECT: Petty Cash (cont.)
To process Petty Cash through the POS system:

        ♦   Select #7, Petty Cash In/Out from the P.O.S. menu.

        ♦   Select ‘O’ for Petty Cash Out.

        ♦   From the list provided on the screen, select the applicable petty cash item for the
            item or services purchased.

        ♦   Enter the name of the payee in “Additional Text”.

        ♦   Enter amount.

The Store Manager (or manager’s designee) must sign the petty cash slip. For services
rendered, a signature is required from the person receiving the payment.

Receipts must be attached to the P.O.S. generated petty cash slip and kept with store files.
CONTROL                                                                           Policy 3-002

                          Stride Rite/Outlet/Saucony Stores Only

SUBJECT: Gift Certificates


POLICY:
Gift Certificates are a perfect way to service customers who do not have their children at the store
or as a gift purchase. Keep an adequate supply of Gift Certificates on hand, available in $30, $40
and $50 denominations.

Only Stride Rite Gift Certificates are redeemed as legal tender. Dealer Gift Certificates and
Saucony Gift Certificates are not legal tender and cannot be deposited for cash. Use promo code
“Dealer Gift Certificate” in the POS after you enter the stock number. Retain all Dealer Gift
Certificates and Saucony Gift Certificates with your closing paperwork. Write VOID across the
redeemed gift certificate prior to filing with your closing paperwork.

Additional Stride Rite and Saucony Gift Certificates can be ordered from the Sales Audit
department.

Keep all Gift Certificates in a secure locked location in the store, either in the cash drawer, locked
file cabinet or secure locked box.


PROCEDURE:

Selling a Gift Certificate through the POS system:

    ♦   Enter the customer history information in the POS

    ♦   Discard the Gift Certificate customer information tear off sheet.

    ♦   Record the transaction # on the Gift Certificate log (see attached), along with the
        associate’s signature.

    ♦   Press F4, Gift Certificate.

    ♦   Enter the Gift Certificate #.

    ♦   Enter the amount of the Gift Certificate.

    ♦   Mark the Gift Certificate with the purchase date.




                                                                                         December 2005
CONTROL                                                                           Policy 3-002
SUBJECT: Gift Certificates (cont.)
Redeeming a Stride Rite Gift Certificate through the POS system:

    ♦   Use the Gift Certificate tender key when redeeming a Stride Rite Gift Certificate into the
        POS system.

    ♦   Verify that the Gift Certificate is valid.

    ♦   Frank the Gift Certificate as a check.

    ♦   Customer information must be posted to the POS history file.

    ♦   Gift certificates must be listed on the deposit slip along with the checks for the
        corresponding day.

    ♦   Note on the deposit slip that it is a Gift Certificate.

    ♦   When redeeming a Gift Certificate for tender, the maximum amount of cash refunded is
        $15.00.



These files should be reviewed and initialed by the District Manager.

Keep Gift Certificate manual log in store files for 12 months.

Stride Rite Gift Certificates may be redeemed at any Stride Rite retail or outlet location. Saucony
Gift Certificates may be redeemed at any Saucony location.




                                                                                        December 2005
CONTROL                                                        Policy 3-002
SUBJECT: Gift Certificates (cont.)

                               Gift Certificate Log

                       GIFT
 DATE     DATE     CERTIFICATE               STORE ASSOCIATE
 SENT     SOLD       SERIAL #    TRANS. #       SIGNATURE       DM INITIAL




                                                                   December 2005
CONTROL                                                                      Policy 3-003


SUBJECT: Payroll Advance

POLICY:

A Payroll Advance may be given only if an associate’s payroll check is not received by Friday at
4P.M.

Payroll advances are limited to 75% of the associate’s gross weekly pay. Upon issuing a payroll
advance, the Store Manager must email their District Manager for approval prior to issuing a
Payroll Advance.

                        s
It is the Store Manager' responsibility to collect all advances on the day the payroll check is
received by the associate. All outstanding Payroll Advances must be reimbursed prior to the
issuance of an associate’s "final" paycheck.

Do not void the payroll check against the advance given. Collect the money from the associate
on the next pay period.


PROCEDURE:

To process a Payroll Advance through the POS system:
♦ Associate number, enter
♦ 7 “Petty Cash”, enter
♦ O “Petty Cash Out”
♦ 2 “Payroll Advance”
♦ Associate name, enter
♦ Amount of Payroll Advance

To process a Payroll Advance payback:
♦ Associate number, enter
♦ 7 “Petty Cash”, enter
♦ I “Petty Cash In”, enter
♦ 2 “Payroll Advance”
♦ Associate name, enter
♦ Amount of payback
♦ Enter tender

The associate must sign the Payroll Advance and Payback receipt. Retain all receipts in the
store files. Email your District Manager upon receipt of an outstanding payroll advance payback.

Sales audit will notify the District Manager at the end of each month of any outstanding payroll
advances.

.
CONTROL                                                                          Policy 3-004


SUBJECT: Store POS Opening Procedure

POLICY:

At the start of each business day, a ‘no sale’ transaction is required to be entered onto the P.O.S.
system prior to the store opening.


PROCEDURE:

The POS system will prompt to print closing reports from the prior day, select yes.
The system prompts to verify date and time.
Enter a “No Sales” transaction ( #6 – via P.O.S. transaction entry menu) onto P.O.S. prior to the
start of each business day.
Retain a copy of the “No Sale” transaction with the store’s daily paperwork.
Count cash in drawer confirming total ties to predetermined drawer amount, usually $200 unless
otherwise instructed. Note opening amount on the no sale slip.


Retain slip with daily closing paperwork.
CONTROL                                                                           Policy 3-005

                          Stride Rite/Outlet/Saucony Stores Only

SUBJECT: P.O.S. Sales Slip Procedures

POLICY:

All customers are provided with a sales slip upon completion of a sale transaction.

PROCEDURE:
The customer copy of the P.O.S. generated sales slip should be given to the customer upon
completion of the sale.

The store copy is maintained at the store level for three months. File in a separate box by month.

Credit card sale and refund slips must be filed in ascending numerical order by day. Store in a
separate box by month.

All credit card receipts are required to be maintained at the store level. Retain with your daily
paperwork.
CONTROL                                                                        Policy 3-006



SUBJECT: Manual Sales Slip’s

POLICY:

Manual Sales Slips are completed when the P.O.S. system is inoperable or during other pre-
approved occasions. All customers are to be provided with a sales slip upon completion of a
sale.

It is required that the Manual Sales Slips be filled out completely. The information recorded is
required to be entered onto the P.O.S. system when it becomes operative (refer to P.O.S. system
failure).

Each Stride Rite store is furnished with packages of pre-numbered two part Manual Sales Slips.
Packages are to be used one at a time and the sales slips must be utilized in ascending
numerical order without exception.

All Manual Sales Slips used are to be accounted for by logging them into the Manual Sales Slip
Log Book at the end of every business day. The white copy is to be kept in the back pocket of
the Manual Sales Slip Binder for the District Manager’s review. Once the District Manager has
reviewed, signed and reconciled all of the manual sales slips to the transaction log, the white
copy must be destroyed.

If for any reason a Manual Sales Slip is made unusable, do not discard the slip. The Store
Manager is to write “VOID” on both copies of the sales slip. Place the white and yellow copies in
the back pocket of the Manual Sales Slip Binder for the District Manager’s review. The sales slip
must be logged into the transaction log book as “void”.




                                                                                    September 2005
CONTROL                                                                         Policy 3-006

SUBJECT: Manual Sales Slips (cont.)

PROCEDURE:

The Manual Sales Slips should be completed as follows:

   ♦   POS System Trans. No - Enter the corresponding POS generated transaction number
       when the sales data is keyed into the POS system.

   ♦                                 s
       Store Number - Enter the store' 4-digit number.

   ♦                                           s
       Cashier - Enter the POS assigned cashier' number.

   ♦                                               s
       Sold by - Enter the POS assigned salesperson' number.

   ♦   Date - Enter the date of sale.

   ♦   Comments - Enter any customer information that may be useful for future reference.

   ♦                             s
       Child's Name - Enter child' name.

   ♦                                s
       Birth Date - Enter each child' birth date.

   ♦                                         s
       Name, Phone Number- Enter the customer' name, complete address and phone
       number. Indicate if customer refused.

   ♦   Stock Number- Enter the complete stock number.

   ♦   Size - Enter size.

   ♦   Width - Enter width.

   ♦   Description - Enter name of items sold.

   ♦   Quantity - Enter number of the individual item sold.

   ♦   Unit Price - Enter price of the individual item sold.

   ♦   % Discount - Enter discount, if applicable.

   ♦   Allowance - Enter the allowance amount, if applicable.

   ♦   Extended Price - Enter quantity times unit price less discount or allowance, if applicable.




                                                                                     September 2005
CONTROL                                                                             Policy 3-006

SUBJECT: Manual Sales Slips (cont.)

    ♦ Tax - Enter where applicable.

    ♦   Sub-total - Enter the total of all extended priced items (excluding tax).

    ♦   Tax - Enter total of all taxable retail items.

    ♦   Total - Add the subtotal and tax total together.

    ♦   Reference - Enter any information useful for future clarification.

    ♦   Form of Tender - Indicate type of tender.

Distribution of Sales Slip Copies

                                                                          s
    White - keep in the back pocket of the binder for the District Manager' review. Once
    reviewed by the District Manager, the white copy must be destroyed. The District
    Manager will sign off on the tracking sheet once they have reviewed the white copy of
    the used manual slips.

                     s
    Yellow - customer' copy.




                                                                                       September 2005
CONTROL                                                                        Policy 3-006

SUBJECT: Manual Sales Slips (cont.)

                                  Manual Sales Slip Log
              STRIDE RITE RETAIL CORP.                                   STORE#--
                MANUAL SALE SLIP LOG
                                SHEET                                    MONTH --
                                                PRIOR MONTH ENDING SALES SLIP # --

 MANUAL                                                                                        REASON
SALE SLIP #         TRANS #              DATE                TENDER                  CASHIER   FOR USE




                                                                                       September 2005
CONTROL                                                                         Policy 3-007

SUBJECT: Daily Price Override Report

POLICY:
The POS Price Variance report is a recap of all daily sales transacted via the price override
function, in which items were sold at a price other than the current POS product master file price.

The Store Manager must review the POS Price Override report daily and provide a written
explanation for all transactions.

The District Manager must review the sign-off on each POS Price Variance report acknowledging
the store's compliance to stated policies.


PROCEDURE:

All items listed on the Daily Price Override report must be reviewed by the Store Manager to
determine the reason for the price override. An explanation must be written directly on the POS
price override report.

The Store Manager must check the price of the display merchandise in question and, if
necessary, change the display price. The Home Office Merchandise Planning department should
be contacted for additional instructions if it is unclear what the correct price should be.

The POS Price Variance report must be filed in the appropriate end of day binder for reference.
CONTROL                                                                       Policy 3-008


SUBJECT: POS System Failure

POLICY:

In the event of a POS system failure, the store must revert back to the Manual Sales Slip system.
Whenever a manual system is used, notify the Help Desk immediately.

Cash/Check Deposits, MasterCard/Visa, Discover and American Express batch header tickets
must be completed daily. The total of Cash/Check Deposits, Master Card/Visa, Discover and
American Express should correspond to the respective day's sales. Never combine two or more
days of sales.

Once the POS system is operable, the Store Manager must key all transactions for the “down
period” into the POS system.



PROCEDURE:

Complete manual documents for daily transactions (i.e. Sales Slips, Petty Cash, Miscellaneous
Income, etc).

Numerical sequence of all manual documents must be maintained.

Enter all manually documented transactions into the P.O.S. system.

Once all the information has been keyed, log and file the manual slips with the P.O.S. generated
sales slip in the Manual Sales Slip Book.

Email the Sales Audit Department with the beginning and ending transaction numbers for the
manually keyed transactions during your down period.
CONTROL                                                                            Policy 3-009


SUBJECT: Store Deposit Controls

POLICY:
Each day after closing, the deposit for the day is prepared. Cash deposits must be made prior to
the associates leaving for the evening. In the event that the store does not have a bank located
in the mall, the associate is required to keep the deposit in the store safe. If the store does not
currently have a safe discuss with the District Manager an alternative locked location. The
deposit must then be made by 10:00A.M. the following morning. Additionally, the register cash
fund remains in the locked POS cash drawer after the deposit is prepared.

To further control and secure store cash, a mid day drop is required any time the cash drawer
exceeds $1,000.00 per POS unit.

Effective immediately, the attached deposit log will be kept at the register in a binder and
maintained daily. It is the responsible of the Store Manager to follow up and ensure associate
compliance.


DEPOSIT PROCEDURE:

•   Mid day deposits must be taken directly to the bank or kept in a store safe until the evening
    drop. The deposit amount is included in the daily closing totals, therefore, leave a copy of the
    mid day deposit slip in the cash drawer.

•   The daily deposit must list all cash, checks, traveler’s checks and gift certificates.

•   All checks should reference the customer’s name for verification with the corresponding
    transaction.

•   Customer’s making restitution on a bad check should have their payment documented on a
    separate deposit slip.

•   Once the deposit slip is completed and verified the deposit log must be completed.

•   Franked deposit slips must be picked up from the bank on the following business day.

•   Franked deposit slips must be stapled to the daily closing report.

•   Send a copy of the franked daily deposit slips weekly to your District Manager.

•   Overages or shortages in excess of $5.00 warrant a voice mail to the District Manager at
    closing with an explanation.

•   Store Managers are required to verify the franked deposit slip with the Daily Cash and Sales
    Closing report. Any discrepancies must be investigated and noted on the closing report.



                                                                                         December 2005
CONTROL                                                                       Policy 3-009

SUBJECT: Store Deposit Controls (cont.)

SAFE PROCEDURE:

Safes are shipped with a preset combination (123456). Upon delivery change the safe
combination to a number specific to your store.

Safe combinations are given to personnel that open the store only. All deposits can be inserted
into the safe via the deposit slot.

To change the safe combination:
       Enter 000000, you will then hear 2 beeps
       Enter old combination once, you will then hear 2 beeps
       Enter new combination twice and you will hear 2 beeps after each entry of the new
       combination.
                                                                       st
The Store Manager is required to change the safe combination on the 1 day of each month.

If you need assistance changing the combination feel free to contact the Customer Service
department @ 1-800-939-5723.

If you have misplaced the combination to the safe contact the Stride Rite Store Operations
department.




                                                                                    December 2005
       CONTROL                                                                       Policy 3-009

       SUBJECT: Store Deposit Controls (cont.)
       On certain occasions, cash disbursements will exceed cash receipts. This will appear as a cash
       discrepancy on the end of day report. Do not adjust the cash or check deposit to balance out for
       the day. The following day, the nightly deposit should appear as a shortage to offset the prior
       day’s discrepancy. This shortage in the following day’s deposit will replenish the register fund
       back to the correct amount.

                                              Cash Deposit Log


Date           Morning count,   Amount of      Date deposit    Signature of    Date the         Verify franked
               associate        closing        was taken to    the associate   deposit slip     deposit slip,
               initials         deposit,       the bank        making the      was franked by   associate
                                associate                      deposit         the bank         initials
                                initials




                                                                                           December 2005
CONTROL                                                                          Policy 3-010


SUBJECT: Charge Card Acceptance Procedures

POLICY:

Stride Rite accepts MasterCard, Visa, American Express and Discover charge cards. Mall
charge cards or any other type of charge card are not accepted under any circumstances. There
is no minimum purchase requirement for charge sales.

All charge card transactions must be processed through the POS system. If the POS is not
operating properly, call the following phone numbers for a manual voice authorization:

                    MasterCard / Visa                  800-884-1167
                    American Express                   800-528-2121
                    Discover                           800-347-1111

Refer to the attached credit card ID list when obtaining manual voice authorization.

A store must obtain authorization on 100% of all its MC/VISA, AMEX, and DISCOVER
transactions regardless of dollar amount.

Additional credit card manual slips can be ordered from the Sales Audit department.

If a fraudulent credit card is suspected call the 800# listed above and communicate a “code 10”.
An operator will guide you through the process.

PROCEDURE:
Accepting Credit Card Charges
Slide the customer's credit card through the POS system. If the POS system can’t read the
customer's card, manually key enter the customer's credit card number into the POS system. If
manually keyed, imprint must be taken and the customer must sign the POS receipt and manual
receipt.

Retain the customer's credit card until the transaction has been completed. If a customer’s credit
card fails authorization and is declined, do not process the sale.

Ensure the customer signs the credit card receipt and that it is legible. Verify the validity of the
signature against the signature on the back of the charge card. If the credit card isn’t signed ask
for the customer’s driver’s license or alternative signed credit card. Verify the validity of the
customer’s signature against the already existing signature on the driver’s license or alternative
credit card.

The customer receives the second copy printed from the POS receipt printer.

Credit card sale slips must be filed in ascending numerical order by day. Store in a separate box
by month, retain for 6 months.
CONTROL                                                                       Policy 3-010

SUBJECT: Charge Card Acceptance Procedures (cont.)

Accepting Customer Phone Orders
Phone orders are processed as a send sale using charge card tender only. Due to the
constraints on a phone order the charge card acceptance policy needs to be amended. Since the
customer isn’t present during the transaction all charge card transactions must be verified with
the bank. Call the appropriate charge card company listed above and request authorization, at
this point they will ask for the cards ID#. We ship domestically only.

Merchant ID #
       STORE               AMEX #                DISCOVER #                  MC/VISA #
        1207             3135300333            601101101008017                24191
        1214             3125300459            601101101008058                24191
        1215             3215302357            601101101008066                24191
        1217             3135308260            601101101008074                24191
        1222             3125300806            601101101008124                24191
        1223             3123208266            601101101112231                24191
        1229             3340470319            601101100912292                24191
        1230             3135300374            601101101008165                24191
        1242             3740044140            601101101012423                24191
        1246             3345332316            601101101012464                24191
        1247             3345332324            601101101012472                24191
        1248             3225303213            601101100112489                24191
        1254             3213216658            601101101012548                24191
        1255             3343251013            601101101012555                24191
        1256             3480080449            601101101112561                24191
        1258             3120268875            601101101112587                24191
        1303             2205300585            601101101008256                24191
        1304             2205300650            601101101008264                24191
        1306             2385300074            601101101008280                24191
        1308             2060059227            601101101013082                24191
        1309             2295302186            601101101008314                24191
        1311             2295302194            601101101008322                24191
        1312             2205300601            601101101008330                24191
        1313             2295302228            601101101008348                24191
        1314             2295302236            601101101008355                24191
        1325             2195301510            601101101008439                24191
        1327             4455300772            601101101008454                24191
        1331             4455300764            601101101008496                24191
        1339             6310292107            601101101113395                24191
        1341             2295309264            601101101008553                24191
        1342             2195304175            601101101013553                24191
        1343             2195305446            601101101018453                24191
CONTROL                                    Policy 3-010

  STORE     AMEX #       DISCOVER #      MC/VISA #
   1344   2285306767   601101101011821    24191
   1352   2205301724   601101101113528    24191
   1353   6315309823   601101101213534    24191
   1354   6315309781   601101101213542    24191
   1355   6315309757   601101101213559    24191
   1356   6315309682   601101101213567    24191
   1357   2205302789   601101101113577    24191
   1358   2295306427   601101101013587    24191
   1359   2180139972   601101101013595    24191
   1360   2204106694   601101100113602    24191
   1361   4453080368   601101101013611    24191
   1362   4453121071   601101101113627    24191
   1363   4453121063   601101101113635    24191
   1364   6313373953   601101101013645    24191
   1365   6313303109   601101101013652    24191
   1366   6317177236   601101101013660    24191
   1367   2193137320   601101101013678    24191
   1368   2190011171   601101101013686    24191
   1369   2190011189   601101101013694    24191
   1370   2190144311   601101101013702    24191
   1371   4450189923   601101101013710    24191
   1372   2200241248   601101101013728    24191
   1373   2280053216   601101101013736    24191
   1374   2290432772   601101101013744    24191
   1375   2200224236   601101100113750    24191
   1376   2200549160   601101101013769    24191
   1399   4320144996   601101101113999    24191
   1402   4323162917   601101101014023    24191
   1404   4415300771   601101101008587    24191
   1407   4395304611   601101101008603    24191
   1410   4105301105   601101101008637    24191
   1412   4395301294   601101101008652    24191
   1416   4320085673   601101101114161    24191
   1421   4095303756   601101101008728    24191
   1422   4325301174   601101101008736    24191
   1425   4325308211   601101101008769    24191
   1427   4415300763   601101101008785    24191
   1434   4395304496   601101101008850    24191
   1435   4105306013   601101101009585    24191
   1436   4095324364   601101101008868    24191
CONTROL                                   Policy 3-010

  STORE     AMEX #       DISCOVER #      MC/VISA #
   1437   4097166805   601101101114377    24191
   1441   2295319917   601101101114419    24191
   1448   4100151315   601101101114484    24191
   1449   4105500250   601101101614491    24191
   1450   4415300359   601101100114501    24191
   1453   4323080309   601101101014536    24191
   1454   4103178240   601101100014545    24191
   1455   4013070719   601101100014552    24191
   1456   4103229142   601101103014567    24191
   1457   4320000003   601101101014577    24191
   1458   4100291103   601101101114583    24191
   1459   4100332675   601101101214599    24191
   1460   4453150302   601101101114609    24191
   1461   4450083308   601101101114617    24191
   1462   4090753054   601101101114625    24191
   1463   4090773144   601101101114633    24191
   1464   4010165322   601101101914644    24191
   1465   4320225444   601101101214656    24191
   1466   4320306236   601101100114667    24191
   1467   4091587501   601101100114675    24191
   1468   4320306244   601101100114683    24191
   1469   2290444686   601101101014692    24191
   1471   6311546956   601101100914710    24191
   1472   4450554720   601101100214723    24191
   1480   4230083529   601101101014809    24191
   1481   4092788116   601101101014817    24191
   1482   4092788124   601101101014825    24191
   1483   4092788132   601101101014833    24191
   1484   4092788157   601101101014841    24191
   1500   1350073979   601101101015004    24191
   1503   1425303518   601101101008884    24191
   1505   1425303500   601101101008892    24191
   1513   1175300698   601101101008975    24191
   1514   1420786352   601101101015145    24191
   1520   1425303435   601101101009023    24191
   1528   1425303872   601101101009098    24191
   1530   1355300393   601101101015301    24191
   1533   1425318961   601101101009148    24191
   1535   1175303700   601101101009163    24191
   1537   1175305481   601101101009619    24191
CONTROL                                  Policy 3-010

  STORE     AMEX #       DISCOVER #      MC/VISA #
   1541   1425326618   601101101018818    24191
   1542   1425319639   601101101013538    24191
   1543   1425365400   601101101115432    24191
   1546   1350126199   601101101015467    24191
   1547   1425338498   601101101115473    24191
   1549   1424825594   601101101315495    24191
   1553   1155300510   601101101215539    24191
   1554   1420583486   601101101115549    24191
   1556   1425094968   601101104015563    24191
   1557   1421592825   601101101015574    24191
   1558   1421665282   601101100115581    24191
   1559   3240282343   601101100915592    24191
   1560   1420786329   601101101015608    24191
   1561   3240425629   601101101015616    24191
   1601   1421522608   601101101016010    24191
   1602   1422397042   601101101016028    24191
   1603   1422770412   601101101016036    24191
   1607   1422770396   601101101016077    24191
   1608   1422772582   601101101016085    24191
   1625   4410248066   601101100116258    24191
   1626   4410248074   601101100116266    24191
   1627   4410248082   601101100116274    24191
   1628   4410248090   601101100116282    24191
   1630   5460243579   601101100116308    24191
   1663   2375301371   601101101216636    24191
   1675   2370062721   601101101016754    24191
   1676   2370240494   601101101016762    24191
   1679   5465310308   601101102016795    24191
   1697   4415300284   601101100116977    24191
   1703   6315357137   601101101217030    24191
   1704   2195303359   601101100217049    24191
   1706   4325302875   601101101017067    24191
   1707   5047312996   601101101017075    24191
   1708   5047295530   601101101017083    24191
   1709   6310644612   601101101217097    24191
   1710   6310889266   601101101017109    24191
   1711   6310943717   601101100117116    24191
   2017   5020083861   601101101120176    24192
   2022   5045305877   601101101009346    24192
   2024   5045302486   601101101009361    24192
   2027   5270152556   601101100120276    24192
CONTROL                                   Policy 3-010

  STORE      AMEX #       DISCOVER #      MC/VISA #
   2028    5020221503   601101101220281    24192
   2029    5043790997   601101101220299    24192
   2031    5043791003   601101101220315    24192
   2036    5041699265   601101101120366    24192
   2040    5045305844   601101101009429    24192
   2044    5046055620   601101101020442    24192
   2045    5045305943   601101101009460    24192
   2048    5365301050   601101101009478    24192
   2053    5045305869   601101101009494    24192
   2055    5020194882   601101101120556    24192
   2057    5044497394   601101101920575    24192
   2065    5360167373   601101101020657    24192
   2067    5045305562   601101101015533    24192
   2077    3340238120   601101101020772    24192
   2080    3345306823   601101101020806    24192
   2082    5043791029   601101101220828    24192
   2094   50475544993   601101101020947    24192
   2095    5048320139   601101101020954    24192
   2096    5049090905   601101100129961    24192
   2097    1040394330   601101101020970    24192
   2098    5049922578   601101101020988    24192
   2099    1050552942   601101101020996    24192
   3204    2180146391   601101103232045    24196
   3209    2200780427   601101103232094    24196
   3210    2200780419   601101103232102    24196
   3211    4096074836   601101103232110    24196
   3212    4096074844   601101103232128    24196
   3214    4096074851   601101103232144    24196
   3215    2180146409   601101103232151    24196
   3218    2070092200   601101103232185    24196
   3219    4010492114   601101103232193    24196
   3220    6313878779   601101103232201    24196
   3221    4450879820   601101103232219    24196
   3222    4390450187   601101103232227    24196
   3224    1426741674   601101103232243    24196
   3226    6313878829   601101103232268    24196
   3227    2060420072   601101103232274    24196
   3228    2280186933   601101103232284    24196
   3229    2200780401   601101103232292    24196
   3230    2200780435   601101103232300    24196
CONTROL                                      Policy 3-010

CON
      STORE     AMEX #       DISCOVER #       MC/VISA #
       4901   6312674294   601101101049011     24196
       4902   6312674211   601101101049029     24196
       4903   6312674278   601101101049037     24196
       4906   6312673304   601101101049060     24196
       4953   6312674252   601101101049532     24196
       4975   2290899947   601101101049755     24196
       4981   2290899988   601101101049813     24196
       6001   2185300829   601101101160016     24196
       6002   1425303112   601101101060026     24196
       6003   5274904507   601101101160032     24196
       6004   4095961009   601101101160040     24196
       6009   5044439750   601101101060091     24196
       6011   4105305577   601101101060117     24196
       6012   5025300963   601101101060125     24196
       6013   3345307276   601101101960134     24196
       6014   4015300247   601101101160149     24196
       6017   2375308236   601101101060174     24196
       6018   2375309069   601101101060182     24196
       6019   3480096874   601101101260196     24196
       6020   4395301682   601101101060208     24196
       6021   6315321836   601101101060216     24196
       6022   6315332064   601101101060224     24196
       6023   4093145233   601101101060232     24196
       6024   2203075916   601101101060240     24196
       6025   2373124452   601101101060257     24196
       6026   4393037510   601101101060265     24196
       6027   6313258766   601101101060273     24196
       6028   2193102464   601101101060281     24196
       6029   4093473403   601101101060299     24196
       6030   4103168530   601101101060307     24196
       6031   4453099574   601101101060315     24196
       6032   1427175070   601101101060323     24196
       6033   4413138223   601101101060331     24196
       6034   4097174783   601101101060349     24196
       6035   5047751698   601101101160354     24196
       6036   5047748918   601101101060364     24196
       6037   2073017063   601101101060372     24196
       6038   5047833561   601101101060380     24196
       6039   5047785266   601101101060398     24196
       6040   9383041762   601101101060406     24196
CONTROL                                  Policy 3-010

  STORE     AMEX #       DISCOVER #       MC/VISA #
   6041   2293245858   601101101060414     24196
   6042   2193140258   601101101060422     24196
   6043   2290059955   601101101060430     24196
   6044   4450044227   601101101060448     24196
   6045   4410038400   601101100060456     24196
   6046   4390036820   601101100060463     24196
   6047   2370089963   601101100060471     24196
   6049   4230042129   601101101160495     24196
   6050   5042995647   601101101060505     24196
   6051   4100291095   601101101060513     24196
   6052   6310547716   601101101060521     24196
   6053   5270228273   601101101060539     24196
   6054   3130138944   601101101260543     24196
   6055   4090943457   601101101260550     24196
   6056   4320225428   601101101260568     24196
   6057   5020221487   601101101260576     24196
   6058   5460176233   601101101060588     24196
   6059   4320195415   601101101060596     24196
   6060   5042345611   601101101060604     24196
   6061   1050179100   601101101060612     24196
   6062   5360090054   601101101060620     24196
   6063   4091295162   601101101060638     24196
   6064   5430125179   601101101060646     24196
   6066   3210354882   601101101060661     24196
   6067   3340381763   601101101060679     24196
   6068   1050320183   601101101060687     24196
   6070   3220335061   601101100160702     24196
   6071   2290771286   601101101160719     24196
   6072   3130366289   601101101060729     24196
   6073   4390288249   601101100160736     24196
   6074   4093650117   601101101060745     24196
   6080   2200500452   601101101032017     24196
   6081    632657505   601101105032021     24196
   7001   2205304108   601101101970018     24197
   7002   6315329334   601101101016499     24197
   7004   2295302244   601101101008397     24197
CONTROL                                                                        Policy 3-011


SUBJECT: Travelers Check Acceptance

POLICY:

Travelers Checks are a valid form of payment when following the procedures listed below.



