Document:

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                                                                Exhibit 10.5

                            PAYLESS SHOESOURCE, INC.

                            1996 STOCK INCENTIVE PLAN

                           AMENDED SEPTEMBER 18, 2003

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                            1996 STOCK INCENTIVE PLAN

I. GENERAL

         1. PURPOSE. The purpose of the Plan is to aid the Company and its
Subsidiaries in attracting, retaining, and motivating management employees.

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

            (a) "Board" means the Board of Directors of the Company.

            (b) "Code" means the Internal Revenue Code of 1986, as amended.

            (c) "Committee" means a committee designated by the Board, which
shall consist of not less than two members of the Board who shall be appointed
by and serve at the pleasure of the Board and who shall be "non-employee
directors" within the meaning of Rule 16b-3 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended, and who shall be
"outside" directors within the meaning of Section 162(m) of the Code.

            (d) "Company" means Payless ShoeSource, Inc., a Delaware
corporation.

            (e) "Disability" means a permanent and total disability which
enables the Participant to be eligible for and receive a disability benefit
under the Federal Social Security Act.

            (f) "Fair Market Value" means the average of the high and low prices
of the Stock on the New York Stock Exchange on the date in question, or, if no
sale or sales of the Stock occurred on such Exchange on that day, the average of
the high and low prices of the Stock on the last preceding day when the Stock
was sold on the New York Stock Exchange; with respect to a Stock Appreciation
Right, the term means the average of the high and low prices of the Stock on the
New York Stock Exchange on such date or dates as may be provided in the Stock
Appreciation Right Agreement; provided, however, that with respect to Options
granted as of the effective date of the spin-off (the "Effective Date") of the
Company by The May Department Stores Company ("May") with respect to options
previously granted by May which were waived by the Participant or which were not
yet exercisable and therefore lapsed on the Effective Date, the "Fair Market
Value" means the arithmetic average of the high and low trading prices of the
Stock on the New York Stock Exchange for each of the first 30 trading days on
which trading in the Stock on that exchange occurs.

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            (g) "Incentive Stock Option" means an Option granted under the Plan
which constitutes and shall be treated as an "incentive stock option" as defined
in Section 422 of the Code.

            (h) "Non-Qualified Stock Option" means an Option granted under the
Plan which shall not constitute or be treated as an Incentive Stock Option.

            (i) "Non-Tandem Stock Appreciation Right" means a Right described in
Part III, Section 3.

            (j) "Option" means a right or rights to purchase shares of Stock
described in Part II.

            (k) "Option Agreement" means the agreement between the Company and a
Participant evidencing the grant of an Option and containing the terms and
conditions, not inconsistent with the Plan, that are applicable to such Option.

            (l) "Participant" means an individual to whom an Option, Right or
Performance Unit is granted or Restricted Stock Grant is made.

            (m) "Performance Restricted Stock" means Restricted Stock whose
provisions include the restrictions described in Part IV, Section 3(b).

            (n) "Performance Unit" means a right, described in Part V, to
receive up to 100% of the value of shares of Stock.

            (o) "Plan" means the 1996 Stock Incentive Plan of the Company, as
amended from time to time.

            (p) "Related Option" means the Option in relation to which a Tandem
Stock Appreciation Right is granted.

            (q) "Restricted Stock Grant" means a grant described in Part IV.

            (r) "Retirement" means retirement as that word is defined in the
Company's Profit Sharing Plan.

            (s) "Stock" means the Common Stock of the Company.

            (t) "Stock Appreciation Right" or "Right" means a right described in
Part III which provides for the payment of an amount in cash or Stock in
accordance with such terms and conditions as are provided in the Stock
Appreciation Right Agreement

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applicable to such Right; provided however, that in Part III, Section 2, "Right"
shall refer only to a "Tandem Stock Appreciation Right" and that in Part III,
Section 3, "Right" shall refer only to a "Non-Tandem Stock Appreciation Right".

            (u) "Stock Appreciation Right Agreement" means the agreement between
the Company and a Participant evidencing the grant of a Stock Appreciation Right
and containing the terms and conditions, not inconsistent with the Plan, that
are applicable to such Right.

            (v) "Subsidiary" means a subsidiary of the Company or an
unincorporated organization controlled, directly or indirectly, by the Company.
With respect to Incentive Stock Options, the term "Subsidiary" shall have the
meaning set forth in Section 424(f) of the Code.

            (w) "Tandem Stock Appreciation Right" means a Right described in
Part III, Section 2.

         3. ADMINISTRATION. The Plan shall be administered by the Committee.
Subject to all applicable provisions of the Plan, the Committee is authorized to
approve grants of Options, Rights or Performance Units or the making of
Restricted Stock Grants in accordance with the Plan, to construe and interpret
the Plan, to prescribe, amend, and rescind rules and regulations relating to the
Plan and to make all determinations and take all actions necessary or advisable
for the Plan's administration. The Committee shall act by vote or written
consent of a majority of its members. Whenever the Plan authorizes or requires
the Committee to take any action, make any determination or decision or form any
opinion, then any such action, determination, decision or opinion by or of the
Committee shall be in the absolute discretion of the Committee. Notwithstanding
anything in the Plan to the contrary, with respect to any employee who is a
resident outside the United States, the Committee may, in its sole discretion,
amend the terms of the Plan in order to conform such terms with the requirements
of local law or to meet the objectives of the Plan. The Committee may, where
appropriate, establish one or more sub-Plans for this purpose.

         4. SHARES SUBJECT TO THE PLAN.

            (a) Maximum Number of Shares. Stock issued under the Plan shall be
treasury shares or previously authorized but unissued shares, subject to the
following limitations:

                        (i) Plan Maximum. The maximum number of shares of Stock
            which may be issued under the Plan is 5,200,000, of which no more
            than 400,000 may be issued pursuant to Restricted Stock Grants.

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                        (ii) Participant Maximum. The maximum number of Options
            and Stock Appreciation Rights which may be granted to any
            Participant during the term of the Plan is 500,000; provided,
            however, that if a Stock Appreciation Right is issued in
            substitution for an existing stock option or in tandem with a stock
            option, then the grant of such a Stock Appreciation Right shall not
            count against the limit. The maximum number of shares of Stock which
            may be issued to each Participant free from restrictions pursuant to
            a grant of Performance Restricted Stock is 50,000 per year. The
            maximum number of shares of Stock which may be granted to each
            Participant pursuant to Performance Units is 50,000 per year.

            (b) Expired Options or Rights. If an Option or Right expires,
terminates, ceases to be exercisable or is surrendered without having been
exercised in full, then the shares relating to the Option or Right shall, unless
the Plan has been terminated, again become available under the Plan.

            (c) Lapse of Restrictions on Restricted Stock. If any shares of
Stock shall be returned to the Company pursuant to the provisions of Sections 2
or 3 of Part IV or in the instruments evidencing the making of Restricted Stock
Grants, then such shares shall, unless the Plan has been terminated, again
become available under the Plan.

            (d) Expired Performance Units. If a Performance Unit expires,
terminates, is surrendered or otherwise ceases to exist, so that no further
shares of Stock may be issued pursuant to such Performance Unit, then the shares
of Stock which could have been issued but were not issued pursuant thereto
shall, unless the Plan has been terminated, again become available under the
Plan.

         5. PARTICIPANTS. Participants in the Plan shall be determined as
follows:

            (a) Eligibility. The individuals who are eligible to receive
Options, Rights, Performance Units or Restricted Stock Grants hereunder shall be
limited to management employees of the Company and its Subsidiaries (including
employees who are directors and/or officers).

            (b) Determination. From time to time the Committee shall, in its
sole discretion, but subject to all of the provisions of the Plan, determine
which of those eligible employees shall receive Option(s), Stock Appreciation
Right(s), Performance Unit(s) or Restricted Stock Grant(s) under the Plan and
the size, terms, conditions and/or restrictions of the Option(s), Right(s),
Performance Unit(s) or Restricted Stock Grant(s).

            (c) Differing Terms; Effect of Grant. The Committee may approve the
grant of Option(s) Right(s), or Performance Unit(s) or the making of Restricted
Stock Grant(s) subject to differing terms, conditions and/or restrictions to any
eligible employee in any year. The Committee's decision to approve the grant of
an Option, Right or

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Performance Unit or the making of a Restricted Stock Grant to an eligible
employee in any year shall not require the Committee to approve the grant of an
Option, Right or Performance Unit or the making of a Restricted Stock Grant to
that employee in any other year or to any other employee in any year; nor shall
the Committee's decision with respect to the size, terms, conditions and/or
restrictions of any Option, Right or Performance Unit to be granted to an
employee or any Restricted Stock Grant to be made to an employee in any year
require the Committee to approve the grant of an Option, Right or Performance
Unit or the making of a Restricted Stock Grant of the same size or with the same
terms, conditions and/or restrictions to that employee in any other year or to
any other employee in any year. The Committee shall not be precluded from
approving the grant of an Option, Right or Performance Unit or the making of a
Restricted Stock Grant to any eligible employee solely because such employee may
previously have been granted an Option, Right or Performance Unit or may
previously have received a Restricted Stock Grant.

