Document:

exv10w15

 

EXHIBIT 10.15

Collective Brands, Inc.

Deferred Compensation Plan

As Amended and Restated January 1, 2008

 

 

Collective Brands, Inc. Deferred Compensation Plan

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	Purpose
	 	 	1	 
	 
	 	 	 	 
	ARTICLE 1 Definitions
	 	 	1	 
	 
	 	 	 	 
	ARTICLE 2 Selection, Enrollment, Eligibility
	 	 	8	 
	2.1 Selection by Committee
	 	 	8	 
	2.2 Enrollment Requirements
	 	 	8	 
	2.4 Termination of Participation and/or Deferrals
	 	 	8	 
	 
	 	 	 	 
	ARTICLE 3 Deferral Commitments/Company Matching/Crediting/Taxes
	 	 	9	 
	3.1 Minimum Deferrals
	 	 	9	 
	3.2 Maximum Deferral
	 	 	9	 
	3.3 Election to Defer; Effect of Election Form
	 	 	10	 
	3.4 Withholding of Annual Deferral Amounts
	 	 	11	 
	3.5 Annual Company Contribution Amount
	 	 	11	 
	3.6 Annual Company Matching Amount
	 	 	12	 
	3.8 Investment of Trust Assets
	 	 	12	 
	3.9 Vesting
	 	 	12	 
	3.10 Crediting/Debiting of Account Balances
	 	 	13	 
	3.11 FICA and Other Taxes
	 	 	15	 
	3.12 Distributions
	 	 	15	 
	 
	 	 	 	 
	ARTICLE 4 Short-Term Payout; Unforeseeable Financial Emergencies; Withdrawal Election; 401(k) Roll-Over
	 	 	16	 
	4.1 Short-Term Payout
	 	 	16	 
	4.2 Other Benefits Take Precedence Over Short-Term
	 	 	16	 
	4.3 Withdrawal Payout/Suspensions for Unforeseeable Financial Emergencies
	 	 	16	 
	 
	 	 	 	 
	ARTICLE 5 Retirement Benefit
	 	 	18	 
	5.1 Retirement Benefit
	 	 	18	 
	5.2 Payment of Retirement Benefit
	 	 	18	 
	5.3 Death Prior to Completion of Retirement Benefit
	 	 	18	 
	 
	 	 	 	 
	ARTICLE 6 Pre-Retirement Survivor Benefit
	 	 	19	 
	6.1 Pre-Retirement Survivor Benefit
	 	 	19	 
	 
	 	 	 	 
	ARTICLE 7 Termination Benefit
	 	 	20	 
	7.1 Termination Benefit
	 	 	20	 
	7.2 Payment of Termination Benefit
	 	 	20	 
	 
	 	 	 	 
	ARTICLE 8 Disability Waiver and Benefit
	 	 	21	 

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	 	 	Page	 
	ARTICLE 9 Beneficiary Designation
	 	 	22	 
	9.1 Beneficiary
	 	 	22	 
	9.2 Beneficiary Designation; Change; Spousal Consent
	 	 	22	 
	9.3 Acknowledgement
	 	 	22	 
	9.4 No Beneficiary Designation
	 	 	22	 
	9.5 Doubt as to Beneficiary
	 	 	22	 
	9.6 Discharge of Obligations
	 	 	22	 
	 
	 	 	 	 
	ARTICLE 10 Leave of Absence
	 	 	23	 
	10.1 Paid Leave of Absence
	 	 	23	 
	10.2 Unpaid Leave of Absence
	 	 	23	 
	 
	 	 	 	 
	ARTICLE 11 Termination, Amendment or Modification
	 	 	24	 
	11.1 Termination
	 	 	24	 
	11.2 Amendment
	 	 	25	 
	11.4 Effect of Payment
	 	 	25	 
	 
	 	 	 	 
	ARTICLE 12 Administration
	 	 	26	 
	12.1 Committee Duties
	 	 	26	 
	12.2 Administration Upon Change In Control
	 	 	26	 
	12.3 Agents
	 	 	26	 
	12.4 Binding Effect of Decisions
	 	 	26	 
	12.5 Indemnity of Committee
	 	 	27	 
	12.6 Employer Information
	 	 	27	 
	 
	 	 	 	 
	ARTICLE 13 Other Benefits and Agreements
	 	 	28	 
	13.1 Coordination with Other Benefits
	 	 	28	 
	 
	 	 	 	 
	ARTICLE 14 Claims Procedures
	 	 	29	 
	14.1 Presentation of Claim
	 	 	29	 
	14.2 Notification of Decision
	 	 	29	 
	14.3 Review of a Denied Claim
	 	 	30	 
	14.4 Decision of Review
	 	 	30	 
	14.5 Special Disability Provisions
	 	 	32	 
	14.6 Legal Action
	 	 	32	 
	 
	 	 	 	 
	ARTICLE 15 Trust
	 	 	33	 
	15.1 Establishment of the Trust
	 	 	33	 
	15.2 Interrelationship of the Plan and the Trust
	 	 	33	 
	15.3 Distributions From the Trust
	 	 	33	 
	15.4 Stock Transferred to the Trust
	 	 	33	 
	 
	 	 	 	 
	ARTICLE 16 Miscellaneous
	 	 	34	 
	16.1 Status of Plan
	 	 	34	 

 

 

Collective Brands, Inc. Deferred Compensation Plan

	 	 	 	 	 
	 	 	Page	 
	16.2 Unsecured General Creditor
	 	 	34	 
	16.3 Employer’s Liability
	 	 	34	 
	16.4 Nonassignability
	 	 	34	 
	16.5 Not a Contract of Employment
	 	 	34	 
	16.6 Furnishing Information
	 	 	34	 
	16.7 Terms
	 	 	35	 
	16.8 Captions
	 	 	35	 
	16.9 Governing Law
	 	 	35	 
	16.10 Notice
	 	 	35	 
	16.11 Successors
	 	 	35	 
	16.12 Validity
	 	 	35	 
	16.13 Incompetent
	 	 	35	 
	16.14 Court Order
	 	 	36	 
	16.15 Distribution in the Event of Taxation
	 	 	36	 
	16.16 Insurance
	 	 	36	 
	16.17 Trust
	 	 	36	 
	16.18 Legal Fees To Enforce Rights After Change in Control
	 	 	36	 

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Collective Brands, Inc. Deferred Compensation Plan

COLLECTIVE BRANDS, INC.

DEFERRED COMPENSATION PLAN

As Amended and Restated

January 1, 2008

Purpose

          The purpose of this Plan is to provide specified benefits to a select group of management and
highly compensated Employees who contribute materially to the continued growth, development and
future business success of Collective Brands, Inc., a Delaware corporation, and its subsidiaries,
if any, that sponsor this Plan. This Plan shall be unfunded for tax purposes and for purposes of
Title I of ERISA. This is an amendment and restatement of the Collective Brands, Inc. Deferred
Compensation Plan, formerly known as the Payless ShoeSource, Inc. Deferred Compensation 401(k)
Mirror Plan, and is intended to comply with Code Section 409A. The Plan document in effect prior
to the effective date of this amendment and restatement of January 1, 2008 will remain in effect
for amounts which were both earned and vested on December 31, 2004. Such amounts are
“grandfathered” under the pre-Code Section 409A rules. The Plan was originally effective on
October 1, 2000.

ARTICLE 1

Definitions 

          For purposes of this Plan, unless otherwise clearly apparent from the context, the following
phrases or terms shall have the following indicated meanings:

	1.1	 	“Account Balance” shall mean, with respect to a Participant, a credit on the records of the
Employer equal to the sum of (i) the Deferral Account balance, (ii) the Company Contribution
Account balance and (iii) the Company Matching Account balance. The Account Balance, and each
other specified account balance, shall be a bookkeeping entry only and shall be utilized
solely as a device for the measurement and determination of the amounts to be paid to a
Participant, or his or her designated Beneficiary, pursuant to this Plan.
	 
	1.2	 	“Annual Deferral Amount” shall mean that portion of a Participant’s Annual Salary and Bonus
that a Participant elects to have, and is, deferred, in accordance with Article 3, for any one
Plan Year. In the event of a Participant’s Retirement, Disability, death or a Termination of
Employment prior to the end of a Plan Year, such year’s Annual Deferral Amount shall be the
actual amount withheld prior to such event.
	 
	1.3	 	“Annual Installment Method” shall mean annual installments over the number of years selected
by the Participant or Committee in accordance with this Plan, calculated in accordance with
this Section 1.3. The first annual installment shall be paid during the later of (a) the
month of January of the calendar year immediately following the calendar year in which the
Participant Retires, experiences a Termination of Employment or dies, as

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	 	 	applicable, or (b) the 30-day period beginning on the Benefit Distribution Date. Each
subsequent annual installment shall be paid during the month of January of each succeeding
calendar year. The Account Balance of the Participant shall be calculated on the date
determined by the Committee for payment in accordance with the Plan. The annual installment
shall be calculated by multiplying this balance by a fraction, the numerator of which is
one, and the denominator of which is the remaining number of annual installments due the
Participant. By way of example, if the Participant elects a 10-year Annual Installment
Method, the first annual installment shall be 1/10 of the Account Balance, calculated as
described in this definition. The following year, the annual installment shall be 1/9 of
the Account Balance, calculated as described in this definition.

	1.4	 	“Annual Salary” shall mean the annual cash compensation relating to services performed during
any Plan Year, whether or not paid in such Plan Year, excluding bonuses, commissions,
royalties, overtime, fringe benefits, relocation expenses, incentive payments, non-monetary
awards, directors fees and other fees and automobile and other allowances paid to a
Participant for employment services rendered (whether or not such allowances are included in
the Employee’s gross income). Annual Salary shall be calculated before reduction for
compensation voluntarily deferred or contributed by the Participant pursuant to all qualified
or non-qualified plans of any Employer and shall be calculated to include amounts not
otherwise included in the Participant’s gross income under Code Sections 125, 402(e)(3),
402(h), or 403(b) pursuant to plans established by any Employer; provided, however, that all
such amounts will be included in compensation only to the extent that, had there been no such
plan, the amount would have been payable in cash to the Employee.
	 
	1.5	 	“Beneficiary” shall mean one or more persons, trusts, estates or other entities, designated
in accordance with Article 9, that are entitled to receive benefits under this Plan upon the
death of a Participant.
	 
	1.6	 	“Beneficiary Designation Form” shall mean the form established from time to time by the
Committee that a Participant completes, signs and returns to the Committee to designate one or
more Beneficiaries.
	 
	1.7	 	“Benefit Distribution Date” shall mean the date that triggers distribution of a
Participant’s vested Account Balance. A Participant’s Benefit Distribution Date shall be
determined upon the occurrence of any one of the following: (a) If the Participant Retires,
his or her Benefit Distribution Date shall be (i) the last day of the six-month period
immediately following the date on which the Participant Retires if the Participant is a Key
Employee, and (ii) for all other Participants, the date on which the Participant Retires;
provided, however, in the event the Participant changes his or her Retirement Benefit election
in accordance with Section 5.2, his or her Benefit Distribution Date shall be postponed in
accordance with Section 5.2; (b) If the Participant experiences a Termination of Employment,
his or her Benefit Distribution Date shall be (i) the last day of the six-month period
immediately following the date on which the Participant experiences a Termination of
Employment if the Participant is a Key Employee, and (ii) for all other Participants, the date
on which the Participant experiences a Termination of Employment; provided, however, in the
event the Participant changes his or her Termination Benefit election in accordance with
Section 7.2, his or her Benefit Distribution Date shall be postponed in accordance with
Section 7.2; or (c) the date of the Participant’s death, if the Participant

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Collective Brands, Inc. Deferred Compensation Plan

	 	 	dies prior to the complete distribution of his or her vested Account Balance; or
(d) the date on which the Participant becomes Disabled.
	 
	1.8	 	“Board” shall mean the board of directors of the Company.
	 
	1.9	 	“Bonus” shall mean any compensation, in addition to Annual Salary, relating to services
performed during any Plan Year or fiscal year of the Company, as applicable, whether or not
paid in such Plan Year or fiscal year, payable to a Participant as an Employee under any
Employer’s bonus, commissions, royalties and cash incentive plans, excluding stock based
incentive programs and including special retention and sign-on bonuses, if any.
	 
	1.10	 	“Change in Control” shall mean the first to occur of any of the following events:

	 	(a)	 	One person, or more than one person acting as a group, acquires ownership of
stock of the Company that, together with stock held by such person or group,
constitutes more than 50% of the total fair market value or total voting power of the
stock of the Company; or
	 
	 	(b)	 	One person, or more than one person acting as a group, acquires (or has
acquired during the 12-month period ending on the date of the most recent acquisition
by such person or group) ownership of stock of the Company possessing 30% or more of
the total voting power of the stock of the Company;
	 
	 	(c)	 	A majority of the members of the Board is replaced during any 12-month period
by directors whose appointment or election is not endorsed by a majority of the members
of the Board prior to the date of such appointment or election; or
	 
	 	(d)	 	One person, or more than one person acting as a group, acquires (or has
acquired during the 12-month period ending on the date of the most recent acquisition
by such person or group) assets from the Company that have a total gross fair market
value equal to or more than 40% of the total gross fair market value of all assets of
the Company immediately prior to such acquisition or acquisitions..

