Document:

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                                                                  "EXHIBIT 10.1"

                               EIGHTH AMENDMENT TO
                           LOAN AND SECURITY AGREEMENT

This Amendment is made effective as of the 9th day of April, 2003, by and among
HEI, Inc., a Minnesota corporation ("HEI"), Cross Technology, Inc., a Minnesota
corporation ("Cross" and, together with HEI, the "Borrower"), and LaSalle
Business Credit, LLC, a Delaware limited liability company successor by merger
to LaSalle Business Credit, Inc., a Delaware corporation (the "Lender").

                                    Recitals

HEI and the Lender have entered into that certain Loan and Security Agreement
dated as of July 31, 2000, as amended (collectively, the "Loan Agreement") to
which Cross is also a party as a Borrower.

HEI may request certain advances from the Lender from time to time pursuant to
the Loan Agreement, and the Lender has previously made capital expenditure
loans, term loans, machinery and equipment loans, and has made available letters
of credit, to or for the benefit of HEI pursuant to the terms of the Loan
Agreement.

The revolving loan advances under the Loan Agreement are evidenced by HEI's
amended and restated revolving note dated December 1, 2002, in the maximum
principal amount of $3,000,000 and payable to the order of the Lender (the
"Revolving Note"). The capital expenditure loans and term loans made under the
Loan Agreement have been repaid in full.

All indebtedness of HEI to the Lender is secured pursuant to the terms of the
Loan Agreement and all Other Agreements as defined therein.

NOW, THEREFORE, in consideration of the premises and of the mutual covenants and
agreements herein contained, it is agreed as follows:

1. Terms used in this Amendment which are defined in the Loan Agreement shall
have the same meanings as defined therein, unless otherwise defined herein.

2. The Loan Agreement is hereby amended as follows:

     (a)  Section 14(n)(iv) of the Loan Agreement is hereby amended by deleting
          said Section in its entirety and replacing the same with the
          following:

          "(iv) Liabilities to Tangible Net Worth Ratio. Borrower shall
          maintain, on an aggregate basis with all Subsidiaries of Borrower, a
          ratio of (A) Liabilities (provided, however, that for purposes of this
          Section 14(n)(iv),

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          Liabilities shall include amounts owed to LaSalle, its parents,
          affiliates or subsidiaries, or any other Person), other than
          subordinated debt, to (B) Tangible Net Worth, as of the end of each
          fiscal quarter, of not less than 0.75 to 1.0."

3. The Borrower has provided the Lender with certain information indicating a
violation by the Borrower of the covenant set forth at Section 14(n)(iv) of the
Loan Agreement relating to Year to Date Net Loss, with respect to the Borrower's
fiscal quarter ended March 1, 2003, and has requested that the Lender waive such
violation. The Borrower's violation of the covenant set forth in Section
14(n)(iv) described above constitutes an Event of Default under the Loan
Agreement, absent an appropriate waiver. The Lender hereby waives the Event of
Default, which is the result of the covenant violation specifically described
above. Except for the specific waiver set forth in the immediately preceding
sentence, the Lender is not waiving any Default, Event of Default, covenant,
violation, or breach of the Loan Agreement or any of the Other Agreements,
whether or not known to the Lender and whether or not existing on the date
hereof or any other event, circumstance or condition which with the giving of
notice or the passage of time, or both, would constitute a Default, Event of
Default, violation or breach of the Loan Agreement or any of the Other
Agreements. Lender specifically reserves the right to exercise any and all
rights and remedies available to it under the Loan Agreement and the documents
related thereto in the event of a Default or an Event of Default at any time in
the future. Without limiting the foregoing, Lender expects that the Borrower
will maintain compliance with all its covenants under and relating to the Loan
Agreement, including the covenant regarding Tangible Net Worth, [Jim, do we
still need all the following covenants in this sections if they no longer
apply?]the covenant regarding Interest Coverage Ratio, the covenant regarding
Debt Service Coverage Ratio and the newly effective covenant relating to the
ratio of Liabilities to Tangible Net Worth, and Lender will closely monitor the
same in the future to ascertain such continued compliance. The failure or
forbearance by Lender to exercise any of its rights or remedies at any time
shall not constitute a waiver of any such rights or remedies.

4. The Lender has been informed of the acquisition by HEI, Inc. of certain
assets (the "Acquisition") pursuant to that certain Asset Purchase Agreement
dated January 24, 2003 by and between HEI, Inc. and Colorado MEDtech, Inc. (the
"Purchase Agreement"). The Lender hereby consents to the Acquisition, in
accordance with and pursuant to the Purchase Agreement.