         6. RIGHTS WITH RESPECT TO SHARES OF STOCK. A Participant who has
exercised an Option or Right (payable all or in part in Stock) or to whom a
Restricted Stock Grant has been made or to whom shares of Stock have been issued
pursuant to Performance Units shall have, after a certificate or certificates
for the number of shares of Stock granted have been issued in his name, absolute
ownership of such shares including the right to vote the same and receive
dividends thereon; provided, however that rights with respect to shares issued
in connection with a Restricted Stock Grant shall be subject to the terms,
conditions and restrictions described in the Plan and in the instrument
evidencing the making of the Restricted Stock Grant to such Participant.

         7. EMPLOYMENT. In the absence of any specific agreement to the
contrary, no grant of an Option, Right or Performance Unit or making of a
Restricted Stock Grant to a Participant under the Plan shall affect any right of
the Company or its Subsidiaries to terminate the Participant's employment at any
time.

II. OPTIONS

         1. GENERAL. Each employee chosen to receive an Option(s) may be granted
an Incentive Stock Option, a Non-Qualified Stock Option or both, subject to the
following terms, conditions and restrictions. Each Option granted under the Plan
shall be evidenced by an Option Agreement which shall contain such terms and
conditions consistent with the Plan as the Committee shall determine; provided,
however, that each Option shall satisfy the following requirements and each
Incentive Stock Option shall satisfy the requirement of Part II, Section 2:

            (a) Option Price. The option price for each share purchased under
any Option shall be specified in the Option Agreement and, subject to the
provisions of paragraph (b) below and Part VII, Section 3, shall not be less
than Fair Market Value on

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the date the Option is granted; provided, however, that in no event shall the
option price per share be less than the par value thereof.

            (b) Option Period.

                        (i) General. The period in which an Option may be
            exercised shall not exceed ten years from the date the Option is
            granted; provided, however, that the Option may be sooner terminated
            in accordance with the provisions of this paragraph (b). Subject to
            the foregoing, the Committee may provide that any Option may be
            exercised, in whole or in part, at such time or times as the
            Committee may in its discretion determine.

                        (ii) Termination of Employment. If the Participant
            ceases to be an employee of the Company or a Subsidiary for any
            reason other than Retirement, Disability, or death, all of such
            Participant's outstanding Options shall immediately terminate.

                        (iii) Retirement or Disability. If a Participant's
            employment is terminated by Retirement or Disability, the term of
            any then outstanding Option held by the Participant shall extend for
            a period specified by the Committee in the agreement pertaining to
            such Option, and the number of shares in respect of which the Option
            may be exercised after the Participant's Retirement or Disability
            shall be determined by the agreement pertaining to such Option;
            provided, however, that such agreement shall provide that the
            Committee may cancel the Participant's Option during such period if
            the Participant's Retirement was without the consent of the Company,
            or if the Participant engages during such period of Retirement or
            Disability in employment or activities contrary, in the opinion of
            the Committee, to the best interests of the Company.

         2. INCENTIVE STOCK OPTIONS. Each Option Agreement evidencing an
Incentive Stock Option shall satisfy the requirement that to the extent that the
aggregate Fair Market Value of Stock with respect to which Incentive Stock
Options are exercisable for the first time by any Participant during any
calendar year (under the Plan and all stock option plans of the Company and its
Subsidiaries) exceeds $100,000, such Options shall be treated as Non-Qualified
Stock Options. For purposes of this Section 2, aggregate Fair Market Value of
Stock shall be determined as of the time the Option with respect to such Stock
is granted.

         3. DEATH. If a Participant's employment is terminated by death at a
time when he or she has not fully exercised any then outstanding Option, or if a
Participant dies after Retirement or Disability without having fully exercised
any then outstanding Option, the beneficiary designated by the Participant (or,
in the absence of such designation, the executors or administrators or legatees
or distributees of the Participant's

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estate) shall have the right to exercise such Option in whole or in part during
such period following the Participant's death as is set forth in the Option
Agreement. The Company shall prescribe the procedures and requirements for
beneficiary designations not inconsistent with this provision and has the right
to review and approve such designations.

         4. NONASSIGNABILITY. Each Option shall not be transferable (other than,
upon the death of the Participant, by beneficiary designation, by last will and
testament or by the laws of descent and distribution) and shall be exercisable
during the Participant's lifetime only by the Participant.

         5. PAYMENT FOR STOCK. Full payment in cash or, if the Committee
approves, in Stock, for shares purchased shall be made at the time of exercising
the Option in whole or in part. No certificates for shares so purchased shall be
issued until full payment therefor has been made, and a Participant shall have
none of the rights of a shareowner until such certificates are issued to him or
her. If the Committee approves, a Participant may elect to pay all or part of
the purchase price for shares pursuant to an exercise of a Non-Qualified Stock
Option by requesting the Company to reduce the number of shares otherwise
issuable to the Participant upon the exercise of the Non-Qualified Stock Option
by the number of shares with a Fair Market Value sufficient to pay the exercise
price. In addition, if the Committee approves, the Option Agreement may provide
that the Participant may elect, on terms set forth in the Option Agreement, to
have the Company withhold from the shares of Stock payable to the Participant
upon exercise of an Option the number of shares of Stock having a Fair Market
Value equal to the amount of any required withholding taxes. In addition, if the
Committee approves, a Participant may elect to pay all or part of the purchase
price for shares through simultaneous sale through a broker of shares acquired
on exercise, as permitted under Regulation T of the Federal Reserve Board or, at
the discretion of the Committee and to the extent permitted by law, by such
other methods as the Committee may from time to time prescribe.

         6. USE OF PROCEEDS. The proceeds received by the Company from the sale
of Stock pursuant to the exercise of an Option may be used for general corporate
purposes.

         7. RESTRICTIONS UPON EXERCISE OF OPTION. The exercise of each Option
shall be subject to the condition that if at any time the Company shall
determine in its discretion that the satisfaction of withholding tax or other
withholding liabilities under any state or Federal law, or that the listing,
registration or qualification of any shares otherwise deliverable upon such
exercise upon any securities exchange or under any state or Federal law, or that
the consent or approval of any regulatory body, is necessary or desirable as a
condition of, or in connection with, such exercise or the delivery or purchase
of shares thereunder, then in any such event such exercise shall not be
effective unless such withholding, listing, registration, qualification, consent
or approval shall have been effected or obtained free of any conditions not
acceptable to the Company.

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         8. REPRICING PROHIBITED. There shall be no grant of an Option(s) to a
Participant in exchange for a Participant's agreement to cancellation of a
higher-priced Option(s) that was previously granted to such Participant.

III. STOCK APPRECIATION RIGHTS

         1. GENERAL. Each employee chosen to receive a Stock Appreciation
Right(s) may be granted a Tandem Stock Appreciation Right, a Non-Tandem Stock
Appreciation Right or both, subject to the following terms, conditions and
restrictions and subject to such additional terms, conditions and restrictions
as may be determined by the Committee from time to time hereafter; provided
however, that no Right shall be subject to additional terms, conditions or
restrictions which are more favorable to a Participant than the terms,
conditions and restrictions set forth in the Plan.

         2. TANDEM STOCK APPRECIATION RIGHTS. Each Tandem Stock Appreciation
Right may be granted only with respect to a share(s) of Stock for which an
Option(s) has been granted under the Plan, and may be awarded concurrently with
the grant of such Option or at any time thereafter while the Option is
outstanding. If the Committee so determines, a Tandem Stock Appreciation Right
may also be granted with respect to a share(s) of Stock for which an option has
been granted and is outstanding under any other plan of the Company. A Stock
Appreciation Right shall be evidenced by a Stock Appreciation Right Agreement
which shall contain such terms and conditions (which may include limitations as
to the time when such Stock Appreciation Right becomes exercisable and when it
ceases to be exercisable that are more restrictive than the limitations
applicable to the Related Option(s)) not inconsistent with the Plan as the
Committee shall determine; provided, however, that each Tandem Stock
Appreciation Right shall satisfy the following requirements:

            (a) Termination of a Right. If the Related Option is exercised, in
whole or in part, then the Right with respect to the shares of Stock purchased
pursuant to such exercise (but not with respect to any unpurchased shares of
Stock) shall terminate as of the date of the exercise. If an unexercised Right
is otherwise exercisable on the date that the Related Option expires, and if the
Fair Market Value of the shares of Stock with respect to which such Right was
granted, determined as of the date of such expiration, exceeds the Option price
of such shares, then, notwithstanding Section 2(b), the Right shall
automatically be deemed to have been exercised as of the date of such
expiration; otherwise, on the date that the Related Option expires, any
outstanding Right related thereto shall be terminated as of the date of such
expiration.

