exv10w4



 





Exhibit 10.4




STOCK PLAN FOR NON-MANAGEMENT DIRECTORS




Effective May 4, 1996




Amended and restated March 29, 2007




 









 





STOCK PLAN FOR NON-MANAGEMENT DIRECTORS

OF

PAYLESS SHOESOURCE, INC.




I. GENERAL




     1. Purpose. The purpose of the Plan is to provide certain compensation to eligible directors
of the Corporation and to encourage the highest level of performance of non-management directors by
providing those directors with a proprietary interest in the Corporation’s success and
progress by granting them shares of the Corporation’s common stock or rights to purchase
shares of the Corporation’s common stock subject to the terms and conditions set forth below.



     2. Definitions. Whenever used herein, the following terms shall have the meanings set forth
below:



          (a) “Award” means an initial or annual grant of equity, as described in Section 6 of Part I
of the Plan.




          (b) “Award Agreement” means a document setting forth the terms and conditions applicable to
the Award granted to the Participant.




          (c)
“Board” means the Board of Directors of the Corporation.




          (d) “Committee” means the Board or such committee as may be designated by the Board from time
to time. Any such Committee must be comprised of at least one employee member of the Board and two
or more outside directors who are “non-employee directors” within the meaning of Rule 16b-3 under
the Exchange Act.




          (e) “Corporation” means Payless ShoeSource, Inc., a Delaware corporation and any successor
thereto.




          (f) “Disability” means a medically determinable physical or mental impairment which renders a
Participant substantially unable to function as a director of the Corporation.




          (g) “Dividend Equivalent” means an amount equal to the amount payable with respect to a share
of Stock after the date an Award is granted.




          (h) “Exchange Act” means the Securities Exchange Act of 1934, as amended. References
to a particular section of the Exchange Act include references to successor provisions.




 









 





          (i) “Fair Market Value” of Stock means the closing price of the Stock on the New York Stock
Exchange Composite Transaction Tape on the date in question (or if the Stock is not then so traded,
the closing price of the Stock on the stock exchange or over-the-counter market on which the Stock
is principally trading on such date) or, if no sale of the Stock occurred on such exchange on that
day, the closing price of the Stock on the last preceding day when the Stock was sold on the
exchange. If Stock, as later defined, is no longer traded on the New York Stock Exchange and if
there is no public market for the Stock, “Fair Market Value” shall be determined in good faith by
the Committee using other reasonable means.




          (j) “Option Award” means an option granted to a Participant pursuant to Section 6 of Part I of
the Plan.




          (k) “Participant” means a member of the Board (i) who is not at the time of grant an officer
or employee of the Corporation (ii) who has not during the immediately preceding 12 month period
been, an officer or employee of the Corporation or any subsidiary of the Corporation and (iii) to
whom an Award is made under the Plan.




          (l) “Plan” means the Restricted Stock Plan for Non-Management Directors of Payless ShoeSource,
Inc., amended, restated and renamed May 25, 2006 or such other date as approved by the stockholders
of the Corporation, as the Stock Plan for Non-Management Directors of Payless ShoeSource, Inc.




          (m) “Restricted Period” means the period from the vesting of the Stock Award or the receipt of
shares of Stock upon exercise of an Option Award until the earlier of (i) the cessation of the
Participant’s membership on the Board by reason of death or Disability and (ii) the later of
(a) the expiration of the six month period immediately following the Award grant or (b) the date
the Participant satisfies their stock ownership requirements as set forth in the Stock Ownership
Guidelines for Directors, as such guidelines may be amended from time to time.




          (n) “Stock” means the common stock of the Corporation, $.01 par value, or any other equity
securities of the Corporation designated by the Committee, including any attached rights.




          (o) “Stock Award” means a grant of Stock or of a right to receive Stock or its cash equivalent
(or both).




          (p) “Stock Ownership Guidelines” means the Stock Ownership Guidelines for Directors adopted by
the Company and as amended from time to time.




     3. Administration. The Plan shall be administered by the Committee. Subject to all the
applicable provisions of the Plan, the Committee is authorized: (i) to



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exercise all of the powers granted to it under the Plan, (ii) to construe and interpret the
Plan, to prescribe, amend and rescind rules and regulations relating to the Plan, (iii) to make
all determinations and take all actions necessary or advisable for the Plan’s administration,
(iv) to correct any defect, supply any omission and reconcile any inconsistency in the Plan, (v) to
authorize any person to execute on behalf of the Corporation, any instrument required to effect the
grant of an Award made by the Committee and (vi) to determine whether, to what extent and under
what circumstances Awards may be settled or exercised in cash, shares of Stock, other securities,
other Awards or other property, or canceled, forfeited or suspended and the method or methods by
which Awards may be settled, canceled, forfeited or suspended. The Committee shall act by vote or
written consent of a majority of its members. Whenever the Plan authorizes or requires the
Committee to take any action, make any determination or decision or form any opinion, then any such
action, determination, decision or opinion by or of the Committee shall be conclusive and binding
on all persons. The Committee may obtain such advice or assistance as it deems appropriate from
persons not serving on the Committee including but not limited to accountants and counsel. The
Committee and others to whom the Committee has allocated or delegated authority or duties shall
keep a record of all their proceedings and actions and shall maintain all such books of account,
records and other data as shall be necessary for the proper administration of the Plan.