5. The Borrower hereby agrees to exercise commercially reasonable efforts to
obtain sufficient alternative financing (debt, equity or otherwise) to enable
the Borrower to prepay all of the Loans in full, and to terminate the Loan
Agreement on or before June 30, 2003 (the "Target Date"). The Borrower hereby
agrees to pay to the Lender on July 1, 2003, a fully-earned, non-refundable
accommodation fee in the amount of $50,000.00, if all Loans are not paid in full
and the Loan Agreement is not terminated on or before the Target Date.

6. Except as otherwise provided in this Amendment, all of the terms and
conditions of the Loan Agreement shall remain in full force and effect and shall
apply to any advance thereunder.

7. This Amendment shall be effective as of the date hereof, upon receipt by the
Lender of (1) an executed original hereof, together with such resolutions and
other documents, instruments

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and agreements as the Lender may require, and (2) a fully-earned,
non-refundable amendment fee in an amount equal to $25,000.

8. The Borrower hereby represents and warrants to the Lender as follows:

     (a)  The Borrower has requisite power and authority to execute this
          Amendment and to perform all of its obligations hereunder, and this
          Amendment has been duly executed and delivered by the Borrower and
          constitutes the legal, valid and binding obligation of the Borrower,
          enforceable in accordance with its terms.

     (b)  The execution, delivery and performance by the Borrower of this
          Amendment have been duly authorized by all necessary corporate action
          and do not (i) require any authorization, consent or approval by any
          governmental department, commission, board, bureau, agency or
          instrumentality, domestic or foreign, (ii) violate any provision of
          any law, rule or regulation or of any order, writ, injunction or
          decree presently in effect, having applicability to the Borrower, or
          the articles of incorporation or by-laws of the Borrower, or (iii)
          result in a breach of or constitute a default under any indenture or
          loan Agreement or any other agreement, lease or instrument to which
          the Borrower is a party or by which it or its properties may be bound
          or affected, except that the consent of U.S. Bank National Association
          ("US Bank") is required under the Business Loan Agreement dated May
          24, 1999 with US Bank (the "US Bank Agreement") for any additional
          indebtedness incurred after the date of the US Bank Agreement.

     (c)  All of the representations and warranties contained in paragraph 13 of
          the Loan Agreement are correct on and as of the date hereof as though
          made on and as of such date, except to the extent that such
          representations and warranties relate solely to an earlier date, and
          except to the extent that such representations and warranties are
          incorrect as a result of a failure to obtain the above-described
          consent under the US Bank Agreement.

9. All references in the Loan Agreement to "this Agreement" shall be deemed to
refer to the Loan Agreement as amended hereby; and any and all references in the
Other Agreements to the Loan Agreement shall be deemed to refer to the Loan
Agreement as amended hereby.

10. The Borrower hereby absolutely and unconditionally releases and forever
discharges the Lender, and any and all participants, parent corporations,
subsidiary corporations, affiliated corporations, insurers, indemnitors,
successors and assigns thereof, together with all of the present and former
directors, officers, agents and employees of any of the foregoing, from any and
all claims, demands or causes of action of any kind, nature or description,
whether arising in law or equity or upon contract or tort or under any state or
federal law or otherwise, which the Borrower has had, now has or has made claim
to have against any such person for or by reason of any act, omission, matter,
cause or thing whatsoever arising from the beginning of time to and including
the date of this Amendment, whether such claims, demands and causes of action
are matured or unmatured or known or unknown.

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11. The Borrower hereby reaffirms its agreement under the Loan Agreement to pay
or reimburse the Lender on demand for all costs and expenses incurred by the
Lender in connection with the Loan Agreement, the Other Agreements and all other
documents contemplated thereby, including without limitation all reasonable fees
and disbursements of legal counsel. Without limiting the generality of the
foregoing, the Borrower specifically agrees to pay all fees and disbursements of
counsel to the Lender, for the services performed by such counsel in connection
with the preparation of this Amendment and the documents and instruments
incidental hereto. The Borrower hereby agrees that the Lender may, at any time
or from time to time in its sole discretion and without further authorization by
the Borrower, make a loan to the Borrower under the Loan Agreement, or apply the
proceeds of any loan, for the purpose of paying any such fees, disbursements,
costs and expenses.

12. This Amendment may be executed in any number of counterparts, each of which
when so executed and delivered shall be deemed an original and all of which
counterparts, taken together, shall constitute one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed effective as of the day and year first above written.