            (b) Exercise. Tandem Stock Appreciation Rights may be exercised (i)
only at such time or times as, and to the extent that, the Related Options shall
be exercisable, (ii) only upon surrender of the Related Options with respect to
the shares for

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which the Rights are then being exercised, and (iii) subject to the terms and
conditions set forth in the Stock Appreciation Right Agreement; provided that no
Tandem Stock Appreciation Right may be exercised prior to the expiration of six
(6) months from the date of the grant and can only be exercised during the
ten-day period beginning on the third business day following the release of the
Company's quarterly or annual statement of sales and earnings.

         3. NON-TANDEM STOCK APPRECIATION RIGHTS. Each Non-Tandem Stock
Appreciation Right may be granted with respect to a share(s) of Stock or, if the
Committee so determines, in exchange for an outstanding Option or an outstanding
stock option granted under any other plan of the Company. A Non-Tandem Stock
Appreciation Right shall be evidenced by a Stock Appreciation Right Agreement
which shall contain such terms and conditions not inconsistent with the Plan as
the Committee shall determine; provided, however, that each Non-Tandem Stock
Appreciation Right shall satisfy the following requirements:

            (a) Termination of a Right. A Non-Tandem Stock Appreciation Right
shall terminate as of the earlier of (i) the date of exercise of such Right, to
the extent that it is exercised; or (ii) the termination date specified in the
Stock Appreciation Right Agreement. If an unexercised Right is otherwise
exercisable on the date that it expires, and if the Fair Market Value of the
shares of Stock with respect to which such Right was granted, determined as of
the date of such expiration, exceeds the exercise price of such Right (set forth
in the Stock Appreciation Right Agreement), then the Right shall automatically
be deemed to have been exercised as of the date of such expiration.

            (b) Exercise. Non-Tandem Stock Appreciation Rights may be exercised
in accordance with the terms and conditions set forth in the Stock Appreciation
Right Agreement; provided that (i) no Non-Tandem Stock Appreciation Right that
is payable all or in part in Stock may be exercised prior to the expiration of
six (6) months from the date of the grant; (ii) the exercise price of any
Non-Tandem Stock Appreciation Right granted in exchange for an outstanding
Option or for an outstanding stock option granted under any other plan of the
Company shall be the same exercise price as that outstanding Option or option
and (iii) the exercise price of any Non-Tandem Stock Appreciation Right not
granted in exchange for an outstanding Option or for an outstanding stock option
granted under any other plan of the Company shall be the Fair Market Value of
the Stock on the date of the grant of the Right(s).

         4. PAYMENT.

            (a) Amount. Upon the exercise of a Stock Appreciation Right, a
Participant shall be entitled to receive the excess of the aggregate Fair Market
Value of the shares of Stock with respect to which the Right is being exercised
(determined as of the date of such exercise) over (i) the aggregate option price
of such shares in the case of

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Tandem Stock Appreciation Rights; or (ii) the aggregate exercise price (set
forth in the Stock Appreciation Right Agreement) in the case of Non-Tandem Stock
Appreciation Rights.

            (b) Form. Any amount which becomes payable upon exercise of a Stock
Appreciation Right under the Plan shall be paid entirely in cash, entirely in
Stock or partly in cash and partly in Stock in accordance with such terms and
conditions as are provided in the applicable Stock Appreciation Right Agreement;
provided, however, that notwithstanding any provision in any Stock Appreciation
Right Agreement, the Committee may determine in its sole and absolute judgment
that any amount which may become payable upon exercise of a Right shall be paid
entirely in cash.

         5. TERMINATION OF EMPLOYMENT.

            (a) General. If a Participant ceases to be an employee of the
Company or of a Subsidiary for any reason other than Retirement, Disability or
death, all of such Participant's outstanding Rights shall immediately terminate.

            (b) Retirement or Disability. If a Participant's employment is
terminated by Retirement or Disability, the Participant's right to exercise all
or any portion of any Right after the date of such Retirement or Disability
shall be determined by the provisions of the Stock Appreciation Right Agreement;
provided, however, that such Agreement shall provide that the Committee may
terminate the Participant's Right prior to the date on which the Right is
exercised if the Participant's Retirement was without the consent of the
Company, or if the Participant engages during such period of Retirement or
Disability in employment or activities contrary, in the opinion of the
Committee, to the best interests of the Company.

            (c) Death. If a Participant's employment is terminated by death at a
time when the Participant has not fully exercised any then outstanding Rights,
or if a Participant dies after Retirement or Disability without having fully
exercised any then outstanding Rights, the beneficiary designated by the
Participant (or, in the absence of such designation, the executors or
administrators or legatees or distributees of the Participant's estate) shall
have the right to exercise such Right in whole or in part during such period
following the Participant's death as set forth in the Stock Appreciation Right
Agreement. The Company shall prescribe the procedures and requirements for
beneficiary designations not inconsistent with this provision and has the right
to review and approve such designations.

         6. EXPIRATION. If the period in which a Stock Appreciation Right is
exercisable expires and the Right has not been exercised, then such Right shall
terminate as of the last day on which it was exercisable.

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         7. NONASSIGNABILITY. Each Right shall not be transferable (other than,
upon the death of the Participant, by beneficiary designation, by last will and
testament or by the laws of descent and distribution) and shall be exercisable
during the Participant's lifetime only by the Participant.

         8. RESTRICTIONS UPON EXERCISE OF RIGHTS. The exercise of each Right
shall be subject to the condition that if at any time the Company shall
determine in its discretion that the satisfaction of withholding tax or other
withholding liabilities under any state or Federal law, or that the consent or
approval of any regulatory body, is necessary or desirable as a condition of, or
in connection with, such exercise, then, in any such event, such exercise shall
not be effective unless such withholding, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Company.

IV. RESTRICTED STOCK GRANTS

         1. GENERAL. A Restricted Stock Grant made under the Plan shall contain
the following terms, conditions and restrictions and such additional terms,
conditions and restrictions as may be determined by the Committee from time to
time hereafter; provided, however, that no Restricted Stock Grant shall be
subject to additional terms, conditions or restrictions which are more favorable
to a Participant than the terms, conditions and restrictions set forth in the
Plan.

         2. RESTRICTIONS. Subject to the provisions of Part IV, Section 3,
shares of Stock granted to a Participant pursuant to a Restricted Stock Grant:

            (a) shall not be sold, assigned, conveyed, transferred, pledged,
hypothecated, or otherwise disposed of, and

            (b) shall be returned to the Company forthwith, and all the rights
of the Participant to such shares shall immediately terminate without any
payment or consideration by the Company, if the Participant's continuous
employment with the Company or any Subsidiary shall terminate for any reason,
except as provided in Part IV, Section 4. Such return of such Stock shall be
accomplished by the Participant's delivering or causing to be delivered to the
Secretary or any Assistant Secretary of the Company the certificate(s) for such
shares of Stock, accompanied by such endorsement(s) and/or instrument(s) of
transfer as may be required by the Secretary or any Assistant Secretary of the
Company.

         3. LAPSE OF RESTRICTIONS.

            (a) General. Subject to the provisions of Part IV, Sections 3(b) and
4 and of Part VII, Section 4, the restrictions set forth in Part IV, Section 2
shall lapse on

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such date or dates on or after the first anniversary and on or before the tenth
anniversary of the date as of which the Restricted Stock Grant is made, as the
Committee shall determine at the time of the Restricted Stock Grant.

            (b) Performance Restricted Stock. If the Committee has designated
the Stock covered by a Restricted Stock Grant as Performance Restricted Stock,
then the lapse of restrictions set forth in Part IV, Section 2 that would
otherwise occur on a specified date shall also be subject to the following:

                        (i) if the Company meets or exceeds the Target Long-Term
            EPS Growth Objective (after adjustment for Relative Performance
            Rank) for the most recently ended Long-Term Performance Period, then
            the restrictions that would otherwise lapse on such date shall lapse
            as to 100% of the shares of such Performance Restricted Stock; and

                        (ii) if the Company meets or exceeds the Threshold
            Long-Term EPS Growth Objective (after adjustment for Relative
            Performance Rank) but does not meet or exceed the Target Long-Term
            Growth Objective (after adjustment for Relative Performance Rank)
            for the most recently ended Long-Term Performance Period, then the
            restrictions on the shares of Performance Restricted Stock that
            would otherwise lapse on such date shall lapse as to (i) 50% of such
            shares plus (ii) 50% of such shares multiplied by a fraction (not
            less than zero and not greater than one), the numerator of which is
            the Company's actual Long-Term EPS Growth for the most recently
            ended Long-Term Performance Period less the Threshold Long-Term EPS
            Growth Objective for such period and the denominator of which is the
            Target Long-Term EPS Growth Objective for such period less the
            Threshold Long-Term EPS Growth Objective for such period, and the
            remaining shares of Performance Restricted Stock shall immediately
            forfeit to the Company; and

                        (iii) if the Company does not meet or exceed the
            Threshold Long-Term EPS Objective (after adjustment for Relative
            Performance Rank) for the most recently ended Long-Term Performance
            Period, then 100% of the shares of such Performance Restricted Stock
            shall immediately forfeit to the Company.