	1.11	 	“Claimant” shall have the meaning set forth in Section 14.1.
	 
	1.12	 	“Code” shall mean the Internal Revenue Code of 1986, as it may be amended from time to time.

	1.13	 	“Committee” shall mean the administrative committee appointed pursuant to the Plan as
described in Article 12. The Committee shall consist of the members of the Payless
ShoeSource, Inc. 401(k) Profit Sharing Plan Committee as such term is defined in the Payless
ShoeSource, Inc. 401(k) Profit Sharing Plan.
	 
	1.14	 	“Company” shall mean Collective Brands, Inc., a Delaware corporation, and any successor to
all or substantially all of the Company’s assets or business.
	 
	1.15	 	“Company Contribution Account” shall mean (i) the sum of the Participant’s Company
Contribution Amounts, plus or minus (ii) amounts credited or debited in accordance with

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	 	 	all
the applicable crediting and debiting provisions of this Plan that relate to the Participant’s
Company Contribution Account, less (iii) all distributions made to the Participant or his or
her Beneficiary pursuant to this Plan that relate to the Participant’s Company Contribution
Account.
	 
	1.16	 	“Company Contribution Amount” shall mean, for any one Plan Year, the amount determined in
accordance with Section 3.5.
	 
	1.17	 	“Company Matching Account” shall mean (i) the sum of all of a Participant’s Company Matching
Amounts, plus or minus (ii) amounts credited or debited in accordance with all the applicable
crediting and debiting provisions of this Plan that relate to the Participant’s Company
Matching Account, less (iii) all distributions made to the Participant or his or her
Beneficiary pursuant to this Plan that relate to the Participant’s Company Matching Account.
	 
	1.18	 	“Company Matching Amount” for any one Plan Year shall be the amount determined in accordance
with Section 3.6.
	 
	1.19	 	“Deduction Limitation” shall mean the following described limitation on a benefit that may
otherwise be distributable pursuant to the provisions of this Plan. Except as otherwise
provided, this limitation shall be applied to all distributions that are “subject to the
Deduction Limitation” under this Plan. If an Employer reasonably anticipates prior to a
Change in Control that any compensation paid to a Participant for a taxable year of the
Employer would not be deductible by the Employer solely by reason of the limitation under Code
Section 162(m), then to the extent deemed necessary by the Employer to ensure that the entire
amount of any distribution to the Participant pursuant to this Plan prior to the Change in
Control is deductible, the Employer may defer all or any portion of a distribution under this
Plan. Any amounts deferred pursuant to this limitation shall continue to be credited/debited
with additional amounts in accordance with Section 3.10 below. The amounts so deferred and
amounts credited/debited thereon shall be distributed to the Participant or his or her
Beneficiary (in the event of the Participant’s death) at the earliest possible date on which
the Employer reasonably anticipates, or should reasonably anticipate, that the deductibility
of compensation paid or payable to the Participant for the taxable year of the Employer during
which the distribution is made will not be limited by Section 162(m) (or, in the event of the
Participant’s Retirement, Termination of Employment or death, within sixty (60) days after the
applicable Benefit Distribution Date). Notwithstanding anything to the contrary in this Plan,
the Deduction Limitation shall not apply to any distributions made after a Change in Control.
	 
	1.20	 	“Deferral Account” shall mean (i) the sum of all of a Participant’s Annual Deferral Amounts,
plus or minus (ii) amounts credited or debited in accordance with all the applicable crediting
and debiting provisions of this Plan that relate to the Participant’s Deferral Account, less
(iii) all distributions made to the Participant or his or her Beneficiary pursuant to this
Plan that relate to his or her Deferral Account.
	 
	1.21	 	“Disability” or “Disabled” shall mean that a Participant is (i) unable to engage in any
substantial gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last for a
continuous period of not less than 12 months, or (ii) by reason of any medically

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Collective Brands, Inc. Deferred Compensation Plan

	 	 	determinable
physical or mental impairment which can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months, receiving income replacement benefits
for a period of not less than 3 months under an accident or health plan covering employees of
the Participant’s Employer. For purposes of this Plan, a Participant shall be deemed Disabled
if determined to be totally disabled by the Social Security Administration, or if determined
to be disabled in accordance with any disability insurance program of such Participant’s
Employer, provided that the definition of “disability” applied under such disability insurance
program complies with the requirements in the preceding sentence.
	 
	1.22	 	“Disability Benefit” shall mean the benefit set forth in Article 8.
	 
	1.23	 	“Election Form” shall mean the form established from time to time by the Committee that a
Participant completes, signs and returns to the Committee to make an election under the Plan.
	 
	1.24	 	“Employee” shall mean a person who is an employee of any Employer.
	 
	1.25	 	“Employer(s)” shall mean the Company and if authorized by the Company to participate herein,
any subsidiary of the Company or any affiliated corporation or partnership which elects to
participate herein. An Employer may terminate its participation in the Plan as of the first
day of any Plan Year, which shall mean a determination by the Employer’s Board of Directors no
later than December 31 preceding such Plan Year that (i) all of its Participants in the Plan
shall no longer be eligible to participate in the Plan, (ii) no new deferral elections for
such Participants shall be permitted, and (iii) such Participants shall no longer be eligible
to receive Company Contribution Amounts or Company Matching Amounts under this Plan. The
Account Balances of the Participants of any Employer which terminates its participation in the
Plan shall continue to be credited or debited with earnings or losses and distributed in
accordance with the remaining provisions of the Plan.
	 
	1.26	 	“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as it may be amended
from time to time.
	 
	1.27	 	“401(k) Plan” shall be the Payless ShoeSource, Inc. 401(k) Profit Sharing Plan or any
successor plan adopted by the Company, and as amended from time to time.
	 
	1.28	 	“Key Employee” shall mean any Participant who is a “key employee” (as defined in Code Section
416(i) without regard to paragraph (5) thereof) of an Employer based upon the 12-month period
ending on each December 31st (such 12-month period is referred to below as the
“identification period”). All Participants who are determined to be key employees under Code
Section 416(i) (without regard to paragraph (5) thereof) during the identification period
shall be treated as Key Employees for purposes of the Plan during the 12-month period that
begins on the first day of the 4th month following the close of such
identification period. For purposes of determining whether a Participant is a Key Employee,
the definition of Compensation set forth in Treasury Regulation Section 1.415(c)-2(a) shall
be applied [without respect to any safe harbor provided in 

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	 	 	Section 1.415(c)-2(d), without
respect to the special timing rules in
Section 1.415(c)-2(e), and without respect to any of the special rules in Section 1.415(c)-2(g)].

	1.29	 	“Participant” shall mean any Employee of an Employer (i) who is selected to participate in
the Plan, (ii) who elects to participate in the Plan, (iii) who signs and properly completes
an Election Form, (iv)  whose signed and properly completed Election Form is timely submitted
to the Committee, (v) who commences participation in the Plan, and (vi) whose participation
has not terminated. A spouse or former spouse of a Participant shall not be treated as a
Participant in the Plan or have an account balance under the Plan, even if he or she has an
interest in the Participant’s benefits under the Plan as a result of applicable law or
property settlements resulting from legal separation or divorce.
	 
	1.30	 	“Performance Based Compensation” shall have such definition as set forth in Code Section 409A
and related Treasury guidance and Regulations. As specified under Code Section 409A, until
such time as amended under Code Section 409A, performance based compensation refers to
compensation where (i) the payment of the compensation or the amount of the compensation is
contingent on the satisfaction of organizational or individual performance criteria
established in writing no later than ninety (90) days after the commencement of the
performance period to which the criteria relate, and (ii) the performance criteria are not
substantially certain to be met at the time the criteria are established. Performance Based
Compensation may include payments based upon subjective performance criteria, but (i) any
subjective performance criteria must relate to the performance of the Participant, a group of
Participants that includes the Participant, or a business unit for which the Participant
provides services (which may include the entire organization); and (ii) the determination that
any subjective performance criteria have been met must not be made by the Participant, a
family member of the Participant (as defined in Code Section 267(c)(4) applied as if the
family of an individual includes the spouse of any member of the family) or a person under the
effective control of the Participant or any such family member. Performance Based Compensation
may also include payments based on performance criteria that are not approved by a
compensation committee of the Board of Directors or by the stockholders or members of the
Company or an Employer. Notwithstanding the foregoing, Performance Based Compensation does not
include any amount or portion of any amount that will be paid either regardless of
performance, or based upon a level of performance that is substantially certain to be met at
the time the criteria are established, or that is based solely on the value of, or
appreciation in value of, the Company or the stock of the Company.
	 
	1.31	 	“Plan” shall mean the Collective Brands, Inc. Deferred Compensation Plan, formerly the
Payless ShoeSource, Inc. Deferred Compensation 401(k) Mirror Plan, which shall be evidenced by
this instrument, as it may be amended from time to time.
	 
	1.32	 	“Plan Year” shall mean (a) prior to February 1, 2009, the fiscal year of the Company,
(b) effective February 1, 2009, the period beginning on February 1, 2009 and ending on
December 31, 2009, and (c), effective January 1, 2010, the period beginning on January
1st and ending on December 31st of each year.
	 
	1.33	 	“Pre-Retirement Survivor Benefit” shall mean the benefit set forth in Article 6.

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Collective Brands, Inc. Deferred Compensation Plan

	1.34	 	“Retirement”, “Retire(s)” or “Retired” shall mean, with respect to an Employee, separation
from service with all Employers, and all other corporations, trades or businesses aggregated
with any Employer under Code Section 414(b) or (c), for any reason other than death or
Disability, as determined in accordance with Code Section 409A and related Treasury guidance
and Regulations, on or after the earlier of the attainment of (a) age sixty-five (65) or (b)
age fifty-five (55) with five (5) Years of Service.
	 
	1.35	 	“Retirement Benefit” shall mean the benefit set forth in Article 5.
	 
	1.36	 	“Scheduled Distribution” shall mean the distribution set forth in Section 4.1.
	 
	1.37	 	“Stock” shall mean Collective Brands, Inc. common stock, $ .001 par value, or any other
equity securities of the Company designated by the Committee.
	 
	1.38	 	“Terminate the Plan” or “Termination of the Plan” shall mean a determination by the Board to
terminate and liquidate the Plan in accordance with Section 11.1.
	 
	1.39	 	“Termination Benefit” shall mean the benefit set forth in Article 7.
	 
	1.40	 	“Termination of Employment” shall mean the separation from service with all Employers, and
all other corporations, trades or businesses aggregated with any Employer under Code Section
414(b) or (c), involuntarily or voluntarily, for any reason other than Retirement, Disability
or death, as determined in accordance with Code Section 409A and related Treasury guidance and
Regulations.
	 
	1.41	 	“Trust” shall mean one or more trusts, commonly referred to as a “rabbi trust,” established
between the Company and the Trustee named therein, as amended from time to time.
	 
	1.42	 	“Unforeseeable Emergency” shall mean a severe financial hardship of the Participant or his or
her Beneficiary resulting from (i) an illness or accident of the Participant or Beneficiary,
the Participant’s or Beneficiary’s spouse, or the Participant’s or Beneficiary’s dependent (as
defined in Code Section 152, without regard to Code Section 152(b)(1), (b)(2) and (d)(1)(B)),
(ii) a loss of the Participant’s or Beneficiary’s property due to casualty, or (iii) such
other similar extraordinary and unforeseeable circumstances arising as a result of events
beyond the control of the Participant or the Participant’s Beneficiary, all as determined in
the sole discretion of the Committee.
	 
	1.43	 	“Variable Account” shall mean, with respect to a Participant, a credit on the records of the
Employer equal to the sum of (i) the Deferral Account balance, (ii) the Company Contribution
Account balance, and (iii) the Company Matching Account balance. The Variable Account, and
each other specified account balance, shall be a bookkeeping entry only and shall be utilized
solely as a device for the measurement and determination of the amounts to be paid to a
Participant, or his or her designated Beneficiary, pursuant to this Plan.
	 
	1.44	 	“Year of Service” shall have the same meaning as the term Vesting Service under the 401(k)
Plan.

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ARTICLE 2

Selection, Enrollment, Eligibility

	2.1	 	Selection by Committee. Participation in the Plan shall be limited to a select group
of management and highly compensated Employees of the Employers, as determined by the
Committee in its sole discretion. From that group, the Committee shall select, in its sole
discretion, Employees to participate in the Plan.
	 
	2.2	 	Enrollment Requirements.

	 	(a)	 	As a condition to participation, each selected Employee who is eligible to
participate in the Plan effective as of the first day of a Plan Year shall properly
complete, execute and return to the Committee an Election Form on or before the
December 31st preceding such Plan Year, or such earlier deadline as may be
established by the Committee in its sole discretion, in order to participate for that
Plan Year. In addition, the Committee shall establish from time to time such other
enrollment requirements as it determines in its sole discretion are necessary. An
eligible Employee who satisfies the enrollment requirements of this subsection (a)
shall commence or continue participation in the Plan as of the first day of the
applicable Plan Year.
	 
