**Exhibit 10.1****2006 PAYLESS SHOESOURCE, INC. STOCK INCENTIVE PLAN****Section 1: Purpose**The purpose of the 2006 Payless Shoesource, Inc. Stock Incentive Plan (the “Plan”) is topromote the interests of Payless Shoesource, Inc. (the “Company”), its Subsidiaries andstockholders by (i) attracting and retaining individuals eligible to participate in the Plan; (ii)motivating such individuals by providing incentive compensation; and (iii) aligning the interestsof such individuals with the interests of the Company’s stockholders.**Section 2: Definitions**The following terms, as used in the Plan, shall have the meanings specified below. Othercapitalized terms shall have the meanings specified in the Plan. a. **“Appreciation Value Award Vehicle”**means an Award type structured to correlatethe realization of gains based on absolute Stock price appreciation. May include butnot be limited to Options, cash-settled stock appreciation rights and stock-settledstock appreciation rights.  b. **“Award”**means an award granted pursuant to Section 4.  c. **“Award Agreement”**means a document described in Section 7 setting forth theterms and conditions applicable to the Award granted to the Participant.  d. **“Board of Directors”**means the Board of Directors of the Company, as it may becomprised from time to time.  e. **“Change of Control”**means Change of Control as defined in Section 11.  f. **“Code”**means the Internal Revenue Code of 1986, and any successor statute, asit or they may be amended from time to time.
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 g. **“Committee”**means the Compensation, Nominating & Governance Committee of theBoard of Directors or such other committee as may be designated by the Board ofDirectors from time to time. To the extent that compensation realized in respect ofAwards is intended to be “performance based” under Section 162(m) of the Code and theCommittee is not comprised solely of individuals who are “outside directors” within themeaning of section 162(m) of the Code, or that any member of one Committee is not a“non-employee director” within the meaning of Rule 16b-3 under the Exchange Act, theCommittee may from time to time delegate some or all of its functions under the Plan toa committee or subcommittee composed of members that meet the relevant requirements.The term “Committee” includes only such committee or subcommittee, to the extent of theCommittee’s delegation.  h. **“Company”**means Payless ShoeSource, Inc., a Delaware corporation, and anysuccessor thereto.  i. **“Covered Employee”**means a covered employee within the meaning of Code section162(m)(3).  j. **“Disability”**means a permanent and total disability which enables theParticipant to be eligible for and receive a disability benefit under the FederalSocial Security Act.  k. **“Dividend Equivalent”**means an amount equal to the amount of cash dividends, ifany, payable with respect to a share of Stock after the date an Award is granted.  l. **“Employee”**means any person employed by Payless ShoeSource, Inc. or any of itsSubsidiaries and classified as a common law employee. Employee does not includeindependent contractors or leased employees from third parties.  m. **“Exchange Act”**means the Securities Exchange Act of 1934, and any successorstatute, as it may be amended from time to time.  n. **“Fair Market Value”**of a Stock, as later defined, means the average of the highand low prices of the Stock on the New York Stock Exchange Composite Transaction Tapeon the date in question, (or if the Stock is not then so traded, the average of thehighest and lowest sale prices of the Stock on the stock exchange or over-the-countermarket on which the Stock is principally trading on such date) or, if no sale or salesof the Stock occurred on such exchange on that day, the average of the high and low
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   prices of the Stock on the last preceding day when the Stock was sold on the exchange.In the event that no sale of the Stock occurred on such exchange or the over the countermarket on that day because the exchange was closed, then Fair Market Value shall be theaverage of the high and low prices of the Stock on the next day the exchange is open fortrading. If Stock is no longer traded on the New York Stock Exchange and if there is nopublic market for the Stock, “Fair Market Value” shall be determined in good faith bythe Committee using other reasonable means. o. **“Full Value Award Vehicle”**means an Award type structured to provide equivalentvalue of a share of Stock based on a ratio of 1:1. Full Value Award Vehicles mayinclude but not be limited to restricted Stock, Stock Equivalent Units and other StockAwards such as unrestricted Stock, restricted Stock unit grants and performance basedshares.  p. **“Incentive Stock Option”**means an Option that is intended to qualify as an“incentive stock option” under Section 422 of the Code and which is so designated inthe applicable Award Agreement. Under no circumstances shall an Option that is notspecifically designated as an Incentive Stock Option be considered an Incentive StockOption.  q. **“Insider”**means any person who is subject to Section 16 of the Exchange Act,and any successor statutory provision, as it may be amended from time to time.  r. **“Non-Qualified Stock Option”**means an Option that is not intended to qualify asan “incentive stock option” under Section 422 of the Code.  s. **“Option”**means an option granted pursuant to Section 4(a).  t. **“Participant”**means any Employee who has been granted an Award.  u. **“Performance Goal”**means with respect to the Performance Measure(s) selected bythe Committee, the goal or goals established by the Committee, for an Award, for aPerformance Period. Performance Goals may vary from Performance Period to PerformancePeriod and from Participant to Participant and may be established on a stand-alonebasis, in tandem or in the alternative.