For purposes of this Section 3(b), the terms Long-Term Performance Period,
Relative Performance Rank, Target Long-Term EPS Objective and Threshold
Long-Term EPS Objective shall have the same meanings as in the Company's
Executive Incentive Compensation Plan for Payless Executives. No restrictions
shall lapse on any Performance Restricted Stock until the Committee certifies,
in writing, that the requirements set forth in this Section 3(b) have been
satisfied.

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            (c) Forfeiture. All shares of Stock forfeited under this Section 3
shall be returned to the Company forthwith, and all the rights of the
Participant to such shares shall immediately terminate without any payment or
consideration by the Company.

         4. TERMINATION OF EMPLOYMENT BY REASON OF DEATH OR DISABILITY. If a
Participant who has been in the continuous employment of the Company or of a
Subsidiary since the date as of which a Restricted Stock Grant was made to such
Participant shall, while in such employment, die or become Disabled and such
Participant's death or Disability shall occur more than one year after the date
as of which the Restricted Stock Grant was made to such Participant, then the
restrictions set forth in Part IV, Section 2 shall lapse as to all shares of
Restricted Stock granted to such Participant pursuant to such Restricted Stock
Grant on the date of such event. A Participant may file a written designation of
beneficiary to receive, in the event of the Participant's death, any shares for
which restrictions lapse on the date of death. The Company shall prescribe
procedures and requirements for beneficiary designations not inconsistent with
this provision and has the right to review and approve such designations.

         5. AGREEMENT BY EMPLOYEE REGARDING WITHHOLDING TAXES. Each Participant
shall agree that, subject to the provisions of Part IV, Section 6,

            (a) no later than the date as of which the restrictions mentioned in
Part IV, Section 2 and in the instrument evidencing the making of the Restricted
Stock Grant shall lapse, such Participant will pay to the Company in cash, or,
if the Committee approves, in Stock, or make other arrangements satisfactory to
the Committee regarding payment of, any Federal, state or local taxes of any
kind required by law to be withheld with respect to the shares of Stock subject
to such Restricted Stock Grant, and

            (b) the Company and its Subsidiaries shall, to the extent permitted
by law, have the right to deduct from any payment of any kind otherwise due to
the Participant any Federal, state or local taxes of any kind required by law to
be withheld with respect to the shares of Stock subject to such Restricted Stock
Grant.

         6. ELECTION TO RECOGNIZE GROSS INCOME IN THE YEAR OF GRANT. If any
Participant properly elects, within thirty (30) days of the date of grant, to
include in gross income for Federal income tax purposes an amount equal to the
Fair Market Value of the shares of Stock granted on the date of grant, such
Participant shall pay to the Company, or make arrangements satisfactory to the
Committee to pay to the Company in the year of such grant, any Federal, state or
local taxes required to be withheld with respect to such shares. If such
Participant shall fail to make such payments, the Company and its Subsidiaries
shall, to the extent permitted by law, have the right to deduct from any payment
of any kind otherwise due to the employee any Federal, state or local taxes of
any kind required by law to be withheld with respect to such shares.

                                       13

<PAGE>

      7. RESTRICTIVE LEGEND; CERTIFICATES MAY BE HELD IN CUSTODY. Each
certificate evidencing shares of Stock granted pursuant to a Restricted Stock
Grant shall, (i) if issued to any person other than the Company for safekeeping
while the restrictions apply, bear an appropriate legend referring to the terms,
conditions and restrictions applicable to such Restricted Stock Grant and (ii)
if issued to the Company for safekeeping while the restrictions apply, be noted
as restricted on the records of the transfer agent. Any attempt to dispose of
such shares of Stock in contravention of such terms, conditions and restrictions
shall be ineffective. The Committee may adopt rules which provide that the
certificates evidencing such shares may be held in custody by a bank or other
institution, or that the Company may itself hold such shares in custody, until
the restrictions thereon shall have lapsed.

      8. RESTRICTIONS UPON MAKING OF RESTRICTED STOCK GRANTS. The listing upon
the New York Stock Exchange or the registration or qualification under any
Federal or state law of any shares of Stock to be granted pursuant to Restricted
Stock Grants (whether to permit the making of Restricted Stock Grants or the
resale or other disposition of any such shares of Stock by or on behalf of the
employees receiving such shares) may be necessary or desirable as a condition of
or in connection with such Restricted Stock Grants and if, in any such event,
the Board in its sole discretion so determines, delivery of the certificates for
such shares of Stock shall not be made until such listing, registration or
qualification shall have been completed. In such connection, the Company agrees
that it will use its best effort to effect any such listing, registration or
qualification; provided, however, the Company shall not be required to use its
best efforts to effect such registration under the Securities Act of 1933 other
than on Form S-8, as presently in effect, or such other forms as may be in
effect from time to time calling for information comparable to that presently
required to be furnished under Form S-8.

      9. RESTRICTIONS UPON RESALE OF STOCK. If the shares of Stock that have
been granted to a Participant pursuant to the terms of the Plan are not
registered under the Securities Act of 1933, as amended, pursuant to an
effective registration statement, such Participant, if the Committee shall deem
it advisable, may be required to represent and agree in writing that (i) any
shares of Stock acquired by such employee pursuant to the Plan will not be sold
except pursuant to an effective registration statement under the Securities Act
of 1933, as amended, or pursuant to an exemption from registration under said
Act and (ii) such Participant is acquiring such shares of Stock for the
Participant's own account and not with a view to the distribution thereof.

V. PERFORMANCE UNITS

      1. GENERAL. The Committee may, from time to time and upon such terms and
conditions as it may determine, grant Performance Units which will become
payable to a Participant upon the achievement of specified performance
objectives. Each grant of

                                       14
<PAGE>
Performance Units shall be evidenced by a Performance Unit Agreement which shall
contain such terms and conditions consistent with the Plan as the Committee
shall determine; provided, however that each grant of Performance Units shall
satisfy the following requirements:

            (a) Each grant shall specify the number of Performance Units to
which it pertains.

            (b) The performance period with respect to each Performance Unit
shall be such period of time commencing with the date of grant as shall be
determined by the Committee at the time of grant.

            (c) Each grant shall specify performance objectives, if any, that
are to be achieved in order for payments to be made with respect to such
Performance Units.

            (d) Each grant shall specify a minimum acceptable level of
achievement in respect of the specified performance objective below which no
payment will be made and shall set forth a formula for determining the amount of
payment to be made if performance is at or above such minimum, but short of full
achievement of the performance objectives.

            (e) Each grant shall specify the time and manner of payment (whether
in cash, shares of Stock or a combination thereof) of Performance Units which
have been earned. If the value of a Performance Unit is paid in whole or in part
with Stock, the number of shares issued with respect to such Unit or portion
thereof that is paid in Stock shall be based on the Fair Market Value of the
Stock on the date the Performance Unit is earned. In no event shall the total
payment of a Performance Unit (whether in cash, shares of Stock or a combination
thereof) exceed the amount earned based on the performance objectives
established at the time of grant.

            (f) The Committee may adjust the performance objectives and the
related minimum acceptable level of achievement if, in the sole judgment of the
Committee, events or transactions, such as stock splits, recapitalizations,
mergers, combinations, divestitures, spin-offs and the like, have occurred after
the date of grant which are unrelated to the performance of the Participant and
result in distortion of the performance objectives or the related minimum.

      2. PAYMENT FOR PERFORMANCE UNITS. Full and/or partial payment of
Performance Units will be made only upon certification by the Committee of the
attainment by the Participant of the performance objectives.

      3. TERMINATION OF EMPLOYMENT BY REASON OF DEATH, DISABILITY OR RETIREMENT.
The Committee may, in its sole discretion, determine that Performance

                                       15
<PAGE>
Units awarded to a Participant shall become partially or fully vested upon such
Participant's termination of employment due to death, Disability or Retirement.