PROCEDURE:

One form of valid customer identification must be obtained for all Travelers Checks.
         ♦ Valid customer identification includes the following:
              o Driver's license (permanent type)
              o Non-Driver's State issued I.D.

The customer must sign the Travelers Check in the presence of a salesperson.

Verify the validity of the customer's signature against the already existing signature on the
travelers check.

Examine the check carefully for validity and for any signs of tampering.

If there are any questions on American Express Travelers Checks, or the validity of the check,
call 1-800-525-7641. If there are any questions on Visa Travelers Checks, or the validity of the
check, call 1-800-227-6811.

Travelers Checks must be drawn from a U.S. bank and you may give cash back as change on a
Travelers Check transaction.
CONTROL                                                                        Policy 3-012

                               Concept/Outlet Stores Only

SUBJECT: Personal Check Acceptance

POLICY:

The check must be made out in the salesperson's presence by the customer. Ensure that the
check is completely filled in by the customer. It can be accepted only up to the amount of sale
and must be made payable to Stride Rite.

Checks must have:

       ♦   Name imprinted by bank

       ♦   Customer's complete street address, city and state (no P.O. box, general delivery
           only)

       ♦   Customer's home and/or work phone number (if not on check, write number(s) on
           check)

       ♦   Current date (no pre- or post-dated checks)

Do not accept checks under the following conditions:

       ♦   Associates are not allowed to cash personal checks for cash.

       ♦   Do not cash payroll checks, including Stride Rite Payroll checks.

       ♦   Do not accept a check that is either pre- or post- dated.

       ♦   Do not accept any check which is made out for more than the purchase.

       ♦   Do not accept checks from minors (under age 18).
CONTROL                                                                     Policy 3-012

SUBJECT: Check Acceptance (cont.)

PROCEDURES:

Obtain one form of valid customer identification.     Note on the front of the check, near the
customer's imprinted name, the type of ID.

          ♦   Valid customer identification includes the following:
              o Driver's license (permanent type)
              o Non-Driver's State issued I.D.

          ♦   Do not use the following as acceptable customer I.D.:
              o Social Security card
              o Bank passbook
              o Membership cards
              o Automobile Registration

   Verify that the customer's check contains the following:
          ♦ Bank imprinted name (not typed)
          ♦ Complete home address and home and/or business phone number (this may be
               written in)
          ♦ Current date (not pre- or post-dated)

   Verify the customer signature with the imprinted name and ensure they are the same.

   Ensure that the numerical payment amount on the check agrees with the written payment
   amount.

   Refer to the “TeleCheck Check Authorization Instructions” for processing instructions using
   the guarantee and collection services of TeleCheck.
CONTROL                                                                         Policy 3-012

SUBJECT: Check Acceptance (cont.)

                              TeleCheck Authorization
                                   Instructions
General Instructions:

   •   Each store should have a “procedure card”. Contact Sales Audit if the store does not
       have this procedure card. Disregard steps two through four. Steps two through four
       discuss hardware used to read the information off the check. We will not be using this
       hardware. The procedure card will be helpful to identify information needed on a check,
       what should be done with the check after approval and what the different TeleCheck
       response codes signify.
   •   By law we need to affix the TeleCheck fee sticker explaining the fee assessed to a
       returned check. This should be put on the side of the register for customers to clearly
       view.
   •   The smaller sticker with the call center phone number should be affixed to a location
       easily visible to the associate. Write the store’s subscriber number in the space provided.
       This number can be found in the package on the, “Welcome to TeleCheck” sheet.
   •   Below is a sample of the stamp that was sent for all checks.




 Unique store ID #                                                    Store #
                                   Tck.# Stride Rite
                                    ____________
 Area for 4 digit                  Phone Approval                     Area for customer
 authorization # for                                                  telephone # if not on
 guarantee stores                                                     front of check.
 with a check over
 $50. Otherwise
 leave blank.
CONTROL                                                                             Policy 3-012

SUBJECT: Check Acceptance (cont.)

Identify your store as a “Check Guarantee” or “Collection Only” by your TeleCheck subscriber
number. Check Guarantee store identification numbers begin with 355*****, Collection Only
store identification numbers begin with 358*****.

Check Guarantee stores will dial out for authorization code for checks over $50. Collection only
stores are stores that are not on authorization and will not dial out for authorization, but are still
required to stamp the check and fill in all relevant information.

    Checks under $50, Check Guarantee and all Collection stores:

    •   Follow all of the normal customer information verification steps.
    •   Ensure the customer’s name, address, and phone number is on the front of the check. If
        information is missing, write it in.
    •   Stamp the front of the check with the stamp supplied. This stamp has the store ID.
        number, store number, area for authorization number and an area for the customer’s
        telephone number if missing from the check. This information assists TeleCheck to
        identify where the check is from and helps to build a database of customers in the area.
    •   Since this check is under the $50 floor limit, the system will not prompt you for an
        authorization number to complete the transaction, therefore no authorization number is
        required to be written on the check.

    Checks over $50, Check Guarantee Stores Only:

    •   Follow the first two steps from above.
    •   As the transaction is being processed, the POS system will recognize that the check is
        over the $50 floor limit and will automatically dial out for an authorization number.
    •   You will be prompted to enter the drivers’ license number. TeleCheck uses this number
        to review the check writers’ history.
    •   If the check is approved for processing, you will be given a four-digit authorization code
        through the POS system. Write this number into the area provided from the stamp.
    •   If you receive a, “code 3 or code 4” decline message, it signifies the customer has some
        history in the TeleCheck file that is preventing them from being authorized. At this time
        the customer is to receive one of the courtesy cards provided in the TeleCheck package.
        The customer can then call TeleCheck directly using the telephone number on the card to
        resolve the problem.
    •   If the check is declined, the customer should be persuaded to settle the transaction with
        another form of tender.

Problems:
    •   If you receive a message other than “code 3 or code 4”, give the customer a courtesy
        card.
    •   If you need additional courtesy cards, contact the Sales Audit department.
CONTROL                                                                          Policy 3-013


SUBJECT: Returned Customer Checks

POLICY:

All returned checks are sent directly to a collection agency by the originating store’s bank.


PROCEDURE:
A customer may pay a returned check at the originating store. Process the transaction under
Petty Cash In: Payoff NSF Check. Refer to your TeleCheck sticker specific to your store for the
return check handling fee. Add this amount to the amount of the check when processing the
repayment. Email Maria Rodrigues from the Sales Audit department with the customer’s name
and amount of the original returned check.
CONTROL                                                                         Policy 3-014


SUBJECT: RTV: Internal and External Vendors

POLICY:

A Return to Vendor transaction must be processed at POS for merchandise returned to an
internal or external vendor. Examples of product returnable to a vendor would be substitutions,
defective or damaged product out of the box.



PROCEDURE:
The Store Manager must contact the vendor via telephone or in writing to obtain authorization to
return merchandise. The vendor will either issue a return authorization number with instructions
for returning the merchandise or deny the return. If the return is denied, you must contact the
Home Office Merchandising department immediately.

The outside of each carton shipped must contain the following address information:

          ♦   Vendor name and address
          ♦   Store name, number and address
          ♦   Return Authorization number

A copy of the POS Return to Vendor document must be placed into the carton as the shipment
packing list.

Merchandise should be returned to the vendor via U.P.S. ground on a pre- paid basis unless
otherwise specified by the vendor. All vendor chargebacks shipped via U.P.S. must be recorded
in the store’s U.P.S. shipping manifest.

Vendors may contract with other freight carriers, such as R.P.S., to pick up the carton from the
store and deliver it back to the vendor. The vendor will notify the store if the carton is to be
picked up and will provide specific shipping instructions.

The Store Manager must sign all POS Return to Vendor documents as a formal
acknowledgement of the document’s accuracy.

Return to Vendor transactions must be entered directly onto POS or utilizing the symbol unit.
CONTROL                                                                       Policy 3-014

SUBJECT: RTV: Internal and External Vendors (cont.)

Processing a RTV through the POS system:

Beginning at the POS “Main Menu”, follow the steps below to process a Return to Vendor

    ♦   Select Option 9 “Shipping/Receiving”.

    ♦   Select Option 5 “Return to Vendor”.

    ♦   The POS will prompt the store associate to select whether or not the information was
        previously scanned into the symbol unit.

    ♦   The POS will provide a header screen for input of the Return to Vendor information. The
        Return Authorization number must be provided by the vendor.

    ♦   POS will provide a header screen for input of the vendor number for the merchandise that
        is being returned. Always use the vendor pick list. Under no circumstance is the store to
        create a vendor number.

The following information must be keyed into the POS Return to Vendor screen:

        ♦   Stock Number
        ♦   Width
        ♦   Size
        ♦   Quantity

When finished entering merchandise information:

        ♦   Press the “Esc” key
        ♦   F5 – to Save/Exit

A receipt will then print containing the following information: vendor number, document number
and quantity of items returned.

Retain all Return to Vendor documents in the store files.
CONTROL                                                                Policy 3-014

SUBJECT: RTV: Internal and External Vendors (cont.)

VENDOR NAME                         VENDOR #   VENDOR NAME                           VENDOR #
ADIDAS DISTRIBUTING (EAST) INC      1846       JAY GROUP - KEDS (JOBBER)             3313
AIRWAIR USA, LTD                    1739       JAY GROUP - LEVIS (JOBBER)            3317
ASICS TIGER CORPORATION             544        JAY GROUP - NINE WEST KIDS (JOBBER)   3316
ASTER S.A.                          1860       JAY GROUP - S/R (JOBBER)              3312
B & B ORIGINALS, INC.               763        JAY GROUP - SPERRY (JOBBER)           3314
BADORF SHOE CO INC                  270        JAY GROUP - TOMMY (JOBBER)            3315
BAY RAG - KEDS (JOBBER)             3201       JEFFERIES SOCKS/COUNTRY KIDS          158
BAY RAG - LEVIS (JOBBER)            3205       JUDYS SHOES - KEDS (JOBBER)           1030
BAY RAG - NINE WEST KIDS (JOBBER)   3204       JUDYS SHOES - LEVIS (JOBBER)          1041
BAY RAG - SPERRY (JOBBER)           3202       JUDYS SHOES - NINEWEST (JOBBER)       1040
BAY RAG - SR (JOBBER)               3200       JUDYS SHOES - S/R (JOBBER)            1026
BAY RAG - TOMMY (JOBBER)            3203       JUDYS SHOES - SPERRY (JOBBER)         1033
BIRKENSTOCK                         6422       JUDYS SHOES - TOMMY (JOBBER)          1039
BRAKKIES INTERNATIONAL INC          201        JUMPING-JACKS SHOE INC                28450
      S
CANDIE' INC.                        108        K-SWISS                               29575
COLE-HAAN                           548        KANGAROOS USA, INC                    28562
COLUMBIA FOOTWEAR INC BGRADE        174        KAUFMAN FOOTWEAR                      28595
COLUMBIA FOOTWEAR, INC.             134        KEDS B-GRADES                         104
CONVERSE INC                        14150      KEDS CORPORATION, THE                 28598
DECKERS OUTDOOR CORPORATION         1975       KEDS.COM ACCESSORIES                  191
DONNA KARAN SHOE COMPANY            184        KEDS-DESTROYED MERCHANDISE (RTV)      1017
DOVER HANDBAG CO., INC.             17502      KENNETH COLE PROD., INC.              143
EAST END ACCESSORIES                1990       L.A. GEAR                             29616
EASTLAND SHOE MFG CORP.             18200      LEI FOOTWEAR                          180
EASTPAK, INC.                       1628       LEVIS                                 153
ELEFANTEN                           1982       LEVIS – DESTROYED                     170
EPHRATA SHOE CO INC                 1649       M J MARKELL SHOE CO INC               32850
ESPRIT                              19357      MCCUBBIN HOISIERY,INC                 208
FANCY FEET INC.                     1646       MIA SHOES, INC.                       2501
FILA SPORTS, INC.                   2605       MITRE SPORTS                          1482
G. H. BASS CO.                      805        MOOTSIE TOOTSIE                       35263
GENFOOT AMERICA INC.                1755       NEW BALANCE ATHLETIC SHOES, INC.      533
GOODWEAR SHOE CO., INC.             178        NIKE                                  37010
HI TEC SPORTS USA, INC.             1255       NINE WEST KIDS                        152
HOY SHOE COMPANY, INC.              25230      NINE WEST KIDS - DESTROYED            172
    S    L
ITEM' INT' AIRWALK                  1986       NY LUG CO.                            1989
CONTROL                                                              Policy 3-014

SUBJECT: RTV: Internal and External Vendors (cont.)

VENDOR NAME                        VENDOR #   VENDOR NAME                         VENDOR #
OUTSIDE VENDOR DAMAGES             1037             S
                                              STEVIE'                             202
PRICE POINT & CONVERSION VENDOR    88888      STRIDE RITE B-GRADES                103
R.G. BARRY CORP.                   5110       STRIDE RITE CORPORATION, THE        47950
R.G. BARRY CORPORATION             342        STRIDE RITE HOSIERY                 177
REEBOK USA LTD INC                 41878      STRIDE RITE INTERNATIONAL           28500

ROSS SHOE STORE CLEARANCE CTR
ONLY                               183        STRIDE RITE-DESTROYED MERCH (RTV)   1022
SAM & LIBBY / MAXWELL              1760       THE TIMBERLAND COMPANY              185
SAMUEL BRILLIANT COMPANY           7710       TOMMY - DESTROYED                   1023
SKECHER USA INC.                   359        TOMMY HILFIGER                      102
SPECIAL-DO NOT USE                 1032       TOMMY HILFIGER B-GRADES             109
SPEEN & CO., INC.                  46450      TRU STITCH FOOTWEAR                 50550
SPERRY                             1987       VALENCIA IMPORTS                    1210

SPERRY B-GRADES                    105        VANS INC.                           326
SPERRY-DESTROYED MERCHANDISE (RTV) 1020       VIDA SHOES                          2787
SPORTO CORP                        20138      WOLVERINE WORLD WIDE INC            3271
STEP & STRIDE                      978        ZYLOWARE CORPORATION INC.           198
STEP & STRIDE                      47480
CONTROL                                                                      Policy 3-015


SUBJECT: RTV: Destroyed Merchandise

POLICY:

A Return to Vendor transaction must be processed at POS for merchandise that will be discarded
or thrown away. Suitable merchandise that can be discarded is worn merchandise beyond any
salvage value, mismates, singles, store used polish and hosiery.



PROCEDURE:

All merchandise that is being destroyed must be cut-up and thrown away.

The Store Manager must sign all POS Return to Vendor Documents as a formal acknowledgment
of the document’s accuracy.

Enter all Return to Vendor chargebacks directly into the POS system.

Process one document per shipping carton.

The Store Manager must sign all POS Return to Vendor documents as a formal
acknowledgement of the document’s accuracy.

Processing a Return to Vendor - Destroyed Merchandise:

Beginning at the POS “Main Menu”, follow the steps below to process a return to vendor:

   ♦   Select Option 9 – Shipping/Receiving.

   ♦   Select Option 5 – Return to Vendor.

   ♦   The POS will prompt the store associate to select whether or not the information was
       previously scanned into the symbol unit.

   ♦   The POS will provide a header screen for input of the return to vendor chargeback
       information. A Return Authorization Number will NOT be provided; therefore, the store
       associate must create an Authorization Number. Use the following Return Authorization
       Number for all Destroyed Merchandise: “D9999999”.
CONTROL                                                                     Policy 3-015
SUBJECT: RTV: Destroyed Merchandise (cont.)

    ♦   POS will provide a header screen for input of the vendor number for the merchandise that
        is being destroyed. Select from the following five vendors:
                               1022 – Stride Rite Destroy
                               1017 – Keds Destroy
                               1020 – Sperry Destroy
                               1023 – Tommy Destroy
                               1037 – Outside Vendor Destroy

NOTE: When destroying merchandise use only the Vendor Destroy Number. Do not use the
regular vendor number. Example: Stride Rite – use 1022 – Stride Rite Destroy, not 47950 –
Stride Rite.

The following information must be keyed into the POS Return to Vendor chargeback screen:

        ♦   Stock Number
        ♦   Width
        ♦   Size
        ♦   Quantity


When finished entering merchandise information:

        ♦   Press the “Esc” key
        ♦   F5 – to Save/Exit

A receipt will then print containing the following information: vendor number, document number
and quantity of items destroyed.

Retain all Return to Vendor documents in the store files.
CONTROL                                                                         Policy 3-016


SUBJECT: RTV: Damaged Merchandise Sent to a “Jobber”

POLICY:

Customer returns not saleable to the consumer but having salvage value (i.e., the product is still
“wearable”) should be sent to one of the jobber vendors listed below. A Return to Vendor
transaction must be processed at POS for all product that is sent to a jobber.



PROCEDURE:

External vendor merchandise must not be sent to “Jobbers”.

The outside of each carton shipped must contain the following information:

                “Jobber” Name and Address
                U.P.S. stamp with the weight of the carton
                Store Name, Number and Address

Merchandise sent to jobbers must be shipped via U.P.S. on a pre-paid basis.

When shipping merchandise via U.P.S ground., the Store Manager must ensure that the address
of the “Jobber” is recorded in the U.P.S. shipping manifest.

The store manager must sign all POS Return to Vendor documents as a formal
acknowledgement of the document’s accuracy.

Processing Return to Vendor “Jobber” Documents into POS:

Beginning at the POS “Main Menu”, follow the steps below to process a Return to Vendor:

    ♦   Select Option 9 – Shipping/Receiving

    ♦   Select Option 5 – Return to Vendor

    ♦   The POS will prompt the store associate to select whether or not the information you are
        using was previously scanned into the symbol unit.

    ♦   POS will provide a header screen for input of the Return to Vendor information. A Return
        Authorization Number will NOT be provided; therefore, the store associate must create
        an Authorization Number. Use the following Return Authorization Number for all “Jobber”
        Merchandise: “JOBBER”.




                                                                                         August 2002
CONTROL                                                                      Policy 3-016
SUBJECT: RTV: Damaged Merchandise Sent to a “Jobber” (cont.)

    ♦   The POS will provide a header screen for input of the vendor number for the
        merchandise that is being sent to the “Jobber”. There are four vendor numbers for each
        of the shoe jobbers, one for each of the divisions:

3200 – Bay Rag – S/R              1026 – Judys Shoes – S/R        3312 – Jay Group – S/R
3201 – Bay Rag – Keds             1030 – Judys Shoes – Keds       3313 – Jay Group – Keds
3202 – Bay Rag – Sperry           1033 – Judys Shoes – Sperry     3314 – Jay Group – Sperry
3203 – Bay Rag – Tommy            1039 – Judys Shoes – Tommy      3315 – Jay Group – Tommy

    ♦   Each District is assigned a specific jobber:
           o Fulford, Armstead Judy Shoes
           o Miceli, Hall, Abrakjian, Broussard, Leary, Dehnoo, Bennett: Bay Rag
           o Horvath, Love: Jay Group

The Jobber addresses are as follows:

Bay Rag                           Judy Shoes                    Jay Group
6350 Northwest 35 Ave.            4573 U.S. Highway 431         436 No. Pearl St.
Miami, FL 33147                   Albertville, AL 35950         Rocky Mount, NC 27804

The following information must be keyed into the POS Return to Vendor screen:

        ♦   Stock Number
        ♦   Width
        ♦   Size
        ♦   Quantity


When finished entering merchandise information:

        ♦   Press the “Esc” key
        ♦   F5 – to Save/Exit

A receipt will then print containing the following information: vendor number, document number
and quantity of items.

Retain all Return to Vendor documents in the store files.




                                                                                      August 2002
CONTROL                                                                         Policy 3-016


SUBJECT: RTV: Damaged Merchandise Sent to a “Jobber”

POLICY:

Customer returns not saleable to the consumer but having salvage value (i.e., the product is still
“wearable”) should be sent to one of the jobber vendors listed below. A Return to Vendor
transaction must be processed at POS for all product that is sent to a jobber.



PROCEDURE:

External vendor merchandise must not be sent to “Jobbers”.

The outside of each carton shipped must contain the following information:

                “Jobber” Name and Address
                U.P.S. stamp with the weight of the carton
                Store Name, Number and Address

Merchandise sent to jobbers must be shipped via U.P.S. on a pre-paid basis.

When shipping merchandise via U.P.S ground., the Store Manager must ensure that the address
of the “Jobber” is recorded in the U.P.S. shipping manifest.

The store manager must sign all POS Return to Vendor documents as a formal
acknowledgement of the document’s accuracy.

Processing Return to Vendor “Jobber” Documents into POS:

Beginning at the POS “Main Menu”, follow the steps below to process a Return to Vendor:

    ♦   Select Option 9 – Shipping/Receiving

    ♦   Select Option 5 – Return to Vendor

    ♦   The POS will prompt the store associate to select whether or not the information you are
        using was previously scanned into the symbol unit.

    ♦   POS will provide a header screen for input of the Return to Vendor information. A Return
        Authorization Number will NOT be provided; therefore, the store associate must create
        an Authorization Number. Use the following Return Authorization Number for all “Jobber”
        Merchandise: “D9999999”.




                                                                                         August 2002
CONTROL                                                                         Policy 3-016
SUBJECT: RTV: Damaged Merchandise Sent to a “Jobber” (cont.)

    ♦   The POS will provide a header screen for input of the vendor number for the
        merchandise that is being sent to the “Jobber”. There are four vendor numbers for each
        of the shoe jobbers, one for each of the divisions:

3200 – Bay Rag – S/R              1026 – Judys Shoes – S/R            3312 – Jay Group – S/R
3201 – Bay Rag – Keds             1030 – Judys Shoes – Keds           3313 – Jay Group – Keds
3202 – Bay Rag – Sperry           1033 – Judys Shoes – Sperry         3314 – Jay Group – Sperry
3203 – Bay Rag – Tommy            1039 – Judys Shoes – Tommy          3315 – Jay Group – Tommy

    ♦   Each store is assigned a specific jobber (refer to attached list.)

The Jobber addresses are as follows:

Bay Rag                           Judy Shoes                        Jay Group
6350 Northwest 35 Ave.            4573 U.S. Highway 431             436 No. Pearl St.
Miami, FL 33147                   Albertville, AL 35950             Rocky Mount, NC 27804

The following information must be keyed into the POS Return to Vendor screen:

        ♦   Stock Number
        ♦   Width
        ♦   Size
        ♦   Quantity


When finished entering merchandise information:

        ♦   Press the “Esc” key
        ♦   F5 – to Save/Exit

A receipt will then print containing the following information: vendor number, document number
and quantity of items.

Retain all Return to Vendor documents in the store files.




                                                                                       August 2002
CONTROL                                                                       Policy 3-017


SUBJECT: Merchandise Transfer In

POLICY:
Merchandise Transfer-Ins are shipments of salable product received from another retail store or,
product shipped from the Huntington Distribution Center to retail outlet stores. At the present
time, the store is not required to enter merchandise Transfer-Ins into the POS system.


PROCEDURE:

Verify the contains of the carton against the Transfer-In document. If a transferred carton is
received from another store without a transfer-out document, the store associate must
immediately contact the sending Store's Manager to identify the transfer and determine what
product was sent. If the sending store cannot be identified, Home Office Inventory Control should
be called immediately to identify the transfer.

A transfer from the Huntington Distribution Center to an Outlet store can be distinguished from
normal ASN shipments by the fact that no PO number has been entered on the carton label.
These transfers should be checked in accordance with this procedure. An ASN transaction
should not be entered into POS for these shipments.

A store filing system by Transfer-In date must be maintained for all merchandise Transfer-In
documents.
CONTROL                                                                    Policy 3-018

SUBJECT: Merchandise Transfer-Out

POLICY:

A merchandise Transfer-Out is the shipment of salable merchandise from one retail store to
another. The Home Office or District Manager most often initiates merchandise Transfer-Outs in
order to balance stock between stores or districts. A Transfer-Out may be initiated at the
direction of the Home Office from the Huntington Distribution Center for outlet stores only.

All merchandise Transfer-Outs must be entered into the POS system.


PROCEDURES:
A POS merchandise Transfer-Out Document must be prepared via symbol or POS for all
merchandise being shipped to another Stride Rite store.

A Transfer-Out document is required for each case being shipped. A copy of the Transfer-Out
document should be included in each carton.

The Store Manager must sign all final POS merchandise Transfer-Out documents as a formal
acknowledgment of the document's accuracy.

Merchandise Transfer-Outs are shipped to the "Ship To" store via U.P.S. ground on a prepaid
basis. All transfers shipped via U.P.S. must be recorded in the store's U.P.S. shipping book.

Merchandise Transfer-Outs that are hand carried to the "Ship To" store must be signed for by
both the shipping Store Manager and the "Ship To" Store Manager as proof of delivery.

A store filing system by Transfer-Out date must be maintained for all merchandise Transfer-Out
documents.
CONTROL                                                                       Policy 3-018
SUBJECT: Merchandise Transfer-Out (cont.)

PROCEDURE:

MERCHANDISE TRANSFER-OUT USING THE SYMBOL UNIT:

   ♦   From the main menu of the scanner select option #2, Ship

   ♦   When prompted for the document #, key in the 4-digit store number

   ♦   Scan the merchandise to be transferred out

   ♦   Press the CLEAR button

   ♦   Is scanning complete? Y

   ♦   Go to POS and connect the download cable to the Symbol unit

   ♦   From the POS main menu, select option #9, Shipping and Receiving

   ♦   Then select option #4, Transfer Out

   ♦   Was the information scanned? Y

   ♦   Do you want to read information from the handheld device? Y

   ♦   Is the symbol scanner ready for SHIP download? Y

   ♦   When prompted for the division number, enter 02.

   ♦   When prompted, enter the store number to which the merchandise is being transferred.

   ♦   If the Transfer Out document on the screen is OK, press F5

   ♦   Is everything correct? Y

   POS will print two copies of the transfer out document, one for the carton and one for the
   store files.
CONTROL                                                                         Policy 3-018
SUBJECT: Merchandise Transfer-Out (cont.)

From the POS main menu select option #9, Shipping and Receiving

    ♦   Then select option #4, Transfer Out

    ♦   Was the information scanned? N

    ♦   There are no transfer requests pending. Do you wish to manually enter a transfer out? Y

    ♦   When prompted for the division number, enter 02.

    ♦   When prompted, enter the store number to which the merchandise is being transferred.

    ♦   The store associate may either scan the product being transferred using the register
        device or manually key in the stock number, size, and width.

    ♦   If the transfer out document on the screen is OK, press F5

    ♦   Is everything correct? Y

POS will print two copies of the transfer out document, one for the carton and one for the store
files.
CONTROL                                                                           Policy 3-019


SUBJECT: Records Retention

POLICY:

All control documents referred to in this section should be retained in the store on a rolling twelve-
month basis unless otherwise noted.


PROCEDURE:
Store control documents should be filed by month so that the oldest month can be thrown out at
the beginning of each month.
CONTROL                                                                         Policy 3-020


SUBJECT: Merchandise Receiving

POLICY:

All Store Managers, Assistant Managers, and designated employees must be thoroughly trained
on POS and symbol merchandise receiving software applications.

A POS Receiving document must be initiated via POS or symbol/POS upon receipt of all
resalable merchandise.

The Store Manager must attach the vendor’s packing slip to the POS MRD where applicable, sign
the POS MRD as formal acknowledgment of accuracy, and file the documents in the
merchandise receiving file by date.

A separate receiver must be completed for each carton when using the ASN process. A separate
receiver must be completed for each Purchase Order when using the PO receiving method.


PROCEDURE:

Three receiving procedures are presently in effect. They are (1) Auto-receiving for certain
internal brands; (2) Advance Ship Notice (ASN) carton receiving for certain internal brands not
auto-received and McCubbin Hoisery; and (3) Purchase Order receiving for outside vendors.
Detailed symbol unit/POS instructions for each type follow. Please note that if an ASN carton
number is not in the POS, the store associate will be prompted to detail receive the shipment
without having the carton number downloaded from the Home Office. However, if an outside
vendor purchase order is not on the expected receipts list in POS, the store associate must call
the Home Office Merchandise Allocation department to download the PO number before the
shipment can be received.