	 	(b)	 	An Employee who first becomes eligible to participate in this Plan after the
first day of a Plan Year must properly complete, execute and return to the Committee an
Election Form within thirty (30) days after he or she first becomes eligible to
participate in the Plan, or within such other earlier deadline as may be established by
the Committee, in its sole discretion, in order to participate for that Plan Year;
provided, however, that this Section 2.2(b) shall not apply with respect to any
Employee who previously participated in a nonqualified deferred compensation plan
aggregated with this Plan, as determined in accordance with Code Section 409A and
related Treasury guidance or Regulations, and any such Employee may participate in the
Plan only in accordance with Section 2.2(a). In addition, the Committee shall
establish from time to time such other enrollment requirements as it determines in its
sole discretion are necessary. An eligible Employee who satisfies the enrollment
requirements of this subsection (b) shall commence participation in the Plan as of the
date his or her Election Form is returned to the Committee.
	 
	 	(c)	 	If an Employee fails to meet the requirements contained in Section 2.2 within
the period required, that Employee shall not be eligible to participate in the Plan
during the Plan Year.

	2.3	 	Termination of Participation and/or Deferrals. If the Committee determines in good
faith that a Participant no longer qualifies as a member of a select group of management or
highly compensated employees, as membership in such group is determined in accordance with
Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, the Committee shall have the right, in its
sole discretion, to prevent the Participant from making future deferral elections.

-8-

 

Collective Brands, Inc. Deferred Compensation Plan

ARTICLE 3

Deferral Commitments/Company Matching/Crediting/Taxes

	3.1	 	Minimum Deferrals.

	 	(a)	 	Annual Salary and Bonus. For each Plan Year, a Participant may elect
to defer, as his or her Annual Deferral Amount, Annual Salary payable for such Plan
Year and/or Bonus payable for the Plan Year or the fiscal year of the Company beginning
in such Plan Year, in the following combined minimum amount.

	 	 	 	 	 
	Deferral	 	Minimum Amount
	Annual Salary
	 	$	0	 
	Bonus
	 	$	0	 
	Annual Salary plus Bonus
	 	$	500	 

	 	 	 	If an election is made for less than the stated minimum amount, or if no election is
made, the amount deferred shall be zero.
	 
	 	(b)	 	Short Plan Year. Notwithstanding the foregoing, if a Participant first
becomes a Participant after the first day of a Plan Year the minimum Annual Deferral
Amount with respect to Annual Salary plus Bonus shall be an amount equal to the minimum
set forth above, multiplied by a fraction, the numerator of which is the number of
complete months remaining in the Plan Year and the denominator of which is 12.

	3.2	 	Maximum Deferral.

	 	(a)	 	Annual Salary and Bonus. For each Plan Year, a Participant may elect
to defer, as his or her Annual Deferral Amount, Annual Salary payable for such Plan
Year and/or Bonus payable for the Plan Year or the fiscal year of the Company beginning
in such Plan Year, as applicable, up to the following maximum percentages for each
deferral elected:

-9-

 

	 	 	 	 	 
	Deferral	 	Maximum Amount
	Annual Salary
	 	 	75	%
	Bonus
	 	 	100	%

	 	(b)	 	Notwithstanding the foregoing, if a Participant first becomes a Participant
after the first day of a Plan Year the maximum Annual Deferral Amount with respect to
Annual Salary and Bonus shall be limited to the amount of compensation not yet earned
by the Participant as of the date the Participant submits an Election Form to the
Committee in accordance with Section 2.2(b), except that in the case of compensation
that is earned based upon a specified performance period, the Participant’s deferral
election will apply to the portion of such compensation that is equal to (i) the total
amount of such compensation for the performance period, multiplied by (ii) a fraction,
the numerator of which is the number of days remaining in the performance period after
the Participant’s deferral election is made, and the denominator of which is the total
number of days in the performance period.

	3.3	 	Election to Defer; Effect of Election Form.

	 	(a)	 	First Plan Year. In connection with a Participant’s commencement of
participation in the Plan, the Participant shall make an irrevocable deferral election
for the Plan Year in which the Participant commences participation in the Plan, along
with such other elections as the Committee deems necessary or desirable under the Plan.
For these elections to be valid, the Election Form must be completed and signed by the
Participant and timely delivered to the Committee (in accordance with Section 2.2
above). Any such election shall be applicable with respect to (i) Annual Salary
payable for the portion of such Plan Year after the date of such election, and (ii) in
accordance with rules and procedures prescribed by the Administrator, one or more
categories of Bonus payable for the portion of the Plan Year or the fiscal year of the
Company beginning in such Plan Year, as applicable, determined in accordance with
Section 3.2(b).
	 
	 	(b)	 	General Timing Rule for Subsequent Plan Years. For each succeeding
Plan Year, a Participant may irrevocably elect to defer Annual Salary and Bonus and
make such other elections as the Committee deems necessary or desirable under the plan
by timely delivering a new Election Form to the Committee, in accordance with its rules
and procedures, on or before the December 31st preceding the Plan Year in
which such compensation is earned, or before such other deadline established by the
Committee in accordance with the requirements of Code Section 409A and related Treasury
guidance or Regulations. Any such election shall be applicable with respect to (i)
Annual Salary payable for such Plan Year, and (ii) in accordance with rules and
procedures prescribed by the Administrator, one or more categories of Bonus payable for
the Plan Year or the fiscal year of the Company beginning in such Plan Year, as
applicable.

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Collective Brands, Inc. Deferred Compensation Plan

	 	(c)	 	Performance-Based Compensation. Notwithstanding the foregoing, the
Committee may, in its sole discretion, determine that an irrevocable deferral election
pertaining to Performance-Based Compensation based on services performed over a period
of at least twelve (12) months, may be made by timely delivering a properly completed
and signed Election Form to the Committee in accordance with its rules and procedures
no later than six (6) months before the end of the performance period. In order to be
eligible to make a deferral election for Performance-Based Compensation, a Participant
must perform services continuously from the later of the beginning of the performance
period or the date upon which the performance criteria for such compensation are
established through the date upon which the Participant makes a deferral election for
such compensation. In no event shall an election to defer Performance-Based
Compensation be permitted after such compensation has become readily ascertainable.
	 
	 	(d)	 	Compensation Subject to Risk of Forfeiture. With respect to
compensation (i) to which a Participant has a legally binding right to payment in a
subsequent year, and (ii) that is subject to a forfeiture condition requiring the
Participant’s continued services for a period of at least twelve (12) months from the
date the Participant obtains the legally binding right, the Committee may, in its sole
discretion, determine that an irrevocable deferral election for such compensation may
be made by timely delivering a properly completed and signed Election Form to the
Committee in accordance with its rules and procedures no later than the 30th
day after the Participant obtains the legally binding right to the compensation,
provided that the election is made at least twelve (12) months in advance of the
earliest date at which the forfeiture condition could lapse.

	3.4	 	Withholding of Annual Deferral Amounts. For each Plan Year, the Annual Salary
portion of the Annual Deferral Amount shall be withheld from each regularly scheduled Annual
Salary payroll in equal amounts, as adjusted from time to time for increases and decreases in
Annual Salary. The Bonus portion of the Annual Deferral Amount shall be withheld at the time
the Bonus is or otherwise would be paid to the Participant, whether or not this occurs during
the Plan Year itself. Annual Deferral Amounts shall be credited to a Participant’s Deferral
Account at the time such amounts would otherwise have been paid to the Participant.
	 
	3.5	 	Company Contribution Amount. For each Plan Year, an Employer, in its sole
discretion, may, but is not required to, credit any amount it desires to any Participant’s
Company Contribution Account under this Plan, which amount shall be for that Participant. The
amount so credited to a Participant may be smaller or larger than the amount credited to any
other Participant, and the amount credited to any Participant for a Plan Year may be zero,
even though one or more other Participants receive a Company Contribution Amount for that Plan
Year. If a Participant is not employed by an Employer as of the last day of a Plan Year other
than by reason of his or her Retirement, Disability or death (while employed), the Company
Contribution Amount for that Plan Year shall be zero.

-11-

 

	3.6	 	Company Matching Amount. For each Plan Year, an Employer, in its sole discretion,
may, but is not required to, credit any amount it desires to any Participant’s Matching
Contribution Account under this Plan, which amount shall be for that Participant.
	 
	3.7	 	Crediting of Amounts after Benefit Distribution. Notwithstanding any provision of
this Plan to the contrary, should the complete distribution of a Participant’s vested Account
Balance occur prior to the date on which any portion of (i) the Annual Deferral Amount that a
Participant has elected to defer in accordance with Section 3.3, (ii) the Company Contribution
Amount, or (iii) the Company Matching Amount, would otherwise be credited to the Participant’s
Account Balance, such amounts shall not be credited to the Participant’s Account Balance, but
shall be paid to the Participant by the last day of the Plan Year in which such amount would
otherwise have been credited to the Participant’s Account Balance.
	 
	3.8	 	Investment of Trust Assets. The Trustee of the Trust shall be authorized, upon
written instructions received from the Committee or investment manager appointed by the
Committee, to invest and reinvest the assets of the Trust in accordance with the applicable
Trust Agreement.
	 
	3.9	 	Vesting.
	 
	 	 	A Participant shall at all times be 100% vested in his or her Deferral Account.

	 	(a)	 	A Participant shall be vested in his or her Company Contribution Account and
Company Matching Account as follows: (i) with respect to all benefits under this Plan
other than the Termination Benefit, a Participant’s Company Contribution Account and
Company Matching Account shall equal 100% of such Participant’s Company Contribution
Account and Company Matching Account; and (ii) with respect to the Termination Benefit,
a Participant’s Company Contribution Account and Company Matching Account shall vest on
the basis of the Participant’s Years of Service at the time the Participant experiences
a Termination of Employment, in accordance with the following schedule:

	 	 	 	 	 
	 	 	Vested Percentage of
	Years of Service at	 	Company Contribution
	Date of Termination of	 	Account and
	Employment	 	Company Matching Account
	Fewer than 2 years
	 	 	0	%
	2 years
	 	 	25	%
	3 years
	 	 	50	%
	4 years
	 	 	75	%
	5 years or more
	 	 	100	%

	 	(b)	 	Notwithstanding anything to the contrary contained in this Section 3.9, a
Participant’s Company Contribution Account and Company Matching Account shall
immediately become 100% vested (if it is not already vested in accordance with the
above vesting schedules) in the event of the following with respect to a

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Collective Brands, Inc. Deferred Compensation Plan

	 	 	 	Participant while employed by an Employer: Retirement; Disability; death; or a
Change in Control.
	 
	 	(c)	 	Notwithstanding subsection (a), the vesting schedule for a Participant’s
Company Contribution Account and Company Matching Account shall not be accelerated to
the extent that the Committee determines that such acceleration would cause the
deduction limitations of Section 280G of the Code to become effective (except as may be
provided in agreements that exist from time to time between any Employer and a
Participant which provides for acceleration of vesting upon a Change in Control). In
the event that all of a Participant’s Company Contribution Account and/or Company
Matching Account is not vested pursuant to such a determination, the Participant may
request independent verification of the Committee’s calculations with respect to the
application of Section 280G. In such case, the Committee must provide to the
Participant within 15 business days of such a request an opinion from a nationally
recognized accounting firm selected by the Participant (the “Accounting Firm”). The
opinion shall state the Accounting Firm’s opinion that any limitation in the vested
percentage hereunder is necessary to avoid the limits of Section 280G and contain
supporting calculations. The cost of such opinion shall be paid for by the Company.

	3.10	 	Crediting/Debiting of Account Balances. In accordance with, and subject to,
the rules and procedures that are established from time to time by the Committee, in its sole
discretion, amounts shall be credited or debited to a Participant’s Account Balance in
accordance with the following rules:

	 	(a)	 	Election of Measurement Funds for Variable Account. A Participant, in
connection with his or her initial deferral election in accordance with Section 3.3(a)
above, shall elect, on the Election Form, one or more Measurement Fund(s) (as described
in Section 3.10(c) below) to be used to determine the additional amounts to be credited
or debited to his or her Variable Account when the Participant commences participation
in the Plan and continuing thereafter for each subsequent business day in which the
Participant participates in the Plan, unless changed in accordance with the next
sentence. Commencing with the business day that follows the Participant’s commencement
of participation in the Plan and continuing thereafter for each subsequent business day
in which the Participant participates in the Plan, the Participant may (but is not
required to) elect, by submitting an Election Form to the Committee that is accepted by
the Committee, to reallocate among the available Measurement Fund(s) to be used to
determine the additional amounts to be credited or debited to his or her Variable
Account, or to change the portion of his or her Variable Account allocated to each
previously or newly elected Measurement Fund. If an election is made in accordance with
the previous sentence, it shall apply as soon as administratively possible and shall
continue thereafter for each subsequent business day in which the Participant
participates in the Plan, unless changed in accordance with the previous sentence. A
Participant shall be permitted to request that the Committee reallocate the amount
available in the Measurement Fund(s) once during a calendar month.