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 v. **“Performance Measure”**means one or more of the following, either alone or incombination, selected by the Committee to measure individual Participant, Company orone or more operating units, groups or any Subsidiary performance for a PerformancePeriod, whether in absolute or relative terms: cash flow; cash flow from operations;total earnings; earnings per share, diluted or basic; earnings per share fromcontinuing operations, diluted or basic; earnings before interest and taxes; earningsbefore interest, taxes, depreciation, and amortization; earnings from continuingoperations; net asset turnover; inventory turnover; net earnings; operating earnings;operating margin; return on equity; return on assets or net assets; return on totalassets; return on capital; return on investment; return on investment capital; returnon sales; revenues; sales; store for store sales; net or gross sales; income or netincome; operating income or net operating income; operating profit or net operatingprofit; gross margin; operating margin or profit margin; market share; economic valueadded; expense reduction levels; cost of capital; change in assets; stock price; totalshareholder return; capital expenditures; debt; debt reduction; working capital,completion of acquisitions; business expansion; product diversification; productivity;new or expanded market penetration and other financial and non-financial operating andmanagement performance objectives. For any Performance Period, Performance Measuresmay be determined on an absolute basis or relative to internal goals or relative tolevels attained in a year or years prior to such Performance Period or relative toother companies or indices or as ratios expressing relationships between two or morePerformance Measures. For any Performance Period, the Committee shall provide how anyPerformance Measure shall be adjusted to the extent necessary to prevent dilution orenlargement of any Award as a result of extraordinary events or circumstances, asdetermined by the Committee, or to exclude the effects of extraordinary, unusual, ornon-recurring items; changes in applicable laws, regulations, or accounting principles;currency fluctuations; discontinued operations; non-cash items, such as amortization,depreciation, or reserves; or any recapitalization, restructuring, reorganization,merger, acquisition, divestiture, consolidation, spin-off, split-up, combination,liquidation, dissolution, sale of assets, or other similar corporate transaction, orstock dividends, or stock splits or combinations. Unless otherwise specified by theCommittee, each such measure shall be determined in accordance with generally acceptedaccounting principles as consistently applied by the Company. Performance Measures mayvary from
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   Performance Period to Performance Period and from Participant to Participant and may beestablished on a stand-alone basis, in tandem or in the alternative. Other PerformanceMeasures may be used by the Committee in its sole discretion, except that thePerformance Measures set forth above in this paragraph v shall be used if thecompensation under the Award (other than an Option) is intended to qualify asperformance based under Section 162(m) of the Code. w. **“Performance Period”**means one or more periods of time (of not less than 364calendar days), as the Committee may designate, over which the attainment of one ormore Performance Goals will be measured for the purpose of determining a Participant’srights in respect of an Award.  x. **“Plan”**means the 2006 Payless ShoeSource, Inc. Stock Incentive Plan, as amendedfrom time to time.  y. **“Retirement”**means a Participant’s termination of employment on or after age 55and after completing at least five (5) years of service with the Company or aSubsidiary of the Company.  z. **“Stock”**means common stock of the Company, $ .01 par value, or any other equitysecurities of the Company designated by the Committee, including any attached rights.  aa. **“Stock Award”**means a grant of Stock or the right to receive Stock or its cashequivalent (or both).  bb. **“Subsidiary”**means (i) any corporation or other entity in which the Company,directly or indirectly, controls fifty percent (50%) or more of the total combinedvoting power of such corporation or other entity or (ii) any other corporation or otherentity in which the Company has a significant equity interest, in either case asdetermined by the Committee.  cc. **“Ten-percent Stockholder”**means any person who owns, directly or indirectly, onthe relevant date, securities having ten percent (10%) or more of the combined votingpower of all classes of the Company’s securities or of its parent or subsidiaries. Forpurposes of applying the foregoing ten percent (10%) limitation, the rules of Codesection 424(d) shall apply.
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**Section 3: Eligibility**The Committee may grant one or more Awards to any Employee designated by it to receive anAward as the Committee shall select in its sole discretion.**Section 4: Awards**The Committee may grant any one or more of the following types of Awards, either singly, intandem or in combination with other types of Awards:**Appreciation Value Award Vehicles** a. **Options****.**An Option is a right or rights (either an Incentive StockOption or a Non-Qualified Stock Option) to purchase a specific number of shares ofStock exercisable at such time or times and subject to such terms and conditions as theCommittee may determine in its sole discretion subject to the Plan, including but notlimited to the achievement of specific Performance Goals. Options may be settled incash or stock. (1) Incentive Stock Options shall be subject to the following provisions: A. The aggregate Fair Market Value (determined onthe date that such Option is granted) of the shares of Stock subject toIncentive Stock Options which are exercisable by one person for thefirst time during a particular calendar year shall not exceed $100,000.To the extent that the aggregate Fair Market Value (determined at thetime of grant) of Stock with respect to which Incentive Stock Optionsare exercisable for the first time by any Option holder during anycalendar year (under all plans of the Company and its Subsidiaries)exceeds $100,000, or such other limit as may be set by applicable law,the Options or portions thereof which exceed such limit (according tothe order in which they were granted) shall be treated as Non-QualifiedStock Options.  B. Each Award Agreement with respect to anIncentive Stock Option shall set forth the periods during which theOption shall be exercisable, whether in whole or in part. Such periodsshall be
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   determined by the Committee in its discretion. No Incentive StockOption may be exercisable more than: (i) in the case of an Employee who isnot a Ten-Percent Stockholder on the date that such Option isgranted, seven (7) years from the date the Option is granted orsuch earlier period as otherwise specified in the Plan or anAward Agreement, and  (ii) in the case of an Employee who isa Ten-Percent Stockholder on the date such Option is granted,five (5) years from the date the Option is granted. C. Each Award Agreement with respect to anIncentive Stock Option shall set forth the price at which a share ofStock may be acquired under the Option (the “Exercise Price”), whichshall be at least 100% of the Fair Market Value of a share of Stock onthe date the option is granted (except as permitted under Section424(a) of the Code with respect to Acquisition Awards (as defined inSection 4(i)). In the case of an Employee who is a Ten-PercentStockholder on the date that such Option is granted, the Exercise Priceof any Incentive Stock Option shall not be less than 110% of the FairMarket Value of the Stock subject to such Option on such date.  D. No Incentive Stock Option may be granted to anEmployee who is not a Employee of the Company or a Subsidiary (asdefined in Section 2(bb) on the date that such Option is granted.  E. Notwithstanding any other provision of the Planto the contrary, the maximum aggregate number of shares of Stock thatmay be issued under the Plan pursuant to Incentive Stock Options is 2million shares of Stock (the “ISO Limit”), subject to adjustmentsprovided for in Section 10 of the Plan. b. **Appreciation Rights**. An Appreciation Right is a right to receive anamount payable entirely in cash, entirely in Stock or partly in cash and partly inStock and exercisable at such time or times and subject to such conditions as theCommittee
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   may determine in its sole discretion subject to the Plan, including but not limitedto the achievement of specific Performance Goals. c. **Other Awards****.**Subject to limitations under applicable law, theCommittee may from time to time grant other Awards under this Plan, using AppreciationValue Award Vehicles, that provide the Participant with Stock or the right to purchaseStock, or provide other incentive Awards that have a value derived from the value ofStock, or an exercise or conversion privilege at a price related to Stock, or that areotherwise payable in or convertible into shares of Stock. These Awards shall be in aform and based upon the terms and conditions determined by the Committee (including butnot limited to the achievement of specific Performance Goals if determined by theCommittee), provided that the Award shall not be inconsistent with the other terms ofthis Plan.**Full Value Award Vehicles** d. **Stock Award****.**Stock Awards may include shares with or withoutrestrictions. Restricted Stock is Stock that is issued to a Participant subject torestrictions on transfer and such other restrictions on incidents of ownership, and/orother terms and conditions as the Committee may determine, including but not limited tothe achievement of specific Performance Goals. A certificate for the shares ofRestricted Stock, which certificate shall be registered in the name of the Participant,shall bear an appropriate restrictive legend and shall be subject to appropriatestop-transfer orders; provided*,*however, that the certificates representing shares ofRestricted Stock shall be held in custody by the Company until the restrictionsrelating thereto otherwise lapse, and the Participant shall deliver to the Company astock power endorsed in blank relating to the Restricted Stock or other form asappropriate.  e. **Stock Equivalent Units****.**A Stock Equivalent Unit is an Award based onthe Fair Market Value of one share of Stock. All or part of any Stock Equivalent UnitsAward may be subject to conditions and restrictions established by the Committee,including but not limited to the achievement of specific Performance Goals. StockEquivalent Units may be settled in Stock or cash or both as determined by theCommittee.