Before any shipment is received, the store associate must first verify the address on the shipping
label. If the shipment is not the stores, do not receive it into POS. Call UPS and have the
shipment delivered to the correct store.

Auto receiving unlike the ASN and PO receiving processes detailed on the following pages is
systemically received at the Home Office, therefore, the store team will not receive each carton
into the POS unit. When you receive a shipment, you will verify that the correct vendor is in the
carton and then simply put the product away. Stride Rite retail and outlet store auto received
PO#’s will begin with a 9, this is not necessarily the case with the Saucony stores.

The list of receiving processes by vendor follows.




                                                                                      December 2005
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                           December 2005
CONTROL                                                                                              Policy 3-020

                      ASN RECEIVING
                                                                          7. From the Shipping and Receiving Menu,
1. Carrier drops off shipment.                                            choose option [1], “Receive Carton”, and
                                                                          press [ENTER].
2. Locate the carton# on the outside of the                                         SHIPPING & RECEIVING
carton on the shipping label.                                                                Select Option
                                                                                          _____________
                                                                                         1...Receive Carton
3. Verify address on the shipping label.                                                 2...Store Transfer In
                                                                                         3...Vendor Drop Shipment
4. Using the symbol unit, choose option [1],                                             4...Transfers Out
“Receive”.                                                                               5...Return to Vendor


Choose option [1], Carton #. Scan the carton                              8.The following message will appear. Select
# from the outside carton label.                                          [YES] with the arrow keys and press
                                                                          [ENTER].
When complete press clear. The symbol
scanner is now ready to download.                                                 CHOOSE <Yes> OR <No>
                                                                                 ________________________
5. On the POS system, enter Employee                                             Was the information scanned?
Number and press [ENTER].                                                        ________________________
                           EMPLOYEE SELECTION
                                                                                           Yes No
                               Employee List


                   Dave Johnson
                   Janet Thompson
                                           FT
                                           PT
                                                                          9. On the POS system, the following
                   John Dee
                   Mary Smith
                                           MG
                                           MG
                                                                          message will appear.
                     PgUp/PgDn to browse through list
                                                                                  CHOOSE<Yes> OR <No>
          Thank You for using Stride Rite Corp.' P.O.S. System
                                                   s                       Do you want to read information in from the
          If you encounter any difficulties, or have any questions,
             please contact the STR help desk @ 800-411-8719                           handheld device?
 Enter employee number for corresponding name: [___ ] and press <ENTER>
                                                                              ______________________________
                                                                                            Yes No
6. From the Transaction Menu, choose
option [9], “Shipping/ Receiving”, and press                              Select [YES] with the arrow keys and press
[ENTER].                                                                  [ENTER].

                           TRANSACTION MENU
                                                                          10. Connect the symbol unit to the POS
                            Select a Transaction                          cable. Choose [4] “Download”.
            1...Sale
            2...Exchange
            3... Return
                                        14...Void Transaction
                                        15...Customer Inquiry
                                                                          11. The following message will appear.
            6...No Sale
            7...Petty Cash In/Out
                                        16...Inventory Inquiry
                                        17...Reprint Document                    Is the Symbol scanner ready for
            9...Shipping/Receiving      19...Inquire/Close Send Sales
                                        97...Inventory Menu
                                                                                      CARTNUMB download?
            10...Close Register
                                        98...Reporting Menu
                                        99...Services Menu                                  Yes No
                            or Option Number +     ↵                      12. On the POS system, select [YES] with
                                                                          the arrow keys and press [ENTER].

                                                                          The following message will appear “Press
                                                                          Any Key”. Press [ENTER] to continue.

                                                                          13. The information will be transferred to the
                                                                          POS system.


                                                                                                            December 2005
CONTROL                                                            Policy 3-020


OPTION 1:CARTON ACCEPTED
                                          The following message will appear.

14. The following message will appear.    HANDHELD TRANSFER EXCEPTION
                                          REPORT
             RECEIVE CARTON               ____________________________
                                          Receive Cartons***“Duplicate Saved”.
 Receive Cartons                          THE RECORDS LISTED ABOVE HAVE
 Carton# Units Starus                     BEEN IGNORED!!
 000000000 11       OK

            11    Subtotal                Press [Esc] to cancel.

                                          Press [Yes] to cancel.
15. Press [F7] to save all.

Save all cartons with a status of OK?
                                          OPTION 3: NON ASN VENDOR
Select [Yes].
                                          This includes any outside vendor
                                          product.
OPTION 2: DUPLICATE SAVED
                                          14. The following message will appear.
This message will appear when an
attempt is made to receive product that                  ERROR
has already been received.                  ERRORS HAVE BEEN FOUND IN THE
                                             HANDHELD DATA! See the report for
14. The following message will appear.                   details!
                                             Press [SPACEBAR TO CONTINUE].

             ERROR
  ERRORS HAVE BEEN FOUND IN THE
                                          HANDHELD TRANSFER EXCEPTION
   HANDHELD DATA! See the report for
                                          REPORT
             details!
                                          ____________________________
                                          Receive Cartons***“Non ASN Vendor”.
Press [SPACEBAR TO CONTINUE].             THE RECORDS LISTED ABOVE HAVE
                                          BEEN IGNORED!!

                                          Press [ESC] to cancel.

                                          Press [Yes] to cancel.




                                                                         December 2005
CONTROL                                                                             Policy 3-020

OPTION 4: DETAIL REQUIRED                             The following message will appear “Scanning
                                                      Complete”. Enter [Y] for complete.
14. The following message will appear.
               RECEIVE CARTON                         24. The symbol scanner is now ready to
                                                      download.
                Receive Cartons
  Carton Number          Units Status                 Connect the symbol unit to the POS cable.
  00006534380000079850     0    Detail Required       Choose [4] “Download”.

                                                      25. On the POS system, choose [YES] with the
                                                      arrow key and press [ENTER].

                                                      26. The following message will appear “PRESS
                                  0        SUBTOTAL   ANY KEY”. Press [ENTER] to continue.

15. Press [ENTER] to detail receive.                  27. The information will be transferred to the POS
                                                      system.
16. The following message will appear.                                  RECEIVE CARTON
                                                      PO#272436 Carton#000065343800000071137 from
                                                      Vendor # 152
                                                                             Shipped Act
         Was the Carton Detail Scanned?
                                                      Stock # WD Size Color QTY QTY Description
                   Yes No                             Price
Choose “YES” with the arrow key and press             1107358 D 4.0              1 1 First           38.00
[ENTER].                                                                                 Move

17. The following message will appear.                                      1   1   SUBTOTAL      38.00

          CHOOSE<Yes> OR <No>                         Press [F5] “Save/Exit”.
   Do you want to read information in from the
              handheld device?                                      Is everything correct?
     ______________________________                                       Yes No
                    Yes No
Choose “YES” and press [ENTER].                       The following message will appear.
                                                                    RECEIVE CARTON
18. The following message will appear.                                Receive Cartons
                                                      Carton Number      Units Status
  Is the Symbol scanner ready for CARTNUMB            00006534380000079850        11     OK
                  download?
                   Yes No

19. Using the symbol unit, choose option [1],
                                                                       11       SUBTOTAL
“Receive”.

20. Choose option [2], “Carton Detail”.               Save carton #000065343800000079850
                                                                        Yes No
21. Enter the first 6 digits of the PO#.
                                                      Choose “Yes” and press [ENTER].
22. Scan the carton # from the outside carton         All of the cartons have been saved. Do you wish
label.                                                                     to exit?
                                                                           Yes No
23. Using the symbol unit scan all product. When
complete press [CLEAR].
                                                      Choose "Yes” and press [ENTER].



                                                                                         December 2005
CONTROL                                                                                                            Policy 3-020

                             P.O. Receiving                                    6. After the store associate presses [ENTER], the
                                                                               following message will appear. With “No” darkened,
                                                                               press [ENTER].

1. Carrier drops off shipment.                                                           CHOOSE <Yes> OR <No>
                                                                                         ______________________
2. Locate the PO# on the packing slip.                                                  Was the information scanned?
                                                                                         ____________________
3. On the POS system, enter your Employee
number and press [ENTER].                                                                          Yes No

                                                                               7. The POS system will display the following message
                            EMPLOYEE SELECTION
                                                                               for a few seconds as it generates a list of all Purchase
                                Employee List
                                                                               Order numbers in the system.
                    Dave Johnson             FT
                    Janet Thompson           PT
                    John Dee
                    Mary Smith
                                             MG
                                             MG                                             PLEASE WAIT……
                                                                                         ______________________
                      PgUp/PgDn to browse through list
                                                    s
           Thank You for using Stride Rite Corp.' P.O.S. System
           If you encounter any difficulties, or have any questions,                       Preparing Receipt List!
              please contact the STR help desk @ 800-411-8719
                                                                                          _____________________
 Enter employee number for corresponding name: [___      ] and press <ENTER>




4. From the Transaction Menu, choose option [9],
“Shipping and Receiving”, press [ENTER].                                       8. Use the up and down arrows to find the correct
                            TRANSACTION MENU
                                                                               Purchase Order from the system. Once the correct
                                                                               Purchase Order is highlighted, press [ENTER] to select.
                             Select a Transaction

             1...Sale
             2...Exchange
             3... Return
                                         14...Void Transaction
                                         15...Customer Inquiry
                                                                                           Select Receipt to Process
             6...No Sale                 16...Inventory Inquiry
                                         17...Reprint Document
                                                                                            __________________
             7...Petty Cash In/Out

                                         19...Inquire/Close Send Sales
             9...Shipping/Receiving
             10...Close Register         97...Inventory Menu                           1. 123456   DS    2 102 02/15/00
                                         98...Reporting Menu
                                         99...Services Menu                            2. 123457   DS    2 102 02/20/00
                                                    ↵
                                                                                       3. 124387   DS    2 47950 03/01/00
                             or Option Number +
                                                                                       4. 292254   DS    2 47950 03/10/00

                                                                                           ______________________
                                                                                                  or Option Number +
5. From the Shipping and Receiving Menu, choose
option [3], “Vendor Drop Shipment”, and press
[ENTER].
                                                                               9. Once the screen appears, compare the quantity from
                                                                               the Purchase Order document with the information on
                        SHIPPING & RECEIVING
                                                                               the screen. If the quantity and styles match to the
                                                                               packing slip, press [F5] to accept the shipment.
                                 Select Option
                            ____________________
                                                                                                   RECEIVE CARTON
                                1.    Receive Carton                           Document#123456-Receiving from Vendor #47950-M/D/Y
                                2.    Store Transfer In                                                         Shipped Act
                                3.    Vendor Drop Shipment                     Stock # WD      Size     Color     QTY QTY Description Color
                                4.    Transfers Out
                                5.    Return to Vendor

                                                                                                                    SUBTOTAL




                                                                                                                         December 2005
CONTROL                                                                       Policy 3-020

10. If the content of the Purchase order does     After the store associate presses enter the
not match the information on the screen           following message will appear. Select [YES]
exactly, the store associate will need to         with the arrow keys and press [ENTER].
make corrections:

OPTION 1:                                                 CHOOSE <Yes> OR <No>
                                                          ______________________
If the quantity of a specific item is different
(more or less), use the arrow keys to select             Was the information scanned?
the item and press [ENTER]. Ensure the                    ____________________
exact item is selected with the correct color,                    Yes No
size and width. Enter the correct quantity
received and press [ENTER] to accept.
                                                  Use the symbol unit to enter all of the
If an item is on the screen but appears as a      merchandise that will be received.
quantity of “0” on the Purchase Order
document, change the quantity to “0” on the       After the store associate presses [ENTER],
screen.                                           the following message will appear. Select
                                                  [YES] with the arrow keys and press
If additional items are included with the         [ENTER].
shipment but missing from the information
on the screen and these items are a               The following message will appear:
different color, size or width than other items
in the shipment, press [F10] to add the item.

Once complete, press [F5] to accept the
                                                        CHOOSE<Yes> OR <No>
shipment.
                                                  Do you want to read information in from the
                                                             handheld device?
OPTION 2:                                           ______________________________
                                                                   Yes No
If the symbol unit is available:

From the Shipping and Receiving Menu,             Connect the symbol unit to the POS cable.
choose option [3], ‘Vendor Drop Shipment”,        Select [YES] with the arrow keys and press
and press [ENTER].                                [ENTER].
           SHIPPING & RECEIVING
                                                  The information will be transferred to the
                  Select Option                   POS system.
             ____________________
                                                  Verify the quantity.
               1.Receive Carton
               2.Store Transfer In
               3.Vendor Drop Shipment             Once complete, press [F5] to accept the
               4.Transfers Out                    shipment.
               5. Return to Vendor
                                                  Staple the receiving document to the
                                                  packing slip and file.




                                                                                        December 2005
HUMAN RESOURCES                                                                      Policy 2-001


SUBJECT: Equal Employment Opportunity

POLICY:

It is the policy of the Company to provide equal employment opportunity for all persons, and to
ensure that there shall be no discrimination against any associate on the grounds of color, race,
sex, age, religion, national origin, sexual orientation, or legally recognized disability. The ability to
produce results and to contribute productively to the business is the appropriate measure of a
person’s future with the Company.

In accordance with this policy, the Company resolves to:

1. Recruit, hire, train and promote persons in all levels of employment without regard to race,
   color, sex, age, religion, national origin, sexual orientation, or legally recognized disability;

2. Base employment decisions in furtherance of the principle of equal employment
   opportunities;

3. Ensure that promotion decisions are in accordance with the principle of equal employment
   opportunities by imposing only valid requirements for promotion opportunities; and

4. Ensure that all personnel matters within the Company, such as compensation, benefits,
   transfers, promotions, Company-sponsored training, education and tuition assistance, and
   social and recreational programs are administered without regard to race, color, sex, age,
   religion, national origin, sexual orientation, or legally recognized disability.


PROCEDURE:

♦    All Supervisors should familiarize themselves with this policy and the programs and
     procedures developed to carry out its objectives.

♦    All levels of management and supervision are expected to cooperate fully and to contribute
     meaningfully to the implementation of this policy.

♦    Any associate who believes that discriminatory actions have occurred should discuss the
     matter with his or her immediate supervisor unless that person is the source of the alleged
     discrimination. In such a case, the associate should contact Human Resources to report the
     problem. If an associate is in Human Resources, the matter should be reported to the
     Company’s General Counsel.

♦    If satisfaction is not achieved on a departmental level, the associate should contact Human
     Resources.

♦    Any supervisor who has been contacted by an associate concerning possible discriminatory
     actions should contact Human Resources.


                                                                                             January 2005
HUMAN RESOURCES                                                                  Policy 2-001.1


SUBJECT: The Americans with Disabilities Act

ADA POLICY:
The Americans with Disabilities Act, (ADA) prohibits employers from intentionally or
unintentionally discriminating against persons with disabilities and requires employers to make
reasonable accommodations in the workplace to allow disabled persons to perform the essential
functions of their jobs.

It is Stride Rite’s policy to fully comply with the requirements of the ADA to not discriminate
against qualified individuals who have a disability. This includes selection and hiring, promotion,
transfer, compensation, training, and other conditions of employment, such as return from leave.

Stride Rite also has a policy against any discrimination because an associate has a family
member with a disability. Therefore, in general, benefits are made available to associates on an
equal basis without regard to whether any individual has a disability.

Additionally, Stride Rite will reasonably accommodate a qualified individual with a disability so
that he or she can perform the essential functions of his or her position.

Responsibility: The Human Resources Department is responsible for implementing this policy,
including resolution of reasonable accommodation, safety, and undue hardship issues. In
general, some of the terms used in the ADA are defined as follows:

        ♦     Disability refers to 1.) a physical or mental impairment that substantially limits one or
             more of the major life activities of an individual; 2.) an individual who has such an
             impairment or a record of such impairment, or 3.) an individual who is generally
             regarded as having such an impairment.

         ♦   A qualified individual with a disability means an individual with a disability who, with
             or without reasonable accommodation, can perform the essential functions of the
             position that the individual holds or has applied for.

         ♦   Reasonable accommodation may include a variety of possible adaptations, such as
             making existing facilities accessible to individuals with disabilities; modifying work
             schedules, providing a qualified reader or acquiring/modifying equipment or devices.
             However, in some instances a particular accommodation might not be possible if it
             would result in undue hardship for the Company.

         ♦   Factors to be considered in determining whether a proposed accommodation
             creates an undue hardship include the nature and cost of the accommodation and
             the financial resources of the facility at which the reasonable accommodation is
             necessary.

         ♦   A direct threat to safety or health means a significant risk to the health or safety of
             others that cannot be eliminated by reasonable accommodation.




                                                                                           January 2005
HUMAN RESOURCES                                                                 Policy 2-001.1
SUBJECT: The Americans with Disabilities Act (cont.)
Placement Considerations: The Human Resources Department will make every effort to place
applicants and associates or to return associates to work with appropriate documentation, to
positions that they are qualified for. However, associates and job applicants will not placed in
positions, with or without a reasonable accommodation, that would create a direct threat to the
associate or to the safety of others.

Drugs and Alcohol: The Human Resources Department will endeavor to reasonably
accommodate individuals who are recovering from chemical or alcohol dependency. All
associates are expected, however, to comply with Stride Rite’s policy regarding the use of drugs
and alcohol while employed. For example, associates are expected to cooperate with any drug
testing requirements or requests made in accordance with that policy.

Complaint Procedure: Any associate or applicant who believes that there has been a violation of
Stride Rite’s policy or any applicable law relating to accommodating a person with a disability
should immediately contact:

                 The Director of Associate Relations
                 The Stride Rite Corporation
                 191 Spring Street
                 Lexington, MA 02420
                 (617) 824-6000

All complaints will be promptly investigated and all individuals involved are expected to
cooperate. Additionally, the information obtained in the course of the investigation will be held in
confidence and is only disclosed to individuals on a need to know basis.




                                                                                          January 2005
HUMAN RESOURCES                                                                   Policy 2-002


SUBJECT: Sexual Harassment/Discriminatory Harassment

All Stride Rite associates have the right to work in an environment in which they are free of sexual
harassment and other forms of discriminatory harassment.

POLICY:

Sexual harassment and other forms of discriminatory harassment are unlawful and prohibited by
the Company. This policy applies to all work-related settings and activities, whether inside or
outside the workplace, and includes business trips, business-related social events, as well as
interactions with external groups with whom the Company does business, such as customers,
vendors and/or suppliers. Company property (e.g. telephones, copy machines, facsimile
machines, computers and computer applications such as e-mail and Internet access) cannot be
used to engage in conduct which violates this policy.

Definitions:

        Sexual Harassment

        ♦   Sexual harassment is defined as unwelcome sexual advances, requests for sexual
            favors and any other physical or verbal conduct of a sexual nature by an associate
            when:

                (1)      submission to such conduct is made an express or implicit condition of
                         employment;

                (2)      submission to or rejection of such conduct is used as a basis for
                         employment decisions affecting the individual who submits to or rejects
                         such conduct; or

                (3)      such conduct has the purpose or effect of interfering with an associate’s
                         work performance or creating an intimidating, hostile or offensive working
                         environment.

        ♦   While it is not possible for Stride Rite to list all those circumstances which we would
            consider to be sexual harassment, the following are some examples which may,
            depending on the circumstances, constitute harassment:

                -        Explicit sexual propositions;

                -        Sexual innuendoes, sexual epithets, sexual comments, sexually oriented
                         teasing or jokes;

                -        Assault or coerced sexual acts;




                                                                                         January 2005
HUMAN RESOURCES                                                                     Policy 2-002

SUBJECT: Sexual Harassment/Discriminatory Harassment (cont.)

                -        Written or verbal references to sexual conduct; gossip regarding one’s
                         sex life; comments about an individual’s body or an individual’s sexual
                         activity, deficiencies, or prowess; inquiries into another’s sexual
                         experiences; discussion of one’s sexual activities;

                -        Displaying sexually suggestive objects, pictures, or cartoons;

                -        Unwelcome leering, whistling, sexual gestures, suggestive or insulting
                         comments;

                -        Physical contact such as petting, pinching or intentionally brushing
                         against another’s body;

Other conduct may also constitute sexual harassment if it falls within the definition of sexual
harassment set forth above.

Other Types of Discriminatory Harassment

        ♦   Other types of discriminatory harassment include verbal or physical conduct that
            denigrates or shows hostility or aversion towards an individual because of his or her
            race, color, gender, religion, sexual orientation, age, national origin or disability (or
            that of the individual’s relatives, friends or associates) and that:

                (1)      has the purpose or effect of creating an intimidating, hostile or offensive
                         working environment;

                (2)      has the purpose or effect of unreasonably interfering with an individual’s
                         work performance; or

                (3)      otherwise adversely affects an individual’s employment opportunities.

        ♦   Examples of discriminatory harassment may, depending on the circumstances,
            include: (1) epithets, slurs, negative stereotyping or threatening, intimidating or
            hostile acts that relate to race, color, gender, religion, sexual orientation, age,
            national origin or disability; and (2) written or graphic material that denigrates or
            shows hostility towards an individual or group because of race, color, gender,
            religion, sexual orientation, age, national origin or disability and that is circulated in
            the workplace, or placed anywhere in the Company’s premises such as on an
            associate’s desk or workspace, on the Company’s computer network, equipment or
            bulletin boards.




                                                                                            January 2005
HUMAN RESOURCES                                                                    Policy 2-002
SUBJECT: Sexual Harassment/Discriminatory Harassment (cont.)

Procedure for Reporting Harassment:

       ♦   If you believe that you have experienced or witnessed sexual harassment or other
           discriminatory harassment by any associate, you should report the incident
           immediately to your supervisor or Denise Lockaby, Director of Professional
           Development at 191 Spring Street, P.O. Box 9191, Lexington, MA 02420-9191 or via
           telephone, at (617) 824-6073. Reports of harassment by others with whom the
           Company has a business relationship, such as customers, contractors or outside
           vendors should also be reported as soon as possible so that appropriate action can
           be taken.

       ♦   Human Resources will promptly and thoroughly investigate all reports of harassment
           as discreetly and confidentially as practicable. However, it may be necessary to
           discuss allegations of harassment with the accused individual or with other
           associates, including supervisors, to conduct a thorough investigation, to determine
           whether harassment occurred, or to determine what action to take against the
           offending individual. In that case, only individuals who the Company determines
           have a need to know will be informed of the allegations and they will be instructed to
           treat the matter confidentially.

       ♦   Upon completion of the investigation, the Company will inform the associate who
           made the complaint of the results of the investigation.

       ♦   If the Company determines that harassment has occurred, whether intentionally or
           unintentionally, it will take appropriate disciplinary action against the offending party,
           which can include warnings, suspensions and termination.

Protection Against Retaliation

       ♦   Retaliation is against the law and will not be tolerated. Associates who report
           violations of this policy and associates who cooperate in investigations into alleged
           violations of this policy will not be retaliated against in any way. Even if no violation is
           found after an investigation, no action will be taken against the reporting associate or
           an associate who cooperates in the investigation.

Reports to Outside Agencies

       ♦   The Company hopes that associates will bring any concerns about sexual or other
           discriminatory harassment to the Company’s attention and has instituted this policy
           and reporting procedure so that associates’ concerns can be addressed promptly.
           However, complaints regarding violations of the laws against harassment can also be
           directed to your local State Fair Employment Practices Agency.




                                                                                           January 2005
HUMAN RESOURCES                                                                  Policy 2-002

SUBJECT: Sexual Harassment/Discriminatory Harassment

Other Information:

      ♦   Personal relationships between associates are to be on a strict business level.
          Because even a good friendship can affect your business judgment, your
          responsibilities to Stride Rite must always be paramount. Dating relationships are
          even more compromising of your business judgment and can also subject the
          Company to legal liability if interpreted as sexual harassment.

      ♦   A claim of sexual harassment or sex discrimination can be made by a male or
          female. The claim can be based on words or conduct before, during, or after a dating
          relationship, as well as on other situations.

      ♦   A claim can come from an associate who feels discriminated against because of a
          supervisor’s relationship with another associate.

      ♦   Dating relationships between associates having a direct or indirect reporting
          relationship are prohibited. You are in a direct or indirect reporting relationship if you
          review or assign the work of the other associate or can effectively improve or lessen
          their promotability or the terms or conditions of the other associate’s employment.

      ♦   Compliance with this policy is an important priority for the Company. Associates are
          encouraged to direct any questions or concerns about possible sexual or other
          discriminatory harassment with Denise Lockaby, Director of Professional
          Development at 617-824-6073.




                                                                                         January 2005
HUMAN RESOURCES                                                                       Policy 2-003


SUBJECT: Solicitation

POLICY:

In order to prevent disruptions in the operation of our business, and to minimize interference with
or inconvenience to all of us, the following will apply to solicitation and distribution of literature on
Company property.



Associates
Associates may not solicit for any purpose during working time. Associates may not distribute
literature for any purpose during working time or in work areas at any time. “Working Time”
includes the working time of both the individual doing the solicitation or distribution and the
individual to whom it is directed. “Working time” does not include authorized or approved break
or meal times. If you have any questions as to the meaning of “working time” or “work areas”,
please contact Human Resources for clarification.

Associates should not use e-mail for personal advertisements, such as renting apartments,
selling concert or sports event tickets, or soliciting donations to a favorite charity.


Associates who violate this policy are subject to disciplinary action up to and including
termination.

Outsiders
Persons who are not associates employed by the Company may not solicit or distribute literature
on Company property for any purpose at any time.




                                                                                              January 2005
HUMAN RESOURCES                                                                 Policy 2-004


SUBJECT: Substance Abuse

POLICY:

Stride Rite strictly prohibits the illegal possession, use, purchase, or sale of any drug by any
associate while on Company premises, in Company-owned vehicles, or while representing the
Company. Stride Rite also prohibits the possession, use, purchase, or sale of alcohol by any
associate while on Company premises, in Company-owned vehicles, or while representing the
Company. Stride Rite further prohibits associates from working while under the influence of
alcohol or illegally used drugs.

PROCEDURE:

♦   An associate suspected of working under the influence of alcohol or illegally used drugs
    should be reported to the immediate supervisor.

♦   When an associate is unfit to perform work requirements because of suspected alcohol/illegal
    drug use, the supervisor should suspend the associate immediately, pending further
    investigation. Appropriate steps must be taken to assure the safety of the associate and
    others. The supervisor can arrange alternative transportation for the associate to go home if
    necessary.

♦   The supervisor should gather the facts concerning the associate’s suspected drug/alcohol
    abuse in violation of this policy and discuss them with Human Resources.

♦   Human Resources and the supervisor will determine the course of action to be taken.

♦   Any associate who asks for help in finding treatment for admitted drug or alcohol dependence
    will be referred to appropriate medical care providers through Human Resources.

♦   An associate is ultimately responsible for deciding whether to request diagnosis and
    participate in treatment.




                                                                                        January 2005
HUMAN RESOURCES                                                                  Policy 2-005


SUBJECT: Clean Air

POLICY:

Stride Rite has a clean air policy. Smoking is prohibited by associates, visitors, vendors, and
contractors in all work and common areas, including stores, private offices and rest rooms.

♦   Any associate violating this policy should be reported immediately to the Human Resources
    Department and appropriate disciplinary action will be initiated.

♦   Associates should advise visitors of our Clean Air Policy.




                                                                                        January 2005
HUMAN RESOURCES                                                               Policy 2-006


SUBJECT: Requests for Information from Non-Associates


POLICY:

Information about The Stride Rite Corporation's business management, operations, sales,
associates or former associates is not to be released to non-associates. Refer all requests for
information to the following:

1.     Questions about financial information should be referred to the Treasurer of the
Corporation.

2.       Inquiries about pending legal claims, lawsuits, labor unions, contracts, stocks or
securities should be referred to the General Counsel or the Vice President of Human Resources.

3.       Requests for references, letters of recommendation, salary or employment verification,
etc. for current and former associates should be referred to the Human Resources Service
Center. The confidentiality of information relating to an associate’s application, hiring, wages,
employment status and termination is to be protected at all times.

NOTE:       Information about current or former associates may represent a possible
            legal situation for the Company. When associates disclose information they
            can personally be held responsible for the consequences.




                                                                                      January 2005
HUMAN RESOURCES                                                                    Policy 2-007


SUBJECT: Absenteeism and Tardiness

POLICY:

Stride Rite associates are expected to work according to the schedule established by their
supervisor. It is the associate’s responsibility to report to work as scheduled. If an associate
expects to be late or absent, they must notify their manager within 15 minutes of their scheduled
start time.


PROCEDURE:

♦   An associate absent from work for three working days in a row due to illness or accident shall
    be required to present a doctor’s release statement to their supervisor upon return to work.

♦   An associate who is absent in excess of six days per calendar year shall be required to
    account for subsequent absences with documentation (such as a doctor’s note).

♦   An associate who is absent or tardy in a routine or predictable way (ex. Mondays, Fridays,
    before or after a holiday, etc.) can also be considered as having an excessive
    absenteeism/tardiness problem which can affect a department’s overall customer service,
    productivity and morale. Patterns of absenteeism/tardiness must be promptly addressed.
    This will include disciplinary action, up to and including termination.