-13-

 

	 	(b)	 	Proportionate Allocation. In making any election described in Section
3.0(a) above, the Participant shall specify on the Election Form, in increments of one
percentage point (1%), the percentage of his or her Variable Account to be allocated to
a Measurement Fund (as if the Participant was making an investment in that Measurement
Fund with that portion of his or her Variable Account).
	 
	 	(c)	 	Measurement Funds. The Participant may elect one or more measurement
funds (the “Measurement Funds”) for the purpose of crediting or debiting additional
amounts to his or her Variable Account. The Committee shall, in its sole discretion,
select, discontinue, substitute or add a Measurement Fund at any time. Subject to the
shareholders of the Company approving the use of Stock under the Plan, the Committee
may offer a Collective Brands, Inc. Stock Fund (the “Stock Fund”) as a Measurement
Fund.
	 
	 	(d)	 	Crediting or Debiting Method. The performance of each elected
Measurement Fund (either positive or negative) will be determined by the Committee, in
its reasonable discretion, based on the performance of the Measurement Funds
themselves. A Participant’s Account balance shall be credited or debited on a daily
basis based on the performance of each Measurement Fund selected by the Participant for
the Variable Account, as determined by the Committee, as though (i) a Participant’s
Account Balance were invested in the selected or required Measurement Fund(s), or both,
in the percentages applicable to such business day, as of the close of business on the
business day, at the closing price on such date; (ii) the portion of the Annual
Deferral Amount that was actually deferred as of the business day were invested in the
Measurement Fund(s) selected by the Participant, in the percentages applicable to such
business day, as soon as administratively possible after the day on which such amounts
are actually deferred from the Participant’s Annual Salary through reductions in his or
her payroll; and (iii) any distribution made to a Participant that decreases such
Participant’s Account Balance ceased being invested in the Measurement Fund(s), in the
percentages applicable to such business day, as soon as administratively possible. The
Participant’s Company Matching Amount, if any, shall be credited to his or her Company
Matching Account for purposes of this Section 3.10(d) on the date selected by the
Committee in its sole and absolute discretion. The Participant’s Company Contribution
Amount, if any, shall be credited to his or her Company Contribution Account for
purposes of this Section 3.10(d) on the date selected by the Committee, in its sole and
absolute discretion.
	 
	 	(e)	 	Special Rule for Variable Account Invested in Stock. Notwithstanding
any provision of this Plan that may be construed to the contrary, (i) the portion of
the Participant’s Variable Account allocated to the Stock Fund must at all times prior
to distribution be allocated to the Stock Fund, and (ii) the portion of the
Participant’s Variable Account allocated to the Stock Fund must be distributed in the
form of Stock.
	 
	 	(f)	 	No Actual Investment. Notwithstanding any other provision of this Plan
that may be interpreted to the contrary, the Measurement Funds are to be used for
measurement purposes only, and a Participant’s election of any such Measurement

 

 

Collective Brands, Inc. Deferred Compensation Plan

	 	 	 	Fund, the allocation to his or her Account Balance thereto, the calculation of
additional amounts and the crediting or debiting of such amounts to a Participant’s
Account Balance shall not be considered or construed in any manner
as an actual investment of his or her Account Balance in any such Measurement Fund.
In the event that the Company or the Trustee (as that term is defined in the Trust),
in its own discretion, decides to invest funds in any or all of the Measurement
Funds, no Participant shall have any rights in or to such investments themselves.
Without limiting the foregoing, a Participant’s Account Balance shall at all times
be a bookkeeping entry only and shall not represent any investment made on his or
her behalf by the Company or the Trust; the Participant shall at all times remain an
unsecured creditor of the Company.

	3.11	  	FICA and Other Taxes.
	 
	(a)   	  	Annual Deferral Amounts. For each Plan Year in which an Annual Deferral Amount
is being withheld from a Participant, the Participant’s Employer(s) shall withhold from that
portion of the Participant’s Annual Salary and Bonus that is not being deferred, in a manner
determined by the Employer(s), the Participant’s share of FICA and other employment taxes on
such Annual Deferral Amount. If necessary, the Committee may reduce the Deferral Account in
order to comply with this Section 3.11 and to satisfy any withholding obligation of the
Employer(s) for income or earnings taxes under federal, state or local law resulting from such
reduction.
	 
	(b)   	  	Company Matching Account and Company Contribution Account. When a Participant
becomes vested in a portion of his or her Company Matching Account or Company Contribution
Account, or both, the Participant’s Employer(s) shall withhold from the Participant’s Annual
Salary and/or Bonus that is not deferred, in a manner determined by the Employer(s), the
Participant’s share of FICA and other employment taxes on such vested portions of his or her
Company Matching Account and/or Company Contribution Account. If necessary, the Committee may
reduce the vested portion of the Participant’s Company Matching Account or Company
Contribution Account, or both, as the case may be, in order to comply with this Section 3.11
and to satisfy any withholding obligation of the Employer(s) for income or other taxes under
federal, state or local law resulting from such reduction.
	 
	3.12	  	Distributions. The Participant’s Employer(s), or the Trustee of the Trust,
shall withhold from any distributions made to a Participant under this Plan all federal, state
and local income, employment and other taxes required to be withheld by the Employer(s), or
the Trustee of the Trust, in connection with such distributions, in amounts and in a manner to
be determined in the sole discretion of the Employer(s) and the Trustee of the Trust.

-15-

 

ARTICLE 4

Scheduled Distribution; Unforeseeable Emergencies;

Withdrawal Election

	4.1	 	Scheduled Distribution. In connection with each election to defer an Annual Deferral
Amount, a Participant may irrevocably elect to receive a Scheduled Distribution, in the form
of a lump sum payment, from the Plan with respect to all or a portion of the Annual Deferral
Amount. Subject to the Deduction Limitation, the Scheduled Distribution shall be a lump sum
payment in an amount that is equal to the Annual Deferral Amount plus amounts credited or
debited in the manner provided in Section 3.10 above on that amount, determined at the time
that the Scheduled Distribution becomes payable. Subject to the Deduction Limitation and the
other terms and conditions of this Plan, each Scheduled Distribution elected shall be paid out
during a sixty (60) day period commencing immediately after the last day of any calendar year
designated by the Participant that is at least three Plan Years after the Plan Year in which
the Annual Deferral Amount is actually deferred (“Scheduled Distribution Date”). With respect
to any Scheduled Distribution election, a Participant may make a one time election to re-defer
that distribution to a specified date that is not less than the first day of the Plan Year
that is five (5) Plan Years after the Plan Year in which the Scheduled Distribution would
otherwise be paid. The Participant may make this re-deferral election by submitting an
Election Form to the Committee, provided that any such Election Form is submitted at least one
(1) year prior to the first day of the Plan Year in which the Scheduled Distribution would
otherwise be paid.
	 
	4.2	 	Other Benefits Take Precedence Over Scheduled Distribution. Should an event occur
that triggers a benefit under Article 5, 6, 7 or 8, any Annual Deferral Amount, plus amounts
credited or debited thereon, that is subject to a Scheduled Distribution election under
Section 4.1 shall not be paid in accordance with Section 4.1 but shall be paid in accordance
with the other applicable Article. Notwithstanding the foregoing, the Committee shall
interpret this Section 4.2 in a manner that is consistent with Code Section 409A and related
Treasury guidance and Regulations.
	 
	4.3	 	Unforeseeable Emergencies.

	 	(a)	 	If the Participant experiences an Unforeseeable Emergency, the Participant may
petition the Committee to receive a partial or full payout from the Plan, subject to
the provisions set forth below.
	 
	 	(b)	 	The payout, if any, from the Plan shall not exceed the lesser of (i) the
Participant’s vested Account Balance, calculated as of the close of the business on or
as soon as administratively feasible after the date on which the amount becomes
payable, as determined by the Committee, or (ii) the amount necessary to satisfy the
Unforeseeable Emergency, plus amounts necessary to pay Federal, state, or local income
taxes or penalties reasonably anticipated as a result of the distribution.
Notwithstanding the foregoing, a Participant may not receive a payout from the Plan to
the extent that the Unforeseeable Emergency is or may be relieved (A) through
reimbursement or compensation by insurance or otherwise, (B) by liquidation of the
Participant’s assets, to the extent the liquidation of such assets would not itself
cause severe financial hardship or (C) by cessation of deferrals

-16-

 

Collective Brands, Inc. Deferred Compensation Plan

	 	 	 	under this Plan. The availability of payments due to the unforeseeable emergency
under any other nonqualified deferred compensation plan as defined for purposes of
Code Section 409A, including plans that would be nonqualified deferred compensation
plans for purposes of Code Section 409A except due to the effective date thereof, or
under any qualified plan (including any assets available by obtaining a loan under a
qualified plan), need not be considered in determining whether an emergency is or
may be relieved through other means. If an event would constitute an Unforeseeable
Emergency under the Plan if it occurred with respect to the Participant’s spouse or
dependent, such event will be deemed to constitute an Unforeseeable Emergency if it
occurs with respect to a person who is a Participant’s Beneficiary under the Plan.
	 
	 	(c)	 	If the Committee, in its sole discretion, approves a Participant’s petition for
payout from the Plan, the Participant shall receive a payout from the Plan within sixty
(60) days of the date of such approval, and the Participant’s deferrals under the Plan
shall be terminated as of the date of such approval.
	 
	 	(d)	 	In addition, a Participant’s deferral elections under this Plan shall be
terminated to the extent the Committee determines, in its sole discretion, that
termination of such Participant’s deferral elections is required pursuant to Treas.
Reg. §1.401(k)-1(d)(3) for the Participant to obtain a hardship distribution from an
Employer’s 401(k) Plan. If the Committee determines that a termination of the
Participant’s deferrals is required in accordance with the preceding sentence, the
Participant’s deferrals shall be terminated as soon as administratively practicable
following the date on which such determination is made.
	 
	 	(e)	 	Notwithstanding the foregoing, the Committee shall interpret all provisions
relating to a payout and/or termination of deferrals under Section 4.3 in a manner that
is consistent with Code Section 409A and related Treasury guidance and Regulations.

-17-

 

ARTICLE 5

Retirement Benefit

	 	 	 
	5.1

	 	Retirement Benefit. A Participant who Retires shall receive, as a Retirement
Benefit, his or her Account Balance, calculated as of the close of the business on or as soon
as administratively feasible after the Participant’s Benefit Distribution Date and each date
provided under Section 1.3, if applicable, as determined by the Committee.
	 
	 	 
	5.2

	 	Payment of Retirement Benefit. A Participant, in connection with his or her
commencement of participation in the Plan, shall elect on an Election Form to receive the
Retirement Benefit pursuant to a lump sum or an Annual Installment Method paid over a period
not to exceed 15 years. The Participant may annually change his or her election to an
allowable alternative payout form or period by submitting a new Election Form to the
Committee, provided that any such Election Form is submitted at least one year prior to the
Participant’s Benefit Distribution Date, and that such payout shall not be made or commence
until a specified date that is not less than five years after such Benefit Distribution Date.
The Election Form most recently submitted by the Participant in accordance with the foregoing
provisions of this Section 5.2 shall govern the payout of the Retirement Benefit. If a
Participant does not make any election with respect to the payment of the Retirement Benefit,
then such benefit shall be payable in a lump sum. The lump sum payment shall be made on or
within sixty (60) days after his or her Benefit Distribution Date. Payments made pursuant to
the Annual Installment Method shall be made in accordance with Section 1.3.
	 
	 	 
	5.3

	 	Death Prior to Completion of Retirement Benefit. If a Participant dies after
Retirement but before the Retirement Benefit is paid in full, the Participant’s unpaid Account
Balance shall be paid to the Participant’s Beneficiary in a lump sum (or, if a Beneficiary
dies before such lump sum is paid, to the beneficiary designated in writing by the Beneficiary
on a form to be submitted by the Beneficiary to the Committee (or to the Beneficiary’s estate
if the Beneficiary fails to so designate a beneficiary)). The lump sum payment shall be made
no later than sixty (60) days after the date of the Participant’s death (or, if later, in
January 2009).

 

 

Collective Brands, Inc. Deferred Compensation Plan

ARTICLE 6

Pre-Retirement Survivor Benefit

	 	 	 
	6.1

	 	Pre-Retirement Survivor Benefit. The Participant’s Beneficiary shall receive a
Pre-Retirement Survivor Benefit equal to the Participant’s Account Balance, calculated as of
the close of the business on or as soon as administratively feasible after the Participant’s
Benefit Distribution Date and each date provided under Section 1.3, if applicable, as
determined by the Committee, if the Participant dies before he or she Retires, experiences a
Termination of Employment or suffers a Disability.
	 
	 	 
	6.2

	 	Payment of Pre-Retirement Survivor Benefit. A Participant, in connection with his or
her commencement of participation in the Plan, shall elect on an Election Form the form of
payment to be made to his or her Beneficiary. The Pre-Retirement Survivor Benefit shall be
paid in a lump sum or an Annual Installment Method paid over a period not to exceed 15 years.
The Participant may annually change his or her election to an allowable alternative payout
form or period by submitting a new Election Form to the Committee, provided that any such
Election Form is submitted at least one year prior to the Participant’s death. The Election
Form most recently submitted by the Participant in accordance with the foregoing provisions of
this Section 5.2 shall govern the payout of the Pre-Retirement Survivor Benefit. If a
Participant does not make any election with respect to the payment of the Pre-Retirement
Survivor Benefit, then such benefit shall be payable in a lump sum. The lump sum payment shall
be made no later than sixty (60) days after the date of the Participant’s death. Payments
made pursuant to the Annual Installment Method shall be made in accordance with Section 1.3.
	 