VI. CANCELLATION AND RESCISSION.

      1. COMPETITION; CONFIDENTIAL INFORMATION.

            (a) Unless an Option Agreement or a Stock Appreciation Right
Agreement (any such agreement being referred to herein as an "Agreement")
specifies otherwise, the Committee may

                  (i) cancel at any time any unexercised Option or Right; or

                  (ii) rescind any exercise of an Option or Right;

      if the Participant is not in compliance with all other applicable
      provisions of the Agreement or the Plan or if, prior to any such exercise
      or within six months after such exercise, the Participant

                  (i) engages in a Competing Business, as such term is defined
      in the Agreement; or

                  (ii) solicits for employment, hires or offers employment to,
      or discloses information to or otherwise aids or assists any other person
      or entity other than the Company in soliciting for employment, hiring or
      offering employment to, any employee of the Company; or

                  (iii) takes any action which is intended to harm the Company
      or its reputation, which the Company reasonably concludes could harm the
      Company or its reputation or which the Company reasonably concludes could
      lead to unwanted or unfavorable publicity to the Company; or

                  (iv) discloses to anyone outside the Company, or uses in other
      than the Company's business, any "confidential information", as such term
      is defined in the Agreement.

            (b) Upon exercise of an Option or Right, the Participant shall
certify on a form acceptable to the Committee that the Participant is in
compliance with the terms and conditions of the Agreement and the Plan.

            (c) The Company shall immediately notify the Participant in writing
of any cancellation of any unexercised Option or Right. Following receipt of
such notice, the Participant shall have no further rights with respect to such
Option or Right.

                                       16
<PAGE>
            (d) The Company shall notify the Participant in writing of any
rescission of an exercise of an Option or Right within one year after the
activity referred to in Part VI, Section 1(a). Within ten days after receiving
such a notice from the Company, the Participant shall either (i) pay to the
Company the excess of the Fair Market Value of the Stock on the date of exercise
of an Option over the exercise price for the Option or the Fair Market Value of
the Stock and/or cash distributed to the Participant as a result of the exercise
of a Right or (ii) return the Stock received upon the exercise of an Option (in
which case the Company will return the exercise price to the Participant) or
return the Stock and/or cash distributed upon the exercise of a Right.

      2. AGREEMENT BY PARTICIPANT REGARDING DEDUCTION. The Participant shall
agree and consent to a deduction from any amounts the Company owes to the
Participant from time to time (including amounts owed as wages or other
compensation, fringe benefits, or vacation pay, as well as any other amounts
owed to the Participant by the Company), to the extent of the amounts the
Participant owes the Company under this Article VI. Whether or not the Company
elects to make any set-off in whole or in part, if the Company does not recover
by means of set-off the full amount owed by the Participant, calculated as set
forth in this Article VI, then the Participant agrees to pay immediately the
unpaid balance to the Company.

VII. MISCELLANEOUS

      1. EFFECTIVE DATE. The Plan became effective on April 30, 1996, subject to
approval by shareowners, and the Plan was approved by shareowners on April 30,
1996.

      2. DURATION OF PLAN. Unless sooner terminated, the Plan shall remain in
effect until April 30, 2006. Termination of the Plan shall not affect any
Options or Rights previously granted, which Options or Rights shall remain in
effect until exercised, surrendered, or canceled, or until they have expired,
all in accordance with their terms. Termination of the Plan shall not affect any
Restricted Stock Grants previously made, or Stock previously granted pursuant to
a Restricted Stock Grant; the terms, conditions and restrictions applicable to
shares issued pursuant to a Restricted Stock Grant shall remain in effect until
such terms, conditions and restrictions shall have lapsed all in accordance with
their terms. Termination of the Plan shall not affect any grant of Performance
Units previously made; the terms and conditions applicable to such Performance
Units shall remain in effect until the Performance Units are earned in
accordance with their terms.

      3. CHANGES IN CAPITAL STRUCTURE. In the event that there is any change in
the capital structure of the Company through merger, consolidation,
reorganization, recapitalization, spin-off or otherwise, or if there shall be
any dividend on the Company's Stock, payable in such Stock, or if there shall be
a Stock split or a combination of shares, then:

                                       17
<PAGE>
            (a) the number of shares reserved for Options (both in the aggregate
and with respect to each Participant) and the number of shares subject to
outstanding Options and the price per share of each such Option;

            (b) the number of shares with respect to which Rights may be
exercised (both in the aggregate and with respect to each Participant); and

            (c) the number of shares of Stock reserved for Restricted Stock
Grants under the Plan shall be proportionately adjusted by the Board as it deems
equitable, in its absolute discretion, to prevent dilution or enlargement of the
rights of a Participant and any shares issued pursuant to such change in capital
structure shall be subject to the same terms, conditions and restrictions as the
shares of Stock with respect to which newly issued shares are issued. The
issuance of Stock for consideration and the issuance of Stock rights shall not
be considered a change in the Company's capital structure. No adjustment
provided for in this Section 3 shall require the issuance of any fractional
share.

      4. CHANGE IN CONTROL. If while unexercised Options, Rights, Restricted
Stock Grants or Performance Units remain outstanding under the Plan:

            (a) Any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) (a "Person") acquires beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (i)
the then-outstanding shares of common stock of the Company (the "Outstanding
Company Common Stock") or (ii) the combined voting power of the then-outstanding
voting securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities"); provided, however,
that, for purposes of this Section 4, none of the following shall constitute a
Change of Control: (A) any acquisition directly from the Company of 30% or less
of Outstanding Company Common Stock or Outstanding Company Voting Securities
provided that at least a majority of the members of the board of directors of
the Company following such acquisition were members of the Incumbent Board at
the time of the Board's approval of such acquisition, (B) any acquisition by the
Company, (C) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any affiliated company, or (D) any
acquisition by the Company which, by reducing the number of shares of
Outstanding Company Common Stock or Outstanding Company Voting Securities,
increases the proportionate number of shares of Outstanding Company Common Stock
or Outstanding Company Voting Securities beneficially owned by any Person to 20%
or more of the Outstanding Company Common Stock or Outstanding Company Voting
Securities; provided, however, that, if such Person shall thereafter become the
beneficial owner of any additional shares of Outstanding Company Common Stock or
Outstanding Company Voting Securities and beneficially owns 20% or

                                       18
<PAGE>
more of either the Outstanding Company Common Stock or the Outstanding Company
Voting Securities, then such additional acquisition shall constitute a Change of
Control; or

            (b) Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by the
Company's stockholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board;

            (c) A reorganization, merger, consolidation or sale or other
disposition of all or substantially all of the assets of the Company (a
"Business Combination") is consummated, in each case, unless, immediately
following such Business Combination, (i), more than 50%, respectively, of the
then-outstanding shares of common stock and the combined voting power of the
then-outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of (x) the corporation resulting from such
Business Combination or (y) a corporation that, as a result of such transaction,
owns the Company or all or substantially all of the Company's assets either
directly or through one or more subsidiaries, is represented by the Outstanding
Company Common Stock and the Outstanding Company Voting Securities (or, if
applicable, is represented by shares into which Outstanding Company Common Stock
or Outstanding Company Voting Securities were converted pursuant to such
Business Combination) in substantially the same proportions as their ownership
immediately prior to such Business Combination of the Outstanding Company Common
Stock and the Outstanding Company Voting Securities, as the case may be, (ii) no
Person (excluding any corporation resulting from such Business Combination or
any employee benefit plan (or related trust) of the Company or such corporation
resulting from such Business Combination) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then-outstanding shares of common
stock of the corporation resulting from such Business Combination or the
combined voting power of the then-outstanding voting securities of such
corporation, except to the extent that such ownership existed prior to the
Business Combination, and (iii) at least a majority of the members of the board
of directors of the corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of the initial
agreement or of the action of the Board providing for such Business Combination;
or

            (d) The stockholders of the Company approve of a complete
liquidation or dissolution of the Company.

                                       19
<PAGE>
then from and after the date of the first of the foregoing events to occur, (i)
all Options and Rights held by active employees on such date shall be
exercisable in full, whether or not otherwise exercisable; (ii) the restrictions
set forth in Part IV, Section 2 on all outstanding Restricted Stock Grants,
including Performance Restricted Stock Grants, shall lapse; and (iii)
Performance Units shall be earned and become fully payable.

      5. AMENDMENT OR TERMINATION. The Board may, by resolution, amend or
terminate the Plan at any time; provided, however, that

            (a) shareowner approval shall be required for (i) any changes to the
Plan which would require shareowner approval under the New York Business
Corporation Law, Rule 16b-3 of the Securities Exchange Act of 1934, as amended,
or Section 162(m) of the Code, and (ii) except as otherwise provided herein or
except for changes which do not otherwise involve in the aggregate more than 5%
of the total shares authorized under the Plan, any other changes to the Plan
that would (A) increase the maximum number of shares that may be issued under
the Plan, (B) permit participation by persons who are not employees of the
Company, (C) permit regranting or repricing of previously granted stock options,
or (D) waive restrictions on previously granted restricted stock awards except
in the case of retirement or other termination of employment; and

            (b) the Board may not, without the written consent of the
Participant, alter, impair or adversely affect any right of such Participant
with respect to any Option, Right or Performance Unit previously granted, or
Restricted Stock Grant grant previously made to such Participant under the Plan
except as authorized herein.