♦   An associate who is absent and does not notify his or her immediate supervisor within the
    established guidelines, or who is absent after having been refused permission for the time off,
    or leaving the assigned work area without permission of the supervisor is considered an
    unexcused absence.

♦   An associate who fails to report to work on two consecutively scheduled days without
    notifying his/her supervisor will be considered voluntarily terminated for job abandonment-
    refer to Job Abandonment Policy 2-024.

♦   An associate not prepared to begin work in his/her assigned workstation or area at the
    scheduled time is considered tardy.

♦   An associate taking an extended break or lunch period is considered tardy.


Associates who violate this policy will be subject to disciplinary action up to and including
termination.

These guidelines are not intended to limit the authority of supervisors to take disciplinary action or
inhibit ability to grant flexibility.




                                                                                          January 2005
HUMAN RESOURCES                                                                   Policy 2-008


SUBJECT: In Store Labor Posters

POLICY:
Federal and State laws require that certain posters be displayed in the work place. It is
mandatory that the following posters are displayed at all times:

        1.       Fair Labor Standards Act
        2.       Occupational Safety and Health Act (OSHA)
        3.       Equal Employment Opportunity (EEO)
        4.       Employee Polygraph Protection Act
        5.       Americans with Disabilities Act
        6.       Family and Medical Leave Act of 1993

Certain states require additional posters to be displayed in addition to those listed above (refer to
list).

PROCEDURE:

        1.       These posters are to be displayed in the back room.

        2.       All posters (with the exception of Workers’ Compensation posters) are sent from
                 the Human Resources Service Center. Workers’ Compensation posters are sent
                 from the Human Resources/Payroll Departments.

                  STATE              REQUIRED POSTERS
                  Alabama            Child Labor
                                     Workers’ Compensation
                                     Unemployment Benefits
                  Arizona            Equal Employment Opportunity
                                     Job Safety and Health
                                     Workers’ Compensation Insurance
                                     Work Exposure to Bodily Fluids




                                                                                          January 2005
HUMAN RESOURCES                                                   Policy 2-008

SUBJECT: In Store Labor Posters (cont.)
             Arkansas        Consolidated Wage-Hours Laws
                             Right-to-Know
                             Unemployment Benefits
                             Workers’ Compensation
                             Managed Care for Injured Employees
                             “Bare Bones” Health Insurance
             California      Consolidated Wage-hour and Working Conditions
                             Unemployment Insurance and Temporary Disability
                             Day of Pay
                             Minimum Wage
                             Voting Leave
                             Job Safety and Health
                             Emergency Information
                             Harassment/Discrimination Prohibitions
                             Medical Records Access
             Colorado        Equal Employment Opportunity
                             Minimum Wage
                             Workers’ Compensation
                             Worker’s Compensation (Notice to Employer of Injury)
                             Unemployment Compensation
             Connecticut     Equal Employment Opportunity
                             Consolidated Wage-Hour Laws
                             Sexual Harassment
                             Minimum Wage
                             Job Safety and Health
                             Workers’ Compensation Benefits
                             Unemployment Compensation
                             Unemployment Compensation (Schedule for Filing)
             Delaware        Consolidated Wage-Hour, employment Non
                             discrimination and Worker’s Compensation
             District of     Equal Employment Opportunity
             Columbia        Minimum Wage and Overtime Hours
                             Family and Medical Leave
                             Workers’ Compensation
                             Unemployment Compensation
             Florida         Equal Employment Opportunity
                             Child Labor Law
                             Job Safety and Health
                             Right-to-Know
                             Unemployment Benefits




                                                                        January 2005
HUMAN RESOURCES                                                    Policy 2-008

SUBJECT: In Store Labor Posters (cont.)
             Georgia         Equal Employment Opportunity
                             Equal Pay
                             Workers’ Compensation-Bill of Rights for the Injured
                             Worker
                             Workers’ Compensation-Physician’s List
                             Unemployment Compensation
             Idaho           Equal Employment Opportunity
                             Minimum Wage and Overtime Hours
                             Workers’ Compensation
                             Unemployment Compensation Benefits
             Illinois        Consolidated Wage-Hour Laws
                             Workers’ Compensation
                             Unemployment Compensation Benefits
             Indiana         Equal Employment Opportunity
                             Minimum Wage
                             Child Labor Law
                             Job Safety and Health
                             Workers’ Compensation
                             Unemployment Compensation Benefits
             Iowa            Equal Employment Opportunity
                             Minimum Wage and Overtime Hours
                             Job Safety and Health
                             Unemployment Compensation Benefits
             Kansas          Equal Employment Opportunity
                             Child Labor Law
                             Workers’ Compensation Insurance
                             Unemployment Compensation Benefits
             Kentucky        Equal Employment Opportunity
                             Equal Pay
                             Consolidated Wage-Hour Laws
                             Child Labor
                             Job Safety and Health
                             First Aid for Choking Victims
                             Radiation Protection
                             Unemployment Benefits-Notice to Workers’ Comp
                             Recipients
                             Unemployment Compensation Benefits
             Louisiana       Sickle Cell Trait Employment Nondiscrimination
                             Child Labor
                             Workers’ Compensation
                             Unemployment Compensation Benefits
                             Certificate-Employment Security Law
                             Certificate-Employment Security Law, Penalties


                                                                          January 2005
HUMAN RESOURCES                                                Policy 2-008

SUBJECT: In Store Labor Posters (cont.)
             Maine           Equal Employment Opportunity
                             Sexual Harassment
                             Consolidated Child Labor Law, Wage Payment
                             and Family Medical Leave Law
                             Minimum Wage and Overtime Hours
                             VDT Operators’ Rights
                             Whistleblower Protection Act
                             Workers’ Compensation Insurance
                             Unemployment Compensation Benefits
             Maryland        Equal Employment Opportunity
                             Equal Pay
                             Minimum Wage and Overtime Hours
                             Child Labor Law
                             Job Safety and Health
                             Health Insurance Coverage
                             Workers’ Compensation Insurance
                             Unemployment Compensation Benefits
             Massachusetts   Equal Employment Opportunity/Sexual Harassment
                             Minimum Wage and Overtime Hours
                             Right-to-Know
                             Workers’ Compensation Insurance
                             Unemployment Compensation Benefits
             Michigan        Equal Employment Opportunity
                             Minimum Wage and Overtime Hours
                             Overtime Compensation
                             Wage-Hour Recordkeeping
                             Child Labor Law
                             Job Safety and Health
                             Right-to-Know
                             Whistleblower Protection Act
                             Unemployment Compensation Benefits
             Minnesota       Age Nondiscrimination
                             Consolidated Minimum Wage/Overtime Hours,
                             Whistleblowers’ Protection and Parental Leave
                             Parental Leave
                             Job Safety and Health
                             Workers’ Compensation Insurance
                             Unemployment Compensation Benefits
             Mississippi     Workers’ Compensation Insurance
                             Unemployment Compensation Benefits
             Missouri        Equal Employment Opportunity
                             Workers’ Compensation Insurance
                             Unemployment Compensation Benefits


                                                                     January 2005
HUMAN RESOURCES                                                Policy 2-008

SUBJECT: In Store Labor Posters (cont.)
             Montana         Equal Employment Opportunity
                             Consolidated Minimum Wage, Overtime Hours and
                             Wage Payment
                             Job Safety and Health
                             Workers’ Compensation Insurance
                             Unemployment Compensation Benefits
             Nebraska        Equal Employment Opportunity
                             Minimum Wage
                             Emergency Information Numbers
             Nevada          Equal Employment Opportunity
                             Consolidated Wage and Hour Laws
                             Job Safety and Health
                             Emergency Information Numbers
                             Polygraph Testing
                             Workers’ Compensation Insurance
                             Unemployment Compensation Benefits
             New             Equal Employment Opportunity
             Hampshire       Consolidated Minimum Wage, Overtime Hours and
                             Child Labor Law
                             Wage Payment
                             Whistleblowers’ Protection Act
                             Unemployment Compensation Benefits
             New Jersey      Equal Employment Opportunity
                             Minimum Wage and Overtime Hours
                             Wage Payment
                             Child Labor Law Abstract
                             Child Labor Law (Mercantile Establishments)
                             Child Labor Law (Schedule of Hours)
                             Workers’ Compensation Insurance
                             Unemployment Compensation and Temporary
                             Disability Benefits
             New Mexico      Equal Employment Opportunity
                             Minimum Wage
                             Job Safety and Health
                             Workers’ Compensation Insurance
                             Workers’ Compensation Insurance (Form NOA-1,
                             Notice of Accident)
                             Unemployment Compensation Benefits




                                                                    January 2005
HUMAN RESOURCES                                                     Policy 2-008

SUBJECT: In Store Labor Posters (cont.)
             New York         Equal Employment Opportunity
                              AIDS Nondiscrimination
                              Minimum Wage and Overtime Hours
                              Right-to-Know
                              Workers’ Compensation Insurance
                              NY Disability Benefits Rights
                              Unemployment Compensation Benefits
             North Carolina   Consolidated Wage-Hour Laws, Workers’
                              Compensation, Unemployment Insurance and Job
                              Safety and Health
                              Workers’ Compensation Insurance
                              Unemployment Compensation Benefits
                              Unemployment Compensation Benefits (Notice of
                              Benefit Rights during Vacation)
                              Unemployment Compensation Benefits (Notice of
                              Benefit Rights during Vacation)
             North Dakota     Minimum Wage
                              Workers’ Compensation Insurance
                              Unemployment Compensation Benefits
             Ohio             Equal Employment Opportunity
                              Minimum Wage and Overtime Hours
                              Child Labor Law
                              Workers’ Compensation Insurance’
                              Certificate of Employer’s Right to Pay WC Benefits
                              Directly to Injured Employees
                              Unemployment Compensation Benefits
             Oklahoma         Equal Employment Opportunity
                              Minimum Wage
                              Workers’ Compensation Insurance
             Oregon           Consolidated Wage-Hour Law
                              Family Leave
                              Job Safety and Health
                              Workers’ Compensation Insurance Compliance
                              Unemployment Compensation Benefits
             Pennsylvania     Equal Employment Opportunity
                              Equal Pay
                              Minimum Wage Law
                              Child Labor
                              Schedule of Hours for Minors
                              Right-to-Know
                              Workers’ Compensation Insurance
                              Unemployment Compensation Benefits




                                                                          January 2005
HUMAN RESOURCES                                                  Policy 2-008

SUBJECT: In Store Labor Posters (cont.)
             Puerto Rico      Fair Labor
                              OSHA
             Rhode Island     Equal Employment Opportunity
                              Consolidated Minimum Wage, Overtime Hours and
                              Child Labor Law
                              Parental and Family Medical Leave
                              Right-to-Know
                              Workers’ Compensation Insurance
                              Unemployment Compensation and Temporary
                              Disability Insurance Benefits
             South Carolina   Equal Employment Opportunity
                              Consolidated Wage Payment, Child Labor Law and
                              Right-to Work
                              Job Safety and Health
                              Workers’ Compensation Insurance
                              Unemployment Compensation Benefits
                              Unemployment Compensation (Explanation of
                              Unemployment Tax)
             South Dakota     Unemployment Compensation Benefits
             Tennessee        Equal Employment Opportunity
                              Consolidated Wage Payment and Child Labor Laws
                              Job Safety and Health
                              Right-to-Know
                              Drug and Alcohol Testing
                              Unemployment Compensation Benefits
             Texas            Equal Employment Opportunity
                              Day of Pay
                              Child Labor Law
                              Right-to-Know
                              Workers’ Compensation Insurance and Safety Hotline
                              Work Exposure to HIV
                              Radiation Protection
             Utah             Job Safety and Health
                              Workers’ Compensation Insurance
                              Unemployment Compensation Benefits
              Vermont         Sexual Harassment
                              Minimum Wage and Overtime Hours
                              Child Labor Law
                              Parental and Family Leave
                              Job Safety and Health
                              Workplace Smoking
                              Workers’ Compensation Insurance
                              Unemployment Compensation Benefits


                                                                        January 2005
HUMAN RESOURCES                                                   Policy 2-008

SUBJECT: In Store Labor Posters (cont.)
             Virginia        Equal Employment Opportunity
                             Job Safety and Health
                             Workers’ Compensation Insurance
                             Unemployment Compensation Benefits
             Washington      Consolidated Wage-Hour Law and Family/Maternity
                             Leave
                             Job Safety and Health
                             Workers’ Compensation Insurance
                             Unemployment Compensation Benefits
             West Virginia   Equal Employment Opportunity
                             Minimum Wage and Overtime Hours
                             Wage Payment
                             Workers’ Compensation Insurance
                             Unemployment Compensation Benefits
             Wisconsin       Equal Employment Opportunity
                             Family and Medical Leave
                             Special Minimum Wage and Overtime Hours
                             Child Labor Law
                             Business Closings/Mass Layoff
                             Health Care Benefits Termination
                             Unemployment Compensation Benefits
             Wyoming         Consolidated Nondiscrimination, Job Safety, Workers’
                             Compensation and Unemployment Insurance
                             Job Safety and Health
                             Report of Injury




                                                                        January 2005
HUMAN RESOURCES                                                               Policy 2-010


SUBJECT: Applicant Tracking

POLICY:

All applicants must be tracked in accordance with the Company’s Affirmative Action Plan.



PROCEDURE:

1.      All applicants are to be logged on the Monthly Applicant Tracking Form.

        a)      date
        b)      applicant name
        c)      sex: M or F
        d)      ethnic category:
                  A       Asian, Pacific Islander
                  AI      American Indian
                  B       Black
                  H       Hispanic
                  W       White
        e)      handicapped/disabled
        f)      Vietnam era veteran
        g)      EEO job grade = CI-41
        h)      position applied for
        i)      source
        j)      interview date
        k)      hired or not hired
        l)      RC = reason code
        m)      position hired
        n)      store number
        o)      hourly rate/salary

2.      The completed monthly Tracking Form is to be submitted to Human Resources by the
        seventh of each month.

3.      If there are no applicants for any given month, note on a Tracking Form that there were
        no applicants and submit the form to Human Resources by the seventh of each month.




                                                                                     January 2005
HUMAN RESOURCES                                                              Policy 2-011


SUBJECT: Completed Employment Application

POLICY:

All completed employment applications should be retained for three years from
the date completed.


PROCEDURE:

      1.    Place one file folder for each month of the year and label folder accordingly
            (Example June 2000, March 2000, April 2000, etc.).

      2.    All completed applications received for the month will be placed in the file for the
            month it was completed.

      3.    At the end of each year, box up that year’s applications and store in the back
            room. At the end of year four, discard year one. (Example: In the back room,
            2000, 2001 and 2002 are stored. As 2003 is added, 2000 is discarded).




                                                                                    January 2005
HUMAN RESOURCES                                                                   Policy 2-012


SUBJECT: Reference Checks

POLICY:

Two reference checks should be completed on each applicant prior to their being hired.

PROCEDURE:

        1.      At the conclusion of the initial interview, the applicant should be asked to
                complete two (2) telephone reference check authorization forms.

        2.      Contact by telephone the two most recent employers as shown on the
                employment application. Direct supervisors are the most desirable individuals to
                be contacted since they serve as the best indicators of job performance. (If this
                person is unavailable or unable to give a reference, contact the company’s
                Human Resources Department for verification of employment dates.) Ask only
                those questions on the reference check form (see attached). Write in verbatim
                responses given by the supervisor. Only Store Management or Human
                Resources are to conduct reference checks.

        3.      If a former employer requires a written release:

                -       send one of the signed reference forms

                -       on the application, next to the former employer, indicate that the
                        reference check form was mailed and the date.

        4.      In some cases, the former employer will not provide any information. If this
                happens, indicate the date called and write “will not provide any information”
                across the top of the form. When you have made an attempt and are unable to
                obtain references, store management must use their own judgment in making the
                hiring decision.

        5.     The two completed reference forms are to be placed inside the application and
               sent to Human Resources with new hire paperwork.




                                                                                         January 2005
HUMAN RESOURCES                                                                                                             Policy 2-012


                                                                                                 Stride Rite Children’s Group, Inc.
                                                                                                                  Reference Check

                Name                                                                                     Social Security Number
Applicant
                Name                                                                                     Phone No.
Previous
Employer
                Address                                                                                  Immediate Supervisor’s Name


                Dates of Employment                                         Confirmed                    If “NO”, explain
Ask the
                From                                To                        YES       NO
reference to
                Position Held                                               Confirmed
verify the
                                                                              YES       NO
following
                Hourly Rate/Salary                                          Confirmed
information
                                                                              YES       NO
found on the
                Duties                                                      Confirmed
application
                                                                              YES       NO
                What were the associate’s responsibilities?
Ask the
following
questions
                How would the employer rate the associate’s performance?


                How did the associate get along with other associates/customers?


                Was there any attendance/tardiness problems?


                Why did the associate leave the company?


                Is the person eligible for rehire? If not, why not?



Additional
Comments


                Name                                                          Title
Information
Received From
                Did the person work with the applicant?                       Date




                                               I understand that The Stride Rite Children’s Group, Inc. will check my references and/or confirm details of
                                               my prior work history. I hereby authorize my prior employers to furnish any information which The Stride
                                               Rite Children’s Group, Inc. may request concerning my past employment or activities, and I hereby waive
                                               any claim and release all such employers and their employees, The Stride Rite Children’s Group, Inc. and




                                                                                                                                         January 2005
HUMAN RESOURCES                                                                   Policy 2-013


SUBJECT: Immigration Reform and Control Act (I-9 Form)

POLICY:

The Company is required by law to verify employment eligibility of all associates hired after
November 6, 1986. New hired associates must be able to produce qualifying documentation
proving their identity and authorization to work in the United States. Hiring practices will continue
to be based on equal employment opportunity for all individuals without regard to race, color,
religion, national origin, sex, age or handicap.



PROCEDURE:

1. After an offer of employment has been made and accepted, the hiring representative will
   advise each new associate of the requirements to verify employment eligibility.

2. Documentation presented by newly hired associates will be compared against the list of
   approved documents.

NOTE: A new hire cannot start work if the I-9 has not been completed and verified.

3. Should an associate’s documentation be insufficient or invalid, the associate must apply for
   the necessary documents. After the receipt for application of appropriate documents has
   been presented to Stride Rite, associates will be advised that they have 21 days from the
   date of hire to provide the required documents.

NOTE: Employment eligibility documents not presented within 21 days following application will
       require follow-up by the newly hired associate. When documents are not presented by
       the associate 21 days from receipt of application for documents, contact the Human
       Resources Department.

4. Completion of Form I-9 is mandatory for all new hired associates including re-hires.

5. Upon examination and approval of documents presented by the associate, a photocopy of
   each document must be made and attached to the Employment Eligibility Verification Form.

6. Completed I-9 forms and copies of documents should be forwarded to the Human Resources
   Department along with the new hire paperwork.




                                                                                          January 2005
HUMAN RESOURCES                                                                       Policy 2-015


SUBJECT: Rehire

POLICY:

Former associates are eligible for rehire if they left the Company in good standing. Individuals
rehired after 30 days from the date of termination with the Company will be treated as new hires
for benefits purposes.

Individuals who return to work less than 30 days from the date of termination will be reinstated
with their original date of hire with no break in service.

If an associate is reinstated to his/her original date of hire, they will be eligible for medical,
vacation and sick benefits without having to satisfy the waiting period.

If the amount of time between the termination date and the date of rehire is less than the length of
original plan participation in the Retirement Income Plan, benefits will be reinstated.

If the amount of time between the termination date and the date of rehire, is greater than the
length of original plan participation in the Retirement Income Plan, the associate must satisfy the
waiting period. The associate will begin participation in the Retirement Income Plan on the first
day of the month following the date on which they complete one year of service.



PROCEDURE:

    ♦   The Store Manager or District Manager should call Human Resources prior to rehiring a
        former associate to insure the individual is eligible for rehire.

    ♦   The Store Manager should call their District Manager to inform him/her of the intention to
        rehire the former associate.

    ♦   The completed maintenance form should be received in Human Resources prior to the
        first paycheck being issued or the associate will automatically be paid at the hourly rate
        on the Payroll system from when previously employed, and their paycheck will be sent to
        the store they worked in when previously employed.

    ♦   The following paperwork is required to be sent to Human Resources if the rehire occurs
        more than 30 days from the date of termination:

                 Employee Master File Maintenance Form
                 Federal Tax Withholding Form W-4
                 Application for Employment
                 I-9 Form with copies of identification
                 New Hire Paperwork Check List




                                                                                              January 2005
HUMAN RESOURCES                                                                   Policy 2-016


SUBJECT: Store Personnel Files

POLICY:

Store Managers may keep copies of an associate’s new hire paperwork and subsequent changes
and reviews in a locked file in the store. Originals of all paperwork should be sent to Human
Resources.

The Voluntary Equal Employment Opportunity Data Form must be filed separately from the
associate’s file.

Do not include a copy of the Vereda Authorization and Consent For The Release of Information
form in the associate’s file. The original form should be destroyed after the screening results are
obtained.

When an associate leaves the Company, the file containing copies of paperwork is to be
destroyed.




                                                                                         January 2005
HUMAN RESOURCES                                                                   Policy 2-017


SUBJECT: Employment of Family or Relatives

POLICY:
Stride Rite allows the employment of qualified relatives and members of the same household in
the Company. However, because this can become a sensitive issue, each situation will be
evaluated by Human Resources in conjunction with senior management.

The following criteria are important when considering transfers or promotions, or when two
previously unrelated associates become related. Relatives subject to this policy are: parents,
grandparents, spouses, children, siblings, uncles, aunts, nephews, nieces, first cousins, in-laws,
and any of these in a step or foster relationship.

♦   Employment of relatives of Director level and above, including members of the Board of
    Directors, General Managers of facilities or Regional Managers is prohibited.

♦   Hiring of relatives of associates who are in positions of a sensitive nature, such as the
    Chairman’s Office, Human Resources, Finance, Payroll or Security is discouraged.

♦   There should be no direct or indirect reporting relationship or control of some aspect of
    employment such as performance rating, attendance, tardiness, pay, etc.

♦   The possibility exists that associates of the Company may become related by marriage after
    employment. When this occurs, each situation will be evaluated by Human Resources.
    When two associates marry, it is the responsibility of the supervisor(s) in charge of their
    department(s) to inform Human Resources. If there is a conflict of interest, the Company will
    make every effort to transfer one of the associates to a new position.




                                                                                         January 2005
HUMAN RESOURCES                                                                Policy 2-018


SUBJECT: Associate Classification

POLICY:

1.   All associates hired by The Stride Rite Corporation will be classified as one of the
     following:

             A. Full-time associate
             B. Part-time associate
             C. Temporary/Seasonal Associate

2.   Individuals hired to work on an on-going basis for 32 hours or more per week will be
     classified as a full-time associate from the first day worked.

3.   Individuals hired to work on an on-going basis for less than 32 hours per week will be
     classified as a part-time associate.

4.   Individuals hired to work for short periods of time will be classified as temporary/seasonal
     associates.


     NOTE:           An individual hired to fill a vacant position, due to a leave of absence, will
                     be classified as a temporary, even though he/she may work 32 hours or
                     more per week. If the individual completes 90 days, then the
                     classification will be changed to either part-time or full-time.




                                                                                       January 2005
HUMAN RESOURCES                                                                  Policy 2-019


SUBJECT: Training

POLICY:

Training programs are designed to provide newly hired associates with the skill, knowledge and
confidence necessary to efficiently and effectively work in a Stride Rite store. Training programs
are in a modular format so they can be adapted to meet the needs of each new hire’s situation.

1. All newly hired associates must satisfactorily complete the Sales Associate Training Program.

2. All Store Managers are responsible for training their associates and must taking an active
   role in the initial and ongoing training as well as conducting sales clinic meetings, etc. as
   designated.

3. Utilize all follow-up tools following established guidelines.




                                                                                         January 2005
HUMAN RESOURCES                                                                 Policy 2-020

RESOURCESRESOU
SUBJECT: Store Manager Reviews

POLICY:

Stride Rite utilizes an annual performance planning and appraisal process for associates. The
performance appraisal cycle constitutes a twelve-month period, at the end of which a formal
performance evaluation is written. All Store Managers hired or promoted to the position of Store
                            st
Manager prior to October 1 will be reviewed December 1. Merit increases are based on these
evaluations.
Guidelines:

     Timing           Stage of Appraisal Cycle                          Tasks
   (12/1 cycle)
  Beginning of        Performance Expectations/        Manager and associate discuss and agree
Performance Year      Development Plan/Annual       on performance expectations, development
                             Objectives             plan and annual objectives for the upcoming
 December or at                                     performance year
  time of hire,
  promotion or                                        Document annual objectives and
     transfer                                       development plan.

                                                      Copy of evaluation to manager, associate
                                                    and human resources
On-Going through               Review                 Feedback on progress provided
    the year                 Of Progress
                                                       Changes in objectives discussed and
                                                       documented
Six Weeks before       Performance Evaluation          Associate prepares/submits a self
  Performance                Preparation            appraisal including list of accomplishments,
Evaluation is Due                                   strengths and development needs, proposed
                                                    development activities, and list of proposed
    November                                        objectives for following year

                                                      Manager prepares evaluation and reviews
                                                      with department head
   End of Year         Performance Evaluation         Manager and associate meet to discuss
   Performance                                      annual performance evaluation

 By December 31                                       Appropriate compensation is
                                                    communicated

                                                       Development actions are discussed

                                                       Time set to finalize development plan and
                                                       annual objective for following year




                                                                                       January 2005
         Store Manager and Assistant Store Manager - Annual Performance Review


Name:                                                   Store:

Manager:                                                Review Date:

        PART A – Our Service “CREW” Non-Negotiables

Courtesy and Respect - Treats co-workers and customers with the utmost courtesy and         Inconsistent
respect.
Comments/Examples:
                                                                                            Consistent
                                                                                            Significant
                                                                                            Exceptional



Reliability - Arrives to work, on time, in proper attire, groomed appropriately, does not   Inconsistent
extend breaks and does not exceed maximum allowable sick/personal days.
Comments/Examples:                                                                          Consistent
                                                                                            Significant
                                                                                            Exceptional



Expertise - Delivers expert fitting and product knowledge to our customers practicing the   Inconsistent
Six Steps of Stride Rite Service.
Comments/Examples:                                                                          Consistent
                                                                                            Significant
                                                                                            Exceptional



Warmth and Friendliness -Treats each customer as a member of the Stride Rite family         Inconsistent
through a warm greeting as they enter the store, helps customers gather their packages
and stroller as they leave, walks in front to the cash wrap to deliver purchases to the
                                                                                            Consistent
customer with a sincere thank you to both parent and child.                                 Significant
Comments/Examples:                                                                          Exceptional




                                                                                            January 2005
       PART B – STORE LEADERSHIP
Hiring/staffing: Hires individuals that demonstrate the CREW model, conducts
behavioral interviews and completes background screens as appropriate.                    Inconsistent
Comments/Examples:
                                                                                          Consistent
                                                                                          Significant
                                                                                          Exceptional
Training: Trains New Associates in the Perfect Fit program within 30 days of hire,
conducts on-going customer service and product training.                                  Inconsistent
Comments/Examples:
                                                                                          Consistent
                                                                                          Significant
                                                                                          Exceptional



Store Visual Standards: Selling floor is clean and well maintained; executes
planograms and sets up floor for promotional events in a timely manner.                   Inconsistent
Comments/Examples:
                                                                                          Consistent
                                                                                          Significant
                                                                                          Exceptional
Store Operational Standards/Customer Service: Store is offering superior service as
demonstrated by customer comment cards, mystery shop reports, and calls to the            Inconsistent
customer service center, maintains customer history file.
Comments/Examples:
                                                                                          Consistent
                                                                                          Significant
                                                                                          Exceptional




Store Controls: Ensure that all control procedures are followed, audits daily deposits,
refunds, price variances and payroll timesheets.                                          Inconsistent
Comments/Examples:
                                                                                          Consistent
                                                                                          Significant
                                                                                          Exceptional



People Management: Sets goals for sales team, provides on-going performance
coaching and feedback, documents performance problems when necessary, handles             Inconsistent
employee relations issues thoroughly and confidentially.
Comments/Examples:
                                                                                          Consistent
                                                                                          Significant
                                                                                          Exceptional




                                                                                          January 2005
         PART C - PERFORMANCE AGAINST GOALS
Comment on progress in accomplishing goals to date, document any changes or shifts in priorities.


Store Sales                            Goal _____________________ Result ____________________
Store Payroll                                    Goal _____________________ Result
____________________
Inventory Shrink                       Goal _____________________ Result ____________________
Units Per Transaction:                 Goal _____________________ Result ____________________
Accessory Sales:                       Goal _____________________ Result ____________________
Average Unit Sales:                    Goal _____________________ Result ____________________


         PART D - OVERALL PERFORMANCE




Development Goals: (comment on areas where Associate has the opportunity to learn or contribute more)




OVERALL PERFORMANCE RATING
Consider performance plan objectives, behavioral competencies and overall contributions. Using the following
definitions indicate the performance level which most accurately describes this individual’s performance.