	 	 
	6.3

	 	Death of Beneficiary Prior to Completion of Pre-Retirement Survivor Benefit. If a
Beneficiary dies before the Pre-Retirement Survivor Benefit is paid in full, the unpaid
Pre-Retirement Survivor Benefit shall continue and shall be paid to the beneficiary designated
in writing by the Beneficiary on a form to be submitted by the Beneficiary to the Committee
(or to the Beneficiary’s estate if the Beneficiary fails to so designate a beneficiary) over
the remaining period of time and in the same amounts as that benefit would have been paid to
the Beneficiary had the Beneficiary survived.

-19-

 

ARTICLE 7

Termination Benefit

	 	 	 
	7.1

	 	Termination Benefit. The Participant shall receive a Termination Benefit, which
shall be equal to the Participant’s vested Account Balance if a Participant experiences a
Termination of Employment prior to his or her Retirement, death or Disability. The
Termination Benefit will be calculated as of the close of business on or as soon as
administratively feasible after the Participant’s Benefit Distribution Date and each date
provided under Section 1.3, if applicable, as determined by the Committee in.
	 
	 	 
	7.2

	 	Payment of Termination Benefit. A Participant, in connection with his or her
commencement of participation in the Plan, shall elect on an Election Form to receive the
Termination Benefit pursuant to a lump sum or an Annual Installment Method paid over a period
not to exceed 15 years. Notwithstanding the above, if the Participant’s vested Account
Balance at the time of his or her Termination of Employment (or, in the case of a Key
Employee, the date which is six months after the date of his or her Termination of
Employment), plus his or her vested interest in any other nonqualified deferred compensation
plan aggregated with the Plan under Code Section 409A, does not exceed the limitation
described in Section 402(g) of the Code, payment of his or her Termination Benefit shall be
paid in a lump sum on such date; provided, however, that this sentence shall only be
applicable if such Participant’s interest in any other nonqualified deferred compensation plan
aggregated with the Plan under Code Section 409A is also paid in a lump sum on such date. The
Participant may annually change his or her election to an allowable alternative payout form or
period by submitting a new Election Form to the Committee, provided that any such Election
Form is submitted at least one year prior to the Participant’s Benefit Distribution Date, and
that such payout shall not be made or commence until a specified date that is not less than
five years after such Benefit Distribution Date. The Election Form most recently submitted by
the Participant in accordance with the foregoing provisions of this Section 7.2 shall govern
the payout of the Termination Benefit. If a Participant does not make any election with
respect to the payment of the Termination Benefit, then such benefit shall be payable in a
lump sum. The lump sum payment shall be made on or within sixty (60) days after his or her
Benefit Distribution Date. Payments made pursuant to the Annual Installment Method shall be
made in accordance with Section 1.3.
	 
	 	 
	7.3

	 	Death Prior to Completion of Termination Benefit. If a Participant dies after
Termination of Employment but before the Termination Benefit is paid in full, the
Participant’s unpaid Account Balance shall be paid to the Participant’s Beneficiary in a lump
sum (or, if a Beneficiary dies before such lump sum is paid, to the beneficiary designated in
writing by the Beneficiary on a form to be submitted by the Beneficiary to the Committee (or
to the Beneficiary’s estate if the Beneficiary fails to so designate a beneficiary)). The
lump sum payment shall be made no later than sixty (60) days after the date of the
Participant’s death (or, if later, in January 2009).

 

 

Collective Brands, Inc. Deferred Compensation Plan

ARTICLE 8

Disability Benefit

	 	 	 
	8.1

	 	Disability Benefit. Upon a Participant’s Disability, the Participant shall receive a
Disability Benefit, which shall be equal to the Participant’s Account Balance, calculated as
of the close of business on or as soon as administratively feasible after the Participant’s
Benefit Distribution Date, as determined by the Committee.
	 
	 	 
	8.2

	 	Payment of Disability Benefit. The Disability Benefit shall be paid to the
Participant (or, if a Participant dies after becoming Disabled but before the Disability
Benefit is paid, his or her Beneficiary) in a lump sum payment on or within sixty (60) days
after the Participant’s Benefit Distribution Date.

-21-

 

ARTICLE 9

Beneficiary Designation

	 	 	 
	9.1

	 	Beneficiary. Each Participant shall have the right, at any time, to designate his or
her Beneficiary(ies) (both primary as well as contingent) to receive any benefits payable
under the Plan to a beneficiary upon the death of a Participant. The Beneficiary designated
under this Plan may be the same as or different from the Beneficiary designation under any
other plan of an Employer in which the Participant participates.
	 
	 	 
	9.2

	 	Beneficiary Designation and Change of Beneficiary . A Participant shall designate
his or her Beneficiary by completing and signing the Beneficiary Designation Form, and
returning it to the Committee or its designated agent. A Participant shall have the right to
change a Beneficiary by completing, signing and otherwise complying with the terms of the
Beneficiary Designation Form and the Committee’s rules and procedures, as in effect from time
to time. Upon the acceptance by the Committee of a new Beneficiary Designation Form, all
Beneficiary designations previously filed shall be canceled. The Committee shall be entitled
to rely on the last Beneficiary Designation Form filed by the Participant and accepted by the
Committee prior to his or her death.
	 
	 	 
	9.3

	 	Acknowledgment. No designation or change in designation of a Beneficiary shall be
effective until received and acknowledged in writing by the Committee or its designated agent.
	 
	 	 
	9.4

	 	No Beneficiary Designation. If a Participant fails to designate a Beneficiary as
provided in Sections 9.1, 9.2 and 9.3 above or, if all designated Beneficiaries predecease the
Participant, then the Participant’s designated Beneficiary shall be deemed to be his or her
estate.
	9.5

	 	Doubt as to Beneficiary. If the Committee has any doubt as to the proper Beneficiary
to receive payments pursuant to this Plan, the Committee shall have the right, exercisable in
its discretion, to cause the Participant’s Employer to withhold such payments until this
matter is resolved to the Committee’s satisfaction.
	 
	 	 
	9.6

	 	Discharge of Obligations. The payment of benefits under the Plan to a Beneficiary
shall fully and completely discharge all Employers and the Committee from all further
obligations under this Plan with respect to the Participant, and that Participant’s
participation in the Plan shall terminate upon such full payment of benefits.

 

 

Collective Brands, Inc. Deferred Compensation Plan

ARTICLE 10

Leave of Absence

	 	 	 
	10.1

	 	Paid Leave of Absence. If a Participant is authorized by the Participant’s Employer
to take a paid leave of absence from the employment of the Employer, and such leave of absence
does not constitute a separation from services as determined by the Committee in accordance
with Code Section 409A and related Treasury guidance and Regulations, (i) the Participant
shall continue to be considered eligible for the benefits provided in Articles 4, 5, 6, 7 and
8 in accordance with the provisions of those Articles, and (ii) the Annual Deferral Amount
shall continue to be withheld during such paid leave of absence in accordance with Section
3.3.
	 
	 	 
	10.2

	 	Unpaid Leave of Absence. If a Participant is authorized by the Participant’s
Employer for any reason to take an unpaid leave of absence from the employment of the
Employer, and such leave of absence does not constitute a separation from service, as
determined by the Committee in accordance with Code Section 409A and related Treasury guidance
and Regulations, such Participant shall continue to be eligible for the benefits provided in
Articles 4, 5, 6, 7 and 8 in accordance with the provisions of those Articles. However, if
the Participant returns to employment during the same Plan Year as the unpaid leave of absence
begins, the Participant’s deferral election shall apply to Annual Salary earned during the
remainder of the Plan Year. Even if the Participant does not return to employment during the
same Plan Year, the Participant’s deferral election shall apply to any Bonus earned for the
year in which such unpaid leave of absence commences.

-23-

 

ARTICLE 11

Termination, Amendment or Modification

	 	 	 
	11.1

	 	Termination. Although the Company anticipates that it will continue the Plan for an
indefinite period of time, there is no guarantee that the Company will continue the Plan or
will not Terminate the Plan at any time in the future. The Company may Terminate the Plan in
accordance with Code Section 409A as follows:
	 
	 	 
	 

	 	(A) by irrevocable action taken during the 30 days before or 12 months after a Change in
Control and provided that all agreements, methods, programs and other arrangements sponsored
by the Company, and all other corporations, trades or businesses aggregated with the Company
under Code Section 414(b) or (c), immediately after the time of the Change in Control event
with respect to which deferrals of compensation are treated as having been deferred under a
single plan under Code Section 409A, are terminated and liquidated with respect to each
Participant that experienced the Change in Control event, so that all such Participants are
required to receive all amounts of compensation deferred under such terminated agreements,
methods, programs and other arrangements within 12 months of the date all necessary action
to terminate and liquidate such agreements, methods, programs and other arrangements is
irrevocably taken; or
	 
	 	 
	 

	 	(B) within 12 months of a corporate dissolution taxed under Code Section 331, or with the
approval of a bankruptcy court pursuant to 11 U.S.C. Section 503(b)(1)(A), provided that
amounts deferred under the Plan are included in the Participants’ gross incomes in the
latest of the following years (or, if earlier, the taxable year in which the amount is
actually or constructively received): (i) the calendar year in which the Plan termination
and liquidation occurs, (ii) the first calendar year in which the amount is no longer
subject to a substantial risk forfeiture, or (iii) the first calendar year in which the
payment is administratively practicable; or
	 
	 	 
	 

	 	(C) if (i) all “similar plans” within the meaning specified under Code Section 409A and
related Treasury guidance or Regulations are terminated, (ii) distributions are made no
sooner than 12 months and no later than 24 months after termination, (iii) neither the
Company nor any other corporation, trade or business aggregated with any Employer under Code
Section 414(b) or (c) adopts any new plan of the same type for three years and (iv) the
termination and liquidation does not occur proximate to a downturn in the financial health
of the Company and such corporations, trades or businesses; or
	 
	 	 
	 

	 	(D) as a result of such other events and conditions as the U.S. Treasury Commissioner may
prescribe in generally applicable guidance published in the Internal Revenue Bulletin.
	 
	 	 
	 

	 	In the event of a permissible Termination of the Plan as specified above, the Participants’
vested Account Balances, determined as if they had experienced a Termination of Employment
on the date of Termination of the Plan or, if Plan termination occurs after the date upon
which a Participant was eligible to Retire, then with respect to that Participant as if he
or she had Retired on the date of Termination of the Plan, shall be paid to the Participants
as follows: Prior to a Change in Control, an Employer shall, notwithstanding any elections
made by the Participant, pay such vested Account Balances in a lump sum within the
timeframes specified in subsection (B) or (C) above, as applicable. After a

 

 

Collective Brands, Inc. Deferred Compensation Plan

	 	 	 
	 
	 	 
	 

	 	Change in Control, the Account Balances of all Participants shall be fully vested and the Employer
shall be required to pay such benefits in a lump sum within five (5) business days after
Termination of the Plan pursuant to subsection (A) above.
	 
	 	 
	11.2

	 	Amendment.
	 
	 	 
	(a)

	 	Any Employer may, at any time, amend or modify the Plan in whole or in part with respect to
that Employer by the action of its board of directors; provided, however, that: (i) no
amendment or modification shall be effective to decrease or restrict the value of a
Participant’s vested Account Balance in existence at the time the amendment or modification is
made, calculated as if the Participant had experienced a Termination of Employment as of the
effective date of the amendment or modification or, if the amendment or modification occurs
after the date upon which the Participant was eligible to Retire, the Participant had Retired
as of the effective date of the amendment or modification, and (ii) no amendment or
modification of this Section 11.2 or Section 12.2 of the Plan shall be effective. The
amendment or modification of the Plan shall not affect any Participant or Beneficiary who has
become entitled to the payment of benefits under the Plan as of the date of the amendment or
modification.
	 
	 	 
	(b)

	 	Notwithstanding any provision of the Plan to the contrary, in the event that the Company
determines that any provision of the Plan may cause amounts deferred under the Plan to become
immediately taxable to any Participant under Code Section 409A, and related Treasury guidance
or Regulations, the Company may (i) adopt such amendments to the Plan and appropriate policies
and procedures, including amendments and policies with retroactive effect, that the Company
determines necessary or appropriate to preserve the intended tax treatment of the Plan
benefits provided by the Plan and/or (ii) take such other actions as the Company determines
necessary or appropriate to comply with the requirements of Code Section 409A, and related
Treasury guidance or Regulations.
	 
	 	 
	11.3

	 	Effect of Payment. The full payment of the applicable benefit under Articles 4, 5,
6, 7 or 8 of the Plan shall completely discharge all obligations to a Participant and his or
her designated Beneficiaries under this Plan and the Participant’s participation in the Plan
shall terminate.