                                      HEI, INC.

                                      By:
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                                      Its:
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                                      CROSS TECHNOLOGY, INC.

                                      By:
                                         ---------------------------------------
                                      Its:
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                                      LASALLE BUSINESS CREDIT, LLC

                                      By:
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                                      Its:
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                                                                    EXHIBIT 10.8

                              EMPLOYMENT AGREEMENT

         THIS AGREEMENT is made and entered into as of the ____ of _____ 200_,
by and between PAYLESS SHOESOURCE, INC., a Delaware corporation, ("Payless") and
________ ("Executive").

         In consideration of mutual promises and agreements set forth in this
Employment Agreement, Payless and Executive agree as follows:

1.                (a) Payless agrees to employ Executive, and Executive
         agrees to render personal services to Payless, for the period
         commencing on the date of this Employment Agreement through May 31,
         200__ (the "Contract Term") as Senior Vice President of Payless
         ShoeSource, Inc. and/or to perform such other executive duties as may
         from time to time be required of Executive by Payless. Upon the
         anniversary date of this Agreement, the Contract Term shall
         automatically be extended by one (1) year unless, within thirty (30)
         days of said anniversary date, or any anniversary date thereafter,
         Payless shall deliver to Executive, or Executive shall deliver to
         Payless, written notice that the Contract Term shall not be extended.

                  (b) Payless agrees to pay Executive basic compensation
         for such services during the Contract Term at the annual rate of
         $__________, payable in equal bi-weekly installments, and in accordance
         with Paragraph 5, which annual rate will be subject to an annual review
         during Payless' regularly scheduled review time.

                  (c) If Executive is eligible to participate in one of Payless'
         bonus plans (the "Incentive Plan"), then Executive shall be entitled to
         such awards, if any, which may be payable under the Incentive Plan,
         determined in accordance with and subject to all of the terms and
         provisions of the Incentive Plan. If the Executive participates in the
         Payless ShoeSource, Inc. Executive Incentive Compensation Plan (the
         "EICP") for the long-term performance periods ending in fiscal years
         2003 or 2004, the Executive hereby consents to the long-term award, if
         any, being calculated using the following formula: long-term
         performance period ending in 2003, (1/3 of the bonus under the EICP +
         2/3 bonus under the Incentive Compensation Plan (the "ICP")); and for
         the long-term performance period ending in 2004, 100 percent of the
         bonus will be determined under the ICP. Such awards are subject to the
         terms and provisions of the EICP and ICP respectively.

                  (d) Payless shall reimburse Executive for all items of normal
         expense incurred by Executive as an employee of Payless in accordance
         with Payless' reimbursement policies in effect from time to time.

                  (e) Payless has adopted certain employee benefit plans and has
         established certain arrangements concerning executive perquisites which
         may, from time to time, confer rights and benefits on the Executive in
         accordance with their terms, and Payless may, in the future, adopt

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         additional employee benefit plans and establish additional arrangements
         concerning executive perquisites, and may in the future amend, modify
         or terminate any of the aforesaid employee benefit plans and
         arrangements, all in accordance with their terms and in accordance with
         applicable law. Executive shall be entitled to whatever rights and
         benefits may be conferred on Executive, from time to time in accordance
         with the terms of such plans and arrangements, as they may be amended
         from time to time, independent of this Agreement.

                  (f) Executive will be eligible for future grants of restricted
         stock and stock options as may be made under the terms of the Stock
         Incentive Plan in accordance with the levels established by the
         Compensation Committee of the Board of Directors.

                  (g) All references to payment dates or vesting dates in this
         Paragraph 1 or in such plans and arrangements, shall require that
         Executive be employed by Payless on such date to receive such payment
         or be vested in such benefit.

2.                (a) At all times during the Contract Term, Executive will:

                      (i) faithfully and diligently perform Executive's duties
                  in conformity with the directions of Payless and serve Payless
                  to the best of Executive's ability; and

                      (ii) devote Executive's undivided time and attention to
                  the business of Payless, subject to reasonable vacations in
                  accordance with Payless' vacation policy as it applies from
                  time to time, to such extent as may be reasonably necessary
                  for the proper performance of the personal services to be
                  rendered by Executive under this Agreement; and

                      (iii) maintain Executive's residence within reasonable
                  access to the business activities of Payless for the Contract
                  Term.