   Inconsistent – Performance has met some expectations, however it falls short in some areas. The individual may have gotten most of
the job done, but with more direction and guidance than required. Needs improvement.

   Consistent – Performance consistently meets expectations.

   Significant – Performance usually exceeds expectations. Decisions and actions are performed at a high degree resulting in added
value above and beyond normal job requirements.


   Exceptional– Performance substantially and consistently exceeds the expected level of contribution and is easily distinguishable as
exceptional.


         SIGNATURES
MANAGER:______________________________

DATE:___________________________________________                             ASSOCIATE:________________________________

                                                                             DATE:______________________________________
DISTRICT MANAGER:________________________________
                                                                             ASSOCIATE COMMENTS: (FEEL FREE TO ATTACH AN
DATE:___________________________________________                             ADDITIONAL SHEET IF NECESSARY)




                                                                                                                   January 2005
HUMAN RESOURCES                                                               Policy 2-021


SUBJECT: Performance Reviews - Hourly Associates

POLICY:

All part time and full time Sales Associates and Assistant Managers are to receive a performance
evaluation as follows:
 st
1 review                                         6 month anniversary date
 nd
2 review                                         Annual anniversary date
Annually thereafter                              -

A performance evaluation does not warrant an automatic wage increase. All increases are based
on merit. An associate who receives a performance review with a rating below a “3” will not
receive an increase.

Promotions will affect the performance review schedule. Sales Associates, who are promoted to
Assistant Manager within their first year of employment, will remain on the above schedule. Sales
Associates who are promoted after one year of employment will be reviewed at the time of
promotion, then annually from the date of the promotion.




                                                                                      January 2005
                           Sales Associate - Annual Performance Review


Name:                                                   Store:

Manager:                                                Review Date:

        PART A – Our Service “CREW” Non-Negotiables
Courtesy and Respect - Treats co-workers and customers with the utmost courtesy and
respect.                                                                                    Inconsistent
Comments/Examples:
                                                                                            Consistent
                                                                                            Significant
                                                                                            Exceptional




Reliability - Arrives to work, on time, in proper attire, groomed appropriately, does not
extend breaks, does not take excessive sick/personal days, and follows all store control    Inconsistent
procedures.
Comments/Examples:
                                                                                            Consistent
                                                                                            Significant
                                                                                            Exceptional




Expertise - Delivers expert fitting and product knowledge to our customers practicing the
Six Steps of Stride Rite Service.                                                           Inconsistent
Comments/Examples:
                                                                                            Consistent
                                                                                            Significant
                                                                                            Exceptional




        PART B - PERFORMANCE AGAINST GOALS



                                                                                            January 2005
Comment on progress in accomplishing goals to date, document any changes or shifts in priorities.


Individual Sales:                      Goal _____________________ Result _____________________
Units Per Transaction:                 Goal _____________________ Result _____________________
Accessory Sales:                       Goal _____________________ Result _____________________
Average Unit Sales:                    Goal _____________________ Result _____________________
Other:                                 Goal _____________________ Result _____________________

         PART C - OVERALL PERFORMANCE




Development Goals: (comment on areas where Associate has the opportunity to learn or contribute more)




OVERALL PERFORMANCE RATING
Consider performance plan objectives, behavioral competencies and overall contributions. Using the following
definitions indicate the performance level which most accurately describes this individual’s performance.

   Inconsistent – Performance has met some expectations, however it falls short in some areas. The individual may have gotten most of
the job done, but with more direction and guidance than required. Needs improvement.

   Consistent – Performance consistently meets expectations.

   Significant – Performance usually exceeds expectations. Decisions and actions are performed at a high degree resulting in added
value above and beyond normal job requirements.


   Exceptional– Performance substantially and consistently exceeds the expected level of contribution and is easily distinguishable as
exceptional.
         SIGNATURES
STORE MANAGER:________________________________                               ASSOCIATE:________________________________

DATE:___________________________________________                             DATE:______________________________________

                                                                             ASSOCIATE COMMENTS: (FEEL FREE TO ATTACH AN
DISTRICT MANAGER                                                             ADDITIONAL SHEET IF NECESSARY)
AUTHORIZATION__________________________________

DATE:___________________________________________




                                                                                                                   January 2005
HUMAN RESOURCES                                                               Policy 2-022


SUBJECT: Performance Improvement

POLICY:

All associates are expected to maintain high standards of conduct and job performance and to
observe all Company rules and policies. Failure to do so may result in discipline up to and
including termination.

When a supervisor, believes it would be appropriate or useful, a performance improvement plan
may be used to address performance or work related problems in an effort to seek improvement
or changed behavior. Performance improvement plans can include verbal performance
improvement counseling, written performance improvement plans and in rare cases, suspension.

Performance improvement measures will not apply in the event of an offense which the Company
deems serious enough to warrant immediate discharge (see Ground for Immediate Dismissal
policy 2-023) or in other circumstances when the Company determines that corrective measures
would be inappropriate. The Company retains the discretion at all times to determine when to
use the performance improvement plan and the level of action to take.

GUIDELINES & PROCEDURES

Since employment throughout the company is “at will”, these guidelines are not intended to create
an employment contract, written or implied. The procedures presented in this policy are intended
only to provide guidelines for addressing associate performance or work related problems. A
specific number or warnings or procedural steps is not required.

Verbal Performance Improvement Counseling – Performance Improvement Counseling should
be conducted by the supervisor with an associate when an associate’s unsatisfactory job
performance, violations of Company policies, rules or procedures, inappropriate conduct and
excessive tardiness/absenteeism is initially identified.

The problem or issue should be clearly identified along with the performance improvements that
must be made. This first meeting should result in a commitment from the associate to solve the
problem and a mutually agreed upon target date for a follow-up meeting.

It is important that an associate be informed of what might happen, up to and including
termination from the Company. An associate’s employment may be terminated as a result of the
associate’s failure to address the performance issues any time during the process if it is
determined that the issues are not improving or are getting worse. In all cases, HR must be
consulted before any decision is made to terminate an associate.

Written Performance Improvement Plan - When a performance or work related problem, which
has been discussed in a verbal interview, continues, a written performance improvement plan
should be prepared. The problem should be identified in writing using specific details and
examples. A written performance improvement plan should be discussed identifying the specific
activities and goals, which must be achieved in order to show improvement. Target dates should
be set for accomplishment of the goals.



                                                                                      January 2005
HUMAN RESOURCES                                                                   Policy 2-022
SUBJECT: Performance Improvement Plan (cont.)
The supervisor should clearly state the specific action that may be taken if the problem continues,
including potential termination, and the time frame for determining whether or not we will continue
employment.

As is the case in a verbal performance improvement counseling, an associate’s employment may
be terminated as a result of the associate’s failure to address the performance issues any time
during the process if it is determined that the issues are not improving or are getting worse. In all
cases, HR must be consulted before any decision is made to terminate an Associate.

The supervisor and the associate should sign the completed written performance improvement
plan. If the associate refuses to sign, the supervisor should note the refusal on the plan. The
associate may make a separate written response if he/she chooses.

The written performance improvement plan should be forwarded to Human Resources for
inclusion in the associate’s personnel file. The supervisor and the associate should maintain
copies.

Suspension – Suspension may not be used as a punitive disciplinary action. It may be used in
rare situations when further investigation may be necessary to determine the extent of disciplinary
action needed. For example, an associate suspected of theft of Company property, with strong
evidence against him/her, may be suspended pending a legal, criminal or internal investigation.
Suspension may also be used if an incident, which may warrant immediate termination, takes
place over a weekend and HR guidance is not available. If a suspension takes place over a
weekend, HR must be contacted as soon as possible on the Monday following the suspension.




                                                                                          January 2005
HUMAN RESOURCES                                                      Policy 2-022
PERFORMANCE IMPROVEMENT PLAN

Name:                                    Social Security Number:
Date of Hire:                            Position:
Date of This                             Date of Last
Counseling:                              Performance Review:
Store Location:                          Last Performance Rating:


I. FACTS – What is the Performance Area(s) for Improvement?
(Check Applicable Box/Boxes)

        Tardiness                                Poor Customer Service

        Absenteeism                              Gross Misconduct

        Insubordination                          Unacceptable Quality of Work

        Violation of Company Policy              Unacceptable Quantity of Work

        Failure to Follow Instructions           Other


Details of Area(s) for Improvement - What happened? When did it happen?
Where did it happen? Who was involved? Why did it happen?




                                                                            January 2005
II.   OBJECTIVES – What must the associate do to be successful?




III. SOLUTIONS – Help your associate meet the set objectives by offering
solutions.




IV. ACTIONS – What will happen if the associate does not meet the set
objectives?




Follow-up date:

Follow-up Action:

        Suspension                                      Performance Review

        Termination                                     Other (explain on reverse side)



Associate’s Signature                                  Date


Manager/Supervisor’s Signature                         Date

Use the reverse side of this page for associate’s comments or any other additional comments.




                                                                                     January 2005
HUMAN RESOURCES                                                                  Policy 2-024

SUBJECT: Job Abandonment

POLICY:
An associate who fails to report to work on two consecutively scheduled days without notifying
his/her Manager or Supervisor will be terminated as Voluntary Quit - Job Abandonment.


PROCEDURE:

♦   The Manager or Supervisor will send a certified letter, return receipt requested, to the
    associate stating the effective date of the termination (see example).

♦   The letter will state the reason for termination as job abandonment.

♦   The Manager or Supervisor must complete all appropriate termination paperwork. Copies of
    all receipts and letters must be returned to Human Resources. Refer to Termination Policy 2-
    025.


Example: Termination Notification Letter:

Date

Associate Name
Associate Address


Dear Mr./Ms.:

As per Company policy, any associate who fails to report to work for two consecutively scheduled
workdays or any associate who fails to notify his/her Manager or Supervisor in the case of
absence for two consecutively scheduled workdays will be considered to have voluntarily quit.

As of [date of absence of second consecutive day], your employment with The Stride Rite
Corporation has been terminated.

In the event you are enrolled in any of Stride Rite’s associate benefit plans, you will be notified by
mail within two weeks of your benefit rights.

Sincerely,



Store Manager
Store address
Store phone number



                                                                                          January 2005
HUMAN RESOURCES                                                                Policy 2-025


SUBJECT: Termination Paperwork

POLICY:

When an associate resigns, is laid off or terminates employment for any reason, the manager or
supervisor must complete an Employee Master File Maintenance Form, call TALX uceXpress
Telephone Separation Entry System, and enter the termination into the POS system.


PROCEDURES:
1. Complete a Maintenance Form for termination of employment and send the completed form
   to Human Resources within seven days.

    ♦   Write in associate’s employee number
    ♦   Check off associate’s job status
    ♦   Check off termination
    ♦   Write in associate’s name
    ♦   Write in termination date
    ♦   Write in termination code (Refer to termination codes on the back of the Employee
        Maintenance form)
    ♦   In Additional Information/Comments section, provide a detailed explanation for
        termination and indicate any pay owed to the individual; i.e., unused vacation.
    ♦   Mail completed form to Human Resources within 7 days of the termination of
        employment.

2. Report the termination to TALX uceXpress Telephone Separation Entry System at 1-800-
   366-6690 on the associates last day of work. The system will request information about the
   separation, which you will key into your telephone. Before placing the call, be sure to have
   the following information ready:

    ♦   Account Number (refer to TALX uceXpress sheet)
    ♦   Terminated associate’s social security number
    ♦   First day worked
    ♦   Last day worked
    ♦   State Code (refer to TALX uceXpress sheet)
    ♦   Termination Code (refer TALX uceXpress sheet)

3. Enter the termination into the POS system on the associate’s last day of work.




                                                                                      February 2004
                                  STRIDE RITE CORPORATION

                     Telephone Separation Entry System
TELEPHONE: 1-800-366-6690                                 ACCOUNT NUMBER: 08920

    Please have the following information ready before calling    IMPORTANT POINTS FOR PROPER ENTRY                                      STATE CODES
    in your separation(s):
                                                                 • If multiple separations are to be entered, the system   Code   State           Code   State
    • Separated Employee’s Social Security Number                  will return you to step #3.                             01     Alabama         28     Nebraska
                                                                                                                           02     Alaska          29     Nevada
    • Numeric State Code (see state code listing on right).
                                                                                                                           03     Arizona         30     New Hampshire
    • Last Day Separated Employee Worked                         • If the system receives no response within 16            04     Arkansas        31     New Jersey
    • Termination Code                                             seconds after the voice prompt, the voice prompt        05     California      32     New Mexico
                                                                   will be reissued. The same will occur if an invalid
    • Occurrence Dates (if indicated as a requirement for the                                                              06     Colorado        33     New York
                                                                   response is received. If either of these situations     07     Connecticut     34     North Carolina
      termination code)
                                                                   occurs more than twice, you will be given the           08     Delaware        35     North Dakot
    • Additional Monies Paid at Termination (if indicated as       options to try again, be transferred to our technical   09     District of     36     Ohio
      a requirement for the termination code)                      support department or hang up.                                 Columbia        37     Oklahoma
                                                                                                                           10     Florida         38     Oregon
    DATA ENTRY STEPS
                                                                 • If the line is disconnected prior to confirmation       11     Georgia         39     Pennsylvania
                                                                   (step #12), any partial information will be             12     Hawaii          40     Puerto Rico
                                                                   discarded.                                              13     Idaho           41     Rhode Island
     1.   Account Number                                                                                                   14     Illinois        42     South Carolina
     2.   Location Code                                                                                                    15     Indiana         43     South Dakota
     3.   Social Security Number                                 • If the line is disconnected after confirmation (step    16     Iowa            44     Tennessee
     4.   First Day Worked                                         #12), the separation(s) will be loaded to TALX UC       17     Kansas          45     Texas
     5.   Last Day Worked                                          eXpress database.                                       18     Kentucky        46     Utah
     6.   State Code                                                                                                       19     Louisiana       47     Vermont
     7.   Length of Employment or Total Earnings                 • Pressing the pound (#) key, then 2, immediately         20     Maine           48     Virginia
          (if requested)                                           after a prompt returns you to the previous step,        21     Maryland        49     Virgin Islands
     8.   Termination Code                                         discards the entry at that step, and reissues the       22     Massachusetts   50     Washington
     9.   Occurrence Dates (if requested)                          prompt. Subsequent steps are skipped and entries at     23     Michigan        51     West Virginia
    10.   Additional Pay Received (if requested)                   those steps discarded.                                  24     Minnesota       52     Wisconsin
    11.   Special Pay                                                                                                      25     Mississippi     53     Wyoming
    12.   Confirm or Cancel                                                                                                26     Missouri
    13.   Stop Entry or Continue with Additional Separations                                                               27     Montana
                                                                                             January 2005
                                                                        TERMINATION CODES
QUIT______________________________         2190   Dissatisfied – Supervisor        LABOR DISPUTE________________            7220    Maternity leave (give return
0100 Failed to return,                     2200   Walked off the job               Please contact our office to discuss              date)
      No notice/reason given               2300   To stay at home                  labor dispute procedures and             7240    Military leave (give return date)
0300 No reason given                       2500   Attend School                    claimant’s eligibility.
0410 Mutual agreement (not Protestable)    0400   Other*                           8300 Involved in a labor dispute*        MISCELLANEOUS_______________
0500 Quit during temporary assignment,                                             8310 Members of a striking union*        6600 Transfer to a new location
     no notice                             DISCHARGE____________________           8320 Company lockout*                    6900 Disciplinary action – Suspension
0800 Failed to return from leave of        3200 Using intoxicant on the job*       8400 Refused to cross picket line*       8000 Returned to work (give date)
      absence                              3300 Intoxicated on the job*                                                     8100 Refused new job offer or recall
0900 Refused offer of work (give date)     3700 Excessive tardiness (give dates)   LACK OF WORK_________________                  (give date)*
1100 Three days unreported absence         3900 Left work without permission       7000 Vacation or holiday pay given       8500 Deceased
     (give dates)                          4000 Excessive absences (give dates)         (give amount & no. of days paid)    8600 Not available for work*
1200 Accepted better job                   4100 Excessive unreported absences      7600 Lack of work                        9100 No protest per employer
1400 Accepted another job                        (give dates)                      7610 Temporary lack of work              9200 Independent contractor
1410 Accepted another job –                4200 Excessive absences and tardiness         (give return date)                 9300 Records not available
      Own business                               (give dates)                      7620 Job elimination                     9800 On worker’s compensation*
1420 Accepted another job – Military       4300 Fighting on company property*      7630 Seasonal employment
1500 To leave the area                     4400 Refused to perform job duties*     7640 Location closed                     * Requires additional details. A TALX
1600 Personal                              4500 Misuse of equipment*               8700 Assignment completed                UC eXpress representative may contact
1610 Personal – Marriage                   4600 Destruction of company property*   8900 Vacation shutdown (give pay         you for additional information if a claim
1630 Personal – School hours conflict      4800 Violation of company policy*             amount and return date, if any)    is filed by this former employee.
1700 Transportation problem                4900 Insubordination*
1800 Babysitter problem                    5000 Sleeping on job*                   RETIREMENT___________________            NOTE: Some codes will request the
1900 Due to medical reasons                5100 Inability to perform job           1000 Voluntary                           dates paid or dollar amounts for
2000 Pregnancy                                   (not protestable)                      (if pension, give monthly amount)   additional pay. For codes not requesting
2100 Dissatisfied                          5300 Unauthorized removal of company    1030 Disability – Job related            this information, a separate prompt will
2110 Dissatisfied – Work hours                   property*                         1040 Disability – Not job related        be given at which point you may enter
2120 Dissatisfied – Salary                 5400 Violation of safety rules*         7400 Involuntary                         information regarding special pay an
2130 Dissatisfied – Working conditions     5500 Cash shortages*                         (if pension, give monthly amount)   individual may have or will received in
2140 Dissatisfied – Performance review     5800 Falsification*                                                              conjunction with the termination.
2160 Dissatisfied – Career opportunities   5900 Failed to report to work (give     LEAVE OF ABSENCE_____________
2170 Dissatisfied – Company policies            dates)                             7200 Leave of absence (give return
2180 Dissatisfied – Co-workers             6400 Medical disabilities                     date)
                                           5200 Other*                             7210 Medical leave (give return date)




                                                                                               January 2005
HUMAN RESOURCES                                                                     Policy 2-026


SUBJECT: Unclaimed Paychecks

POLICY:

If an associate fails to pick up his/her paycheck within seven (7) days after the check is received
in the store, the Manager should call the associate’s home to inform him/her that the paycheck is
available to be picked up during normal business hours.

PROCEDURE:
1. If the associate has been notified by phone that the check is available, but does not pick it up
   within seven (7) days of notification, the check should be sent certified mail/ return receipt
   requested.

2. When the receipt from the certified letter is returned to the store, attach it to the
   corresponding weekly timesheet.

3. If the check is returned to the store, send the check to Human Resources.




                                                                                           January 2005
HUMAN RESOURCES                                                                  Policy 2-027


SUBJECT: Rate Change-Assistant Manager/Full Time/ Part Time Associates

POLICY:

An associate’s rate may be changed due to a promotion, step down or performance review. It is
the responsibility of the Store Manager to complete an Employee Master File Maintenance Form
for any rate change and acquire the appropriate signatures.

Merit Increases in conjunction with a Performance Review:
It is the responsibility of the Supervisor to administer the Performance review on a timely basis.
Beyond the normal processing time for a Employee Master File Maintenance Form to be routed
and signed, increases will not be processed retro actively.

Promotion:
A promotion to a new position may warrant an increase in the associate’s rate. The District
Manager must approve any change in associate job position and rate.

Step down:
A step down in position may occur for several reasons, but in no case should a demotion be used
as a punitive measure based on poor performance or attendance. The District Manager must
approve any change in associate job position and rate.


PROCEDURE:
Performance Review:

Complete and deliver Sales Associate/Assistant Manager Performance Review Form several
weeks prior to the review due date.

Merit increases within the increase grid:
         ♦ Obtain verbal approval from your District Manager.
         ♦ Administer associate performance review
         ♦ Complete an Employee Master File Maintenance Form and indicate in the comment
            section approval was received.
         ♦ Send maintenance form and associate performance review to Human Resources.




                                                                                         January 2005
HUMAN RESOURCES                                                            Policy 2-027

SUBJECT: Rate Change-Assistant Manager/Full Time/ Sales Associate (cont.)
Assistant Manager/Full Time associate merit increase grid based on performance review:

                         Performance Score           Merit Increase
                             Exceptional                 .35-.80
                              Significant                .25-.50
                              Consistent                  0-.25
                             Inconsistent                   0

Part Time associate merit increase grid based on performance review:

                         Performance Score           Merit Increase
                             Exceptional                 .30-.50
                              Significant                .20-.35
                              Consistent                  0-.25
                             Inconsistent                   0

Merit increases outside the increase grid:
         ♦ Obtain verbal approval from your District Manager.
         ♦ Administer associate performance review.
         ♦ Send a completed Employee Master File Maintenance Form with performance review
            attached to your District Manager.
         ♦ District Manager’s will sign the maintenance form and send to Human Resources.
Promotion:
Review requested associate promotion and rate change with your District Manager.

Upon approval from your District Manager complete an Associate Screening through Vereda
when promoting an internal candidate to any Full Time, Assistant Manager or Manager position.

With a clear screening an offer may be extended to the associate.

Once the associate accepts the offer complete an Employee Master File Maintenance Form.
Indicate in the comment section approval by your District Manager and send to Human
Resources.

Step down:
Review requested status and rate change with your District Manager.

Upon approval from your District Manager complete an Employee Master File Maintenance Form
indicating the status and rate change. Send the completed maintenance form to Human
Resources. Indicate in the comment section of the maintenance form District Manager approval
was obtained.


                                                                                  January 2005
HUMAN RESOURCES                                                             Policy 2-028


SUBJECT: Associate Changes

POLICY:
An associate can have many changes both work related and personal while employed. Some of
these changes can include; store number due to transfer, status change due to
promotion/demotion; name/address change. It is the responsibility of the manager or supervisor
to complete an Employee Master File Maintenance Form to inform the Human Resources
Department of these changes.



PROCEDURE:

1. Complete Employee Master File Maintenance Form with effective date of the change
   indicated on the form.

2. Send completed maintenance form to Human Resources to be processed and included in the
   associate’s personnel file.




                                                                                   January 2005
HUMAN RESOURCES                                                               Policy 2-029


SUBJECT: Overtime

POLICY:

The Stride Rite Corporation complies with federal and state regulations that govern overtime.
Overtime will be paid at time and one half for all hours worked over 40, unless state regulations
are lower or mandated.


PROCEDURE:

NOTE:     Sick and holiday pay are not considered hours worked and will not be used in
          calculating overtime pay.

Exception:      Rhode Island mandates overtime for Sundays and designated holidays (see
                Holiday Policy).

             STATE                          PROVISION
             ALABAMA                        No state provision
             ALASKA                         Over 8 hours/day and over 40 hours/week
             ARIZONA                        No state provision
             ARKANSAS                       Over 40 hours/week
             CALIFORNIA                     Over 8 hours/day and over 40 hours/week
             COLORADO                       Over 12 hours/day and over 40 hours/week
             CONNECTICUT                    Over 40 hours/week
             DELAWARE                       No state provision
             DC                             Over 40 hours/week
             FLORIDA                        No state provision
             GEORGIA                        No state provision
             HAWAII                         Over 40 hours/week
             IDAHO                          No state provision
             ILLINOIS                       Over 40 hours/week
             INDIANA                        Over 40 hours/week
             IOWA                           No state provision
             KANSAS                         Over 46 hours/week
             KENTUCKY                       Over 40 hours/week and all hours on 7th day
             LOUISIANA                      No state provision




                                                                                      January 2005
HUMAN RESOURCES                                             Policy 2-029

SUBJECT: Overtime (cont.)
         STATE              PROVISION
         MAINE              Over 40 hours/week
         MARYLAND           Over 40 hours/week
         MASSACHUSETTS      Over 40 hours/week
         MICHIGAN           Over 40 hours/week
         MINNESOTA          Over 48 hours/week
         MISSISSIPPI        No state provision
         MISSOURI           Over 40 hours/week
         MONTANA            Over 40 hours/week
         NEBRASKA           No state provision
         NEVADA             Over 8 hours/day and over 40 hours/week unless on
                            4 day 10 hour/day week
         NEW HAMPSHIRE      Over 40 hours/week
         NEW JERSEY         Over 40 hours/week
         NEW MEXICO         Over 40 hours/week
         NEW YORK           Over 40 hours/week
         NORTH CAROLINA     Over 40 hours/week
         NORTH DAKOTA       Over 40 hours/week
         OHIO               Over 40 hours/week
         OKLAHOMA           No state provision
         OREGON             Over 40 hours/week
         PENNSYLVANIA       Over 40 hours/week
         PUERTO RICO        Over 8 hours/day and over 40 hours/week
         RHODE ISLAND       Sundays and holidays are paid at time and one half
                            and over 40 hours/week
         SOUTH CAROLINA     No state provision
         SOUTH DAKOTA       No state provision
         TENNESSEE          No state provision
         TEXAS              No state provision
         UTAH               No state provision
         VERMONT            Over 40 hours/week
         VIRGINIA           No state provision
         WASHINGTON         Over 40 hours/week
         WEST VIRGINIA      Over 40 hours/week
         WISCONSIN          Over 40 hours/week
         WYOMING            No state provision




                                                                   January 2005
HUMAN RESOURCES                                                                 Policy 2-030


SUBJECT: Work Permits/Age Certificates/Minimum Age

POLICY:

The recommended minimum age requirement for employment is eighteen (18) years; however,
every effort should be made to hire individuals who are older. Any individual hired under 18 must
have an age certificate/work permit on file, if applicable (see below, prior to beginning work).
Stride Rite complies with all state regulations regarding work permits or age certificates for
minors. Each state designates the age required for these permits/certificates.

No one under 16 years of age is to be hired.

PROCEDURES:

1.      All applicants under the state regulated age requirement must submit a work permit or
        age certificate prior to beginning work.
2.      These permits or certificates are usually obtained through the local board of education or
        school department.
3.      The original work permit or age certificate must be kept on file in the store. A copy
        of the permit is to be mailed to Human Resources with the new hire paperwork.


STATE                    AGE                    STATE                            AGE
                         REQUIREMENT                                             REQUIREMENT




                                                                                       January 2005
HUMAN RESOURCES                                                               Policy 2-031


SUBJECT: Minimum Hours Pay

POLICY:

If an associate reports to work as required or scheduled, and is not put to work, or works less
than the time he/she is scheduled, payment will be based on applicable state law as outlined
below. Company policy does not require associates to be paid for hours not worked.

State Guidelines for Minimum Hours Pay

 STATE                  GUIDELINES
 ALABAMA                No state provision provided
 ALASKA                 No state provision provided
 ARIZONA                No state provision provided
 ARKANSAS               No state provision provided
 CALIFORNIA             Pay and/or work for at least one-half of scheduled time ( a minimum of four
                        hours). Two hour minimum if asked to report same day again.
 COLORADO               No state provision provided
 CONNECTICUT            Pay for at least four hours unless associate regularly scheduled for less than
                        four hours, then pay at least twice the applicable minimum wage.
 DELAWARE               No state provision provided
 DC                     No state provision provided
 FLORIDA                No state provision provided
 GEORGIA                No state provision provided
 HAWAII                 No state provision provided
 IDAHO                  No state provision provided
 ILLINOIS               No state provision provided
 INDIANA                No state provision provided
 IOWA                   No state provision provided
 KANSAS                 No state provision provided
 KENTUCKY               No state provision provided
 LOUISIANA              No state provision provided
 MAINE                  No state provision provided
 MARYLAND               No state provision provided
 MASSACHUSETTS          Pay and/or work for at least three hours
 MICHIGAN               No state provision provided
 MINNESOTA              No state provision provided
 MISSISSIPPI            No state provision provided
 MISSOURI               No state provision provided
 MONTANA                No state provision provided
 NEBRASKA               No state provision provided
 NEVADA                 No state provision provided
 NEW HAMPSHIRE          Pay for at least two hours
 NEW JERSEY             Pay for at least one hour




                                                                                     January 2005
HUMAN RESOURCES                                                  Policy 2-031

SUBJECT: Minimum Hours Pay (cont.)

       NEW MEXICO          No state provision provided
       NEW YORK            Pay, at the applicable minimum wage, for at least four
                           hours, or number of hours in regularly scheduled shift,
                           whichever is less.
       NORTH CAROLINA      No state provision provided
       NORTH DAKOTA        No state provision provided
       OHIO                No state provision provided
       OKLAHOMA            No state provision provided
       OREGON              No state provision provided
       PENNSYLVANIA        No state provision provided
       PUERTO RICO         No state provision provided
       RHODE ISLAND        Pay for at least three hours
       SOUTH CAROLINA      No state provision provided
       SOUTH DAKOTA        No state provision provided
       TENNESSEE           No state provision provided
       TEXAS               No state provision provided
       UTAH                Pay for at least two hours
       VERMONT             No state provision provided
       VIRGINIA            No state provision provided
       WASHINGTON          No state provision provided
       WEST VIRGINIA       No state provision provided
       WISCONSIN           No state provision provided
       WYOMING             No state provision provided




                                                                       January 2005
HUMAN RESOURCES                                                             Policy 2-032


SUBJECT: Minimum Wage

POLICY:

Stride Rite complies with federal and state regulations that govern minimum wage. Minimum
wage paid is the Federal minimum: $5.15 unless state minimum is higher, then the state
minimum is paid.