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 f. **Other Awards**. Subject to limitations under applicable law, theCommittee may from time to time grant other Full Value Awards under this Plan thatprovide the Participants with Stock or the right to purchase Stock, or provide otherincentive Awards that have a value derived from the value of Stock, or an exercise orconversion privilege at a price related to Stock, or that are otherwise payable in orconvertible into shares of Stock. These Awards shall be in a form and based upon theterms and conditions determined by the Committee (including but not limited to theachievement of specific Performance Goals if determined by the Committee), providedthat the Award shall not be inconsistent with the other terms of this Plan.**Other Award Vehicles** g. **Performance Units**. A Performance Unit is an Award denominated in cashor shares of Stock, the amount of which may be based on the achievement of specificPerformance Goals subject to terms and conditions established by the Committee. Themaximum amount of such compensation that may be paid to any one Participant withrespect to any one Performance Period shall be 100,000 shares of Stock or theequivalent Fair Market Value thereof. Performance Units may be settled in Stock or cashor both.  h. **Performance Compensation Awards**.    (1) The Committee may, at the time of grant of an Award (other than an Option),designate such Award as a Performance Compensation Award in order that such Awardconstitute qualified performance-based compensation under Code section 162(m). Withrespect to each such Performance Compensation Award, the Committee shall (on orbefore the ninetieth (90th) day of the applicable Performance Period),establish, in writing, the Performance Goal or Goals.    (2) A Participant shall be eligible to receive payment in respect of a PerformanceCompensation Award only to the extent that the Performance Goal(s) for such Awardare achieved as certified by the Committee.  i. **Acquisition Awards**. An Acquisition Award is an Award granted underthis Plan in substitution for options, rights, and such other awards with respect tothe
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   capital stock of another corporation which is merged into, consolidated with, or allor a substantial portion of the property or stock of which is acquired by, theCompany or one of its Subsidiaries. j. **Other Awards**. Subject to limitations under applicable law and thePlan, the Committee may from time to time grant other Awards under this Plan thatprovide the Participants with Stock or the right to purchase Stock, or provide otherincentive Awards that have a value derived from the value of Stock, or an exercise orconversion privilege at a price related to Stock, or that are otherwise payable in orconvertible into shares of Stock. The Awards shall be in a form and based upon theterms and conditions determined by the Committee (including but not limited to theachievement of specific Performance Goals), provided that the Awards shall not beinconsistent with the other terms of this Plan.**Section 5: Other General Terms and Conditions for Awards** (a) The term of an Award shall not exceed seven (7) years.  (b) Unless otherwise provided under the Plan or by the Committee,no Award (or any rights or obligations thereunder) may be sold, exchanged,transferred, assigned, pledged, hypothecated hedged, or otherwise disposed of(other than upon the death of the Participant, by beneficiary designation, bylast will and testament or by the laws of descent and distribution) and shallbe exercisable and subject to receipt during the Participant’s lifetime only bythe Participant.  (c) The Award price for each Award that allows for the purchase ofa share of Stock under an Award shall be specified in an Award Agreementcontaining the terms and conditions as determined by the Committee and subjectto the provisions of Section 10, shall not be less than Fair Market Value onthe date the Award is granted; provided, however, that in no event shall theAward price per share be less than the par value thereof. The Exercise Price,as applicable, of an Award shall not be less than 100% of the Fair Market Valueof the Stock on the date such Award is granted and the exercise opportunity maybe capped if the Committee determines appropriate and so specifies in the AwardAgreement pertaining thereto.