                  (b) At all times during the Contract Term, Executive will not:

                      (i) engage in any activity which conflicts or interferes
                  with or adversely affects Executive's performance of
                  Executive's duties hereunder, or

                      (ii) accept any other employment, whether as an Executive
                  or as a consultant or in any other capacity, and whether or
                  not compensated therefor, or

                      (iii) violate the terms of any of the policies described
                  in Payless' Policy of Business Conduct distributed from time
                  to time to Executive.

3.                (a) At all times during the Contract Term and for a period of
         one (1) year from actual termination of employment or, if there is more
         than one (1) year remaining in the Contract Term at the time of
         termination of employment, for the remainder of the Contract Term,
         Executive will not:

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                  (i) directly or indirectly, own, manage, operate, finance,
         join, control, or participate in the ownership, management, operation,
         financing or control of, or be employed by or connected in any manner
         with any Competing Business(as defined below), or

                  (ii) solicit for employment, hire or offer employment to, or
         disclose information to or otherwise aid or assist any other person or
         entity other than Payless or any subsidiary of Payless in soliciting
         for employment, hiring or offering employment to, any employee of
         Payless or any subsidiary of Payless, or

                  (iii) take any action which is intended to harm  Payless or
         its reputation, which Payless reasonably concludes could harm Payless
         or its reputation or which Payless reasonably concludes  could lead to
         unwanted or unfavorable publicity to Payless.

         Ownership of an investment of less than the greater of $25,000 or 1% of
any class of equity or debt security of a Competing Business shall not
constitute ownership or participation in ownership in violation of Paragraph
3(a).

         (b) The term "Competing Business" shall include, but not be limited to,

                  (i) any retail business with gross sales or revenue in the
         prior fiscal year of more than $25 million (or which is a subsidiary,
         affiliate or joint venture partner of a business with gross sales or
         revenue in the prior fiscal year of more than $25 million) which sells
         footwear at retail to consumers at price points competitive, or likely
         to be competitive with Payless (e.g., including, without limitation,
         Wal-Mart Stores, Inc., K-Mart Corporation, Target Corporation., Aldo
         Group, Genesco Inc., Foot Locker, Inc., Brown Shoe Company, Inc., Shoe
         Carnival, Inc., Jones Apparel Group, Inc., Kohl's Corporation, Liz
         Claiborne Inc., Big Five Sporting Goods Corporation, Shoe Zone, Bata,
         J.C. Penney Company, Inc. and Sears, Roebuck and Co.) within 20 miles
         of any Payless store or the store of any wholesale customer of Payless
         in the United States, or anywhere in any foreign country in which
         Payless has retail stores, franchisees or wholesale customers;

                  (ii) any franchising or wholesaling business with gross sales
         or revenue in the prior fiscal year of more than $25 million (or which
         is a subsidiary, affiliate or joint venture partner of a business with
         gross sales or revenue in the prior fiscal year of more than $25
         million) which sells footwear at wholesale to franchisees, retailers or
         other footwear distributors located within 20 miles of any Payless
         store or the store of any wholesale customer of Payless in the United
         States, or anywhere in any foreign country in which Payless has retail
         stores, franchisees or wholesale customers:

                  (iii) any footwear manufacturing business with gross sales or
         revenue in the prior fiscal year of more than $25 million (or which is
         a subsidiary, affiliate or joint venture partner of a business with
         gross sales or revenue in the prior fiscal year of more than $25
         million) which sells footwear to retailers or other footwear
         distributors located within 20 miles of any Payless store or the store
         of any wholesale customer of Payless in the United States, or

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         anywhere in any foreign country in which Payless has retail stores,
         franchisees, or wholesale customers; (e.g., including, without
         limitation, Jones Apparel Group, Inc., Dexter, Stride Rite Corporation,
         Wolverine Worldwide, Inc., The Timberland Company, Nike Inc., Reebok
         International Ltd., K-Swiss, Keds and Adidas-Salomon); or

                  (iv) any business which provides buying office services to any
         store or group of stores or businesses referred to in Paragraph 3.(b)
         (i), 3. (b) (ii) or 3. (b) (iii).