Notwithstanding the foregoing, the Board may, by resolution, amend the Plan in
any way that it deems necessary or appropriate in order to make income with
respect to the Plan deductible for Federal income tax purposes under Section
162(m) of the Code without regard to the foregoing provisos (i) and (ii), and
any such amendment shall be effective as of such date as is necessary to make
such income under the Plan so deductible.

      6. UNFUNDED PLAN. The Plan shall be unfunded. Neither the Company nor the
Committee shall be required to segregate any assets that may at any time be
represented by Options or Rights under the Plan. Neither the Company nor the
Committee shall be deemed to be a trustee of any amounts to be paid under the
Plan. Any liability of the Company to any Participant with respect to a right
shall be based solely upon any contractual obligations created by the Plan, a
Performance Unit Agreement, a Stock Appreciation Right Agreement or an Option
Agreement; no such obligation shall be deemed to be secured by any pledge or any
encumbrance on any property of the Company.

                                       20
<PAGE>
      7. GOVERNING LAW. The law of the State of Kansas shall apply to all awards
and interpretations under the Plan without regard to the application of such
state's conflict of laws principles.

                                       21<PAGE>
                                                                Exhibit 10.9

                            PAYLESS SHOESOURCE, INC.

                          SUPPLEMENTARY RETIREMENT PLAN

                          AS AMENDED SEPTEMBER 18, 2003

<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<S>      <C>                                                                                               <C>
Section 1.  Definitions......................................................................................1

         1.1  Act............................................................................................1

         1.2  Actuarial Equivalent...........................................................................1

         1.3  Annual Compensation............................................................................1

         1.4  Annual Estimated Social Security Benefits......................................................1

         1.5  Annual Minimum Benefit Amount..................................................................2

         1.6  Annual Retirement Income.......................................................................2

         1.7  Annual Retirement Benefits Offset..............................................................2

         1.8  Average Annual Compensation....................................................................3

         1.9  Associate......................................................................................3

         1.10 CEO............................................................................................3

         1.11 Committee......................................................................................4

         1.12 Company........................................................................................4

         1.13 Compensation...................................................................................4

         1.14 Competing Business.............................................................................4

         1.15 Effective Date.................................................................................4

         1.16 Employer.......................................................................................4

         1.17 Gender.........................................................................................4

         1.18 May............................................................................................4

         1.19 May Profit Sharing Plan........................................................................4

         1.20 May Retirement Plan............................................................................5

         1.21 Member.........................................................................................5

         1.22 Payless........................................................................................5

</TABLE>
<PAGE>
<TABLE>
<S>      <C>
         1.23 Payless Profit Sharing Plan....................................................................5

         1.24 Retirement Date................................................................................5

         1.25 Plan Service...................................................................................5

         1.26  Termination Without Cause.....................................................................5

         1.27  Total Disability..............................................................................5

Section 2.  Membership.......................................................................................6

         2.1  Eligibility for Membership.....................................................................6

         2.2  Eligibility for Benefits.......................................................................6

Section 3.  Benefits.........................................................................................6

         3.1  Normal Retirement..............................................................................6

         3.2  Early Retirement...............................................................................6

         3.3  Cessation of Benefits.........................................................................11

         3.4  Form of Benefit...............................................................................11

         3.5  Standard Payment Period.......................................................................12

         3.6  Limitation on Payments........................................................................12

         3.7  Indirect Payment of Benefits..................................................................13

         3.8  Termination and Rehire........................................................................13

         3.9  Withholding...................................................................................14

Section 4.  Administration of the Plan......................................................................14

         4.1  The Committee.................................................................................14

         4.2  Delegation of Duties..........................................................................14

         4.3  Authority.....................................................................................14

</TABLE>
<PAGE>
<TABLE>
<S>      <C>
Section 5.  Certain Rights and Obligations..................................................................14

         5.1  Rights of Members, Members' Spouses and Beneficiaries.........................................14

         5.2  Employer-Associate Relationship...............................................................14

         5.3  Unfunded Nature of Plan.......................................................................14

Section 6.  Non-Alienation of Benefits......................................................................15

         6.1  Provisions with Respect to Assignment and Levy................................................15

         6.2  Alternate Application.........................................................................15

Section 7.  Amendment and Termination.......................................................................15

         7.1  Company's Rights..............................................................................15

         7.2  Rights to Terminate...........................................................................15

Section 8.  Construction....................................................................................16

</TABLE>
<PAGE>

             Payless ShoeSource, Inc. Supplementary Retirement Plan

This document constitutes and sets forth the terms of the Payless ShoeSource,
Inc. Supplementary Retirement Plan (hereinafter referred to as the "Plan"),
effective as of the date Payless ShoeSource, Inc. was "spun-off" from and ceased
to be a subsidiary of The May Department Stores Company, May 4, 1996 (the
"Effective Date"). Capitalized terms, not otherwise defined herein, which are
defined in the Payless Profit Sharing Plan shall have the meanings set forth in
such plan.

SECTION 1. DEFINITIONS.

1.1 Act means the Social Security Act as in effect from time to time.

1.2 Actuarial Equivalent means a benefit of equivalent value when computed on
the basis of the actuarial principles and tables adopted or otherwise approved
by the Committee.

1.3 Annual Compensation means an Associate's Compensation during a fiscal year
of the Company, on an accrual basis, and shall include all of the Associate's
Compensation accrued for services during such fiscal year, regardless of when
such Compensation is paid or credited.

1.4 Annual Estimated Social Security Benefits means:

      (a) the estimated initial annual amount of the Primary Insurance Amount or
the Disability Insurance Benefit (as such terms are defined in the Act),
whichever is applicable, determined by the Committee from available records and
such other information as the Committee may request the Member to furnish, to
which the Member would be entitled under the Act as in effect at the beginning
of the calendar year in which cessation of employment occurs assuming the Member
is not thereafter in employment covered under the Act. The estimated Primary
Insurance Amount shall be applicable under this Plan in all cases except as
hereinafter provided in certain cases of Total Disability and shall be adjusted
in the manner provided in the Act as of the date of retirement if such
retirement occurs on or after the Member's 62nd birthday or as if the Member's
age at retirement were 62 if such retirement occurs before the Member's 62nd
birthday. The estimated Disability Insurance Benefit shall be applicable to a
Member who sustains Total Disability and qualifies for LTD Plan benefits which
are reduced on account of Disability Insurance Benefits under the Act; and

      (b) the estimated initial annual amount of benefit to which the Member
would be entitled under any public pension or welfare system of any country
other than the United States of America which is similar to the Primary
Insurance Amount or the
<PAGE>
Disability Insurance benefit under the Act, as determined by the Committee in
its sole and absolute discretion.

1.5 Annual Minimum Benefit Amount means:

      (a) for all years in which the Member participated in the Payless Profit
Sharing Plan or the May Profit Sharing Plan, the amount of the Company
contribution and forfeitures which would have been allocated to the Member's
Company Accounts in the May and Payless Profit Sharing Plans but for the
limitation on annual additions imposed by Section 415(c)(1) and Section
415(c)(2) of the Internal Revenue Code (the "Code"), and the limitation under
Code Section 401(a)(17) on the amount of such Member's Compensation which may be
taken into account in determining (i) the Member's basic contributions under the
May Profit Sharing Plan and (ii) the Member's Allocation Pay Amount under the
Payless Profit Sharing Plan. The Minimum Benefit Amount with respect to the
Payless Profit Sharing Plan shall be determined as if the Company Contribution
for the applicable year or years was invested in the investment fund(s) in which
the Company Contribution actually allocated for the Member was invested. (The
amount determined under this paragraph shall be converted to an annual benefit
which would be produced if the amount determined were paid in the form of an
Actuarially Equivalent immediate life annuity with appropriate adjustments to
the amount on account of investment experience actually experienced by the
Profit Sharing Plan); and

      (b) the difference between the annual amount of Retirement Pension, if
any, to which the Member is entitled under the May Retirement Plan paid in the
form of an immediate life annuity and the annual amount of such Retirement
Pension which would be payable to the Member but for (i) the limitation on
benefits under Section 415(b) of the Code, (ii) the limitation under Code
Section 401(a) (17) on the amount of such Member's Compensation which may be
taken into account in determining such Member's annual amount of Retirement
Pension, and (iii) the limitation under Code Section 415(e) on the benefit
payable to a Member who participates in both a defined benefit plan and a
defined contribution plan, to the extent applicable.