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 (d) There shall be no grant of an Appreciation Value Award to aParticipant in exchange for a Participant’s agreement to the cancellation of ahigher-priced Appreciation Value Award that was previously granted to suchParticipant. Re-pricing of Appreciation Value Awards is prohibited.  (e) The Exercise Price, as applicable, of an Award may be paid incash, personal check (subject to collection), bank draft or such other methodas the Committee may determine from time to time. The Exercise Price may alsobe paid by the tender, by either actual delivery or attestation, of Stockacceptable to the Committee and valued at its Fair Market Value on the date ofexercise; through a combination of Stock and cash. Without limiting theforegoing, to the extent permitted by applicable law: the Committee may, onsuch terms and conditions as it may determine, permit a Participant to elect topay the Exercise Price by authorizing a third party, pursuant to a brokerage orsimilar arrangement approved in advance by the Committee, to simultaneouslysell all (or a sufficient portion) of the Stock acquired upon exercise of suchAward and to remit to the Company a sufficient portion of the proceeds fromsuch sale to pay the entire Exercise Price of such Award and any required taxwithholding resulting therefrom.  (f) No Award may be granted under this Plan on or after the tenthanniversary of the date this Plan is approved by stockholders.  (g) The exercise or delivery of Stock or payment of cash pursuantto an Award shall be subject to the condition that if at any time the Companyshall determine in its discretion that the satisfaction of withholding tax orother withholding liabilities under any state or Federal law, or that thelisting, registration or qualification of any shares of Stock otherwisedeliverable upon any securities exchange or under any state or Federal Law, orthat the consent or approval of any regulatory body, is necessary or desirableas a condition of, or in connection with, such exercise or the delivery orpurchase of shares thereunder, then in any such event such exercise or deliveryshall not be effective unless such withholding, listing, registration,qualification, consent or approval shall have been effected or obtained free ofany conditions not acceptable to the Company.
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 (h) Each Participant shall agree that, subject to the provisions ofSection 5(i) below, (i) no later than the date as of which therestrictions mentioned in the instrument evidencing the Award shalllapse, such Participant will pay to the Company in cash, or, if theCommittee approves, in Stock or make other arrangements satisfactory tothe Committee regarding payment of, any Federal, state or local taxes ofany kind required by law to be withheld with respect to such Award, and  (ii) the Company and its Subsidiaries shall, to theextent permitted by law, have the right to deduct from any payment ofany kind otherwise due to the Participant any Federal, state or localtaxes of any kind required by law to be withheld with respect to theAward. (i) If any Participant properly elects, as permitted by CodeSection 83b (or any successor Code provisions) within thirty (30) days of thedate of the grant, to include in gross income for Federal income tax purposes,an amount equal to the Fair Market Value of the shares of Stock grantedpursuant to an Award, such Participant shall pay to the Company, or makearrangements satisfactory to the Committee to pay to the Company, any Federal,state or local taxes required to be withheld with respect to such shares. Ifsuch Participant shall fail to make such payments, the Company and itsSubsidiaries shall, to the extent permitted by law, have the right to deductfrom any payment of any kind otherwise due to the employee any Federal, stateor local taxes of any kind required by law to be withheld withrespect to such shares. (j) Dividends or Dividend Equivalents may be granted with respectto all or part of an Award. If dividends are granted they may be paid, asdetermined by the Committee (i) in cash, (ii) in Dividend Equivalents or (iii)accumulated or reinvested in Stock and held subject to the same restrictions asthe Stock under the Award.  (k) Unless expressly provided otherwise in the Award Agreement (andas provided in Section 4d) no Participant shall have any rights as a
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   stockholder with respect to any Stock covered by an Award until the date theParticipant becomes the holder of record thereof. (l) With respect to each type of Award, the Committee may establishsuch Performance Goals it deems appropriate, in its sole discretion. For eachAward established with Performance Goals, as soon as practicable after theclose of each Performance Period, the Committee shall review and certify inwriting whether, and to what extent, the Performance Goals(s) for thePerformance Period have been achieved and, if so, determine and certify inwriting the amount of the Performance Compensation Award earned by theParticipant for such Performance Period based upon such Participant’sachievement of the Performance Goals. The Committee shall then determine theactual amount of the Performance Compensation Award to be paid to theParticipant. In so doing, the Committee may use negative discretion todecrease any Participant Award based upon such performance, but may notincrease, the amount of the Award otherwise payable to a Covered Employee basedupon such performance. The maximum Performance Compensation Award for any oneParticipant for any one Performance Period shall be determined in accordancewith Sections 4 and 6. If Performance Goals are established for an Award to aCovered Employee, once established for a Performance Period, such PerformanceGoals shall not be amended or otherwise modified to the extent such amendmentor modification would cause the compensation payable pursuant to the Award tofail to constitute qualified performance-based compensation under Code section162(m).  (m) Unless an Award Agreement specifies otherwise, the Committeemay cancel at any time any Award or rescind any prior delivery of shares orvalue of shares, cash or property, if the Participant is not in compliance withall other applicable provisions of the Award Agreement or the Plan or if,within sixth months or such longer period as specified with respect to theParticipant, in any noncompete entered into between the Participant and theCompany, after exercise, as applicable, the Participant: (i) engages in a Competing Business, as such termis defined in the Award Agreement; or
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 (ii) solicits for employment, hires or offersemployment to, or discloses information to or otherwise aids or assistsany other person or entity other than the Company in soliciting foremployment, hiring or offering employment to, any employee of theCompany; or  (iii) takes any action which is intended to harm theCompany or its reputation, which the Company reasonably concludes couldharm the Company or its reputation or which the Company reasonablyconcludes could lead to unwanted or unfavorable publicity to theCompany; or  (iv) discloses to anyone outside of the Company, oruses in other than the Company’s business, any “confidentialinformation”, as such term is defined in the Agreement.    The Company shall immediately notify the Participant in writing ofany cancellation of any unexercised or unvested Award. Followingsuch notice, the Participant shall have no further rights withrespect to such Award. In the event of the rescission of theexercise of an Award within six months (or such longer periodspecified in any agreement between Participant and Company) after theactivity referred to above in this Section 5(m), the Company shallnotify the Participant in writing. Within ten (10) days afterreceiving such notice from the Company, the Participant shall either(i) pay to the Company the excess of the Fair Market Value of theStock on the date of exercise of an Award over the exercise price forthe Award or the Fair Market Value of the Stock and/or cashdistributed to the Participant as a result of the exercise of anAward or (ii) return the Stock received upon the exercise of an Award(in which case the Company will return the exercise price to theParticipant) or return the Stock and/or cash delivered upon theexercise of this Award.