STATE                   WAGE                    STATE                   WAGE

Alabama                 None                    Montana                 $5.15
Alaska                  $5.65                   Nebraska                $5.15
Arizona                 None                    Nevada                  $5.15
Arkansas                $5.15                   New Hampshire           $5.15
California              $6.75                   New Jersey              $5.15
Colorado                $5.15                   New Mexico              $4.25
Connecticut             $6.70                   New York                $5.15
DC                      $6.15                   North Carolina          $5.15
Delaware                $6.15                   North Dakota            $5.15
Florida                 None                    Ohio                    $5.15
Georgia                 $5.15                   Oklahoma                $5.15
Hawaii                  $5.75 (6.25*)           Oregon                  $6.50
Idaho                   $5.15                   Pennsylvania            $5.15
Illinois                $5.15                   Puerto Rico             $5.15
Indiana                 $5.15                   Rhode Island            $6.15
Iowa                    $5.15                   South Carolina          None
Kansas                  $2.65                   South Dakota            $5.15
Kentucky                $5.15                   Tennessee               None
Louisiana               None                    Texas                   $5.15
Maine                   $5.75 (6.25*)           Utah                    $5.15
Maryland                $5.15                   Vermont                 $6.25
Massachusetts           $6.75                   Virginia                $5.15
Michigan                $5.15                   Washington              $6.90
Minnesota               $5.15                   West Virginia           $5.15
Mississippi             None                    Wisconsin               $5.15
Missouri                $5.15                   Wyoming                 $5.15
* Effective 1/1/03




                                                                                   January 2005
HUMAN RESOURCES                                                                      Policy 2-033


SUBJECT: Associate Final Paycheck

POLICY:

Any associate who is separated from the Company, either voluntarily or involuntarily, will receive
his/her final paycheck as mandated by applicable state laws. In states where there is no specific
provision concerning final paychecks, the associate will receive his/her final paycheck on the next
regular payday. Final paychecks that are paid at the next regular payday will include all monies
owed.


PROCEDURE:

1. Final Paycheck Provided at Next Regular Payday
   Final paychecks are generally delivered to the store. In the case of involuntary discharge,
   final paychecks may be sent directly to the associate’s home address.

    a. When the final paycheck is received in the store, the Manager should call the associate’s
       home to inform him/her that the final paycheck is available, noting date and time of call
       and the person with whom the message was left. The associate must pick up the check
       during normal business hours.

    b. If the associate has been notified that the check is available, but does not pick it up within
       one (1) week, the check should be sent certified mail/return receipt requested.

    c.   When the receipt from the certified letter is returned to the store, it is to be attached to the
         corresponding timesheet.

    d. If the check is returned to the store, the check is to be sent to Human Resources.

2. Final Paycheck Due Prior to Next Regular Payday
   (as mandated by state law)

    a. The District Manager or Store Manager should contact Human Resources as far in
       advance of separation as possible.

    b. All final payments will be discussed and determined at that time.

    c.   Human Resources will determine if there is any unused vacation or voluntary deduction
         reimbursements (ie. Employee Stock Purchase Plan) and initiate the necessary
         paperwork for payment.

    d. The Payroll Department will generate the final check, which may be sent to the
       supervisor via overnight express carrier.




                                                                                             January 2005
HUMAN RESOURCES                                                                  Policy 2-033
SUBJECT: Associate Final Paycheck (cont.)

Guidelines for Final Paycheck

State                      Resignation                           Discharge
ALABAMA                    No state provision.                   No state provision.
ALASKA                     Within three working days.            Within three working days.
ARIZONA                    Next regular pay date or by mail if   Within three working days or next
                           requested.                            regular payday, whichever is
                                                                 sooner. May mail if requested.
ARKANSAS                   No state provision.                   Payment is due on date of
                                                                 discharge.
CALIFORNIA                 Payment is due within 72 hours        Payment due at termination at
                           unless 72 hours notice was given,     place of discharge. If payment is
                           then payment is due at time of        mailed, mailing date is date of
                           resignation. Mailing date is          payment.
                           considered date of payment.
COLORADO                   Next regular payday.                  Payment due at termination or by
                                                                 mail, if requested.
CONNECTICUT                Next regular payday.                  Next business day.
DC                         Next regular payday or within 7       Next working day or 4 days for
                           days, whichever is earlier.           employee responsible for
                                                                 employers’ monies.
DELAWARE                   Next regular payday or by mail, if    Next regular payday or by mail, if
                           requested.                            requested.
FLORIDA                    No state provision.                   Next regular payday.
GEORGIA                    No state provision.                   No state provision.
HAWAII                     Next regular payday or, if at least   Payment due at termination or
                           one pay period notice is given,       next working day if conditions
                           due on last day.                      prevent immediate payment.
IDAHO                      Next regular payday or within 10      Next regular payday or within 10
                           days, whichever is earlier.           days, whichever is earlier.
ILLINOIS                   At time of separation or no later     At time of separation or no later
                           than next regular payday or by        than next regular payday or by
                           mail, if requested.                   mail, if requested.
INDIANA                    Next regular payday.                  On regular payday for period in
                                                                 which discharge occurs.
IOWA                       Next regular payday.                  On regular payday for period in
                                                                 which discharge occurs.




                                                                                         January 2005
HUMAN RESOURCES                                                          Policy 2-033

SUBJECT: Associate Final Paycheck (cont.)

State              Resignation                           Discharge
KANSAS             Next regular payday, or by mail if    Next regular payday, or by mail if
                   requested.                            requested.
KENTUCKY           Next regular payday or 14 days        Next regular payday or 14 days
                   following last day worked,            following last day worked,
                   whichever occurs later.               whichever occurs later.
LOUISIANA          On or before next regular payday      On or before next regular payday
                   or within 15 days following           or within 15 days, whichever is
                   resignation date.                     sooner.
MAINE              Next regular payday or within 2       Next regular payday or within 2
                   weeks, whichever is earlier.          weeks whichever is earlier.
MARYLAND           Next regular payday.                  Next regular payday.
MASSACHUSETTS      Next regular payday.                  Payment due at termination.
MICHIGAN           Next regular payday.                  Payment due immediately, as
                                                         soon as amount owed is
                                                         determined, or within 4 working
                                                         days.
MINNESOTA          Payment due within 5 days. If 5       Payment due at termination.
                   days notice is given, payment due
                   within 24 hours upon demand.
MISSISSIPPI        No state provision.                   No state provision.
MISSOURI           No state provision.                   Payment due at termination.
MONTANA            Payment due within 3 days or 6        Payment due at termination.
                   days if paychecks originate from
                   out-of-state office.
NEBRASKA           Next regular payday or within 2       Next regular payday or within 2
                   weeks, whichever occurs earlier.      weeks, whichever occurs earlier.
NEVADA             Next regular pay date or within 7     Payment due at termination.
                   days, whichever occurs earlier.
NEW HAMPSHIRE      Next regular payday or by mail if     Payment due within 72 hours.
                   requested. Payment is due within
                   72 hours if one pay period’s notice
                   is given.
NEW JERSEY         Next regular payday or by mail if     Next regular payday or by mail if
                   requested.                            requested.
NEW MEXICO         Next regular payday.                  Payment due within 5 days.
NEW YORK           Next regular payday or by mail if     Next regular payday or by mail if
                   requested.                            requested.
NORTH CAROLINA     Next regular payday.                  Next regular payday.




                                                                                 January 2005
HUMAN RESOURCES                                                          Policy 2-033

SUBJECT: Associate Final Paycheck (cont.)


State              Resignation                           Discharge
NORTH DAKOTA       On the regularly established          On the regularly established
                   payday for the periods the            payday for the periods the
                   employee worked.                      employee worked.
OHIO               No state provision.                   No state provision.
OKLAHOMA           Next regular payday or by certified   Next regular payday or by certified
                   mail if requested.                    mail if requested.
OREGON             Payment, which may be mailed on       Payment is due no later than the
                   request, is due on day of             end of the first business day after
                   termination if associate gave 48      discharge.
                   hours notice, excluding weekends
                   and holidays. If no notice was
                   given, payment is due within 5
                   days, excluding weekends and
                   holidays or next regular payday
                   whichever occurs earlier.
PENNSYLVANIA       Next regular payday or by certified   Next regular payday or by certified
                   mail if requested.                    mail if requested.
PUERTO RICO        Next regular payday.                  Next regular payday.
RHODE ISLAND       Next regular payday.                  Next regular payday.
SOUTH CAROLINA     Payment is due within 48 hours or     Payment is due within 48 hours or
                   next regular payday, which cannot     next regular payday, which cannot
                   exceed 30 days.                       exceed 30 days.
SOUTH DAKOTA       Next regular payday.                  Within 5 days.
TENNESSEE          All wages within 21 days, or the      All wages within 21 days, or the
                   next payday following termination,    next payday following termination,
                   whichever occurs first.               whichever occurs first.
TEXAS              Next regular payday.                  Payment due within 6 days.
UTAH               Next regular payday.                  Payment is due within 24 hours of
                                                         termination.
VERMONT            Last regular payday.                  Payment due within 72 hours.
VIRGINIA           Next regular payday.                  Next regular payday.
WASHINGTON         Next regular payday.                  Next regular payday.
WEST VIRGINIA      Next regular payday or by mail if     Payment due within 72 hours.
                   requested. If one pay period
                   notice was given, due on date of
                   termination.
WISCONSIN          Next regular payday.                  Next regular payday.
WYOMING            Within 5 working days.                Within 5 working days.




                                                                                  January 2005
HUMAN RESOURCES                                                                   Policy 2-034


SUBJECT: Vacation Store Managers/Assistant Managers/Full-Time Associates

POLICY:

Full-Time Associates who meet eligibility requirements may take paid vacation time upon prior
approval from their supervisor. All time off should be scheduled as far in advance as possible
and is subject to the approval of the District Manager.

No vacation time may be taken during the following seasons:
Back to school (Approximately July 15 – September 15; varies by district)
Peak Season Promotion Events
4 weeks preceding Easter
                                                                                                 st
The vacation year runs concurrent with the Company’s fiscal year approximately December 1 to
              st
November 31 . Vacation time for all eligible Associates will be earned on a semi-annual basis
with earning periods in December and June.

Associates are eligible to “carry over” up to one week of earned vacation time from one fiscal year
to another.

Associates may not take more than two weeks of continuous vacation at a time.

Illness, which occurs during vacation time, does not entitle the Associate to additional days off.

ELIGIBILITY:
Stride Rite provides vacation time to Associates who have been employed at full-time status for
at least six (6) consecutive months at the beginning of December and June. Vacation
eligibility requires that you have an average of 32 hours worked per week during the six months
prior to the earning period. Vacation time is based on length of service; however, part-time
service prior to becoming full-time is not considered in the calculation of length of service.
Associates who do not meet eligibility requirements at the time of an earning period will be
considered again with the next scheduled earning period.


                                                   December                 June
       Length of Service                         Earning Period        Earning Period
       6 months but less than 5 years                 1 Week                1 Week
       5 years but less than 15 years               1.5 Weeks             1.5 Weeks
       15 years but less than 25 years               2 Weeks               2 Weeks
       More than 25 years                           2.5 Weeks             2.5 Weeks




                                                                                          January 2005
HUMAN RESOURCES                                                                     Policy 2-034
SUBJECT: Vacation (cont.)
The number of vacation hours an Assistant Manager or Full-Time Associate is eligible for per
week will be calculated as follows:
                                                                             st                   st
    December Earning Period        Average hours worked between June 1 and November 31
                                                                          st          st
        June Earning Period        Average hours worked between December 1 and May 31

Associates who do not average a minimum of 32 hours per week will not be eligible for vacation.
Full-Time Associate’s vacation pay will be paid at their current hourly rate.
All Store Manager’s earn 44 hours of vacation for every week they are eligible. Manager’s
vacation pay will be paid at their normal base salary.
If a holiday falls during an Associate’s vacation, it will be paid as a holiday, not a vacation day.

PROCEDURE:
•   The District Manager will receive a list of all Associates in their district who have earned
    vacation hours during the first week of December and June. The list will note the number of
    vacation hours the Associate is eligible for.

•   All eligible Associates will receive a memo from Human Resources, indicating their eligible
    vacation hours by the first week of December and June. If there are any questions or
    concerns regarding vacation hours or eligibility, the Associate is to contact the Human
    Resources Service Center within two weeks of receipt of the memo. Any Associate who
    does not receive written confirmation of vacation eligibility should call the Human
    Resources Department prior to taking any vacation.

•   Associates should request vacation time from their supervisor at least 30 days in advance.

•   Full-time Associates and Assistant Managers may receive their earned vacation pay in
    advance. The Store Manager must complete an Employee Master File Maintenance Form
    and send in to the Human Resources Department at least two weeks in advance. Store
    Managers are not eligible to receive vacation pay in advance.

•   Store Managers are responsible for providing adequate coverage during vacations. Vacations
    should be scheduled in such a way that customer’s needs are met.

•   Associates who submit hours to Payroll for sick/personnel time that have exceeded their
    annual allotment will have the balance deducted from their available vacation time. If an
    Associate has used all of their available paid time for the year and submits for additional time
    it will be unpaid.

•   Payment will not be made in lieu of vacation not taken unless upon resignation or separation
    in which an Associate will be paid for all vacation hours that have been earned including carry
    over but not used.

•   Earned vacation time may not be used in lieu of proper resignation notice and will not be
    used to extend an Associate’s length of employment.


                                                                                            January 2005
HUMAN RESOURCES                                                                 Policy 2-035


SUBJECT: Sick/Personal Time

POLICY:

Managers and Full-time associates, working a minimum of 32 hours per week are eligible for
sick/personal pay based on the length of continuous full-time service. Sick/personal days are
accrued based on the following schedule:

        Sick/Personal Days Eligibility in the First Year of Full Time Employment
Hire Month              Jan   Feb    Mar    April May June       July Aug Sept        Oct    Nov Dec
                 Jan    0
                Feb     0       0
                Mar     0       0      0
                 Apr    2       0      0      0
Sick Day        May     0       2      0      0      0
Eligibility     June    0       0      2      0      0      0
                July    2       0      0      2      0      0      0
                Aug     0       2      0      0      2      0      0     0
                Sept    0       0      2      0      0      2      0     0      0
                 Oct    2       0      0      2      0      0      2     0      0      0
                Nov     0       2      0      0      2      0      0     2      0      0      0
                Dec     0       0      2      0      0      2      0     0      2      0      0        0
 st
1 Year                  6       6      6      4      4      4      2     2      2      0      0        0
Total Days
                                                                          Following Year Eligibility
                                                                        Hire Month Oct Nov Dec
                                                                            Jan      2      0       0
                                                                           Feb       0      2       0
                                                                           Mar       0      0       2
                                                                            Apr      2      0       0
                                                                           May       0      2       0
                                                                           June      0      0       0
                                                                           July      2      0       2
                                                                           Aug       0      2       0
                                                                           Sept      0      0       0
                                                                            Oct      0      0       0
                                                                           Nov       0      0       2
                                                                           Dec       0      0       0
                                                                          Total      6      6       6
                                                                          Days

An associate hired or promoted to full time status in January through March will receive two
sick/personal days after three months of full time service. An additional two sick/personal days
are earned after six months of full time service and an additional two days are earned after nine
months of full time service.



                                                                                        January 2005
HUMAN RESOURCES                                                                   Policy 2-035

SUBJECT: Sick/Personal Pay (cont.)

An associate hired or promoted to full time status in April through June will receive two
sick/personal days after three months of full time service. An additional two sick/personal days
are earned after six months of full time service.

An associate hired or promoted to full time status in July through September will receive two
sick/personal days after three months of full time service.

An associate hired or promoted to full time status after October 1 through December 31 will
receive two sick/personal days after three months of full time service. An additional two
sick/personal days are earned after six months of full time service and an additional two days are
earned after nine months of full time service.

Associates with more than three months continuous full time service on January 1 are credited
with six sick/personal days for period January through December.

Payment of Sick/Personal Time:

♦   Associates are paid a maximum of 48 hours sick/personal pay per calendar year.

♦   Associates using a full sick/personal day will be paid with eligible sick/personal hours, not to
    exceed scheduled hours for that day.

♦   When an associate leaves work early or arrives late due to illness or personal reasons,
    he/she will be paid only for the actual hours worked plus eligible sick/personal hours, not to
    exceed remaining scheduled hours for that day.

♦   Sick/personal days are paid at the associate’s hourly rate.

♦   Any sick/personal time submitted to be paid beyond the maximum will be paid as vacation
    pay (if available), or will be unpaid. The associates’ time sheet should be completed
    accurately to reflect that the associate was out sick.

♦   Associates may not carry over unused sick/personal days into the next calendar year.

♦   Associates who terminate employment are not paid unused sick/personal time.




                                                                                          January 2005
HUMAN RESOURCES                                                                   Policy 2-035

SUBJECT: Sick/Personal Pay (cont.)


PROCEDURE:

Associates must inform their supervisor as soon as possible that they will not be reporting to
work. Notification should be no later than 15 minutes before the start of scheduled work hours.
For personal time, request permission in advance as soon as possible.
♦ Personal time is intended for conducting personal business and family matters that cannot be
    accomplished except by using work time off. Examples include:

    -   court appearances
    -   medical appointment when no other appointment is available
    -   bereavement time for the funeral of a close friend or relative not qualifying for
        bereavement leave

♦   Supervisors may require medical documentation if an associate is absent for three or more
    consecutive days.

♦   All eligible sick/personal days should be applied at the start of any leave of absence to cover
    the seven-day elimination period.




                                                                                            January 2005
HUMAN RESOURCES                                                                    Policy 2-036


SUBJECT: Holidays and Holiday Pay

POLICY:

Stride Rite offers six paid holidays to full-time associates and Assistant Managers after 30 days of
continuous employment:

Paid Holidays

         New Year’s Day                                    Labor Day
         Memorial Day                                      Thanksgiving Day
         Independence Day                                  Christmas Day

1.      Eligible associates will receive eight hours pay for the holiday in addition to payment for
        any hours worked on the holiday.

Exception:      Rhode Island mandates overtime pay at time and a 1/2 for any hours worked on
                the six paid holidays and Victory Day, Columbus Day and Veteran’s Day.

2.      An associate on a leave of absence will not be eligible for holiday pay.

Note:    An associate returning to work after a leave of absence must work 30 continuous days
         before he/she is eligible for holiday pay.

3.      Store Managers who work on a holiday will not receive additional pay, however he/she
        will receive a compensatory day off. This compensatory day must be taken within two
        weeks of the holiday.

Note:    Holiday pay is not considered hours worked and will not be used in calculating overtime
         pay for over 40 hours or in calculating Store Manager’s premium pay.




                                                                                        January 2005
HUMAN RESOURCES                                                               Policy 2-037


SUBJECT: Bereavement

POLICY:

1.   Full-time associates (32 hours per week) with over 30 days of continuous employment
     will be eligible for up to three days paid leave to attend the funeral of an immediate family
     or household member.

2.   Immediate family is defined as spouse, children, step-children, parents, step-parents,
     mother-in-law, father-in-law, brothers, sisters, step-brother, sister, or grandparents.
     Household members are those family members who reside in the same dwelling
     including domestic partners.

3.   Payment will not be made in lieu of time not taken.

4.   If an associate must travel to attend funeral services, more than three days may be
     requested. The supervisor must approve this request. Any extra days will be unpaid.

5.   Associates may be permitted, at the discretion of the supervisor, to be absent from work
     up to one full day to attend the funeral for extended family members and friends. This will
     be unpaid.


PROCEDURE:
1.   Bereavement pay will be at the associate’s current rate of pay for the scheduled hours for
     each day of bereavement leave not to exceed three days.

2.   Bereavement should be noted on the timesheet for the appropriate days.

3.   When inputting POS, hours should be keyed as bereavement hours.




                                                                                      January 2005
HUMAN RESOURCES                                                                          Policy 2-038
\

SUBJECT: Jury Duty

POLICY:
Stride Rite will provide sufficient time off for associates to fulfill their civil obligation for Jury Duty
without a loss in pay.


PROCEDURE:

1. Associates must submit the court summons to their supervisor in order to notify the
   supervisor of their expected absence. The supervisor should submit the summons to Human
   Resources for inclusion in the associate’s file.

2. The time an associate spends away from work while serving on jury duty is not counted
   against sick/personal days or vacation and it does not count towards overtime. Serving on a
   jury is an excused absence and is not considered when determining excessive absenteeism.

3. Associates should notify their supervisor immediately if the jury service is expected to extend
   longer than one day. Associates must submit their court attendance records for jury service,
   which extends beyond one day.

A.       Pay while On Jury Duty
1.       Stride Rite associates will not suffer any loss of pay due to jury service.
         Store Managers will continue to receive their normal pay while serving jury duty by
         noting the hours in the comment section on POS.
         Hourly associates will receive their normal straight-time pay for the scheduled hours for
         each day on jury duty by noting the hours in the comment section on POS.

2. Many courts pay a small fee to jurors for having served in order to compensate for lost wages
   at work. Any pay received from the court must be submitted to the associate’s supervisor
   immediately.

3. If a regular holiday falls during the time an associate is serving on a jury, he/she will be paid
   the regular rate for the holiday.

4. If an associate serves on any state court jury in the following Massachusetts counties, they
   will not have their jury pay reported by the courts to tax authorities and will therefore receive a
   normal W-2: Suffolk, Middlesex, Hamden, Worcester, Essex, Plymouth and Norfolk. If an
   associate serves in any state court jury in any other county, the associate must notify Human
   Resources who will ascertain that county court’s practice on reporting pay and the Company
   W-2 will be adjusted if necessary to prevent double taxation. If an associate serves on any
   federal court jury and earns over $600 in attendance fees (more than 20 days @ $30.00/day),
   the federal court will issue a form 1099 and the Company’s W-2 will be reduced to avoid
   double taxation.



                                                                                                 January 2005
                                                                           \
HUMAN RESOURCES                                                                   Policy 2-039


SUBJECT: Leave Of Absence
Stride Rite offers several types of leaves of absence that allow associates time away from work
when faced with change or crisis.

            Paid Leave                             Unpaid Leave
            Medical Leave                          Family and Medical Leave
            Maternity Leave                        Personal Leave
            Military Leave

POLICY:

MEDICAL LEAVE
Full Time Sales Associates, Assistant Managers and Store Managers who need time off from
work for medical reasons will be covered under Stride Rite’s Short-Term Disability (STD) policy.
All eligibility requirements and procedures related to STD must be followed (See Short Term
Disability Policy 2-040 2-041)

Part Time and Seasonal Associates, who need time off for medical reasons, may request a
personal leave, and must provide proper medical documentation.

MATERNITY LEAVE
Maternity Leave for Full Time Sales Associates, Assistant Managers and Store Managers is paid
under the provisions of Stride Rite’s Short-Term Disability (STD) policy. All procedures under that
policy must be followed.

Stride Rite provides eight weeks of maternity leave, with a minimum of six weeks of leave, after
the delivery of the child. If the child is delivered by cesarean section, the leave will extend for a
minimum of eight weeks after the delivery.

When the mother is determined to be disabled and unable to work by her physician, she will be
placed on Stride Rite’s STD and receive disability pay after satisfying the seven day elimination
period and contingent upon proper medical documentation.

It is the responsibility of the associate to keep her supervisor and Human Resources up to date
regarding any changes in her condition which may affect her leave, and of her expected return to
work date.




                                                                                         January 2005
HUMAN RESOURCES                                                                    Policy 2-039
SUBJECT: Leave of Absence (cont.)

Employment Status
Upon return from a Maternity Leave, an associate will be restored to her original position or an
equivalent position involving the same or substantially similar duties and responsibilities and will
have the same pay, benefits and working conditions as the original position.

MILITARY LEAVE
If an Associate is called to military service, a leave of absence will be granted for the length of the
tour of duty.

Full Time Associates called to military service will be paid their full salary during the leave. If the
associate receives military pay, Stride Rite will pay any difference between the military pay and
their regular salary.

An estimate of expected military pay to be received while on active duty must be submitted with
the Leave of Absence Request. This will determine eligibility for salary continuation by Stride Rite
while out on leave. Proof of actual military pay must be submitted within 7 days of the associate’s
return from military leave to verify accuracy of all salary payments made by Stride Rite.

Associates returning from military leave are expected to report to work on the next regularly
scheduled work day following the necessary travel day(s) required to return from the location or
military service.


PROCEDURE:

1.      Military leave should be requested as far in advance as possible. Written documentation
        of the call to active duty must be submitted to the supervisor.

2.      A Request for Leave of Absence form must be completed and submitted to Human
        Resources with all appropriate documentation at least one week prior to the beginning of
        the leave.

3.      If the leave will be unpaid by Stride Rite, payments for medical and dental insurance must
        be made by the associate during the length of service.

4.      To return from a military leave and qualify for reemployment and reinstatement, the
        associate must return to the Company within 30 days of discharge for National Guard
        and 90 days from Armed Services and without having held another job since the military
        discharge.




                                                                                           January 2005
HUMAN RESOURCES                                                                        Policy 2-039
SUBJECT: Leave of Absence (cont.)

FAMILY AND MEDICAL LEAVE
In 1993, a federal law was enacted which requires employers of more than 50 workers to provide
up to 12 weeks of unpaid leave in the event of a family medical condition. This law is commonly
known as FMLA.

POLICY:
I.    Eligibility
      Associates who have worked at least 1,250 hours in the past twelve months and who have
      been employed by Stride Rite for at least one year are eligible to take up to 18 calendar
      weeks of Family and Medical Leave in any twelve month period. A portion of this Leave may
      consist of paid time off in the form of any available disability/vacation/sick/personal or floating
      holidays, which may be used concurrently with the Family and Medical Leave. Otherwise, the
      Family and Medical Leave is unpaid.

II. Types of Family and Medical Leaves

      Associates may qualify for any of three types of Family and Medical Leaves. Throughout this
      policy, the term “Family and Medical Leaves” refers to any of these three types of leaves:

      A. Birth, Adoption and Child Care Leave

     An associate may take a Birth, Adoption and Child Care Leave to care for the associate’s
     newborn, newly adopted child or newly placed foster child. If the associate elects to take a
     Birth Leave, the leave shall run concurrent with the commencement of short-term disability and
     in no instance should exceed 18 calendar weeks. The leave must be completed within 12
     months of the child’s birth, adoption or foster care placement.

      B. Family Member Leave

      An associate may take Family Member Leave to care for a seriously ill family member -
      spouse, child, parent or spouse’s parent. The illness must be a “serious health condition”
      within the meaning of the FMLA. In summary a “serious health condition” means a physical
      or mental condition that involves inpatient care or continuing treatment by a health care
      provider. If the leave is for care of a child, the child must be under 18 or unable to care for
      himself/herself due to a mental or physical disability.

      C. Personal Medical Leave

      An associate may take a Personal Medical Leave for the associate’s own illness or injury that
      makes the associate unable to perform his/her job. The illness or injury must also meet the
      requirements of a “serious health condition”.

      In these instances, the leave shall begin as of the first day of disability and will run
      concurrently with the short-term disability period.




                                                                                                 January 2005
HUMAN RESOURCES                                                                          Policy 2-039

SUBJECT: Leave of Absence (cont.)
Family and Medical Leave may be taken over an intermittent period when necessary for planned
medical treatments for an associate or a family member. An associate may also elect a reduced
work schedule following the birth, adoption or placement of child, provided such an arrangement
is approved by his or her department. If a short-term illness or disability requires an associate to
work a restricted or reduced schedule, partial workdays are tallied as one calendar day when
determining the length of a leave.

If the Family and Medical Leave extends beyond a total of 18 calendar weeks, eligible vacation
for the year in which the leave ends will be prorated.

Associates will begin a new 18-calendar week period of Family and Medical Leave for each
separate and unrelated instance. In order to assure consistency throughout the Company, Stride
Rite’s Human Resources Department will be responsible for determining relatedness of cases
and otherwise administering the Family and Medical Leave program.


PROCEDURE:

♦   Associates must provide 30 days notice of the need for the Family and Medical Leave in
    writing to their supervisor if possible. A request must be submitted in writing within one week
    of the start of an unexpected leave.

♦   A Request for Leave of Absence form must be completed and turned in to Human Resources
    accompanied by proper documentation as outlined below.

Medical Certification

♦   Medical certification is required for leaves associated with an associate’s illness or that of a
    family member.

♦   The medical certification should state the nature of the health condition and that the associate is unable
    to work, or that the associate is needed to care for the family member. The certificate should also state
    the length of time the leave is needed. If a time period cannot be established, medical re-certification
    will be required every 30 days.