     4. Shares of Stock Available Under the Plan. Effective May 25, 2006, if this amended and
restated Plan is approved by the stockholders of the Company, the Plan provides that there may be
granted under the Plan an aggregate of not more than 350,000 shares of Stock (the Maximum
Limit”), subject to adjustment as provided in Section 3 of Part II of the Plan.  



     For each Option Award issued, the Maximum Limit shall be decreased based on the term of the
grant as follows for each such Option Award granted:



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	EXCHANGE RATIO TABLE
	Term of Grant	 	5 year	 	6 year	 	7 year	 	10 year
	Option Award
	 	 	[.549]	 	 	 	[.598]	 	 	 	[.641]	 	 	 	[.751]	 





Dividends or Dividend Equivalents, if any, shall be paid in shares of Stock, and shall be deducted
from the Plan Maximum Limit if such shares are available. If such shares to pay dividends are not
available under the Plan Maximum Limit, but are payable, then such dividends will be paid in cash.
Amounts paid entirely in cash shall not be counted against the Maximum Limit. Shares of Stock
covered by the unexercised or terminated or forfeited portion of any Award that did not result in
the delivery of Stock shall be




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available for further Awards. For Stock Awards, if less than the maximum number of shares issuable
are actually issued, such difference shall be available for future Awards.




     Subject to Section 3 or Part II of the Plan, additional rules for determining the number of
shares of Stock granted under an Award may be adopted by the Committee, as it deems necessary and
appropriate and consistent with the overall limits set forth in the Plan. Shares of Stock granted
under the Plan shall be authorized and issued Stock held in the Corporation’s treasury or
previously authorized but unissued Stock. If any shares of Stock shall be returned to the
Corporation pursuant to the termination provisions described in Sections 7(b) & (g) of Part I of
the Plan, or in the instruments evidencing the making of Awards, such shares may again be granted
under the Plan.



5. Eligibility.




          The Committee may grant one or more Awards to any Participant designated by it to receive an
Award.




6. Awards.




          The Committee may grant any one or more of the following types of Awards, either
singly, or in tandem:





	 	a.	 	Option Award. An Option is a right or rights to
purchase a specific number of shares of Stock exercisable at such time or
times and subject to such terms and conditions, including vesting schedule, as
the Committee may determine and specify in the applicable Award Agreement.
Options shall be settled in cash or Stock.
	 
	 	b.	 	Stock Award. Stock Awards may be granted either
alone, in addition to, or in tandem with other Awards granted under the Plan.
Stock Awards are subject to such terms and conditions, including vesting
schedules, as the Committee may determine and specify in the applicable Award
Agreement. Stock Awards shall be settled in Stock.





7. General Terms and Conditions





	 	a.	 	Term. The term of an Option Award shall not exceed seven years.
	 
	 	b.	 	Restrictions. Unless otherwise provided under the Plan or by the Committee,
during the Restricted Period, no Award shall be sold, exchanged, transferred,
assigned, pledged, hypothecated, or otherwise disposed of (other than upon the death
of the Participant, by beneficiary designation, by last will and testament or by the
laws of descent and




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	 	 	 	distribution)and shall be exercisable and/or subject to receipt during the
Restricted Period only by the Participant. Each certificate evidencing shares of
Stock granted pursuant to a Stock Award or shares of Stock received upon exercise
of an Option shall bear an appropriate legend referring to the terms, conditions
and restrictions applicable to such Award. Any attempt to dispose of such shares of Stock
in contravention of such terms, conditions and restrictions shall be
ineffective. The Corporation itself will hold such shares in custody, until the
restrictions thereon shall have lapsed. The Corporation may delay the issuance of shares of Stock
covered by any Award and the delivery of a certificate for such shares of Stock until the shares of Stock to be issued in connection with the grant
or exercise of an Award, as applicable, are effectively registered under applicable
federal securities laws now in force or hereafter amended or until counsel for the
Corporation shall have given an opinion, which opinion shall not be unreasonably
conditioned or withheld, that such shares of Stock are exempt from registration
under applicable federal securities laws now in force or hereafter amended.
	 
	 	c.	 	Exercise Price. The exercise price of an Option Award shall not be less than
100% of the Fair Market Value of the Stock on the date such Option Award is granted
and the exercise opportunity may be capped if the Committee determines appropriate and
so specifies in the Award Agreement pertaining thereto.
	 
	 	d.	 	Repricing Prohibited. There shall be no grant of an Option Award to a
Participant in exchange for a Participant’s agreement to cancellation of a
higher-priced Option Award that was previously granted to such Participant.
	 
	 	e.	 	Payment of Taxes Related to Stock and Option Awards. The Corporation shall
have the right to require the payment (through withholding from any amount payable
from the Corporation to Participant) of any withholding taxes required by federal,
state or local law, if at all, in respect of an Award.
	 
	 	f.	 	Rights of Holders of Stock. A Participant shall have, after a certificate or
certificates for the number of shares of Stock granted have been issued in his or her
name, absolute ownership of such shares including the right to vote the same, subject,
however, to the terms, conditions and restrictions described in the Plan and in the
Award Agreement to such Participant. The Corporation will hold all certificates until
all restrictions on them have lapsed.