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 (n) The Participant shall agree and consent to a deduction from anyamounts the Company owes to the Participant from time to time (includingamounts owed as wages or other compensation, fringe benefits, or vacation pay,as well as any other amounts owed to the Participant by the Company), to theextent of the amounts the Participant owes the Company under Section 5(m)above. Whether or not the Company elects to make any set-off in whole or inpart, if the Company does not recover by means of set-off the full amount owedby the Participant, calculated as set forth in Section 5(m) above, then theParticipant agrees to pay immediately the unpaid balance to the Company.  (o) The Committee may establish such other terms and conditions foran Award as it deems appropriate.  (p) The Committee may, at any time and in its sole discretion,determine that any outstanding Awards granted under the Plan will be canceledand terminated and that in connection with such cancellation and terminationthe holder of such Awards may receive for each share of Stock subject to suchAward a cash payment (or the delivery of shares of stock, other securities or acombination of cash, stock and securities equivalent to such cash payment) asfollows: 1. Appreciation Value AwardVehicles-whether or not exercisable, a cash payment (or thedelivery of shares of stock, other securities or a combination of cash,stock, and securities equivalent to such cash payment) equal to thedifference, if any, between the amount determined by the Committee tobe the Fair Market Value of the Stock and the exercise price per sharemultiplied by the number of shares of Stock subject to such Award;provided that if such product is zero or less or to the extent that theAward is not then exercisable, the Awards will be canceled andterminated without payment therefore.  2. Full Value Award Vehicles-a cashpayment equal to the Fair Market Value of the shares of Stock under theAward, as designated by the Committee.  3. Other Awards-a payment amount asdetermined in the sole discretion of the Committee.
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**Section 6: Stock Available under Plan** a. Subject to the adjustment provisions of Section 10, the number of shares of Stockwith respect to which Awards may be granted (or, in the cases of Awards that may besettled in cash or Stock) under the Plan shall not exceed [2.25 million] shares ofStock (the “Maximum Limit). The following amounts shall be reserved against theMaximum Limit for each type of Award:    **RESERVES**    Full Value Award Vehicles     the greater of (i) one share of Stock for each Full Value Award or (ii) the maximumpotential issuable pursuant to each Award.    Appreciation Value Award Vehicle (other than Stock Settled Stock AppreciationRights)    The amount calculated based on the ratio set forth in the below Exchange Ratiotable.    Stock Settled Stock Appreciation Rights (“SSSAR”)    The lesser of (i) 1 share of Stock for each SSSAR granted under an Award or themaximum potential of shares issuable upon exercise of a SSSAR.    Other Awards    The maximum number of shares of Stock authorized to be issued pursuant to such OtherAward Vehicle.    No single Participant shall receive, in any one calendar year, Awards in the form of(i) Appreciation Value Award Vehicles with respect to more than 250,000 shares ofStock and/or (ii) Full Value Award Vehicles for more than 100,000 shares of Stock.
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             **EXCHANGE RATIO TABLE** **Term of Grant** **5 year** **6 year** **7 year****Appreciation Value Vehicle Awards (otherthan SSSAR)**  .549   .598   .641        **ACTUALS**   Upon exercise of each Award, all shares of Stock reserved for such Award shall bereleased and the Maximum Limit shall be reduced by the number following:  ** **** ****Full Value Awards & Other Awards**- by the shares of Stock actually issued pursuant tosuch Award.  ** **** ****Appreciation Value Awards**(other than a SSSAR)- by the number set forth in theExchange Ratio table above.  ** **** ****SSSAR**- by the amount of shares actually issued under the Award.  b. Awards payable entirely in cash shall not be counted against the Maximum Limit.  c. If at the time of payment of dividends or Dividend Equivalents there are sharesof Stock available that have not been previously reserved, then upon payment they willbe deducted from the Plan Maximum Limit. If such shares to pay dividends are notavailable because all shares of Stock are currently reserved under the Plan MaximumLimit, then such dividends will be paid in cash.  d. Shares of Stock covered by the unexercised or terminated or forfeited portionof any Award that did not result in the delivery of Stock shall be available forfurther Awards. Subject to Section 10, additional rules for determining the number ofshares of Stock granted under an Award type under the Plan may be adopted by theCommittee, as it deems necessary and appropriate and consistent with the overall limitsset forth in the Plan.  e. The Stock that may be issued pursuant to an Award under the Plan may beauthorized and issued Stock held in the Company’s treasury or authorized but
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   unissued Stock, or Stock may be acquired, subsequently or in anticipation of thetransaction, in the open market to satisfy the requirements of the Plan. f. If any stock based award granted under the Company’s 1996 Stock Incentive Planshall for any reason subsequent to April 30, 2006 (i) expire, be cancelled or otherwiseterminate, in whole or in part, without having been exercised or redeemed in full, or(ii) be reacquired by the Company prior to issuance without restriction to the holderof such Award will be added to the Maximum Limit and will become available for issuanceunder this Plan based on the following formula: Full Value Award Vehicles madeavailable under this provision shall increase the Maximum Limit on a ratio of 1:1.Appreciation Value Vehicle Awards, including SSSARs under this provision shall increasethe Maximum Limit by 1/3 for each share of Stock covered by an Appreciation ValueVehicle Award.  g. Any shares of Stock delivered by the Company, any shares of Stock with respectto which Awards are made by the Company and any shares of Stock with respect to whichthe Company becomes obligated to make Awards, through the assumption of, or insubstitution for, outstanding awards previously granted by an acquired entity, shallnot be counted against the shares of Stock available for Awards under this Plan.  h. The Committee may direct that any stock certificate evidencing shares issuedpursuant to the Plan shall bear a legend setting forth such restrictions ontransferability as may apply to such shares pursuant to the Plan.**Section 7: Award Agreements**Each Award granted under the Plan shall be evidenced by an Award Agreement. Each AwardAgreement shall set forth the terms and conditions applicable to the Award, as determined by theCommittee in its discretion and subject to the Plan, including but not limited to provisionsdescribing the treatment of an Award in the event of the termination of a Participant’s status asan Employee for reasons of Retirement, death or otherwise, or in the event of Participant’sDisability or in the event the Participant engages in a “competing business” as such term shall bedefined in the Award Agreement. The Committee may deliver the Award Agreement by