         (c) Background of non-compete restriction:

                  (i) Payless is one of the leading retail companies in North
         America, with self-service shoe stores throughout the United States and
         its territories, Canada and Central America; and

                  (ii) In connection with its business, Payless has expended a
         great deal of time, money and effort to develop and maintain its
         confidential, proprietary and trade secret information; this
         information, if misused or disclosed, could be very harmful to Payless'
         business and its competitive position in the marketplace; and

                  (iii) Executive desires to be employed by Payless, to be
         eligible for opportunities for advancement within Payless, to be
         eligible for potential compensation increases and to be given access to
         confidential and proprietary information of Payless necessary for
         Executive to perform Executive's job, but which Payless would not make
         available to Executive but for Executive's signing and agreeing to
         abide by the terms of this Agreement as a condition of Executive's
         employment by Payless; and

                  (iv) Executive recognizes and acknowledges that Executive's
         position with Payless provides Executive with access to Payless'
         confidential and proprietary trade secret information and other
         confidential business information; and

                  (v) Payless compensates its associates to, among other things,
         develop and preserve goodwill and relationships on Payless' behalf and
         to develop and preserve business information for Payless' exclusive
         ownership and use; and

                  (vi) long-term customer and supplier relationships often can
         be difficult to develop and require a significant investment of time,
         effort and expense; and

                  (vii) Executive recognizes and acknowledges that if
         Executive's employment with Payless were to cease, Payless needs
         certain protections in order to ensure that Executive does not
         appropriate and use any confidential information entrusted to Executive
         during the course of Executive's employment by Payless or take any
         other action which could result in a loss of Payless' goodwill that was
         generated on Payless' behalf and at its expense, and, more generally,
         to prevent Executive from having an unfair competitive advantage over
         Payless.

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                  (d) Reasonableness of non-compete restriction. Executive
         acknowledges and agrees that the restrictions in Paragraph 3(a) are
         reasonable and enforceable in view of the background for the
         non-compete restriction set forth in Paragraph 3(c) and in view of,
         among other things,

                      (i) the markets in which Payless and its subsidiaries
                  operate  their business; and

                      (ii) the confidential information to which Executive has
                  access; and

                      (iii) Executive's training and background, which are such
                  that neither Payless nor Executive believe that the restraint
                  will pose an undue hardship on Executive; and

                      (iv) the fact that a Competing Business could benefit
                  greatly if it were to obtain Payless' confidential
                  information; and

                      (v) the fact that Payless would not have adequate
                  protection if Executive were permitted to work for any
                  Competing Business since Payless would be unable to verify
                  whether its confidential information was being disclosed or
                  misused; and

                      (vi) the limited duration of, the limited scope of, and
                  the limited activities prohibited by, the restrictions in
                  Paragraph 3(a); and

                      (vii) Payless' legitimate interests in protecting its
                  confidential information, goodwill and relationships.

                  (e) If Executive violates Executive's obligations under
         Paragraph 3(a), then Payless shall be entitled to all legal and
         equitable rights and remedies under this Agreement, including all of
         its rights and remedies referred to in Paragraph 8 of this Agreement.
         Further, the time during which Executive violated the obligations shall
         not count toward satisfying the time during which any injunctive
         restriction shall apply. For example, if Executive were to join a
         competitor at the end of the Contract Term in violation of the
         restrictions in Paragraph 3(a) and work for such competitor for one (1)
         month before a court enjoined such violation, then the two (2) year
         time period of the restriction  would begin when such injunction were
         issued; the one (1) month during which Executive violated such
         restriction would not count toward the time that the restriction
         applies.

4.                        If Executive becomes Disabled and remains continuously
         so Disabled for a period of 180 days, then Payless' obligations under
         this Employment Agreement, at Payless' option, may be terminated by
         notice in writing to that effect given during the continuance of such
         Disability, such termination to take effect the later of (a) the last
         day of the month during which such notice is given or (b) the last day
         of such 180 day period. If Executive has made a previous election to
         participate in the Payless ShoeSource, Inc. Long-Term Disability Plan
         (subject to the terms and provisions of that plan), then the terms of
         that plan shall apply. "Disability" or "Disabled" shall mean the
         inability of Executive to perform the essential duties of Executive's
         job under this Agreement.

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5.                (a) If Executive's employment terminates during the Contract
         Term by reason of Executive's death or Disability, by Executive's
         voluntary termination of employment or by Payless for Cause,

                           (i) Executive's basic compensation and employee
                  benefits shall cease on the date of such termination, except
                  as otherwise provided herein or in any applicable employee
                  benefit plan or program; and

                           (ii) Executive (or Executive's legal
                  representative(s)) shall be entitled to such portion of any
                  incentive compensation as shall be payable under the terms of
                  the Incentive Plan.

                  (b) In addition, if Executive's employment is terminated by
         reason of death, then Executive's obligations under Paragraphs 1 and 2
         shall cease on the effective date of such termination.