1.6 Annual Retirement Income means the amount determined by multiplying two
percent (2%) of the Member's Average Annual Compensation by the number of years
and fractions thereof (to the closest one-twelfth) of Plan Service, up to a
maximum of twenty-five (25) years of Plan Service, completed by the Member on
his actual Retirement Date.

1.7 Annual Retirement Benefits Offset means, unless otherwise provided in the
employment agreement between the Member and the Company, the total of the
following annual amounts:

                                       2
<PAGE>
      (a) the annual amount of Retirement Pension that would be produced if the
benefits payable under the May Retirement Plan were paid to the Member in the
form of an immediate life annuity,

      (b) the annual amount of Retirement Pension that would be produced under
any other retirement plan to which the Company or a related entity contributes
and which credits employment included in Plan Service if the benefits thereunder
were payable in the form of an Actuarially Equivalent immediate life annuity,

      (c) the annual amount of benefits that would be produced if the amount
payable from the Member's Company Accounts under the Payless Profit Sharing Plan
(including Company Accounts which were Employer or Company Accounts under the
May Profit Sharing Plan or Plans merged into the May Profit Sharing Plan) were
paid in the form of an Actuarially Equivalent immediate life annuity, assuming
that:

            (i)   for each calendar year that the Member was eligible to
                  participate as a Member of the May Profit Sharing Plan and for
                  such period of time that the Member is eligible to share in
                  Company matching contributions under the Payless Profit
                  Sharing Plan, the Company Contribution and forfeitures
                  allocated to the Member's Company Accounts were and are deemed
                  to be in an amount equal to the product of the May or Company
                  matching rate (as applicable) actually applicable to such year
                  or period of time multiplied by the maximum basic
                  contributions under the May or Payless Profit Sharing Plan(s)
                  which could have been contributed by the Member for such
                  calendar year or other period of time,

            (ii)  appropriate adjustments on account of investment experience
                  were made to such amount based on the actual investment
                  experience of the May Profit Sharing Plan, as the Committee
                  shall determine;

      (d) the May Retirement Plan and May Profit Sharing Plan offsets set forth
in this Section 1.7 shall apply only if the period of membership in those Plans
is included in Plan Service under this Plan.

1.8 Average Annual Compensation means the average of the three highest amounts
of Annual Compensation of the Member accrued with respect to three (not
necessarily consecutive) of the most recent five fiscal years of the Company
ending before the Member's actual Retirement Date.

1.9 Associate means any associate of an Employer under the Payless Profit
Sharing Plan.

                                       3
<PAGE>
1.10 CEO means the Company's Chief Executive Officer as of February 15, 2001,
and any successive Chief Executive Officer of the Company to whom the Board
grants the benefits specifically set forth in this Plan for the CEO.

1.11 Committee means the committee established by Section 4 of this Plan.

1.12 Company means Payless ShoeSource, Inc., a Delaware corporation, and any
other organization which may be a successor to it.

1.13 Compensation means, unless otherwise provided in the employment agreement
between the Associate and the Company, the total compensation from an Employer
(or, for the period prior to the date Payless ceases to be a subsidiary of May,
from an Employer or from any member of the controlled group of corporations
determined in accordance with Section 414(b) of the Code or is a trade or
business under common control in accordance with Section 414(c) of the Code,
which includes an Employer) with respect to an Associate for services rendered
prior to the Associate's actual Retirement Date, including all regular pay
commissions, overtime pay, cash incentives, prize awards, amounts which an
Associate elected to have the Employer contribute directly to the May or Payless
Profit Sharing Plans on the Associate's behalf in accordance with Section
4.01(b) of each such Plan, amounts not otherwise includable in the Associate's
taxable income pursuant to Section 125 of the Code, and amounts subject to the
Payless ShoeSource, Inc. Deferred Compensation Plan or the Payless ShoeSource,
Inc. Deferred Compensation 401(k) Mirror Plan. Compensation shall not include a
pension, retirement allowance, severance pay, retainer or fee under contract,
any special payments, cash or otherwise, relating to the spinoff of Payless or
distributions from the Profit Sharing Plan.

1.14 Competing Business means any single (i) retail department store; (ii)
discount department store; (iii) catalog showroom store; (iv) specialty store;
(v) furniture store; (vi) shoe store; (vii) clothing store; or a group of any of
the type of stores referred to in (i) through (vii) hereof, which such store or
group of stores had, in its fiscal year ending within the twelve month period
immediately preceding the date of such Member's Retirement Date, a gross sales
volume, including sales in leased or licensed departments, in excess of
$25,000,000.

1.15 Effective Date means May 4, 1996. The effective date of this amendment and
restatement is the effective date of the Merger.

1.16 Employer means an employer designated as an Employer under the Payless
Profit Sharing Plan.

                                       4
<PAGE>
1.17 Gender. Wherever applicable, the masculine pronoun as used herein shall
include the feminine pronoun.

1.18 May means The May Department Stores Company.

1.19 May Profit Sharing Plan means The May Department Stores Company Profit
Sharing Plan.

1.20 May Retirement Plan means The May Department Stores Company Retirement
Plan.

1.21 (a) Member means any person included in the membership of the Plan as
provided in Section 2.

     (b) Retired Member means a Member who retires after the Effective Date and
becomes entitled to a supplementary retirement benefit under this Plan in
accordance with its provisions.

1.22 Payless means Payless ShoeSource, Inc., a Delaware corporation.

1.23 Payless Profit Sharing Plan means the Payless ShoeSource, Inc. 401(k)
Profit Sharing Plan, as amended from time to time, and any other successor
retirement plan which may be designated by the Committee, including the Payless
ShoeSource, Inc. Profit Sharing Plan for Puerto Rico Associates.

1.24 Plan Service means Years of Service determined using the elapsed time
method. Plan Members shall receive a Year of Plan Service on each anniversary
date of their commencement of employment with an Employer, subject to any
limitations or restrictions as may be imposed in connection with such Employer's
adoption of the Plan.

1.25 Retirement Date means the last day of the month in which a Member retires
under the Payless Profit Sharing Plan or an earlier date set forth in Section
3.2 of this Plan under which a Member is eligible for benefits hereunder.

1.26 Termination Without Cause means the involuntary termination of Member's
employment for any other reason than specified in Section 3.2(d) and (e).

1.27 Total Disability means a disability qualifying a Member for benefits under
the Payless ShoeSource, Inc. Long-Term Disability Plan.

                                       5
<PAGE>
SECTION 2. MEMBERSHIP.

2.1 Eligibility for Membership. Each Associate who is a member of The May
Department Stores Company Supplementary Retirement Plan on the day Payless
ceased to be a subsidiary of May shall become a Member of the Plan as of that
date. Each other Associate of an Employer who has Compensation from an Employer
in any later calendar year completed prior to his Retirement Date equal to at
least twice the amount of "wages" which are subject to the payment of F.I.C.A.
tax by the Associate in such year shall become a Member as of the January 1
thereafter. The Committee, in its discretion, may permit any other Associate to
become a Member if the Committee determines that the Associate's Compensation
from an Employer in any calendar year does not adequately reflect the
Associate's full Compensation for such year.

2.2 Eligibility for Benefits. A Member shall become entitled to benefits under
the Plan only if, and to the extent that, the Plan so provides. The fact that an
Associate becomes a Member shall not, by itself, entitle the Associate to any
benefit under the Plan.

SECTION 3.  BENEFITS.

3.1 Normal Retirement.

      (a) Subject to the remaining provisions of this Section 3, the annual
supplementary retirement benefit payable to a Member who retires on or after
attaining age 65 shall be equal to the excess, if any, of:

            (i) such Members Annual Retirement Income, over

            (ii) the sum of:

                  X his Annual Estimated Social Security Benefits, and

                  X his Annual Retirement Benefits Offset.

      (b) If the benefit payable under subsection (a) above is less than the
Annual Minimum Benefit Amount computed pursuant to Section 1.5, the Member shall
receive the Annual Minimum Benefit Amount.