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interoffice mail, U.S. mail, email or other electronic means (including posting on a web sitemaintained by the Company or by a third party under contract with the Company) all documentsrelating to the Plan or any Award thereunder and other documents that the Company is required todeliver to its security holders unless otherwise prohibited by law. A Participant shall have norights with respect to an Award unless such Participant accepts the Award within such period as theCommittee shall specify by executing an Award Agreement in such form as the Committee shalldetermine and, if the Committee shall so require, makes payment to the Company in such amount asthe Committee may determine.**Section 8: Amendment and Termination**The Board of Directors may at any time amend, suspend or terminate the Plan, in whole or inpart, and the Committee may, subject to the Plan, at any time alter or amend any or all AwardAgreements to the extent permitted by applicable law and the Plan; provided that no such actionshall impair the rights of any holder of an Award without the holder’s consent. For purposes of thePlan, any action of the Board of Directors or the Committee that alters or affects the taxtreatment of any Award shall not be considered to materially impair any rights of any holder.Notwithstanding the foregoing, neither the Board of Directors nor the Committee shall (exceptpursuant to Section 10) amend the Plan or any Award Agreement, without the approval of thestockholders of the Company to (i) increase the number of shares of Stock available for Awards asset forth in Section 6 or (ii) decrease the Exercise Price of any Award or (iii) make any otheramendments to the Plan or Award Agreement which would require stockholder approval under theGeneral Corporation Law of the State of Delaware, New York Stock Exchange Rules or such other rulesas may govern the trading or quotation of the Company’s Stock, Rule 16b-3 of the SecuritiesExchange Act of 1934, as amended, or Section 162(m) of the Code.Notwithstanding the above, the Board may, by resolution, amend the Plan in any way that it deemsnecessary or appropriate in order to make income with respect to the Plan deductible for Federalincome tax purposes under Section 162(m) of the Code and any such amendment shall be effective asof such date as is necessary to make such income under the Plan so deductible.Notwithstanding anything to the contrary in this Section, the Board of Directors or the Committeeshall have full discretion to amend the Plan to the extent necessary to preserve fixed accountingtreatment with respect to any Award and any outstanding Award Agreement shall be deemed to be soamended to the same extent, without obtaining the consent of any holder,
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without regard to whether such amendment adversely affects a holder’s rights under the Plan or suchAward Agreement.**Section 9: Administration** a. The Plan and all Awards shall be administered by the Committee, provided that, inthe absence of the Committee or to the extent determined by the Board of Directors, anyaction that could be taken by the Committee may be taken by the non-employee members ofthe Board of Directors. A majority of the members of the Committee shall constitute aquorum. The majority of non-employee Board of Director members shall constitute aquorum of the Board. The vote of a majority of a quorum shall constitute action by theCommittee and/or the Board.  b. The Committee shall have full and complete authority, in its sole and absolutediscretion, (i) to exercise all of the powers granted to it under the Plan, (ii) toconstrue, interpret and implement the Plan, any Award Agreement and any relateddocument, (iii) to prescribe, amend and rescind rules relating to the Plan includingrules governing its own operation, (iv) to make all determinations necessary oradvisable in administering the Plan, (v) to correct any defect, supply any omission andreconcile any inconsistency in the Plan, (vi) to authorize any person to execute onbehalf of the Company any instrument required to effect the grant of an Awardpreviously granted by the Committee, (vii) to impose such restrictions, conditions orlimitations as it determines appropriate as to the timing and manner of any resales bya Participant or other subsequent transfers by the Participant of any shares of Stockissued as a result of or under an Award, including without limitation, restrictionsunder the Company’s Trading in Securities Policy as may be amended from time to time,(viii) to amend the Plan to reflect changes in applicable law, and (ix) to determinewhether, to what extent and under what circumstances Awards may be settled or exercisedin cash, shares of Stock, other securities, other Awards or other property, orcanceled, forfeited or suspended and the method or methods by which Awards may besettled, canceled, forfeited or suspended. The actions and determinations of theCommittee on all matters relating to the Plan and any Awards will be final andconclusive. The Committee’s determinations under the Plan need not be uniform and maybe made by it selectively among Employees and Participants who receive, or who are
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   eligible to receive, Awards under the Plan, whether or not such persons aresimilarly situated. c. The Committee and others to whom the Committee has allocated or delegatedauthority or duties shall keep a record of all their proceedings and actions and shallmaintain all such books of account, records and other data as shall be necessary forthe proper administration of the Plan.  d. The Committee may appoint such accountants, counsel, and other experts as itdeems necessary or desirable in connection with the administration of the Plan.  e. The Company shall pay all reasonable expenses of administering the Plan,including, but not limited to, the payment of professional fees.  f. It is the intent of the Company that this Plan and Awards hereunder satisfy,and be interpreted in a manner that satisfy, (i) in the case of Participants who are ormay be Insiders, the applicable requirements of Rule 16b-3 of the Exchange Act, so thatsuch persons will be entitled to the benefits of Rule 16b-3, or other exemptive rulesunder Section 16, and will not be subjected to avoidable liability thereunder and (ii)in the case of Performance Compensation Awards, the applicable requirements of Codesection 162(m). If any provision of this Plan or of any Award Agreement would otherwisefrustrate or conflict with the intent expressed in this Section 9(f), that provision tothe extent possible shall be interpreted and deemed amended so as to avoid suchconflict. To the extent of any remaining irreconcilable conflict with such intent, suchprovision shall be deemed void as applicable to Insiders and/or Covered Employees, asapplicable.  g. Except to the extent prohibited by applicable law or otherwise, the Committeemay from time to time allocate to one or more of its members and delegate to one ormore Employees all or any portion of its authority and duties, provided that theCommittee may not allocate or delegate any discretionary authority with respect tosubstantive decisions or functions regarding the Plan or Awards to the extentinconsistent with the intent expressed in Section 9(f).  h. No member of the Board of Directors or the Committee or any employee of theCompany or any of its subsidiaries or affiliates (each such person a “Covered Person”)shall have any liability to any person (including, without limitation, any