-25-

 

ARTICLE 12

Administration

	 	 	 
	12.1

	 	Committee Duties. Except as otherwise provided in this Article 12, this Plan shall
be administered by a Committee which shall consist of the members of the Payless ShoeSource,
Inc. 401(k) Profit Sharing Plan Committee, or such other committee as the Board shall appoint.
Members of the Committee may be Participants in this Plan. The Committee shall also have the
discretion and authority to (i) make, amend, interpret, and enforce all appropriate rules and
regulations for the administration of this Plan and (ii) decide or resolve any and all
questions including interpretations of this Plan, as may arise in connection with the Plan.
Any individual serving on the Committee who is a Participant shall not vote or act on any
matter relating solely to himself or herself. When making a determination or calculation, the
Committee shall be entitled to rely on information furnished by a Participant or the Company.
	 
	 	 
	12.2

	 	Administration Upon Change In Control. For purposes of this Plan, the Committee
shall be the “Administrator” at all times prior to the occurrence of a Change in Control.
Upon and after the occurrence of a Change in Control, the “Administrator” shall be the Trustee
appointed under the Trust. The Administrator shall have the discretionary power to determine
all questions arising in connection with the administration of the Plan and the interpretation
of the Plan and Trust including, but not limited to benefit entitlement determinations and
responses to legal inquiries and challenges. Upon and after the occurrence of a Change in
Control, the Company must: (i) pay out the Account Balances of all Participants, in a lump sum
within five (5) business days after Plan termination pursuant to Section 11.1(A); (ii) pay all
reasonable administrative expenses and fees of the Administrator; (iii) indemnify the
Administrator against any costs, expenses and liabilities including, without limitation,
attorney’s fees and expenses arising in connection with the performance of the Administrator
hereunder, except with respect to matters resulting from the gross negligence or willful
misconduct of the Administrator or its employees or agents; and (iv) supply full and timely
information to the Administrator on all matters relating to the Plan, the Trust, the
Participants and their Beneficiaries, the Account Balances of the Participants, the date of
circumstances of the Retirement, Disability, death or Termination of Employment of the
Participants, and such other pertinent information as the Administrator may reasonably
require. Upon and after a Change in Control, the Administrator may be terminated (and a
replacement appointed) by the Company only with the written consent of a majority of the
Participants.
	 
	 	 
	12.3

	 	Agents. In the administration of this Plan, the Committee may, from time to time,
employ agents and delegate to them such administrative duties as it sees fit (including acting
through a duly appointed representative) and may from time to time consult with counsel who
may be counsel to any Employer.
	 
	 	 
	12.4

	 	Binding Effect of Decisions. The decision or action of the Administrator with
respect to any question arising out of or in connection with the administration,
interpretation and application of the Plan and the rules and regulations promulgated hereunder
shall be final and conclusive and binding upon all persons having any interest in the Plan.

 

 

Collective Brands, Inc. Deferred Compensation Plan

	 	 	 
	 
	 	 
	12.5

	 	Indemnity of Committee. All Employers shall indemnify and hold harmless the members
of the Committee, and any Employee to whom the duties of the Committee may be delegated, and
the Administrator against any and all claims, losses, damages, expenses or liabilities arising
from any action or failure to act with respect to this Plan, except in the case of willful
misconduct by the Committee, any of its members, any such Employee or the Administrator.
	 
	 	 
	12.6

	 	Employer Information. To enable the Committee and/or Administrator to perform its
functions, the Company and each Employer shall supply full and timely information to the
Committee and/or Administrator, as the case may be, on all matters relating to the
compensation of its Participants, the date and circumstances of the Retirement, Disability,
death or Termination of Employment of its Participants, and such other pertinent information
as the Committee or Administrator may reasonably require.

-27-

 

 ARTICLE 12 

Other Benefits and Agreements

	 	 	 
	13.1

	 	Coordination with Other Benefits. The benefits provided for a Participant and
Participant’s Beneficiary under the Plan are in addition to any other benefits available to
such Participant under any other plan or program for employees of the Participant’s Employer.
The Plan shall supplement and shall not supersede, modify or amend any other such plan or
program except as may otherwise be expressly provided.

 

Collective Brands, Inc. Deferred Compensation Plan

ARTICLE 14

Claims Procedures

	14.1	 	Presentation of Claim. Any Participant or Beneficiary of a deceased Participant
(such Participant or Beneficiary being referred to below as a “Claimant”), or his or her duly
authorized representative, may deliver to the Committee a written claim for a determination
with respect to the amounts distributable to such Claimant from the Plan. If such a claim
relates to the contents of a notice received by the Claimant, the claim must be made within 60
days after such notice was received by the Claimant. All other claims must be made within 180
days of the date on which the event that caused the claim to arise occurred. The claim must
state with particularity the determination desired by the Claimant.
	 
	14.2	 	Notification of Decision. Upon receipt of a claim, the Committee shall advise the
Claimant that a reply will be forthcoming within a reasonable period of time, but ordinarily
not later than 90 days, and shall, in fact, delivery such reply within such period. However,
the Committee may extent the reply period for an additional ninety days for reasonable cause.
If the reply period will be extended, the Committee shall advise the Claimant in writing
during the initial 90-day period indicating the special circumstances requiring an extension
and the date by which the Committee expects to render the benefit determination. The
Committee shall notify the Claimant in writing:

	 	(a)	 	that the Claimant’s requested determination has been made, and that the claim
has been allowed in full; or
	 
	 	(b)	 	that the Committee has reached a conclusion contrary, in whole or in part, to
the Claimant’s requested determination, and such notice must set forth in a manner
calculated to be understood by the Claimant:

	 	(i)	 	the specific reason(s) for the denial of the claim, or any part
of it;
	 
	 	(ii)	 	specific reference(s) to pertinent provisions of the Plan upon
which such denial was based;
	 
	 	(iii)	 	a description of any additional material or information
necessary for the Claimant to perfect the claim, and an explanation of why such
material or information is necessary;
	 
	 	(iv)	 	appropriate information as to the steps to be taken if the
Claimant wishes to submit the claim for review, including a statement of the
Claimant’s right to bring a civil action under Section 502(a) of ERISA
following an adverse benefit determination on review; and
	 
	 	(v)	 	the time limits for requesting a review of the denial under
Section 14.3 hereof and for the actual review of the denial under Section 14.4.

-29-

 

	 	(a)	 	Review of a Denied Claim. Within 60 days after receiving a notice from
the Committee that a claim has been denied, in whole or in part, a Claimant (or the
Claimant’s duly authorized representative) may file with the Committee a written
request for a review of the denial of the claim. The Claimant or his or her duly
authorized representative may submit written comments, documents, records or other
information relating to the denied claim, which such information shall be considered in
the review under this subsection without regard to whether such information was
submitted or considered in the initial benefit determination. The Claimant or his or
her duly authorized representative shall be provided, upon request and free of charge,
reasonable access to, and copies of, all non-privileged documents, records and other
information which (i) was relied upon by the Committee in making its initial claims
decision, (ii) was submitted, considered or generated in the course of the Committee
making its initial claims decision, without regard to whether such information was
actually relied upon by the Committee in making its decision or (iii) demonstrates
compliance by the Committee with its administrative processes and safeguards designed
to ensure and to verify that benefit claims determinations are made in accordance with
governing Plan documents and that, where appropriate, the Plan provisions have been
applied consistently with respect to similarly situated claimants. If the Claimant
does not request a review of the Committee’s determination within such 60-day period,
he or she shall be barred and estopped from challenging such determination.

	14.4	 	Decision on Review. Within a reasonable period of time, ordinarily not later than 60
days, after the Committee’s receipt of a request for review, the Committee will review its
prior determination. If special circumstances require that the 60-day time period be
extended, the Committee will so notify the Claimant within the initial 60-day period
indicating the special circumstances requiring an extension and the date by which the
Committee expects to render its decision on review, which shall be as soon as possible but not
later than 120 days after receipt of the request for review. In the event that the Committee
extends the determination period on review due to a Claimant’s failure to submit information
necessary to decide a claim, the period for making the benefit determination on review shall
not take into account the period beginning on the date on which notification of extension is
sent to the Claimant and ending on the date on which the Claimant responds to the request for
additional information. The Committee has discretionary authority to determine a Claimant’s
eligibility for benefits and to interpret the terms of the Plan. Benefits under the Plan will
be paid only if the Committee decides in its discretion that the Claimant is entitled to such
benefits. The decision of the Committee shall be final and non-reviewable, unless found to be
arbitrary and capricious by a court of competent review. Such decision will be binding upon
the Employer and the Claimant. If the Committee makes an adverse benefit determination on
review, the Committee will render a written opinion, using language calculated to be
understood by the Claimant, setting forth:

	 	(a)	 	specific reasons for the decision;
	 
	 	(b)	 	specific reference(s) to the pertinent Plan provisions upon which the decision
was based;
	 
	 	(c)	 	a statement that the Claimant is entitled to receive, upon request and free of
charge, reasonable access to, and copies of, all non-privileged documents, records and

 

 

Collective Brands, Inc. Deferred Compensation Plan

	 	 	 	other information which (i) was relied upon by the Committee in making its decision,
(ii) was submitted, considered or generated in the course of the Committee making its
decision, without regard to whether such information was actually relied upon by the
Committee in making its decision or (iii) demonstrates compliance by the Committee with
its administrative processes and safeguards designed to ensure and to verify that
benefit claims determinations are made in accordance with governing Plan documents, and
that, where appropriate, the Plan provisions have been applied consistently with
respect to similarly situated claimants; and
	 
	 	(d)	 	a statement of the Claimant’s right to bring a civil action under Section
502(a) of ERISA following the adverse benefit determination on such review.

	14.5	 	Special Disability Provisions.

	 	(a)	 	Notwithstanding anything herein, if a Claimant is denied a benefit because he
or she is determined not to be Disabled (other than any such determination by the
Social Security Administration or in accordance with any disability insurance program
of the Claimant’s Employer) and he or she makes a claim pursuant to such denial, the
provisions of this Section 14.5 shall apply. Upon receipt of a claim, the reply period
shall be forty-five (45) days. If, prior to the end of such 45-day period, the
Committee determines that, due to matters beyond the control of the Plan, a decision
cannot be rendered, the period for making the determination may be extended for up to
thirty (30) days, and the Committee shall notify the Claimant, prior to the expiration
of such 45-day period, of the circumstances requiring an extension and the date by
which the Plan expects to render a decision. If, prior to the end of the first 30-day
extension period, the Committee determines that, due to matters beyond the control of
the Plan, a decision cannot be rendered within that extension period, the period for
making the determination may be extended for up to an additional thirty (30) days, and
the Committee shall notify the Claimant, prior to the expiration of the first 30-day
extension period, of the circumstances requiring the extension and the date by which
the Plan expects to render a decision. In the case of any extension described in this
paragraph, the notice of extension shall specifically explain the standards on which
entitlement to a benefit is based, the unresolved issues that prevent a decision on the
claim and the additional information needed to resolve those issues, and the Claimant
shall be afforded forty-five (45) days within which to provide the specified
information. If information is requested, the period for making the benefit
determination shall be tolled from the date on which notification of an extension is
sent to the Claimant until the date on which the Claimant responds to the request for
information.
	 
	 	(b)	 	Within one hundred eighty (180) days after receiving the written notice of an
adverse disposition of the claim, the Claimant may request in writing, and shall be
entitled to, a review of the benefit determination. In deciding an appeal of any
adverse benefit determination that is based in whole or in part on a medical judgment,
the Plan shall consult with a health care professional who has appropriate training and
experience in the field of medicine involved in the medical 

-31-

 

	 	 	 	judgment. Such health care
professional shall be an individual who is neither an individual who was consulted in
connection with the adverse benefit determination that is the subject of the appeal nor
the subordinate of any such individual. The medical or vocational experts whose advice
was obtained on behalf of the Plan in connection with the Claimant’s adverse benefit
determination will be identified to the Claimant. If the Claimant does not request a
review within one hundred eighty (180) days after receiving written notice of the
original’s disposition of the claim, the Claimant shall be deemed to have accepted the
original written disposition.
	 
	 	(c)	 	A decision on review shall be rendered in writing by the Plan within a
reasonable period of time, but ordinarily not later than forty-five (45) days after
receipt of the Claimant’s request for review by the Plan, unless the Plan determines
that special circumstances require an extension of time for processing the claim. If
the Plan determines that an extension of time for processing is required, written
notice of the extension shall be furnished to the Claimant prior to the termination of
the initial forty-five (45) period. In no event shall such extension exceed a period
of forty-five (45) days from the end of the initial period. The extension notice shall
indicate the special circumstances requiring an extension of time and the date by which
the Plan expects to render the determination on review. In the event the extension is
due to a Claimant’s failure to submit information necessary to decide the claim, the
Claimant shall be afforded forty-five (45) days within which to provide the specified
information, and the period for making the benefit determination on review shall be
tolled from the date on which notification of the extension is sent to the Claimant
until the date on which the Claimant responds to the request for additional
information.
	 