                  (c) In addition, if Executive's employment is terminated by
         reason of Disability, by Executive voluntarily or by Payless for Cause,
         then Executive's obligations under Paragraphs 1 and 2 shall cease on
         the effective date of such termination and Executive's obligations
         under Paragraphs 3 and 6 remain in full force and effect, and Payless
         shall be entitled to all legal and equitable rights and remedies under
         this Agreement, including all of its rights and remedies referred to in
         Paragraph 8 of this Agreement.

                  (d) If Executive's employment is terminated by Payless without
         Cause, then

                           (i) Executive's employment (and status as an
                  employee) shall cease immediately; and

                           (ii) Executive shall be entitled, subject to the
                  provisions of Paragraph 5(d)(v), to continue to receive for
                  the remainder of the Contract Term the higher of Executive's
                  basic compensation specifically stated in Paragraph 1(b) as of
                  the date of this Agreement, or Executive's basic compensation
                  at the time Executive employment terminates; and

                           (iii) Executive shall be entitled to such portion of
                  any incentive compensation as shall be payable under the terms
                  of the Incentive Plan; and

                           (iv) Except as expressly provided in this Paragraph
                  5(d), Executive's post-termination obligations under this
                  Agreement, including, without limitation, the provisions of
                  Paragraphs 3 and 6, shall continue to apply following such
                  termination; and

                           (v) Executive shall use Executive's best efforts to
                  find other employment which does not violate the provisions of
                  Paragraph 3 hereof. If Executive accepts such other
                  employment, Executive shall promptly notify Payless of such
                  employment and of the compensation received, to be received or
                  receivable from Executive's subsequent employer attributable
                  to

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                  the remainder of the Contract Term, and all basic compensation
                  otherwise payable under Paragraph 5(d) for the remainder of
                  the Contract Term shall be reduced to the extent of
                  Executive's similar compensation received, to be received or
                  receivable from such other employer or other business.

                  (e)  "Cause" means

                           (i) an intentional act of fraud, embezzlement, theft
                  or any other material violation of law in connection with
                  Executive's duties or in the course of Executive's employment
                  with Payless; or

                           (ii) intentional damage to assets of Payless; or

                           (iii) intentional disclosure of confidential
                  information of Payless contrary to the policy of Payless; or

                           (iv) breach of Executive's obligations under this
                  Agreement; or

                           (v) intentional engagement in any competitive
                  activity which would constitute a breach of Executive's duty
                  of loyalty or of Executive's obligations under this Agreement;
                  or

                           (vi) intentional breach of any policy of Payless; or

                           (vii) the willful and continued failure by Executive
                  to substantially perform Executive's duties with Payless
                  (other than any such failure resulting from Executive's
                  incapacity due to physical or mental illness); or

                           (viii) the willful engaging by Executive in conduct
                  which is demonstrably and materially injurious to Payless,
                  monetarily or otherwise.

                  For purposes of this Paragraph 5(e), an act, or a failure to
         act, shall not be deemed "willful" or "intentional" unless it is done,
         or omitted to be done, by Executive in bad faith or without reasonable
         belief that Executive's action or omission was in the best interest of
         Payless. Failure to meet performance standards or objectives, by
         itself, will not constitute "Cause".

                  (f) Executive agrees that, in addition to any other remedies,
         Payless shall be permitted, as part of the computation of any final
         amount or amounts due to Executive as wages, compensation, bonus,
         deferred compensation or otherwise, and before any such amount shall be
         due and owing, to reduce any amount which Payless may otherwise owe to
         Executive by any unpaid amount which Executive owes to Payless.

6.                (a) Executive will not, at any time, directly or indirectly,
         use or disclose any of Payless' Confidential Information except as
         authorized and within the scope of Executive's employment with Payless.

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                  (b) At Payless' request and/or termination of Executive's
         employment with Payless, Executive will return to Payless all
         documents, records, notebooks, computer diskettes and tapes and
         anything else containing Payless' Confidential Information, including
         all copies thereof, as well as any other Payless property, in
         Executive's possession, custody or control. Executive will also delete
         from Executive's own computer or other electronic storage medium any of
         Payless' proprietary or Confidential Information. Not later than 20
         days after Executive's employment is terminated, Executive will certify
         in writing to Payless that Executive has complied with these
         obligations.

                  (c) During Executive's employment with Payless and thereafter,
         Executive will

                           (i) notify and provide Payless immediately with the
         details of any unauthorized possession, use or knowledge of any of
         Payless' Confidential Information,

                           (ii) assist in preventing any reoccurrence of this
         possession, use or knowledge, and

                           (iii) cooperate with Payless in any litigation or
         other action to protect or retrieve Payless' Confidential information.