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   Participant) for any action taken or omitted to be taken or any determination madein good faith with respect to the Plan or any Award. Each Covered Person shall beindemnified and held harmless by the Company against and from any loss, cost,liability or expense (including attorneys’ fees) that may be imposed upon orincurred by such Covered Person in connection with or resulting from any action,suit or proceeding to which such Covered Person may be a party or in which suchCovered Person may be involved by reason of any action taken or omitted to be takenunder the Plan and against and from any and all amounts paid by such Covered Person,with the Company’s approval, in settlement thereof, or paid by such Covered Personin satisfaction of any judgment in any such action, suit or proceeding against suchCovered Person, provided that the Company shall have the right, at its own expense,to assume and defend any such action, suit or proceeding and, once the Company givesnotice of its intent to assume the defense, the Company shall have sole control oversuch defense with counsel of the Company’s choice. The foregoing right ofindemnification shall not be available to a Covered Person to the extent that acourt of competent jurisdiction in a final judgment or other final adjudication, ineither case, not subject to further appeal, determines that the acts or omissions ofsuch Covered Person giving rise to the indemnification claim resulted from suchCovered Person’s bad faith, fraud or willful criminal act or omission. Theforegoing right of indemnification shall not be exclusive of any other rights ofindemnification to which Covered Persons may be entitled under the Company’sCertificate of Incorporation or Bylaws, as a matter of law, or otherwise, or anyother power that the Company may have to indemnify such persons or hold themharmless.**Section 10: Adjustment Provisions** a. In the event of any change in the outstanding shares of Stock by reason of a stockdividend greater than 5% of the Stock price, stock split or reverse stock split,recapitalization, merger or consolidation (whether or not the Company is a survivingCompany), reorganization, combination, exchange or reclassification of shares, spin-offor other similar corporate changes or an extraordinary dividend payable in cash orproperty, (i) the number of shares of Stock (or other securities) then remainingsubject to this Plan, including those that are then covered by
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  outstanding Awards, and the maximum number of shares of Stock that may be issued, orwith respect to which Awards may be granted, to any single Participant or in theaggregate pursuant to this Plan, (ii) the price or exercise price for each share orright then covered by an outstanding Award and (iii) the terms and conditions ofeach other outstanding Award may be proportionally adjusted as the Committee deemsequitable in its absolute discretion to prevent dilution or enlargement of therights of a Participant. Any adjustment made by the Committee under this Sectionshall be final, binding and conclusive on all persons. b. The existence of the Plan and the Awards granted hereunder shall not affect orrestrict in any way the right or power of the Board of Directors or the shareholders ofthe Company to make or authorize any adjustment, recapitalization, reorganization orother capital structure of its business, any merger or consolidation of the Company,any issue of bonds, debentures, preferred or prior preference stock ahead of oraffecting the Stock or the rights thereof, the dissolution or liquidation of theCompany or any sale or transfer of all or any part of its assets or business, or anyother corporate act or proceeding.  c. No fractional shares of Stock will be issued or accepted. Any fractionalshares will be paid in the equivalent amount of cash. The Committee may impose suchother conditions, restrictions and contingencies with respect to shares of Stockdelivered pursuant to the exercise of an Award as it deems desirable.**Section 11: Change of Control** a. In the event of a Change of Control, in addition to any action required orauthorized by the terms of an Award Agreement, the Committee may, in its solediscretion, take any of the following actions as a result, or in anticipation, of anysuch event to assure fair and equitable treatment of Participants: (i) accelerate time periods for purposes of vesting in, orrealizing gain from, any outstanding Award made pursuant to this Plan and/orextend the time during which an Award may be exercised following aParticipant’s termination of employment;
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 (ii) offer to purchase any outstanding Award made pursuant to thisPlan from the holder for its equivalent cash value, as determined by theCommittee, as of the date of the Change of Control; or  (iii) make adjustments or modifications to outstanding Awards as theCommittee deems appropriate to maintain and protect the rights and interests ofParticipants following such Change of Control. b. “Change of Control” means: (i) Any individual, entity or group (within the meaning of Section13(d)(3) or 14(d)(2) of the Exchange Act (a “Person”) acquires beneficialownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)of 20% or more of either (A) the then-outstanding shares of common stock of theCompany (the “Outstanding Company Common Stock”) or (B) the combined votingpower of the then-outstanding voting securities of the Company entitled to votegenerally in the election of directors (the “Outstanding Company VotingSecurities”); provided, however, that, for purposes of this Section 11, none ofthe following shall constitute a Change of Control: (a) any acquisitiondirectly from the Company of 30% or less of Outstanding Company Common Stock orOutstanding Company Voting Securities provided that at least a majority of themembers of the Board of Directors of the Company following such acquisitionwere members of the incumbent Board at the time of the Board’s approval of suchacquisition, (b) any acquisition by the Company, (c) any acquisition by anyemployee benefit plan (or related trust) sponsored or maintained by the Companyor any affiliated company, or (d) any acquisition by the Company which byreducing the number of shares of Outstanding Company Common Stock orOutstanding Company Voting Securities, increases the proportionate number of shares of Outstanding Company Common Stock or Outstanding Company VotingSecurities beneficially owned by any Person to 20% or more of the OutstandingCompany Common Stock or Outstanding Company Voting Securities; provided,however, that, if such Person shall thereafter become the beneficial owner ofany additional shares of Outstanding Company Common Stock or OutstandingCompany Voting Securities and beneficially owns 20% or