	 	(d)	 	In the case of an adverse benefit determination on review, in addition to the
information described above, the notice shall state: “You and your Plan may have other
voluntary alternative dispute resolution options, such as mediation. One way to find
out what may be available is to contact your local U.S. Department of Labor Office and
your State insurance regulatory agency.”

	14.6	 	Legal Action. A Claimant’s compliance with the foregoing provisions of this Article
14 is a mandatory prerequisite to a Claimant’s right to commence any legal action with respect
to any claim for benefits under this Plan.

 

 

Collective Brands, Inc. Deferred Compensation Plan

ARTICLE 15

Trust

	15.1	 	Establishment of the Trust. The Company shall establish the Trust, and each Employer
shall at least annually transfer over to the Trust such assets as the Employer determines, in
its sole discretion, are necessary to provide, on a present value basis, for its respective
future liabilities created with respect to the Annual Deferral Amounts, Company Contribution
Amounts and Company Matching Amounts for such Employer’s Participants for all periods prior to
the transfer, as well as any debits and credits to the Participants’ Account Balances for all
periods prior to the transfer, taking into consideration the value of the assets in the trust
at the time of the transfer.
	 
	15.2	 	Interrelationship of the Plan and the Trust. The provisions of the Plan shall govern
the rights of a Participant to receive distributions pursuant to the Plan. The provisions of
the Trust shall govern the rights of the Employers, Participants and the creditors of the
Employers to the assets transferred to the Trust. Each Employer shall at all times remain
liable to carry out its obligations under the Plan.
	 
	15.3	 	Distributions From the Trust. Each Employer’s obligations under the Plan may be
satisfied with Trust assets distributed pursuant to the terms of the Trust, and any such
distribution shall reduce the Employer’s obligations under this Plan.
	 
	15.4	 	Stock Transferred to the Trust. Subject to the shareholders of the Company approving
the use of Stock under the Plan, notwithstanding any other provision of this Plan or the
Trust, if Trust assets are distributed to a Participant in a distribution which reduces such
portion of the Participant’s Variable Account invested in the Stock Fund, such distribution
must be made in the form of Stock.

-33-

 

ARTICLE 16

Miscellaneous

	16.1	  	Status of Plan. The Plan is intended to be a plan that is not qualified
within the meaning of Code Section 401(a) and that is unfunded and is maintained by an
employer primarily for the purpose of providing deferred compensation for a select group of
management or highly compensated employees within the meaning of ERISA Sections 201(2),
301(a)(3) and 401(a)(1). The Plan shall be administered and interpreted to the extent
possible (i) in a manner consistent with that intent, and (ii) in accordance with Code Section
409A and related Treasury guidance and Regulations.
	 
	16.2	  	Unsecured General Creditor. Participants and their Beneficiaries, heirs,
successors and assigns shall have no legal or equitable rights, interests or claims in any
property or assets of an Employer. For purposes of the payment of benefits under this Plan,
any and all of an Employer’s assets shall be, and remain, the general, unpledged unrestricted
assets of the Employer. An Employer’s obligation under the Plan shall be merely that of an
unfunded and unsecured promise to pay money in the future.
	 
	16.3	  	Employer’s Liability. An Employer’s liability for the payment of benefits
shall be defined only by the Plan. An Employer shall have no obligation to a Participant
under the Plan except as expressly provided in the Plan.
	 
	16.4	  	Nonassignability. Neither a Participant nor any other person shall have any
right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber,
transfer, hypothecate, alienate or convey in advance of actual receipt, the amounts, if any,
payable hereunder, or any part thereof, which are, and all rights to which are expressly
declared to be, unassignable and non-transferable. No part of the amounts payable shall,
prior to actual payment, be subject to seizure, attachment, garnishment or sequestration for
the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or
any other person, be transferable by operation of law in the event of a Participant’s or any
other person’s bankruptcy or insolvency or be transferable to a spouse as a result of a
property settlement or otherwise. Notwithstanding the foregoing, all or part of the amounts
payable hereunder to a Participant may be paid to an individual other than the Participant to
the extent necessary to fulfill, and in accordance with the terms of, a domestic relations
order as defined in Code Section 414(p)(1)(B).
	 
	16.5	  	Not a Contract of Employment. The terms and conditions of this Plan shall not
be deemed to constitute a contract of employment between any Employer and the Participant.
Such employment is hereby acknowledged to be an “at will” employment relationship that can be
terminated at any time for any reason, or no reason, with or without cause, and with or
without notice, unless expressly provided in a written employment agreement. Nothing in this
Plan shall be deemed to give a Participant the right to be retained in the service of any
Employer, either as an Employee or a director, or to interfere with the right of any Employer
to discipline or discharge the Participant at any time.
	 
	16.6	  	Furnishing Information. A Participant or his or her Beneficiary will
cooperate with the Committee by furnishing any and all information requested by the Committee
and take such other actions as may be requested in order to facilitate the administration of
the Plan

 

 

Collective Brands, Inc. Deferred Compensation Plan

	 	 	and the payments of benefits hereunder, including but not limited to taking such
physical examinations as the Committee may deem necessary.
	 
	16.7  	  	Terms. Whenever any words are used herein in the masculine, they shall be
construed as though they were in the feminine in all cases where they would so apply; and
whenever any words are used herein in the singular or in the plural, they shall be construed
as though they were used in the plural or the singular, as the case may be, in all cases where
they would so apply.
	 
	16.8  	  	Captions. The captions of the articles, sections and paragraphs of this Plan
are for convenience only and shall not control or affect the meaning or construction of any of
its provisions.
	 
	16.9  	  	Governing Law. Subject to ERISA, the provisions of this Plan shall be
construed and interpreted according to the internal laws of the State of Kansas without regard
to its conflicts of laws principles.
	 
	16.10	  	Notice. Any notice or filing required or permitted to be given to the
Committee under this Plan shall be sufficient if in writing and hand-delivered, or sent by
registered or certified mail, to the address below:

	 	 	 	 	 
	 

	 	Collective Brands, Inc.	 	 
	 

	 	 

3231 SE Sixth Street
	 	 
	 

	 	 	 	 
	 

	 	Topeka, KS 66607-2207	 	 
	 

	 	 	 	 

	 	 	Such notice shall be deemed given as of the date of delivery or, if delivery is made by
mail, as of the date shown on the postmark on the receipt for registration or certification.
	 
	 	 	Any notice or filing required or permitted to be given to a Participant under this Plan
shall be sufficient if in writing and hand-delivered, or sent by mail, to the last known
address of the Participant.
	 
	16.11	  	Successors. The provisions of this Plan shall bind and inure to the benefit
of the Participant’s Employer and its successors and assigns and the Participant and the
Participant’s designated Beneficiaries.
	 
	16.12	  	Validity. In case any provision of this Plan shall be illegal or invalid for
any reason, said illegality or invalidity shall not affect the remaining parts hereof, but
this Plan shall be construed and enforced as if such illegal or invalid provision had never
been inserted herein.
	 
	16.13	  	Incompetent. If the Committee determines in its discretion that a benefit
under this Plan is to be paid to a minor, a person declared
incompetent or to a person incapable of handling the disposition of that person’s property,
the Committee may direct payment of such benefit to the guardian, legal representative or
person having the care and custody of such minor, incompetent or incapable person. The
Committee may require proof of minority, incompetence, incapacity or guardianship, as it may
deem appropriate prior to distribution 

-35-

 

	 	 	of the benefit. Any payment of a benefit shall be a
payment for the account of the Participant and the Participant’s Beneficiary, as the case
may be, and shall be a complete discharge of any liability under the Plan for such payment
amount.

	16.14	  	Court Order. If a court determines that a spouse, former spouse, child or
dependent of a Participant has an interest in the Participant’s benefits under the Plan in
connection with a property settlement or otherwise, the Committee, in its sole discretion,
shall have the right, notwithstanding any election made by a Participant, to distribute the
spouse’s, former spouse’s, child’s or dependent’s interest in the Participant’s benefits under
the Plan to that spouse, former spouse, child or dependent to the extent necessary to fulfill,
and in accordance with the terms of, a domestic relations order as defined in Code Section
414(p)(1)(B).
	 
	16.15	  	Distribution in the Event of Income Inclusion Under 409A. If any portion
of a Participant’s Account Balance under this Plan is required to be included in income by the
Participant prior to receipt due to a failure of this Plan to meet the requirements of Code
Section 409A and related Treasury guidance and Regulations, the Committee may, in its sole
discretion, provide for a distribution of that portion of his or her Account Balance that is
required to be included in his or her income. In such event, the Participant’s Employer shall
distribute to the Participant immediately available funds in an amount equal to the portion of
his or Account Balance required to be included in income as a result of the failure of the
Plan to meet the requirements of Code Section 409A and related Treasury guidance or
Regulations, which amount shall not exceed the Participant’s unpaid vested Account Balance
under the Plan. Such a distribution shall affect and reduce the Participant’s benefits to be
paid under this Plan.
	 
	16.16	  	Insurance. The Employers, on their own behalf or on behalf of the trustee of
the Trust, and in their sole discretion, may apply for and procure insurance on the life of
the Participant, in such amounts and in such forms as the Trust may choose. The Employers or
the Trust, as the case may be, shall be the sole owner and beneficiary of any such insurance.
The Participant shall have no interest whatsoever in any such policy or policies, and at the
request of the Employers shall submit to medical examinations and supply such information and
execute such documents as may be required by the insurance company or companies to whom the
Employers have applied for insurance.
	 
	16.17	  	Trust. If the Trust terminates and benefits are distributed from the Trust
to a Participant, the Participant’s benefits under this Plan shall be reduced to the extent of
such distributions.
	 
	16.18	  	Legal Fees To Enforce Rights After Change in Control. The Company and each
Employer is aware that upon the occurrence of a Change in Control, the Board or the board of
directors of a Participant’s Employer (which might then be composed of new members) or a shareholder of the
Company or the Participant’s Employer, or of any successor corporation might then cause or
attempt to cause the Company, the Participant’s Employer or such successor to refuse to
comply with its obligations under the Plan and might cause or attempt to cause the Company
or the Participant’s Employer to institute, or may institute, litigation seeking to deny
Participants the benefits intended under the Plan. In these circumstances, the purpose of
the Plan could be frustrated. Accordingly, if, following a Change in Control, it should
appear to any Participant that the Company, the

 

 

Collective Brands, Inc. Deferred Compensation Plan

	 	 	Participant’s Employer or any successor
corporation has failed to comply with any of its obligations under the Plan or any agreement
thereunder or, if the Company, such Employer or any other person takes any action to declare
the Plan void or unenforceable or institutes any litigation or other legal action designed
to deny, diminish or to recover from any Participant the benefits intended to be provided,
then the Company and the Participant’s Employer irrevocably authorize such Participant to
retain counsel of his or her choice at the expense of the Company and the Participant’s
Employer (who shall be jointly and severally liable) to represent such Participant in
connection with the initiation or defense of any litigation or other legal action, whether
by or against the Company, the Participant’s Employer or any director, officer, shareholder
or other person affiliated with the Company, the Participant’s Employer or any successor
thereto in any jurisdiction.

SIGNATURE ON FOLLOWING PAGE

-37-

 

     IN WITNESS WHEREOF, the Company has signed this amended and restated Plan document effective
as of January 1, 2008.

	 	 	 	 	 	 	 
	 	 	Collective Brands, Inc., a Delaware corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Title:
	 	Senior Vice President, Human Resourcesexv10w16

 

EXHIBIT 10.16

COLLECTIVE BRANDS, INC.

INCENTIVE COMPENSATION PLAN

SECTION 1. PURPOSES: The purposes of the Collective Brands, Inc. Incentive Compensation Plan are
(i) to provide a means to attract, retain, and motivate talented personnel and (ii) to provide to
participating employees added incentive for high levels of performance and for additional effort to
improve the Company’s financial performance.

SECTION 2. DEFINITIONS: As used in this Plan, unless the context otherwise requires, each of the
following terms shall have the meaning set forth below.

	 	(a)	 	“Annual Award” shall mean, for any Plan Year, a payment made to an Annual Award
Participant under the terms of this Plan.
	 
	 	(b)	 	“Annual Award Maximum Amount” shall mean $5,000,000.
	 
	 	(c)	 	“Annual Award Participant” shall mean an Eligible Employee selected by the
Committee to participate in the Plan pursuant to Section 5.
	 
	 	(d)	 	“Board of Directors” or “Board” shall mean the Board of Directors of the
Company.
	 
	 	(e)	 	“CEO” shall mean the Chief Executive Officer of the Company.
	 
	 	(f)	 	“Code” shall mean the Internal Revenue Code of 1986, as amended from time to
time, and any references to a particular section of the Code shall be deemed to include
any successor provision thereto.
	 
	 	(g)	 	“Committee” shall mean a committee or subcommittee of the Board of Directors,
which shall consist solely of two or more “outside directors” within the meaning of
Section 162(m) of the Code.
	 
	 	(h)	 	“Company” shall mean Collective Brands, Inc., a Delaware corporation (formerly Payless
ShoeSource, Inc.).
	 