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	 	g.	 	Death, Disability & Termination. Any provision of Section 7(h) of Part I of
the Plan to the contrary notwithstanding, if a Participant who has been a member of
the Board continuously since the date as of which an Award was made and such
Participant shall cease to be such a member of the Board by reason of death or
Disability, then an Option Award granted to such Participant may be exercised to the
extent exercisable on the date of death or Disability, within the earlier of (x) 360
days after the death or Disability of such person and (y) the date on which the Option
expires by its terms, by the estate of such person, or by any person or persons who
acquired the right to exercise such Option Award by beneficiary designation, will or
by the laws of descent and distribution. Unless the Committee determines otherwise, a
Stock Award Agreement shall provide for the forfeiture of the non-vested shares of
Stock underlying such Stock Award upon the Participant ceasing to be a Participant for
any reason, including death or Disability.
	 
	 	h.	 	Terms of Award Agreement. After the Committee determines that it will offer
an Option Award or Stock Award, it will advise the Participant in writing or
electronically, by means of an Award Agreement, of the terms, conditions and
restrictions, including vesting, if any, related to the Award grant, including the
number of shares of Stock that the Participant shall be entitled to receive or
purchase, the price to be paid, if any, and, if applicable, the time within which the
Participant must accept the Award grant. The Award grant shall be accepted by
execution of an Award Agreement in the manner determined by the Committee. Unless the
Committee determines otherwise, the Award Agreement shall provide for the forfeiture
of the non-vested shares of Stock underlying such Stock Award and for any such shares
of Stock that remain non-vested at the time the Participant ceases to be a
Participant, the cessation of Participant status shall cause an immediate sale of such
non-vested shares of Stock to the Corporation at the original price per share of
Stock, if any, paid by the Participant.
	 
	 	i.	 	No Future Entitlements. No Participant shall have any claim or right to be
granted an Award under this Plan. Having received an Award under this Plan shall not
give a Participant any right to receive any other Award under this Plan and the
Committee may determine that any or all Participant(s) are not eligible to receive an
Award under this Plan for an indefinite period or for a specified year or years.




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	 	j.	 	Other. The Committee may establish such other terms and conditions for an
Award as it deems appropriate.





II. MISCELLANEOUS




     1. Effective Date. The Plan became effective on May 4, 1996, was first amended on April 20,
1998 and if so approved by the stockholders of the Corporation, is amended and restated effective
on May 25, 2006.



     2. Duration of Plan. Unless terminated pursuant to Section 5 of Part II, the Plan shall remain
in effect.



     3. Changes in Capital Structure. In the event of any change in the outstanding shares of Stock
by reason of a stock dividend greater than 5% of the Stock price, stock split or reverse stock
split, recapitalization, merger or consolidation (whether or not the Company is a surviving
Company), reorganization, combination, exchange or reclassification of shares, spin-off or other
similar corporate changes or an extraordinary dividend payable in cash or property, (i) the number
of shares of Stock (or other securities) then remaining subject to this Plan, including those that
are then covered by outstanding Awards, and the maximum number of shares of Stock that may be
issued, or with respect to which Awards may be granted, to any single Participant or in the
aggregate pursuant to this Plan, (ii) the price or exercise price for each share or right then
covered by an outstanding Award and (iii) the terms and conditions of each other outstanding Award
may be proportionally adjusted as the Committee deems equitable in its absolute discretion to
prevent dilution or enlargement of the rights of a Participant. Any adjustment made by the
Committee under this Section shall be final, binding and conclusive on all persons..



     4 Expenses of Plan. The expenses of the Plan shall be borne by the Corporation.



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     5. Amendment or Termination. The Corporation may at any time amend, suspend or terminate the
Plan, in whole or in part, and the Committee may, subject to the Plan, at any time alter or amend
any or all Award Agreements to the extent permitted by applicable law and the Plan; provided that
no such action shall impair the rights of any holder of an Award without the holder’s consent. For
purposes of the Plan, any action of the Committee that alters or affects the tax treatment of any
Award shall not be considered to materially impair any rights of any holder. Notwithstanding the
foregoing, neither the Corporation nor the Committee shall (except pursuant to Section 3 of Part
II) amend the Plan or any Award Agreement, without the approval of the stockholders of the Company
to (i) increase the number of shares of Stock available for Awards as set forth in Section 4 of
Part I or (ii) decrease the exercise price of any Award or (iii) make any other amendments to the
Plan or Award Agreement which would require stockholder approval under the General Corporation Law
of the State of Delaware, New York Stock Exchange Rules or such other rules as may govern the
trading or quotation of the Company’s Stock or Rule 16b-3 of the Securities Exchange Act of 1934,
as amended.



     6. Nothing in this Plan shall be deemed to create any obligation on the part of the Board to
nominate any director for reelection as a director by the shareholders of the Corporation.




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