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   more of either the Outstanding Company Common Stock or the OutstandingCompany Voting Securities, then such additional acquisition shall constitutea Change of Control; or (ii) Individuals who, as of the date hereof, constitute the Board(the “Incumbent Board”) cease for any reason to constitute at least a majorityof the Board; provided, however, that any individual becoming a directorsubsequent to the date hereof whose election, or nomination for election by theCompany’s stockholders, was approved by a vote of at least a majority of thedirectors then comprising the Incumbent Board shall be considered as thoughsuch individual were a member of the Incumbent Board, but excluding, for thispurpose, any such individual whose initial assumption of office occurs as aresult of an actual or threatened election contest with respect to the electionor removal of directors or other actual or threatened solicitation of proxiesor consents by or on behalf of a Person other than the Board; or  (iii) A reorganization, merger, consolidation or sale or otherdisposition of all or substantially all of the assets of the Company (a“Business Combination”) is consummated, in each case, unless, immediatelyfollowing such Business Combination, (A), more than 50%, respectively, of thethen-outstanding shares of common stock and the combined voting power of thethen-outstanding voting securities entitled to vote generally in the electionof directors, as the case may be, of (x) the corporation resulting from suchBusiness Combination or (y) a corporation that, as a result of suchtransaction, owns the Company or all or substantially all of the Company’sassets whether directly or through one or more Subsidiaries, is represented bythe Outstanding Company Common Stock and the Outstanding Company VotingSecurities (or, if applicable, is represented by shares into which OutstandingCompany Common Stock or Outstanding Company Voting Securities were convertedpursuant to such Business Combination) in substantially the same proportions astheir ownership immediately prior to such Business Combination of theOutstanding Company Common Stock and the Outstanding Company Voting Securities,as the case may be, (B) no Person (excluding any corporation resulting fromsuch Business Combination or any employee benefit plan (or related trust) ofthe
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   Company or such corporation resulting from such Business Combination)beneficially owns, directly or indirectly, 20% or more of, respectively, thethen-outstanding shares of common stock of the corporation resulting fromsuch Business Combination or the combined voting power of thethen-outstanding voting securities of such corporation, except to the extentthat such ownership existed prior to the Business Combination, and (C) atleast a majority of the members of the Board of Directors of the corporationresulting from such Business Combination were members of the Incumbent Boardat the time of the execution of the initial agreement or of the action of theBoard providing for such Business Combination; or (iv) The stockholders of the Company approve of a completeliquidation or dissolution of the Company.**Section 12: Miscellaneous** a. **Other Payments or Awards.**Nothing contained in the Plan shall be deemed in any wayto limit or restrict the Company or a Subsidiary from making any award or payment toany person under any other plan, arrangement or understanding, whether now existing orhereafter in effect.  b. **Unfunded Plan**. The Plan shall be unfunded. No provision of the Plan or anyAward Agreement shall require the Committee, the Company or a Subsidiary, for thepurpose of satisfying any obligations under the Plan, to purchase assets or place anyassets in a trust or other entity to which contributions are made or otherwise tosegregate any assets, nor shall the Company or a Subsidiary maintain separate bankaccounts, books, records or other evidence of the existence of a segregated orseparately maintained or administered fund for such purposes. Participants shall haveno rights under the Plan other than as unsecured general creditors of the Company or aSubsidiary.  c. **Limits of Liability.**Any liability of the Company or a Subsidiary to anyParticipant with respect to an Award shall be based solely upon contractual obligationscreated by the Plan and the Award Agreement.
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 d. **Rights of Employees.**Status as an eligible Employee shall not be construed as acommitment that any Award shall be made under this Plan to such eligible Employee or toeligible Employees generally. Nothing contained in this Plan or in any Award Agreementshall confer upon any Employee or Participant any right to continue in the employ orother service of the Company or a Subsidiary or constitute any contract or limit in anyway the right of the Company or a Subsidiary to change such person’s compensation orother benefits or to terminate the employment or other service of such person with orwithout cause. Except as provided otherwise in an Award Agreement, an Employee’s (i)transfer from the Company to a Subsidiary or affiliate of the Company, whether or notincorporated, or visa versa, or from one Subsidiary to another or (ii) leave ofabsence, duly authorized in writing by the Company or a Subsidiary, shall not be deemeda termination of such Employee’s employment or other service.  e. **Section Headings.**The section headings contained herein are for the purpose ofconvenience only, and in the event of any conflict, the text of the Plan, rather thanthe section headings, shall control.  f. **Construction.**In interpreting the Plan, the masculine gender shall include thefeminine, the neuter gender shall include the masculine or feminine, and the singularshall include the plural unless the context clearly indicates otherwise.  g. **Invalidity.**If any term or provision contained herein or in any Award Agreementshall to any extent be invalid or unenforceable, such term or provision will bereformed so that it is valid, and such invalidity or unenforceability shall not affectany other provision or part thereof.  h. **Applicable Law.**The Plan, the Award Agreements and all actions taken hereunderor thereunder shall be governed by, and construed in accordance with, the laws of theState of Delaware without regard to the conflict of law principles thereof.  i. **Supplementary Plans**. The Committee may authorize Supplementary Plansapplicable to Employees subject to the tax laws of one or more countries other than theUnited States and providing for the grant of Awards to such Employees on terms andconditions, consistent with the Plan, determined by the Committee which may differ fromthe term and conditions of such Awards pursuant to the Plan for the
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   purpose of complying with the conditions for qualification of Awards for favorabletreatment under foreign tax and/or securities laws. Notwithstanding any other provisionhereof, Options granted under any Supplementary Plan shall include provisions thatconform with Sections 4(a); and Restricted Stock granted under any Supplementary Planshall include provisions that conform with Section 4(d). j. **Effective Date and Term.**The Plan was adopted by the Board of Directorseffective as of May 25, 2006, subject to approval by the Company’s stockholders. TheCommittee may grant Awards prior to stockholder approval, provided, however, thatAwards granted prior to such stockholder approval are automatically canceled ifstockholder approval is not obtained at or prior to the period ending twelve monthsafter the date the Plan is effective and provided further that no Award may be settledprior to the date stockholder approval is obtained. Unless sooner terminated, the Planshall remain in effect until May 25, 2016. Termination of the Plan shall not affectany Award previously made.  k. **No Third Party Beneficiaries.**Except as expressly provided therein, neitherthe Plan nor any Award Agreement shall confer on any person other than the Company andthe grantee of any Award any rights or remedies thereunder.  l. **Successors and Assigns.**The terms of this Plan shall be binding upon andinure to the benefit of the Company and its successors and assigns.
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