	 	(i)	 	“Covered Employee” shall mean the CEO and each other executive of the Company
or a Subsidiary whom the Committee determines, in its discretion, is or may be a
“covered employee” within the meaning of Section 162(m) of the Code for a Plan Year or
Plan Period to which an Annual Award or Long-Term Award, as the case may be, relates.
	 
	 	(j)	 	“Eligible Employee” shall mean any officers or other key employees of the
Company or any Company Subsidiary, as determined by the Committee in its sole
discretion.
	 
	 	(k)	 	“Long-Term Award” shall mean, for any Plan Period, a payment made to a Long-

1

 

	 	 	 	Term Award Participant under the terms of this Plan.
	 
	 	(l)	 	“Long-Term Award Maximum Amount” shall mean $5,000,000.
	 
	 	(m)	 	“Long-Term Award Participant” shall mean an Eligible Employee selected by the
Committee to participate in the Plan pursuant to Section 6.
	 
	 	(n)	 	“Performance Goal(s)” shall mean the goal or goals established for an Annual
Award Participant or a Long-Term Award Participant for a Plan Year or Plan Period, as
the case may be, by the Committee pursuant to Section 5 or Section 6, as applicable.
	 
	 	(o)	 	“Performance Measures” shall mean any of the following performance criteria,
either alone or in any combination, and may be expressed with respect to the Company or
one or more operating units, groups, or any Subsidiary, as the Committee may determine:
cash flow; cash flow from operations; total earnings; earnings per share, diluted or
basic; earnings per share from continuing operations, diluted or basic; earnings before
interest and taxes; earnings before interest, taxes, depreciation, and amortization;
earnings from continuing operations; net asset turnover; inventory turnover; net
earnings; operating earnings; operating margin; return on equity; return on net assets;
return on total assets; return on capital; return on investment; return on sales;
revenues; sales; market share; economic value added; expense reduction levels; stock
price; and total shareholder return. For any Plan Year or Plan Period, Performance
Measures may be determined on an absolute basis or relative to internal goals or
relative to levels attained in a year or years prior to such Plan Year or Plan Period
or related to other companies or indices or as ratios expressing relationships between
two or more Performance Measures. For any Plan Year or Plan Period, the Committee
shall provide how any Performance Measure shall be adjusted to the extent necessary to
prevent dilution or enlargement of any Annual Award or Long-Term Award as a result of
extraordinary events or circumstances, as determined by the Committee, or to exclude
the effects of extraordinary, unusual, or non-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, or stock dividends, or stock splits or
combinations; provided, however, in the case of a Covered Employee, no such adjustment
will be made if the effect of such adjustment would cause the Annual Award or Long-Term
Award to a Covered Employee to fail to qualify as “qualified performance-based
compensation” within the meaning of Section 162(m) of the Code.
	 
	 	(p)	 	“Plan” shall mean the Collective Brands, Inc. Incentive Compensation Plan, as
amended and restated from time to time.

2

 

	 	(q)	 	“Plan Period” shall mean a period of one fiscal year or longer, as determined
by the Committee in its sole discretion.
	 
	 	(r)	 	“Plan Year” shall mean a period of one fiscal year or such shorter period, as
determined by the Committee in its sole discretion.
	 
	 	(s)	 	“Subsidiary” shall mean any corporation, the majority of the outstanding voting
stock of which is owned, directly or indirectly, by the Company, and that is not itself
a publicly held corporation within the meaning of Section 162(m) of the Code.

SECTION 3. ADMINISTRATION: Subject to the express provisions of this Plan, the Committee shall
have authority to interpret the Plan, to prescribe, amend, and rescind rules and regulations
relating to the Plan, and to make all other determinations deemed necessary or advisable for the
administration of the Plan. In exercising its discretion, the Committee may use such objective or
subjective factors as it determines to be appropriate in its sole discretion. Except to the extent
not permitted for qualification as “qualified performance-based compensation” within the meaning of
Section 162(m) of the Code or generally prohibited by applicable law, the Committee may delegate
all or a portion of its responsibilities and powers to any one or more of its members or to any
other person or persons selected by the Committee. Any such delegation may be revoked by the
Committee at any time. The determinations of the Committee pursuant to its authority under the
Plan shall be conclusive and binding.

SECTION 4. ELIGIBILITY: The Committee shall designate which Eligible Employees will be Annual
Award Participants or Long-Term Award Participants in the Plan for a particular Plan Year or Plan
Period, as the case may be. Such designation for any Plan Year or Plan Period shall not require
designation of such Eligible Employee as an Annual Award Participant or Long-Term Award Participant
for any other Plan Year or Plan Period.

SECTION 5. ANNUAL AWARDS:

	 	(a)	 	The Committee may make Annual Awards to Annual Award Participants with respect
to each Plan Year, subject to the terms and conditions set forth in the Plan.
	 
	 	(b)	 	Within 90 days after the commencement of each Plan Year (or such other date as
required by Section 162(m) of the Code and the regulations promulgated thereunder), the
Committee shall, in writing, select which Eligible Employees will be Annual Award
Participants for such Plan Year and determine for each such Plan Year the following:

	 	(i)	 	The Performance Goal or Performance Goals applicable to each
Annual Award Participant for the Plan Year based on one or more Performance
Measures; and

3

 

	 	(ii)	 	The payment schedule detailing the total amount which may be
available for payment to each Annual Award Participant as an Annual Award based
upon the relative level of attainment of the Performance Goal or Performance
Goals.

	 	(c)	 	Upon completion of a Plan Year, the Committee shall:

	 	(i)	 	Certify, in writing, prior to payment of any Annual Award,
whether and to what extent the Performance Goal or Performance Goals for the
Plan Year were satisfied;
	 
	 	(ii)	 	Determine the amount available for each Annual Award
Participant’s Annual Award pursuant to the payment schedule established in
Section 5(b)(ii);
	 
	 	(iii)	 	Determine any increase or reduction in the amount of an Annual
Award Participant’s available Annual Award, as determined pursuant to Section
5(c)(ii), (including a reduction to zero) based on any subjective or objective
factors that it determines to be appropriate in its sole discretion; provided,
however, in the case of a Covered Employee, the Committee may reduce (including
a reduction to zero) but may not increase the amount of an available Annual
Award; and provided further that the exercise of such discretion to reduce an
Annual Award with respect to any Annual Award Participant shall not have the
effect of increasing an Annual Award that is payable to a Covered Employee; and
	 
	 	(iv)	 	Authorize payment subject to Section 7 of such amounts
determined under Section 5(c)(iii).

	 	(d)	 	Notwithstanding any other provision of this Plan, in no event shall the Annual
Award earned by any Covered Employee for a Plan Year exceed the Annual Award Maximum
Amount.

SECTION 6. LONG-TERM AWARDS:

	 	(a)	 	The Committee may make Long-Term Awards to Long-Term Award Participants with
respect to each Plan Period, subject to the terms and conditions set forth in the Plan.
	 
	 	(b)	 	Within 90 days after the commencement of each Plan Period (or such other date
as required by Section 162(m) of the Code and the regulations promulgated thereunder),
the Committee shall, in writing, select the length of such Plan Period, select which
Eligible Employees will be Long-Term Award Participants for such Plan Period, and
determine for each such Plan Period the following:

4

 

	 	(i)	 	The Performance Goal or Performance Goals applicable to each
Long-Term Award Participant for the Plan Period based on one or more
Performance Measures; and
	 
	 	(ii)	 	The payment schedule detailing the total amount which may be
available for payment to each Long-Term Award Participant as a Long-Term Award
based upon the relative level of attainment of the Performance Goal or
Performance Goals.

	 	(c)	 	Upon completion of a Plan Period, the Committee shall:

	 	(i)	 	Certify, in writing, prior to payment of any Long-Term Award,
whether and to what extent the Performance Goal or Performance Goals for the
Plan Period were satisfied;

	 	(ii)	 	Determine the amount available for each Long-Term Award
Participant’s Long-Term Award pursuant to the payment schedule established in
Section 6(b)(ii);
	 
	 	(iii)	 	Determine any increase or reduction in the amount of a
Long-Term Award Participant’s available Long-Term Award, as determined pursuant
to Section 6(c)(ii), (including a reduction to zero) based on any subjective or
objective factors that it determines to be appropriate in its sole discretion;
provided, however, in the case of a Covered Employee, the Committee may reduce
(including a reduction to zero) but may not increase the amount of an available
Long-Term Award; and provided further that the exercise of such discretion to
reduce a Long-Term Award with respect to any Long-Term Award Participant shall
not have the effect of increasing a Long-Term Award that is payable to a
Covered Employee; and
	 
	 	(iv)	 	Authorize payment subject to Section 7 of such amounts
determined under Section 6(c)(iii).

	 	(d)	 	Notwithstanding any other provision of this Plan, in no event shall the
Long-Term Award earned by any Covered Employee for a Plan Period exceed the Long-Term
Award Maximum Amount.

SECTION 7. PAYMENT OF AWARDS: Annual Awards and Long-Term Awards under this Plan shall be made in
a lump sum payment in cash to the Annual Award Participant or Long-Term Award Participant, as the
case may be, or to the beneficiary, as designated under procedures established by the Committee, of
such Annual Award Participant or Long-Term Award Participant as soon as practicable following the
Plan Year or Plan Period, as the case may be, or shall be deferred under such plan as the Company
may have established for such purposes. Unless provided otherwise in an employment agreement,
severance agreement or other written agreement between the Company and an Annual Award Participant
or Long-Term Award Participant, as the case may be, no Annual Award or Long-Term Award shall be
paid to any

5

 

Annual Award Participant or Long-Term Award Participant under this Plan unless such Annual Award
Participant or Long-Term Award Participant is employed by the Company or a Subsidiary on the last
day of the Plan Year or Plan Period, as the case may be, for which such Annual Award or Long-Term
Award is payable. The Company may deduct from any Annual Award payment or Long-Term Award payment
such amounts as may be required to be withheld under any federal, state, or local tax laws.

SECTION 8. NO CONTINUED EMPLOYMENT: Nothing in this Plan shall give any person any right to
continue in the employ of the Company or any Company Subsidiary or constitute a contract or
agreement of employment or interfere in any way with the right of the Company or any Company
Subsidiary to terminate or change the conditions of employment.

SECTION 9. NONASSIGNABILITY: Except as otherwise required by applicable law, any rights of an
Annual Award Participant or Long-Term Award Participant or a beneficiary of an Annual Award
Participant or Long-Term Award Participant under this Plan shall not be anticipated, sold,
assigned, transferred, encumbered, hypothecated, or pledged nor subject to any levy or charge and
shall not be subject in any manner to the claims of any creditor of an Annual Award Participant or
Long-Term Award Participant or a beneficiary of an Annual Award Participant or Long-Term Award
Participant; and any attempt to take such action shall be null and void.

SECTION 10. TERMINATION AND AMENDMENT: Subject to the approval of the Board, where required, the
Committee may at any time and from time to time alter, amend, suspend, or terminate the Plan in
whole or in part; provided, however, that no amendment which requires shareholder approval in order
for the Plan to continue to comply with Section 162(m) of the Code with respect to a Covered
Employee shall be effective unless such amendment is approved by the shareholders of the Company.
Notwithstanding the foregoing, no termination or amendment of the Plan may, without the consent of
an Annual Award Participant or Long-Term Award Participant to whom an Annual Award or Long-Term
Award, as the case may be, has been determined for a completed Plan Year or Plan Period, as the
case may be, but not yet paid, adversely affect the rights of such Annual Award Participant or
Long-Term Award Participant in such Annual Award or Long-Term Award.

SECTION 11. INTERPRETATION: Except in connection with a change in control of the Company, as
determined by the Committee in its sole discretion, it is the intent of the Company that Annual
Awards and Long-Term Awards made to Covered Employees shall constitute “qualified performance-based
compensation” satisfying the requirements of Section 162(m) of the Code. Accordingly, the
provisions of the Plan shall be interpreted in a manner consistent with Section 162(m) of the Code.
If any other provision of the Plan, an Annual Award, or a Long-Term Award is intended to but does
not comply or is inconsistent with the requirements of Section 162(m) of the Code, such provision
shall be construed or deemed amended to the extent necessary to conform to and comply with such
requirements.

SECTION 12. UNFUNDED STATUS: Annual Awards and Long-Term Awards shall be made from the general
funds of the Company, and no special or separate fund shall be established or other segregation of
assets made to assure payment. No Annual Award Participant

6

 

or Long-Term Award Participant or other person shall have under any circumstances any interest in
any particular property or assets of the Company.

SECTION 13. APPLICABLE LAW: This Plan shall be governed by and construed in accordance with the
laws of the State of Kansas, without regard to its principles of conflict of laws.

SECTION 14. EFFECTIVE DATE: This Plan was effective as of February 3, 2002, and was amended
effective February 4, 2007, subject to stockholder approval on May 24, 2007; provided, however,
that no Annual Award or Long-Term Award will be made to a Covered Employee under the Plan unless
prior to such payment, the holders of a majority of the shares of the Company’s common stock
actually voting on the matter approve this Plan at a meeting of the shareholders of the Company.
The Plan was further amended on August 17, 2007 to reflect a change in the Company and Plan name.

7

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