                  (d) "Confidential Information" means any non-public
         information pertaining to Payless' business. Confidential Information
         includes information disclosed by Payless to Executive, and information
         developed or learned by Executive during the course of or as a result
         of Executive's employment with Payless, which Executive also agrees is
         Payless' property. Executive further agrees that any item of
         intellectual or artistic property generated or prepared by Executive,
         for Executive or with others, in connection with Executive's employment
         by Payless is Payless' sole property and shall remain so unless Payless
         otherwise specifically agrees in writing. Confidential Information
         includes, without limitation, information and documents concerning
         Payless' processes; suppliers (including Payless' terms, conditions and
         other business arrangements with suppliers); supplier and customer
         lists; advertising, marketing plans and strategies; profit margins;
         seasonal plans, goals, objectives and projections, compilations,
         analyses and projections regarding Payless' divisions, businesses,
         product segments, product lines, suppliers, sales and expenses; files;
         trade secrets and patent applications (prior to their being public);
         salary, staffing and employment information (including information
         about performance of other executives); and "know-how," techniques or
         any technical information not of a published nature relating, for
         example, to how Payless conducts its business.

                  (e) Executive agrees that Executive will not disclose to
         Payless or use, or induce Payless to use, any proprietary information,
         trade secret or confidential business information of any other person
         or entity, including any previous employer of Executive. Executive also
         represents that Executive has returned property, proprietary
         information, trade secret and confidential business information
         belonging to any prior employer.

                                       8

<PAGE>

7.                (a) If any court of competent jurisdiction determines that,
         but for the provisions of this Paragraph 7, any provision of this
         Agreement is illegal, void as against public policy or otherwise
         unenforceable because it is deemed to be overbroad, then such provision
         shall automatically be amended to the extent (but only to the extent)
         necessary to make it sufficiently narrow in scope, time and geographic
         area that it is not illegal, void as against public policy or
         overbroad. All other remaining terms and provisions shall remain in
         full force and effect.

                  (b) If Executive raises any question regarding the
         enforceability of any aspect of this Agreement, including, without
         limitation, Paragraphs 3 or 6, Executive specifically agrees that
         Executive will abide fully by such provisions unless and until a court
         of competent jurisdiction has rendered a final judgment that such
         provisions are not fully enforceable. Following any such final
         judgment, Executive and Payless will abide fully by such judgment.

8.                (a) Payless and Executive shall each be entitled to pursue all
         legal and equitable rights and remedies to secure performance of the
         obligations and duties of the other under this Agreement, and
         enforcement of one or more of such rights and remedies shall in no way
         preclude Payless or Executive from pursuing any and all other rights
         and remedies available to each of them.

                  (b) Executive acknowledges and agrees that the individualized
         services and capabilities that Executive will render and provide to
         Payless during the Contract Term are of a personal, special, unique,
         unusual, extraordinary and intellectual character.

                  (c) Executive acknowledges and agrees that the restrictions in
         this Agreement on Executive are reasonable in order to protect Payless'
         expectations and rights under this Agreement and to provide Payless
         with the protections that Payless needs to, among other things,
         safeguard its confidential information. Executive agrees that any
         breach of this Agreement by Executive will cause immediate irreparable
         injury to Payless, for which an award of damages alone may be
         inadequate. Therefore, Payless shall be entitled, in addition to any
         other right or remedy it may have, to an injunction without the posting
         of any bond or other security, enjoining or restraining Executive from
         any violation or threatened violation of this Agreement. In the event
         that Payless is successful in any suit or proceeding relating to the
         enforcement of this Agreement, Executive agrees to pay the reasonable
         attorneys fees and costs as calculated by the Court.

                  (d) If Executive's employment is terminated by Executive
         voluntarily or by Payless for Cause, Executive shall be liable for all
         attorneys' fees and costs incurred by Payless in seeking to enforce its
         rights under this Agreement.