♦   If the certification is for intermittent medical treatment, the note should state the dates the
    treatment will be needed.

♦   A second or third opinion (at the Company’s expense) may be required by the Company to
    support the need for the leave.




                                                                                                  January 2005
HUMAN RESOURCES                                                                Policy 2-039
SUBJECT: Leave of Absence (cont.)
Intermittent Leave:

♦   An intermittent leave allows an associate to take leave in separate blocks of time when
    deemed “medically necessary.” Appropriate documentation must be submitted every 30 days,
    or as required. An intermittent leave must also be completed within 12 months of the date
    the original leave, paid or unpaid, began.

Reduced Schedule Leave:

♦   A reduced schedule leave allows an associate to return to work on a part-time basis for a
    limited period of time. A reduced schedule leave must be approved by the Human Resources
    Department and the associate’s supervisor, and is contingent on the business needs and
    staffing levels of the department. Approval may be subject to re-evaluation as business
    needs and staffing levels change over time.

Employment Status

♦   Upon return from a Family and Medical Leave, an associate will be restored to his/her original
    position or an equivalent position involving the same or substantially similar duties and
    responsibilities and will have the same pay, benefits and working conditions as the original
    position.

Company Benefits

♦   An associate taking an unpaid Family and Medical Leave will be eligible to continue
    participation in Company benefits during the leave; however, employee contribution
    payments must be made by check directly to Stride Rite. If an associate does not make the
    required premium payments, the health coverage may be canceled until the associate returns
    to work or resumes scheduled monthly payments.

♦   Contributions to personal election benefits such as 401(k), DCAP and ESPP will not continue
    during the leave, but will be re-established automatically upon the associate’s return.

PERSONAL LEAVE
Stride Rite may allow an unpaid leave of absence of up to 30 days for reasons not covered under
the Family and Medical Leave policy. Associates must have at least one year of service to be
eligible for a personal leave.

Personal leave requests will be considered on a case-by-case basis taking into consideration the
associate’s personal circumstances, work performance and the business needs of the
department.




                                                                                       January 2005
HUMAN RESOURCES                                                               Policy 2-039

SUBJECT: Leave of Absence (cont.)


PROCEDURE:
1.      Personal leave should be requested as far in advance as possible. A written request
        outlining the reason for the leave must be submitted to the supervisor.

2.      A Request for Leave of Absence form must be submitted to Human Resources along with
        the appropriate documentation immediately.

3.      Associates are responsible for updating their supervisor and Human Resources of any
        changes that may affect the leave and their expected return to work date.

Company Benefits

Any associate taking a personal leave will be eligible to continue participation in company
benefits during the leave; however, employee contribution payments must be made by check
directly to Stride Rite. If an associate does not make the required premium payments, the health
coverage may be canceled until the associate returns to work or resumes scheduled monthly
payments.

Contributions to personal election benefits such as 401(k), DCAP and ESPP will not continue
during the leave, but will be re-established automatically upon the associate’s return.




                                                                                      January 2005
HUMAN RESOURCES                                                                     Policy 2-041

\
SUBJECT: Short-Term Disability - Store Manager

POLICY:

With proper medical documentation for any short-term illness or disability, an eligible associate
may receive disability pay for up to 90 calendar days at 100% of base salary, and 60% of base
salary for an additional 90 calendar days, after a seven-day elimination period. If a short-term
illness or disability requires an associate to work a restricted or reduced schedule, partial
workdays are tallied as one calendar day when determining the length of a leave.

ELIGIBILITY
All Store Managers who have completed 30 days of continuous employment actively at
work.


PROCEDURE:

♦   A Request for Leave of Absence form must be completed and signed by both the associate
    (if able) and the immediate supervisor, and forwarded to the Human Resources Service
    Center.

♦   Medical certification must be provided to the Human Resources Service Center at least
    seven days prior to a planned leave or within seven days of the start of an unplanned leave.

♦   If medical certification is not received on a timely basis, disability pay may be delayed until
    medical certification is received.

♦   Subsequent medical certification will be required every 30 days beyond the expiration of the
    initial certification. The cost of providing such certifications, if any, will be borne by the
    associate. The Company may, in some cases and at its expense, require a second and
    sometimes a third certification.

♦   All associates must satisfy an elimination period of seven calendar days before disability pay
    begins. The associate may use any available sick/personal or vacation hours in order to be
    paid during this period.

♦   It is the responsibility of the associate to keep their supervisor and Human Resources up to
    date regarding any changes in their condition, which may affect their leave, and of their
    expected return to work date. Failure to do so may result in the interruption of disability pay.

♦   Before an associate may return to work after a medical disability, the associate is required to
    present medical certification that he or she is able to return to his or her job. The certification
    must list any restrictions imposed on the associate for medical reasons and the duration of
    the restrictions. The associate’s supervisor must notify Human Resources when the
    associate has returned to work.




                                                                                            January 2005
HUMAN RESOURCES                                                            Policy 2-041
SUBJECT: Short-Term Disability (cont.)
Company Benefits
Any associate who is approved for STD leave will continue participation in Company
benefits for the duration of the leave. Deductions for all benefits will continue to be
deducted from each paycheck during the leave.

Termination of Employment
If the associate is unable to return to work after the short-term disability period, the
associate may be eligible for benefits under the Long-Term Disability insurance policy
maintained by the Company. In order to be eligible for benefits, the associate must be
currently enrolled in the plan and must initiate an application for long-term disability
benefits with the Company’s long-term disability carrier within 60 days of the end of his or
her approved short-term disability period.




                                                                                   January 2005
HUMAN RESOURCES                                                                 Policy 2-042
\

SUBJECT: Long Term Disability

POLICY:
All Store Managers are eligible to apply for Long-Term Disability coverage to be effective after 30
days of continuous, active employment.

1.      After 180 days of continuous disability, eligible associates may apply to receive a benefit
        from the Long Term Disability Plan. If approved, LTD income is 60% of the salary earned
        prior to the disability up to a maximum of $10,000 per month.

2.      Benefits will be reduced by income an associate may be eligible to receive from Social
        Security, Workers’ Compensation, any other group disability policy or any retirement
        plan.

3.     The LTD benefit is provided on a shared premium basis, with you and Stride Rite each
       paying 50% of the cost. The cost to you is $0.135/$100 of your weekly base pay.

4.     Associate should contact Human Resources at least one month prior to the end of Short-
       term Disability benefits. Claims must approved by our Long Term Disability insurance
       carrier.

PROCEDURE:

1.      Newly hired managers are to complete the enrollment card provided in the Store
        Manager benefits package.

2.      Associates who are promoted to Store Manager will receive an enrollment card from
        Human Resources.

3.      Managers who do not enroll upon eligibility (with 30 days of receipt of the enrollment
        card) must wait until the open enrollment (January 1) to apply.




                                                                                       January 2005
HUMAN RESOURCES                                                                     Policy 2-043
\

SUBJECT: Medical/Dental and Vision Insurance - Store Managers

POLICY:

Store Managers are eligible for medical, dental and vision coverage after 30 days of continuous
employment.

Individual coverage covers the associate.

Family coverage covers:
♦ the associate,
♦ his/her spouse or domestic partner,
♦ unmarried natural children, stepchildren and children placed for adoption with you (who are
   living with you in a parent-child relationship), from birth to age 19, or to age 23 if they are full-
   time students and dependent on you for care and financial support,
♦ children of covered unmarried dependents, and
♦ physically or mentally handicapped dependents over age 19, if there is proper notification
   prior to the dependent’s 19th birthday.



PROCEDURE:

        1.   Benefits/Enrollment packages are sent to new hire Managers from the Human
                Resources Service Center.

        2.   Associates who are promoted to Store Manager and are currently enrolled in the
                Retail B medical plan will be transferred to the Retail A medical plan on the
                effective date of the promotion. The newly promoted Manager will receive a
                Summary Plan Description for the Retail A Plan and enrollment information for
                dental, long-term disability and vision insurance. These additional benefits will
                become effective the first of the month following receipt of the enrollment forms in
                the Human Resources Service Center.

        3.   Enrollment applications are to be completed and returned to the Human Resources
                Service Center within thirty days of the date the benefits package was sent to the
                associate.

        4.   Identification cards for medical insurance and vision insurance will be mailed to the
                associate’s home address. There is no dental Identification card.

        5.   Associates are required to pre-pay their medical, dental and vision contributions for
                30 days, which allows for 30 days of coverage after termination of employment.




                                                                                            January 2005
HUMAN RESOURCES                                                                Policy 2-043
SUBJECT: Medical/Dental and Vision Insurance - Store Managers (cont.)
      6.   Associates who do not enroll at the time of initial eligibility may enroll during the
              annual open enrollment period from December 1 - December 15, with a January
              1st effective date. Associates may be eligible for a Special Enrollment Period if
              they have had a change in family status, i.e., birth, marriage, or loss of coverage.
              Changes will become effective on the date of change in family status.

      7.   All associates with questions should call the Human Resources Service Center at 1-
               800-304-1266.




                                                                                       January 2005
HUMAN RESOURCES                                                               Policy 2-044
\

SUBJECT: Medical Insurance - Assistant Managers and Full Time Sales
Associates

POLICY:

All Assistant Managers and Full Time Sales Associates scheduled to work a minimum of 32 hours
per week are eligible for medical coverage after 90 days of continuous full time employment.

Individual coverage covers the associate.

Family coverage covers:
♦ the associate,
♦ his/her spouse or domestic partner,
♦ unmarried natural children,
♦ stepchildren and children placed for adoption with you (who are living with you in a parent-
   child relationship), from birth to age 19, or to age 23 if they are full-time students and
   dependent on you for care and financial support,
♦ children of covered unmarried dependents, and
♦ physically or mentally handicapped dependents over age 19, if there is proper notification
   prior to the dependent’s 19th birthday.

Coverage is provided by CIGNA Healthcare.


PROCEDURE:

1.      Newly hired Assistant Managers and Full Time Sales Associates are eligible to enroll in
        the Plan effective ninety days from the date of hire. Benefits packages are sent from the
        Human Resources Service Center.

2.      Associates who are promoted to Assistant Manager or Full Time Sales Associate will
        receive a benefits package with all related information from Human Resources. If the
        associate has completed three months of continuous service, benefits will become
        effective the first of the month following receipt of the enrollment forms in the Human
        Resources Service Center.

3.      All enrollment applications are to be completed and returned to the Human Resources
        Service Center within thirty days of the date the benefits package was sent to the
        associate.

4.      Identification cards will be mailed to the associate’s residence.

5.      Associates will be required to pre-pay their medical contributions for 30 days, which
        allows for 30 days of coverage after termination.




                                                                                      January 2005
HUMAN RESOURCES                                                               Policy 2-044

SUBJECT: Medical Insurance - Assistant Managers and Full Time Sales
Associates (cont.)
6.   Associates who do not enroll at the time of initial eligibility may enroll during the annual
     open enrollment period from December 1 - December 15, with a January 1st effective
     date, unless there has been a change in family status, i.e., birth, marriage, or loss of
     coverage. Changes will become effective on the date of change in family status.

7.   All associates with questions should call the Human Resources Service Center.




                                                                                     January 2005
HUMAN RESOURCES                                                                  Policy 2-045
\

SUBJECT: Basic Life Insurance and Accidental Death and Dismemberment

POLICY:

Active full-time associates are eligible for life insurance and AD&D coverage. The benefit amount
depends upon the associate’s annual base salary. In the event of death from an accident, the
AD&D benefit is equal to the associate’s basic life insurance up to a maximum of $600,000. If an
accident results in loss of a limb or eyesight, but not death, the associate can receive a pro-rated
benefit amount.

    Annual Salary                          Insurance Benefit*
    Less than $15,000                      1x Annual Salary
    $15,000, but less than $20,000         1 1/2 x Annual Salary
    $20,000, but less than $30,000         2 x Annual Salary
    $30,000 or more                        3 x Annual Salary up to $600,000

*Rounded to the next highest $1,000

The amount of the associate’s basic life insurance increases automatically when his/her annual
salary increases.

ELIGIBLITY:

Store Managers - after 30 days of continuous full-time employment

Assistant Managers and Full Time Sales Associates - after 90 days of continuous full-time
employment


PROCEDURE:

      1. Eligible associates are to complete an Enrollment Form provided in their benefits
         package, and return the completed form to the Human Resources Service Center.

      2. The Company pays the entire premium for these coverages. A beneficiary
         must be designated on the enrollment form and it is the responsibility of
         the associate to keep the beneficiary information up to date. Beneficiary
         Change forms are available in the Human Resources Service Center.

      3. Federal regulations require that any associate who participates in a company-paid life
         insurance benefit plan, valued in excess of $50,000, must pay income tax based on
         federally mandated premiums for the benefit value in excess of $50,000.




                                                                                         January 2005
HUMAN RESOURCES                                                                  Policy 2-046
\

SUBJECT: Optional Supplemental & Dependent Life Insurance (Group
Universal Life)

POLICY:
Active full time associates and/or the spouse and children of eligible associates are eligible to
participate in this associate-pay-all plan, subject to certain age requirements. The effective date
is upon approval of coverage. Associates pay the full cost of this insurance and may contribute to
an optional cash accumulation account through payroll deduction.



PROCEDURE:

♦   New hires who apply for coverage within 30 days of hire date may be eligible for coverage
    without evidence of insurability.

♦   If an associate does not enroll within 30 days of hire date, he/she may enroll at any time, but
    will have to submit evidence of insurability prior to approval for coverage.

♦   Premiums will be paid through payroll deductions.

♦   Enrollment forms and information on coverage are available from Human Resources.




                                                                                         January 2005
                                                                           \
HUMAN RESOURCES                                                                  Policy 2-047


SUBJECT: Employee Savings and Investment Plan 401(k)

POLICY:
Associates are eligible to participate in The Stride Rite Corporation Employee Savings and
Investment Plan on the first day of any month after they have attained 21 years of age, completed
one year of employment at Stride Rite and completed 1,000 hours of service in the consecutive
12-month period following their date of hire. If 1,000 hours is not reached within their anniversary
year, associates will be eligible for participation in the next Plan year in which they reach 1,000
hours.



PROCEDURE:

♦   New associates may rollover their balance from a previous employer’s qualified plan into The
    Stride Rite Employee Savings and Investment Plan at any time.

♦   Eligible associates may begin contributing to the plan through payroll deduction on the 1st of
    any month following one year of service.

♦   The plan administrator will send an enrollment notice to associates who are nearing one year
    of service.

For details regarding the Employee Savings and Investment Plan, please contact the Human
Resources Service Center at 1-800-304-1266.




                                                                                        January 2005
HUMAN RESOURCES                                                                    Policy 2-048
\

SUBJECT: Retirement Income Plan

POLICY:

An associate is eligible to participate in The Stride Rite Corporation Retirement Income Plan after
one year of continuous employment in which he/she works at least 1,000 hours. If an associate
works 1,000 hours during the first twelve months of employment, his/her date of participation
would be the first of the month coincident with or following his/her first year of service. Otherwise,
date of participation would be the January 1 following the calendar year in which an associate
works 1,000 hours.

The cost of the Retirement Income Plan is paid by the Company.

Eligible associates will be 100% vested after five years of service in which they work at least
1,000 hours with the Company.

Vested associates may begin to receive the retirement benefit at their normal retirement date at
age 65, or after 5 years of service if hired after age 60; or at early retirement age at 55 with 10
years of service.

In the event a vested associate becomes totally disabled while employed and meets certain
additional criteria set forth in the Plan, the Plan may pay benefits to the associate. In the event of
a vested associate’s death, the Plan may pay benefits to his or her beneficiary.

The associate’s retirement benefit is based on the annual salary, the years of service and the age
of the associate at the time of retirement. There are several payment options from which to
choose, and the benefit is paid on a monthly basis.

The Plan alone determines eligibility and benefits. For the governing terms, see the Plan. For a
summary of its provisions, see the Summary Plan Description.


PROCEDURE:

♦   The Company will automatically enroll the eligible associate in the plan. No enrollment form
    is necessary.




                                                                                           January 2005
HUMAN RESOURCES                                                                   Policy 2-049


SUBJECT: Employee Stock Purchase Plan

POLICY:
Associates working a minimum of 20 hours per week are eligible to participate in the Employee
Stock Purchase Plan if actively employed for at least 30 consecutive days. The Plan is in effect
for six-month periods, beginning on January 1 and July 1 each year.



PROCEDURE:

♦   Associates may enroll to participate in the Plan prior to the beginning of any offering period
    (January 1 or July1).

♦   An associate may elect to have deductions of 2% to 10% (in 1% increments) of gross
    earnings.

♦   At the end of each offering period, an associate’s payroll deductions during that period will be
    used to purchase shares of stock at a minimum discount of 15%. If an associate has not
    withdrawn from the Plan, any remaining withholdings will be carried over into the next offering
    period.

♦   By notifying the Human Resources Service Center in writing, an associate may withdraw from
    the plan at any time and receive a full refund of all withholdings the current offering period.




                                                                                         January 2005
HUMAN RESOURCES                                                                   Policy 2-050
\

SUBJECT: Educational Assistance

POLICY:

All full-time associates who are scheduled to work a minimum of 32 hours per week and have
completed six months employment with the Company are eligible for the Educational Assistance
Program. Courses must be business-related and taken at an accredited education institution.
Prior to registering for a course, an associate interested in educational assistance should initiate
a discussion with his or her supervisor. The performance review/development planning meeting
is the optimum time.

Upon successful completion of the course, with a grade of "C" or better for undergraduate
courses and grade “B” or better for graduate courses, the associate will be reimbursed 100% for
tuition, registration, lab, books, library and graduation fees. Reimbursement will be made for up
to two approved courses per semester (6 per calendar year) up to an annual maximum of $2,500
for undergraduate courses and $4,500 for graduate courses.

Attendance of courses must be on the associate’s own time and must not interfere with the
         s
associate' job responsibilities.


PROCEDURE:

♦   An application form for Educational Assistance must be completed by the associate and
    approved within 4 weeks of the start date of a course. The application must be signed by
    the supervisor and forwarded to Human Resources for approval. Associates will be notified
    of course(s) approval or denial by the Training Specialist.

♦   Associates must notify the Training Specialist immediately if an approved course is canceled
    and a substitute course is being taken.

♦   Tuition reimbursement will not be given to an associate who qualifies for educational benefits
    under the G.I. Bill. If an associate is receiving other educational assistance, Stride Rite will
    reimburse 100% of the remaining balance. The associate is required to submit receipts
    showing amount of other assistance paid.

♦   Reimbursement may also be made for elective courses which satisfy degree requirements.
    However, electives involving sports, games or hobbies will not be approved.

♦   Under this program, an associate who leaves the Company prior to the reimbursement of an
    approved course will not be reimbursed and the Company will not be obligated to make any
    further payments.




                                                                                          January 2005
HUMAN RESOURCES                                                                Policy 2-050

SUBJECT: Educational Assistance (cont.)

REIMBURSEMENT:

♦   Reimbursement will be made only if the associate meets the eligibility requirements and the
    course satisfies the policy requirements.

♦   Two copies of the grade transcript, proof of payment to the college and an official itemized
    listing of the cost of tuition and fees must be submitted to Human Resources within 30 days
    of course completion.

♦                                                 s
    Reimbursements will be mailed to the associate' home.

                        s
While it is the Company' present intention to continue the program indefinitely, the Company
reserves the right to amend or terminate its offer of educational assistance.




                                                                                       January 2005
HUMAN RESOURCES                                                                 Policy 2-051


SUBJECT: Associate Discount on Purchases

POLICY:
The Stride Rite Corporation provides all active retail associates and retail associate’s immediate
family members with the opportunity to purchase Company products at a discount. Immediate
family is defined as spouse or dependent children living in the same household. Purchases may
be made at a Corporate owned retail store, Outlet store or through the Company store.

    ♦   Stride Rite Stores: In store discount is 20% off current price.

    ♦   Outlet Stores: In store discount is 20% off current price.

    ♦   Company Store: Purchase price is wholesale cost plus applicable freight and paid
        through a payroll deduction.

All associate purchases performed at a retail location must be posted to an employee customer
file and transacted through Store Management personnel. This applies to all Stride Rite
Corporation associates, corporate and field, regardless of where they live.

Company store purchases will ship directly to the associate’s home only; no other address is
acceptable including PO boxes. Incomplete orders will not be processed. Once an order is
placed it can’t be cancelled.

Purchases made through the Company store may not be returned or exchanged in the Company
store or any Retail store. All purchases from the Company store are final sale.

Associate purchases made at a Corporate owned store may be returned if the purchase is
returned within the posted return policy and transacted through Store Management
personnel.

Associates may not resell shoes at a profit that were purchased with an
associate discount.
Below are examples of substantial savings through the benefit of ordering from the company
store:

Purchased From Style Name        Retail Price    Employee Pays Savings
Company Store          Marti             41.00          19.50                     21.50
Outlet Store           Marti             41.00          22.49                     18.50
Stride Rite Store      Marti             41.00          32.80                      8.20




                                                                                        January 2005
HUMAN RESOURCES                                                                  Policy 2-051
SUBJECT: Associate Discount on Purchases (cont.)


PROCEDURES:
Retail Store Purchases:

♦   Associates are encouraged to make purchases in the store in which they work or through the
    Company store.

♦   Retail associates cannot ring in their own sale. Violation of this procedure may result in
    associate termination.

♦   Associates purchasing merchandise from a store other than the store they work in must
    present their latest paycheck stub indicating that associate discount privileges are allowed.

♦   Stride Rite Lexington associates must present their corporate ID to receive a discount.

Company Store Purchases:

♦   Purchases to the Company store are placed through the retail store POS system to
    COMPANY STORE. The following information is required to process the order:
       Associate Name
       Associate Home Address
       Employee Number
       Footwear Brand Name (ex. Tommy, Keds, Sperry, Stride Rite)
       Footwear Stock Number
       Footwear Size
       Footwear Width
       Footwear Description
       Quantity per pair

♦   Each associate order to the Company Store must be on a separate email. Do not
    consolidate associate orders.

♦   Company store purchases will arrive in approximately two weeks.




                                                                                         January 2005
HUMAN RESOURCES                                                                  Policy 2-052
\

SUBJECT: Scholarship Programs

POLICY:

Scholarship programs are available to the children/dependents of Stride Rite associates and to
Stride Rite associates pursuing a two- or four- year college degree.

The Stride Rite Corporation Scholarship
The Stride Rite Scholarship was established to help Stride Rite associates meet the costs of
higher education for their children/dependents. The Two/Ten Foundation administers The Stride
Rite Corporation Scholarship program.

Eligibility:

♦   Applicants must be the child (natural, step or adopted) or dependent of a Stride Rite
    associate or of the unmarried partner* of a Stride Rite associate who is directly employed by
    The Stride Rite Corporation and has been for at least one year (includes associates at all
    Company facilities, including the Children’s Centers, Company-owned retail stores and
    leased footwear departments).

♦   Applicant must be a high school senior planning to pursue a 2- or 4-year undergraduate
    degree at an accredited college, vocational/technical institute, nursing or business school.

• Applicants must demonstrate academic achievement, personal promise and financial need.


Two/Ten International Footwear Foundation Scholarships
The Two/Ten International Footwear Foundation Scholarship Program was established in 1969 to
provide need-based scholarships to people in the footwear, leather and allied industries. The
program is designed to help employees in these industries and their children meet the cost of
higher education.

Eligibility:

♦   Applicants must be the child (natural, step or adopted) or dependent of a parent/ guardian
    who has worked in the shoe, leather or allied industries for at least one year or be a student
    working part-time for Stride Rite who plans to work at least 500 hours in the year before the
    scholarship would be used.

♦   Applicants may be high school seniors, or college freshman, sophomores or juniors who
    graduated from high school within the four years prior to the year the scholarship would be
    used.




                                                                                        January 2005
HUMAN RESOURCES                                                                  Policy 2-052
Scholarship Programs (cont’d)

♦   Applicants must be planning to earn a 2- or 4- year undergraduate degree at an accredited
    college, vocational/technical institute, nursing or business school.

♦   Applicants must demonstrate academic achievement, personal promise and financial need.


The Oliver B. Ross Memorial Scholarship
The Oliver B. Ross Scholarship was established to help associates at licensed Stride Rite dealer
stores meet the costs of higher education for their children/dependents. Through the Oliver B.
Ross Scholarship, Stride Rite honors Mr. Ross for his dedication to the children’s footwear
industry and for his extensive work with the Company and its many dealers.

Eligibility:

♦   Applicants must be the child (natural, step or adopted) or dependent of a parent/guardian or
    unmarried partner* of a Stride Rite retail store owner (dealer) or is employed by a Stride Rite
    retail store which is independently owned and operated (dealer) or who is employed in a
    children’s shoe department in a department store that sells Stride Rite shoes and has been
    for at least one year.

♦   Applicants must be planning to earn a 2- or 4- year undergraduate degree at an accredited
    college, vocational/technical institute, nursing or business school.

♦   Applicants must demonstrate academic achievement, personal promise and financial need.


*The Stride Rite Scholarship program and the Oliver B. Ross Scholarship program recognizes
children of unmarried partners as dependents in instances when the parent’s unmarried partner,
not the parent, is employed by The Stride Rite Corporation or by the dealer store respectively.


For additional information and applications for these scholarships contact Corporate
Communications or the Two/Ten Foundation.




                                                                                         January 2005
HUMAN RESOURCES                                                                  Policy 2-053
\

SUBJECT: Direct Deposit

POLICY:
All associates may elect direct deposit if their bank participates. At the request of the associate,
pay will be automatically deposited in his/her account on payday. An associate’s total pay can be
deposited into a checking account, a savings account, or both.


PROCEDURE:

♦   A voided check must be attached to a Payroll Direct Deposit Form and sent to the Payroll
    Department for direct deposit into a checking account.

♦   A deposit slip must be attached to a Payroll Direct Deposit Form and sent to the Payroll
    Department for direct deposit into a savings account. The associate must call their bank and
    obtain the ACH routing number. The ACH routing number must be written on the Payroll
    Direct Deposit Form.




                                                                                        January 2005
                                                                            \
HUMAN RESOURCES                                                                   Policy 2-055


SUBJECT: Child Care Resource and Referral

POLICY:
Stride Rite has a contractual arrangement with the Work/Life Benefits referral service. The child
care and school age components of the program can locate licensed day care, before and after
school care and care for school and summer vacations. Elder care referrals can be made in any
city in the continental United States. Assistance in finding local resources and services for pet
care and college planning and scholarship information is also available.

Any full time associate of the Stride Rite Corporation or its subsidiaries may use this free service.
(It is the associate’s responsibility to select, monitor and pay for the child care).



PROCEDURE:

♦   When hired, all eligible associates will be given information describing the services of
    Work/Life Benefits in the Benefits Outline.

♦   Any associate or immediate family member who wishes to use this service should call a Care
    Consultant at Work/Life Benefits ACCOR Services at 1-800-628-5437.




                                                                                          January 2005
HUMAN RESOURCES                                                                   Policy 2-056


SUBJECT: Dependent Care Assistance Plan (DCAP)

POLICY:

Stride Rite’s Dependent Care Assistance Plan enables associates to take advantage of current
IRS legislation which allows associates to pay for certain dependent child and adult care
expenses on a pretax basis. The Plan is designed to allow working parents to save on income
taxes by reducing taxable income.

Active associates who are regularly scheduled to work a minimum of 20 hours per week are
eligible to participate. If an associate is married, their spouse must also be working at least 20
hours per week, or he/she must be disabled or a full time student.

ENROLLMENT:

♦   Associates are eligible to enroll in the DCAP within 30 days of their date of hire or within 30
    days of a change in family status, such as getting married, getting divorced or birth/adoption
    of a child.

♦   Associates who do not enroll for the above reasons may enroll during the Open Enrollment
    period each December.

♦   Participants in the Plan must re-enroll each year.

For details regarding The Dependent Care Assistance Plan, please contact the Human
Resources Service Center. Copies of the Summary Plan Description are available in Human
Resources.




                                                                                          January 2005
                  Kristen Daniels
                  1364                       August 05


                  23,772             123.9
                                    116.3%
                                         %          30
 19,181
74,514            82,540            110.8%

Excellent sales


2.0               1.80              5
2.0               1.89              5

pretty good , need to work on asp and accessories



 8% $1224         5.15%            0
8% $4062        4.92%         00
you beat the stores average, but came no near the points


                                        n                   0
                                                    y       5
                                                                   5
                                                                02.5
                                                                  0
                                                                 5
                                                                2.5
                                                                3
                                                                5

                                                        5
                                                                            68




                                                        Kristen needs to focus more on the

 customers needs. She needs to greet sooner, practice 6 CSI steps; follow up on greeting,
 follow up with inquiring questions as to what they are lloking for
 present asp’s and accessories. these actions will improve her sales, upts, and accessory sales.
Kristen needs to follow up on filing store docuements ie) shipments, instead of allowing them to be

left on the counter. AS an assistant, no paperwork should be unfinished, or unfiled. This includes

 morning reports, deposit log sheets, returns or no sale receipts, goal calendars, daily, weekly
or monthly sales clipboards, and timesheets.