9.                Payless Work Product. The Executive agrees to disclose fully
         to Payless, and hereby assigns and transfers to Payless, and agrees to
         execute any additional documentation Payless may reasonably request to
         evidence the assignment and transfer, immediately upon the conception,
         development, making or acquisition thereof, the right, title, and
         interest in and to any and all inventions, discoveries, improvements,
         innovations, and/or designs (the "Work Product") conceived, discovered,
         developed, acquired or secured by the Executive, solely or jointly with

                                       9

<PAGE>

         others or otherwise, together with all associated U.S. and foreign
         intellectual property rights (i.e., patents, copyrights, trademarks or
         trade secrets) either:

                  (a) during the period of Executive's employment, if such Work
         Product is related directly or indirectly, to the business of, or to
         the research or development work of Payless;

                  (b) with the use of the time, materials, or facilities of
         Payless; or

                  (c) within one (1) year after termination of such employment
         if conceived as a result of and is attributable to work done during
         such employment and relates to Work Product within the scope of the
         business of Payless, together with rights to all intellectual property
         rights which may be granted thereon.

                  Upon discovery, development or acquisition or any such Work
         Product, Executive shall notify Payless and shall execute and deliver
         to Payless, without further compensation, such documents prepared by
         Payless as may be reasonable or necessary to prepare or prosecute
         applications for such Work Product and to assign and transfer to
         Payless Executive's right, title and interest in and to such Work
         Product and intellectual property rights thereof. Executive
         acknowledges that Executive has carefully read and considered the
         provisions of this paragraph and, having done so, agrees that the
         restrictions set forth herein are fair and reasonable and are
         reasonably required for the protection of the interests of Payless, its
         officers, directors, and other executives.

10.               The entire understanding and agreement between the parties has
         been incorporated into this Agreement, and this Agreement supersedes
         all other agreements and understandings between the Executive and
         Payless and its parents and subsidiaries, with respect to the
         employment of Executive by Payless and its parents and subsidiaries.
         This Agreement shall inure to the benefit of, and shall be binding
         upon, Payless, its successors and assigns and upon Executive and
         Executive's heirs, successors and assigns; provided, however, that,
         since this is an agreement for the rendering of personal services,
         Executive cannot assign any of Executive's obligations under this
         Agreement to anyone else. This Agreement may be executed in
         counterparts, in which case each of the two (2) counterparts shall be
         deemed to be an original and the final counterpart shall be deemed to
         have been executed in Topeka, Kansas.

11.               Executive agrees that this Agreement may be assigned by
         Payless to a subsidiary of Payless; such assignment, however, shall not
         relieve Payless of any of its obligations hereunder except to the
         extent that such obligations are actually discharged by such
         subsidiary.

12.               This Agreement has been executed by Payless at Payless'
         corporate headquarters and principal executive offices in Topeka,
         Kansas. Any questions or other matter arising under this Agreement,
         whether of validity, interpretation, performance or otherwise, shall be
         governed by and construed in accordance with the laws of the State of
         Kansas applicable to agreements made and to be performed in such state
         without regard to such state's conflicts of law provision. All actions
         and proceedings arising out of or relating directly or indirectly to
         this Agreement shall be

                                       10

<PAGE>

         filed and litigated exclusively in any state court or federal court
         located in the City of Topeka, Kansas or in Shawnee County, Kansas. The
         parties hereto expressly consent to the jurisdiction of any such court
         and to venue therein and consent to service of process if made upon
         Payless' registered agent or if made at Executive's last known address
         on the records of Payless.

         BY SIGNING THIS AGREEMENT, EXECUTIVE HEREBY CERTIFIES THAT EXECUTIVE
         (A) HAS RECEIVED A COPY OF THIS AGREEMENT FOR REVIEW AND STUDY BEFORE
         SIGNING IT; (B) HAS READ THIS AGREEMENT CAREFULLY BEFORE SIGNING IT;
         (C) HAS HAD SUFFICIENT OPPORTUNITY TO REVIEW THE AGREEMENT WITH ANY
         ADVISOR WHICH EXECUTIVE MAY DESIRE TO CONSULT, INCLUDING LEGAL COUNSEL;
         (D) HAS HAD SUFFICIENT OPPORTUNITY BEFORE SIGNING IT TO ASK ANY
         QUESTIONS EXECUTIVE HAS ABOUT THIS AGREEMENT AND HAS RECEIVED
         SATISFACTORY ANSWERS TO ALL SUCH QUESTIONS; AND (E) UNDERSTANDS
         EXECUTIVE'S RIGHTS AND OBLIGATIONS UNDER THIS AGREEMENT.

         IN WITNESS WHEREOF, this Agreement has been executed by Executive, and
         then by Payless in Topeka, Kansas, effective as of the date first above
         written.

                                     ___________________________________________
                                            Name

                                     Date:______________________________________

                                     PAYLESS SHOESOURCE, INC.

                                     By:________________________________________
                                     Name:  Steven J. Douglass
                                     Title: Chairman and Chief Executive Officer

                                       11

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