                                       Jim Hebert                     Sept 24,2005
STORE MAINTENANCE                                                               Policy 6-001

SUBJECT: Daily Maintenance

POLICY:

Proper care and maintenance of your store will keep it looking its best for many years. Customers judge
a store by its appearance. In order to assist you in keeping your store looking good a list of maintenance
procedures is included in this policy. The information listed in this guide has been obtained from the
leading manufacturers of the services listed.

Page two of this policy is the contact guide of who to call for store maintenance issues. The vendors
listed have been chosen from competitive bids and are the required vendors. No exceptions to the
approved vendors are allowed. If there are issues with a listed vendor contact the Store Design &
Construction department to discuss the problem.

The policy for service calls is as follows: all service work is scheduled in advance. Before making an
emergency response call (same day service) consider if it meets any of the following conditions.
   • Unsafe condition for associates or customers
   • Broken ladder
   • Broken pipe/flowing water
   • Sparking electric fixtures
   • Fire – catastrophe response/clean-up
   • Lock or door/grill problem that prevents the store from opening or closing
   • Termination or resignation, with no notice, of key holder (all rekey requests must be approved by
        your District manager)
   • HVAC failure

If you make an emergency service call notify your District Manager with in 24 hours. Stride Rite pays a
30-50% service charge for emergency or off-hour calls. The Store Design & Construction department
must be notified by email when an emergency/same-day service call is made, no exceptions.

Please remember that the proper use of the service vendors will keep your stores safe and inviting to the
customers. Always think of the bottom line when making a service request.




                                                                                       February 2005
STORE MAINTENANCE                                                               Policy 6-002

PROCEDURE:

                SERVICE                                  WHO TO CALL

                1) Handy-man repairs                     1) A+ Quality: 866-822-9988
                (Carpentry, plumbing,                            or
                Tile & ceiling repair, fixtures          FacilitySource if A+ is not reachable
                & Ladders) NO ELECTRIC OR                in an emergency. 800-896-9000x2
                LOCK.

                2) Lamp replacement. ONCE                2) Lighting Systems 800-622-2852
                A MONTH ONLY

               3) Electrical/Sign                        3) Network Service: 800.848.4818

                4) Heating & Air-conditioning            4) FSN 1- 800-453-5353

                5) Store front, door, grille or          5) Cornell: 800.882.6773
                Gate, locksmith services
                (REKEYS by District Manager
                approval prior to making
                an appointment with Cornell)

                6) Floor cleaning. 4 TIMES               6) AVID 1-561-881-5402 (Armstead,
                A YEAR                                     Leary, Dehnoo, Bennett).
                                                           Clean Systems 781-447-
                                                           5885(Fulford, Horvath, Hall, Love)
                                                           US Maintenance 800-355-4000
                                                            (Miceli, Broussard, Jennings, Atlanta)

               7) Glass/Mirror repair                    7) Mass Glass: 800.SHATTER
                                                         (Option #2: 800.742.8837)

                8) Vacuum cleaner                        8) Vacuum Systems Management:
                                                         800.997.8227 (see policy)

                9) Pest control                          9) Terminex: 800.238.6189


                10) Gumball Machine                      10) SEE POLICY

If your store has not reached its first year anniversary it is possible that many items are covered under
warranty. Items such as locksmith services, broken glass, vacuum cleaner, pest control and lamps go
through the list above. Electric, HVAC, carpentry, handyman service may be warranty items, contact the
Store Design & Construction department prior to calling for service. Log all service calls on attached Log.




                                                                                      February 2005
STORE MAINTENANCE                                                               Policy 6-003


SUBJECT: Standard Maintenance Procedures

PROCEDURE:

Only the vendors listed under Policy 6-002 are approved. There are no exceptions without the approval
of the Store Design & Construction department.

All maintenance calls must be noted in the service call log. This will assist in correcting any quality or
service issues that may arise.

After work is completed, sign the company’s work order form and stamp with your store stamp.

If work is not completed in a satisfactory manner, do not sign approval sheet and contact the
vendor’s ‘800’ number and report deficiencies. If the problem is not resolved, contact the Store
Design & Construction department.

EMERGENCY WORK

Contact the proper ‘800’ number listed on the vendor contact page. Before requesting any work as an
emergency, consider if the problem can wait for normal business hours. Call all work requests as early in
the day as possible to avoid overtime charges. If in doubt about the situation contact your District
Manager. The Store Design & Construction department must be notified about any requests for service
that you have classified as an emergency or for same day service.

    1.      Repairs requiring immediate attention during the evening or on a weekend are considered
            emergency work. Items such as a grill will not open or close, leaking pipes, smoking light
            fixtures are examples of emergency situations (see Policy 6-001 for additional examples).
    2.      Be sure to call a service company specialized in the specific problem area and schedule the
            work.
    3.      As soon as possible, contact the Store Design & Construction Department, emergency work
            only, and follow the above.

LOCK CHANGES

Key change requests must go to District Manager for approval. Issue keys only to Stride Rite associates
authorized to open or close the store. Do not give a key to every associate. Stores are limited to four (4)
keys. If a key holder gives notice they are leaving in several days then the lock service must be
scheduled in advance. Emergency (same day) lock service is acceptable for terminations or same day
resignations of a key holder.

For Gumball lock repairs see the gumball policy. Do not contact the locksmith provider.




                                                                                      February 2005
 STORE MAINTENANCE                                          Policy 6-003

 Service Call Log

Date       Problem            Vendor   Comments   Initial    Resolution    Completion
                                                                             Date




 When calling include:
    1. Your name
    2. Store Name and Number
    3. Store Phone Number
    4. Brief Description of problem




                                                                February 2005
STORE MAINTENANCE                                                                 Policy 6-004


SUBJECT: Floor Maintenance

PROCEDURE:

CARPET:
Daily vacuuming is the most important step you can take to maintain the store’s carpet. More frequent
vacuuming may be necessary if a spill occurs during the day or if a safety issue arises (i.e. spilled
staples). Also, any spills must be dealt with immediately! Blot the spill and if needed pour water directly
on the spill and blot all the fluid up with a clean cloth or paper towel (do not rub). Routine carpet cleaning
is usually necessary three times a year.

Any spills on the carpet must be attended to immediately, before the spill has a chance to set.

NOTE: If you have loop carpet and a snag occurs, cut the snag as far down into the carpet as possible
with sharp scissors to eliminate further damage or runs. Contact the Store Design & Construction
department before runs become excessive.

All carpet cleaning is through national contracts (see approved vendor list for your district contact) three
times per year. Local or non-listed carpet cleaning companies are not authorized. Contact the Store
Design & Construction department if there are any problems with the cleaning arrangement.

You will be contacted by the authorized vendor to schedule your cleaning. If there is an emergency
contact the vendor directly.
There is only one approved method of carpet cleaning. All stores must use Steam Extraction. The
following methods are not allowed: dry foam, dry cleaners, and rotary brush bonnet (except for certain
conditions). In addition, the cleaner is not to use shampoo in the solution. The final “do not” is the carpet
company may not use any maintenance chemicals with optical brighteners. The extraction method of
cleaning is the only way to insure the dirt and cleaning solutions are removed from the carpet. All stains
must be treated with a pre-spray. Do not have the carpet “scotch guarded”.

If your store has a wood/vinyl or tile floor advice the cleaning company to make sure this flooring is
serviced at the same time, it is in the contract.

WOOD VENEER AREAS/WOOD FLOORING:
Regular cleaning of all surfaces will prevent build up of dirt and grime. When cleaning wood surfaces, do
not: submerge with water or use ammonia based or abrasive products. This will remove the protective
finish. Murphy’s Oil Soap will work well (spray). Wipe spills immediately. Never use glass cleaner on
wood or painted surfaces.




                                                                                         February 2005
STORE MAINTENANCE                                                              Policy 6-004

SUBJECT: Floor Maintenance (cont.)

ADDITIONAL CLEANING TIPS – FABRIC GRAIN PATTERNS
These patterns, like all upholstery fabric and vinyl’s, require a regular scheduled cleaning program. A
thorough cleaning should be administered on a weekly or monthly basis depending on use and exposure
to dirt and or staining agents. It is important that efforts begin immediately after a spill to remove any
potential staining agent. It is advisable to clean these products as soon as the first signs of dinginess
occur. Otherwise delaying cleanup will require a much greater effort to restore the product to its original
appearance.

Regular cleaning requires the use of a mild cleaner such as Mr. Clean ™ diluted with water. In situations
where the vinyl has not been washed regularly and there is a buildup of dirt, stronger vinyl cleaners such
as Simonize Tuff Stuff ™ or Turtle Wax Vinyl/Fabric Cleaner are recommended.

In order for the above listed cleaning solutions to work effectively on stubborn stains allow time for the
cleaning solution to soak in, do not flood the material. Remove the cleaning solution before it has had
time to dry. Regardless of the type of cleaner used, it is necessary to finish up with a thorough rinse
using fresh water on a clean sponge or rag. A soft bristled nylon or natural fiber brush can be used to
remove built up dirt and staining agents.

Finally, remember that all of our fabric grain vinyl’s require a greater cleaning effort to maintain than
comparable smooth grain vinyl. These products will provide an attractive and durable alternative to
conventional fabrics and vinyl, if properly cared for.

.




                                                                                      February 2005
STORE MAINTENANCE                                                               Policy 6-005

SUBJECT: General Maintenance

PROCEDURE:

STAIN REMOVAL METHODS:
For upholstery and carpet: pre-mix the following solutions in separate spray bottles and number each.
Use each of the cleaning agent combinations on the stained areas in the order indicated until each stain
is removed.

    Apply a small amount of dry cleaning solvent (available at grocery and drug stores). Use small
    amounts to prevent any possible damage to sizing, backing or stuffed material. Do not use gasoline,
    lighter fluid or other flammables.

    Mix one teaspoonful of white neutral detergent (a mild liquid detergent containing no strong alkali’s or
    bleaches) with one cup of lukewarm water. A good alternative is Oxiclean.

    Mix ½ cup of white household vinegar with 2/3 cup of water.

    Mix solution of powdered enzyme laundry detergent following the directions on the label or box.
    Allow the solution to remain on the stain for the length of time recommended by the manufacturer.

    Contact upholstery cleaning professional.

SPOT CLEANING:
   Flush with water to dilute spill, blot with towel to extract thoroughly.
   Repeat as necessary.

WATER BASED SPOTS:
  Use same procedures as unknown spots.

OIL BASED SPOTS:
(Tar, gum, etc.)
   Apply solvent base spot cleaner to towel and blot thoroughly.




                                                                                       February 2005
STORE MAINTENANCE                                                               Policy 6-005

SUBJECT: General Maintenance (cont.)

PLASTIC LAMINATE:
(NOTE: Avoid hot objects on laminate surfaces)

To keep laminate surfaces looking their best, clean with a damp cloth using a mild, non-abrasive cleaner.
To remove streaks on high-gloss laminate and metal laminate, use a mild glass cleaner.

Acid or alkaline-based cleaners will permanently damage and stain laminate. Never allow these cleaners,
or allow bottles, rags or other items contaminated with these cleaners, to come in contact with laminate.
Examples of such cleaners include:

Drain cleaners                           Some “counter top cleaners”
Ceramic cook top cleaners                Chlorine bleach
Oven cleaners                            Rust removers
Toilet bowl cleaners                     Tub and tile cleaners
Metal cleaners

If you spill such cleaners on the laminate, wipe up the spill immediately and rinse the affected area
thoroughly with water.

STAINS:
Laminate is resistant to most common stains. However, some materials and liquids such as dyes and
pharmaceutical products will permanently stain laminates.

Other stubborn stains include: wood stains, indelible inks, marking pens, cash register inks, newsprint
and food pricing label inks.

To remove or minimize such stains, use full-strength Formula 409 all-purpose household cleaner.
Fantastic all-purpose cleaner or another mild household spray cleaner on the affected area, and allow it
to draw out the stain. Blot with a damp, non-abrasive cloth, then rinse. You can also use solvents such
as denatured alcohol. Follow all directions and warnings on the solvent label because many are
extremely flammable. Citrus-based cleaners also work and do not contain ammonia.

Stubborn or “fugitive” stains that may disappear on their own after a short time or after repeated cleanings
include: food stains, food dyes, coffee and tea stains, glass rings, water marks and fingerprints.

Follow general cleaning instructions for these and other common stains.




                                                                                       February 2005
STORE MAINTENANCE                                                               Policy 6-005
SUBJECT: General Maintenance (cont.)

SCRATCHES AND IMPACT:
Never hammer on the laminate with hard objects, especially near the edges. Heavy impact can result in
chips or cracks in the laminate surface. Sliding ceramic or other hard objects across laminate surfaces
can cause deep scratches or excessive wear to the surfaces.

VINYL SEAT CUSHIONS:
Suggestions for cleaning and care:

Ordinary soil removal: weekly cleaning with warm water and liquid soap (such as Mr. Clean).

Removing unusual stains: remove stains promptly; some stains quickly become permanent and will be
unremovable if allowed to set.

Ball point pen marks: treat immediately with denatured alcohol and a clean cloth.

Grease type stains: these include car grease, wax crayon, tar, oil paint, mustard, lipstick and shoe polish.
Wipe off excess material then go over the area lightly with GOOF-OFF and a clean cloth. Follow with a
mild soap and water solution.

Lacquer type stains: such stains include nail polish. Blot up the excess material at once do not allow it to
dry, then use one of the cleaning fluids as for grease stains followed by surface restoration.

Water base paints: this may be removed with water before the paint dries. Any dried material can be
chipped away with the fingernail.

GENERAL PRECAUTIONS
Some permanent marking pens and dyes can cause stains that are not removable by any method.

Strong solvents like pain remover will permanently damage vinyl. Scouring powder or steel wool may
leave permanent scratches.

Protect upholstery seams, hardware and finished wood and other home furnishings from exposure to
cleaning materials used on vinyl as much as possible.




                                                                                       February 2005
STORE MAINTENANCE                                                              Policy 6-005

SUBJECT: General Maintenance (cont.)

PAINTED WALL SURFACES:
Painted walls can be wiped down from time to time with a damp cloth or sponge to remove surface dirt
and other marks. Any mild (non-ammonia) household detergents can be used with a soft cloth. Do not
use any rough abrasives or glass cleaner. Ammonia based products will ruin any painted surface (glass
cleaner is an ammonia based product).

SEATING:
Vinyl. Upholstered seating should be cleaned weekly with a damp cloth and mild household detergent
such as Formula 409, Fantastic, Mr. Clean.

GLASS/PLEXIGLASS:
Glass surfaces should be cleaned frequently (doors and mirrors daily) with glass cleaner and a lint free
cloth or paper towel to eliminate dust and fingerprints. Plexi glass display pieces should also be cleaned
regularly in the same manner with plexi cleaner (non ammonia base).

WOOD/SILK-SCREENED WOOD:
All wood should be cleaned frequently using wood cleaners such as Pledge or Murphy’s Oil Soap in the
spray bottle only. Do not mix with water. Use damp cloths, never soaked. Wipe wet areas immediately.
Never use ammonia-based products such as glass cleaner. They will remove the finish.




                                                                                      February 2005
STORE MAINTENANCE                                                             Policy 6-006


SUBJECT: Project Request

POLICY:

Do not contact the Store Design & Construction department for work that you would like done in your
store. The following procedure must be utilized.

The attached Project Request form must be utilized for all non-emergency store projects:
   • Carpet replacement
   • Lighting revisions/additions
   • Additional salesfloor fixtures
   • Stockroom revisions/additional shelving

Any work that is non-maintenance or emergency related must follow this policy. Vendors will not process
requests for this type of work until the form has been approved.

The purpose of the work requested should be clearly stated (i.e. carpet replacement, additional shelving,
etc.). The form must be submitted to your District Manager who will forward it to the RVP for their
approval and signature. Once signatures are obtained, the form should be forwarded to the home office,
MD 204N for further review. Requests for work will not be taken over the phone from Stores or District
Managers.

The nature of this form is a means of requesting work that is necessary to keep your store in proper
working order. By utilizing this form, we hope to speed up the turnaround time for assessing repair work
as well as reducing the amount of emergency repairs. The goal here is to use Stride Rite’s resources
wisely and cost-effectively.




                                                                                     February 2005
STORE MAINTENANCE                                                                  Policy 6-006
                                               Project Request


Store number and name:            _____________________________________________

Address:                          _____________________________________________

                                  _____________________________________________

                                  _____________________________________________

Phone number:                     _____________________________________________

Nature of project:                _____________________________________________

                                  _____________________________________________

                                  _____________________________________________

                                  _____________________________________________

Is it a safety issue?             ___ Yes                           ___ No

Why?                              _____________________________________________

                                  _____________________________________________

Benefit to store:                 _____________________________________________

                                  _____________________________________________

                                  _____________________________________________

Is this your first request for this type of repair (or has this been a problem area before)?

                                  _____________________________________________
                                  If yes, date

______________________________
District Manager Signature, date

______________________________
Regional VP Signature, date




                                                                                          February 2005
STORE MAINTENANCE                                                             Policy 6-007

SUBJECT: Lamp Ordering Guide

POLICY:

Lamp orders will only be accepted from each store once a month. Additional requests for lamps, beyond
the first order, will not be accepted. Lamps may only be ordered from the approved vendor. Stores are
responsible for changing their own lamps, unless specific approval has been received from the Store
Design & Construction department.



PROCEDURE:

Helpful Hints:

   1.      Always wear gloves (cotton if possible) when handling lamps. Do not handle metal halide
           lamps without a glove or cloth. The life of the lamp is reduced 50%. Be sure lamps are
           cooled off before handling them.
   2.      When changing light bulbs (lamps), always wipe out interior of light fixture to remove dust.
           This will allow the fixture to operate at maximum brightness. Do not touch socket area with
           hands or cloth.
   3.      Before ordering bulbs/lamps, be sure to check the interior of the light fixture for the maximum
           wattage. Order a bulb of wattage no greater than that shown. Using a bulb of greater
           wattage then intended may cause damage to the fixture or fire hazard.
   4.      Use the attached lamp ordering guide worksheet to place your order with the vendor. You
           may only place one lamp order per month.
   5.      Consider what you are ordering. Do not order more lamps than you need. Check your
           stockroom to ensure you do not already have the lamps in stock. It will save time and money
           if all the replacements are ordered at one time.
   6.      Retain a copy of the order form used as your record of that order. Make more copies of the
           worksheet, as you need them.




                                                                                     February 2005
           LIGHTING
        ORDERING GUIDE




Helping you find the right light for the right site!




             FEBRUARY 2005




                                                       February 2005
               ORDERING PROCEDURES
                          PLACING ORDERS
1. Call Lighting Systems toll free at 1(800) 622-2852 and request
   Customer Service for STRIDE RITE. All Customer Service
   representatives have the same guide and are eager to serve you.

2. Give your name and store number, and identify the items and quantities
you want to order.

3. Ask Lighting Systems for assistance for any unusual bulb types. All
  orders will be   promptly shipped to your store

NOTE: Per Home Office Lighting Systems is authorized to accept only
one order per month.




  IT'S EASY TO CONTACT LIGHTING SYSTEMS
  If you need help with a bulb or have any other questions, please contact us at
      Lighting Systems for assistance, we will help you find the right item:

                                  Phone/FAX
                   Toll Free: 1-800-622-2852 (BULB)
                       Telephone: (215)773-8000
                          FAX: (215)773-9500
                          E-mail: lightingsytems@rumsey.com
                            www.ltgsystems.com




                                                                   February 2005
                         BREAKAGE and RETURNS

Please follow the procedure below if merchandise should arrive
damaged.

1.     Any damage or breakage must be noted on the bill of lading. If possible,
       please note the damage while the carrier is still present. If you have
       concealed damage, please report it within 2 weeks of receiving your order.

2.     Please note the quantity of broken bulbs or the extent of any damages. Please
       do not return broken merchandise. The office will arrange for credit or
       reshipment, whichever is better for the situation.


COMMON BULB SHAPES

FLUORESCENT                                             INCANDESCENT
        T-8 Single Pin Slimline
        T-10 Medium Bi-pin
        T-12 Medium Bi-pin                 PLC-13                     PL-7 PL-9

        T-12 Single Pin Slimline
        T-12 Recessed Double Contact                             PLS-20
                     PL-L40

        T-8 Medium Bi-pin


        U-Bent Lamp

                                        A19     T-6 ½   T-10   F-15     G-16 ½          G-25
G-40




                                                                        February 2005
REFLECTOR & PAR LAMPS



    BR-30 BR-40         PAR-16   PAR-20   PAR-30   PAR-38




                                 PAR-46


       TECHNICAL HOTLINE: 1-800-622-2852 (BULB)




                                                      February 2005
                 LAMP ORDERING GUIDE
     Lamp Type         Description                  Usage          Case Pack Bulb
                             FLUORESCENTS

   F13T5/WW          13 Watt T5 Fluorescent        Under Cabinet
                              Lamp               (Manager’s office)           1
                          .62”W x 21”L
F32T8/TL735/ALT      4’ T8 Fluorescent Lamp         3500K Strips
       O                     1” x 48”               (Back room)              25

PL-L40W/835/RS/IS    40W BIAX Fluorescent      2x2 Parabolic or Wall
                            Lamp              Wash Fluorescent Fixtures      10
                        .62”W x 22.5”L             (Sales Floor)

      PL-           26W Compact Fluorescent     Recessed Fluorescent
C26W/835/4P/ALT             Lamp                    Downlights               10
       O                .62“W x 6.5”L              (Sales Floor)


                                HALOGEN LAMPS

75PAR30/S/HAL/N       75W PAR30 Halogen          Directable Track
      FL               Narrow Flood Lamp       Halogens (Sales Floor)        15
                        3.75”W x 3.6”L

50MR16/FL/40(EX       50W MR16 halogen         Recessed Low Voltage
      N)              Narrow Flood Lamp        Adjustable Downlight          10
                         2”W x 1.9”L                (Entrance)

50PAR20/HAL/NFL       50W PAR20 Halogen         Recessed Downlight
                       Narrow Flood Lamp            (Entrance)               15
                         2.5”W x 3.4”L

   Q50CL/DC          50W T4 DC Base Mini-     Double Contact Bayonet –
                       Cam Halogen Lamp           JD Type, Clear              5
                        .5" W x 2.25" L




                                                                        February 2005
                       DECORATIVE/INCANDESCENT LAMPS

   100A/90/EW          90W Incandescent A-       Decorative Pendant
                             Lamp                Lights/Exhaust Fan          12
                         2.4”W x 4.4”L              (Sales Floor)

 BC60BA9C/F/LL        60W Candelabra Lamp      Decorative Wall Sconce        12
                         .5“W x 4.19”L




BREAKAGE REMINDER

PLEASE ACCEPT ALL SHIPMENTS. If breakage is suspected, please open
the case, count the number of broken lamps, and sign the bill of lading noting the
number of broken lamps while the carrier is still present. Then please call Lighting
Systems Customer Service at 1(800)622-2852 for credit or reshipment.

                Please call Lighting Systems for assistance.
                              1-800-622-2852




                                                                        February 2005
MERCHANDISING                                                                    Policy 4-001


SUBJECT: Store Specific Merchandise Requests

POLICY:
All merchandise requests that are not customer specials should be directed to your District
Manager.

If your District Manager is not able to locate and transfer the requested product to your store, the
request then gets directed to the Home Office.



PROCEDURE:

Email the following information to your District Manager:

    ♦   Vendor name

    ♦   Stock number

    ♦   Description

    ♦   Size and width




                                                                                        December 2004
MERCHANDISING                                                                     Policy 4-004


SUBJECT: PO Redownloads

POLICY:
Internal Vendors: Internal vendor are ASN received, therefore a PO’ is not needed.

Outside Vendors: If you have a PO and it’s not on the pending receipts report, verify the following
before requesting a PO redownload:

    ♦   Verify that the PO was supposed to be shipped to your store. If not, ship it to the correct
        location.

    ♦   Verify that the PO hasn’t already been fully received by checking store receipt paperwork.

    ♦   If the PO has been partially received, there is a 48-hour turnaround before you are able
        to view the PO in your system again. For example, if a PO is partially received on the
            th                                          th
        12 , you will not see the PO again until the 14 .

    ♦   If the above information has been verified, follow the procedure below:



PROCEDURE:

Internal Vendors: ASN receiving is used for all internal vendors, no PO is required.

Outside Vendors: Email the following information to your district’s appropriate Allocation Analyst.
If you do not know your district’s Allocation Analyst, contact your District Manager.

    ♦   Vendor

    ♦   Purchase order number

    ♦   Styles and quantities on the purchase order




                                                                                       December 2004
MERCHANDISING                                                                      Policy 4-005


SUBJECT: Non-scanning UPC’s

POLICY:
Notify the Inventory Control Department immediately upon discovering an UPC that is either
scanning incorrectly, or not scanning at all.


PROCEDURE:

Compile the following information and email the information to the Inventory Control Department.

    ♦   The vendor and description ex: Sam & Libby Down
    ♦   The style number ex: 50031BA
    ♦   The sizes and widths that are not scanning
    ♦   The UPC’s that are associated with those sizes

Indicate if the style can be entered manually, by style, width and size. This is important as a
separate process is used to correct the style when it cannot be entered manually.

To sell an item that is not scanning, first check to see if it can be entered manually by style, width
and size. If this process does not work, compile the following information and email the
information to the Inventory Control Department.

    ♦   The style number that is not scanning ex: 50031BA
    ♦   The vendor and description ex: Sam & Libby Down
    ♦   The size and width of the style that is not scanning
    ♦   The style number of the substituted style
    ♦   The size and width of the substituted style
    ♦   The number of units sold
    ♦   The retail price of the substituted style




                                                                                         December 2004
MERCHANDISING                                                                 Policy 4-006


SUBJECT: Barcode Label Requests

POLICY:
Request barcode labels when they have been removed from a box or damaged, therefore, the
symbol unit is not able to properly scan the UPC on the label.

When prepping for an inventory, forward all requests no later than two weeks before your
scheduled inventory. This allows enough time for the generation of labels and delivery.


PROCEDURE:

Compile the following information for each barcode label needed and email the information to
Tom Tobiassen in Inventory Control.

    ♦   Style ex: 50031BA

    ♦   Name of product ex: Sam & Libby Down

    ♦   Size

    ♦   Width

    ♦   Quantity




                                                                                   December 2004
CONTROL                                                                           Policy 3-002


SUBJECT: Gift Certificates


POLICY:
Gift Certificates are a perfect way to service customers who do not have their children at the store
or as a gift purchase. To ensure a smooth transaction, keep an adequate supply of Gift
Certificates on hand, available in $30, $40 and $50 denominations.

Only Stride Rite Gift Certificates are redeemed as legal tender. Dealer Gift Certificates are not
legal tender and cannot be deposited for cash. Use promo code “Dealer Gift Certificate” in the
POS after you enter the stock number. Retain all Dealer Gift Certificates with your closing
paperwork.

Additional Stride Rite Gift Certificates can be ordered from the Sales Audit department.

Keep all Gift Certificates in a secure locked location in the store, either in the cash drawer, locked
file cabinet or secure locked box.


PROCEDURE:

Selling a Gift Certificate through the POS system:

    ♦   Enter the customer history information in the POS

    ♦   Discard the Gift Certificate customer information tear off sheet.

    ♦   Record the transaction # on the Gift Certificate log (see attached), along with the
        associate’s signature.

    ♦   Press F4, Gift Certificate.

    ♦   Enter the Gift Certificate #.

    ♦   Enter the amount of the Gift Certificate.

    ♦   Mark the Gift Certificate with the purchase date.




                                                                                              April 2005
CONTROL                                                                           Policy 3-002
SUBJECT: Gift Certificates (cont.)
Redeeming a Stride Rite Gift Certificate through the POS system:

    ♦   Use the Gift Certificate tender key when redeeming a Stride Rite Gift Certificate into the
        POS system.

    ♦   Verify that the Gift Certificate is valid.

    ♦   Frank the Gift Certificate as a check.

    ♦   Customer information must be posted to the POS history file.

    ♦   Gift certificates must be listed on the deposit slip along with the checks for the
        corresponding day.

    ♦   Note on the deposit slip that it is a Gift Certificate.

    ♦   When redeeming a Gift Certificate for tender, the maximum amount of cash refunded is
        $15.00.

These files should be reviewed and initialed by the District Manager.

Keep Gift Certificate manual log in store files for 12 months.




                                                                                             April 2005
CONTROL                                                        Policy 3-002
SUBJECT: Gift Certificates (cont.)

                               Gift Certificate Log

                       GIFT
 DATE     DATE     CERTIFICATE               STORE ASSOCIATE
 SENT     SOLD       SERIAL #    TRANS. #       SIGNATURE       DM INITIAL

                    80011451

                    80011452

                    80011453

                    80011454

                    80011455

                    80011456

                    80011457

                    80011458

                    80011459

                    80011460

                    80011461

                    80011462

                    80011463




                                                                      April 2005

				
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