3.2 Early Retirement.

      (a)(i) A Member may retire early under this Plan at any time after
attaining age 55 and completing 5 years of Plan Service. Subject to the
remaining provisions of this Section 3, the annual supplementary retirement
benefit determined under Sections 3.1(a)

                                       6
<PAGE>
and 3.1(b) above, payable to a Member who retires prior to attaining age 65
shall be first computed on the basis provided by Section 3.1(a), taking into
account only years of Plan Service and Average Annual Compensation to the
Member's Retirement Date or, if applicable, on the basis provided by Section
3.1(b), which amount shall be reduced as follows:

<TABLE>
<CAPTION>
Age at Retirement          Reduction in Payment
-----------------          --------------------
<S>                        <C>
65 or older                No reduction
64                         2.0% of Average Annual Compensation
63                         4.0% of Average Annual Compensation
62                         6.0% of Average Annual Compensation
61                         6.5% of Average Annual Compensation
60                         7.0% of Average Annual Compensation
59                         7.5% of Average Annual Compensation
58                         8.0% of Average Annual Compensation
57                         8.5% of Average Annual Compensation
56                         9.0% of Average Annual Compensation
55                         9.5% of Average Annual Compensation
54                         10% of Average Annual Compensation
53                         10.5% of Average Annual Compensation
52                         11% of Average Annual Compensation
51                         11.5% of Average Annual Compensation
</TABLE>

      (a)(ii) The CEO shall be eligible for benefits under the Plan upon an
involuntary Termination without Cause (as defined in the CEO's employment
agreement with the Company). If Terminated Without Cause prior to attaining age
65, the benefits payable to the CEO shall first be computed on the basis
provided by Section 3.1(a), taking into account only years of Plan Service and
Average Annual Compensation to the Member's Retirement Date or, if applicable,
on the basis provided by Section 3.1(b), which amount shall be reduced as
specified in the chart provided under Section 3.2(a)(i).

      (a)(iii) The CEO shall be eligible for benefits under the Plan upon Total
Disability. If the CEO experiences Total Disability prior to attaining age 65,
the benefits payable to the CEO shall first be computed on the basis provided by
Section 3.1(a) taking into account only years of Plan Service and Average Annual
Compensation to the Member's Retirement Date or, if applicable, on the basis
provided by Section 3.1(b), which amount shall be reduced as specified in the
chart provided under Section 3.2(a)(i).

      (b) Notwithstanding the other provisions of this Section 3.2, if a
Member's retirement occurs prior to his 62nd birthday, then during the period
between his Retirement Date and the Member's 62nd birthday only, in the
calculation of the

                                       7
<PAGE>
Member's supplementary retirement benefit, such Member's supplementary
retirement benefit shall not be reduced by his Annual Estimated Social Security
Benefits.

      (c) Notwithstanding anything else to the contrary provided in this Section
3.2 or otherwise in the Plan, if, during the five-year period following the
occurrence of a Change in Control of the Company, the Company or an Employer
terminates a Member's employment, who is not the CEO, other than as a
Termination For Cause and such Member had attained age 50 on the date on which
the Change in Control occurred, then such Member's annual supplementary
retirement benefit shall be computed and paid to such Member as if such Member
had retired at age 55 with at least five years of service on the date of
termination with benefits to be determined as if such Member had been employed
through age 55 at a level of Compensation equal to the Member's Average Annual
Compensation. Notwithstanding anything to the contrary provided in this Section
3.2, or otherwise in the Plan, the CEO shall be eligible (prior to age 55) for
benefits under the Plan immediately upon a Change of Control of the Company and
benefits shall be determined in accordance with this Section 3.2(c). For the
purposes stated in this Section 3.2(c), the Average Annual Compensation of the
specified Member shall be deemed to be the greater of his Average Annual
Compensation determined (i) as of the date of the Change in Control or (ii) as
of the date of termination of employment.

      (d) A "Change in Control of the Company" shall be deemed to have occurred
if:

            (i)   Any individual, entity or group (within the meaning of Section
                  13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
                  as amended (the "Exchange Act")) (a "Person") acquires
                  beneficial ownership (within the meaning of Rule 13d-3
                  promulgated under the Exchange Act) of 20% or more of either
                  (A) the then-outstanding shares of common stock of the Company
                  (the "Outstanding Company Common Stock") or (B) the combined
                  voting power of the then-outstanding voting securities of the
                  Company entitled to vote generally in the election of
                  directors (the "Outstanding Company Voting Securities");
                  provided, however, that, for purposes of this Section 3.2(d),
                  none of the following shall constitute a Change of Control:
                  (i) any acquisition directly from the Company of 30% or less
                  of Outstanding Company Common Stock or Outstanding Company
                  Voting Securities provided that at least a majority of the
                  members of the board of directors of the Company following
                  such acquisition were members of the Incumbent Board at the
                  time of the Board's approval of such acquisition, (ii) any
                  acquisition by the Company, (iii) any acquisition by any
                  employee benefit plan (or related trust) sponsored or
                  maintained by the Company or any affiliated

                                       8
<PAGE>
                  company, or (iv) any acquisition by the Company which, by
                  reducing the number of shares of Outstanding Company Common
                  Stock or Outstanding Company Voting Securities, increases the
                  proportionate number of shares of Outstanding Company Common
                  Stock or Outstanding Company Voting Securities beneficially
                  owned by any Person to 20% or more of the Outstanding Company
                  Common Stock or Outstanding Company Voting Securities;
                  provided, however, that, if such Person shall thereafter
                  become the beneficial owner of any additional shares of
                  Outstanding Company Common Stock or Outstanding Company Voting
                  Securities and beneficially owns 20% or more of either the
                  Outstanding Company Common Stock or the Outstanding Company
                  Voting Securities, then such additional acquisition shall
                  constitute a Change of Control; or

            (ii)  Individuals who, as of the date hereof, constitute the Board
                  (the "Incumbent Board") cease for any reason to constitute at
                  least a majority of the Board; provided, however, that any
                  individual becoming a director subsequent to the date hereof
                  whose election, or nomination for election by the Company's
                  stockholders, was approved by a vote of at least a majority of
                  the directors then comprising the Incumbent Board shall be
                  considered as though such individual were a member of the
                  Incumbent Board, but excluding, for this purpose, any such
                  individual whose initial assumption of office occurs as a
                  result of an actual or threatened election contest with
                  respect to the election or removal of directors or other
                  actual or threatened solicitation of proxies or consents by or
                  on behalf of a Person other than the Board;

            (iii) A reorganization, merger, consolidation or sale or other
                  disposition of all or substantially all of the assets of the
                  Company (a "Business Combination") is consummated, in each
                  case, unless, immediately following such Business Combination,
                  (A), more than 50%, respectively, of the then-outstanding
                  shares of common stock and the combined voting power of the
                  then-outstanding voting securities entitled to vote generally
                  in the election of directors, as the case may be, of (x) the
                  corporation resulting from such Business Combination or (y) a
                  corporation that, as a result of such transaction, owns the
                  Company or all or substantially all of the Company's assets
                  either directly or through one or more subsidiaries, is
                  represented by the Outstanding Company Common Stock and the
                  Outstanding Company Voting Securities (or, if applicable, is
                  represented by shares into which Outstanding Company Common
                  Stock or Outstanding Company Voting

                                       9
<PAGE>
                  Securities were converted pursuant to such Business
                  Combination) in substantially the same proportions as their
                  ownership immediately prior to such Business Combination of
                  the Outstanding Company Common Stock and the Outstanding
                  Company Voting Securities, as the case may be, (B) no Person
                  (excluding any corporation resulting from such Business
                  Combination or any employee benefit plan (or related trust) of
                  the Company or such corporation resulting from such Business
                  Combination) beneficially owns, directly or indirectly, 20% or
                  more of, respectively, the then-outstanding shares of common
                  stock of the corporation resulting from such Business
                  Combination or the combined voting power of the
                  then-outstanding voting securities of such corporation, except
                  to the extent that such ownership existed prior to the
                  Business Combination, and (C) at least a majority of the
                  members of the board of directors of the corporation resulting
                  from such Business Combination were members of the Incumbent
                  Board at the time of the execution of the initial agreement or
                  of the action of the Board providing for such Business
                  Combination; or

            (iv)  The stockholders of the Company approve of a complete
                  liquidation or dissolution of the Company

      (e) "Termination for Cause" by the Company or by an Employer of the
Company means termination upon:

            (i)   the willful and continued failure by the Member to
                  substantially perform his duties with the Company or an
                  Employer (other than any such failure resulting from
                  disability or any such actual or anticipated failure after the
                  Member notifies the Company or an Employer of termination for
                  good reason) after a written demand for substantial
                  performance is delivered to the Member by the Company or
                  Employer, which demand specifically identifies the manner in
                  which the Company or Employer believes the Member has not
                  substantially performed his duties, or

            (ii)  the willful engaging by the Member in conduct that is
                  demonstrably and materially injurious to the Company or
                  Employer, monetarily or otherwise.

provided, however, that a termination shall not be deemed a Termination for
Cause if the Member's employment agreement with the Company provides a
definition of "cause" under which "cause" has not occurred.

                                       10
<PAGE>
For the purposes of this subparagraph, "good reason" means, without the Member's
express written consent, the occurrence of any of the following circumstances
during the one-year period following a Change in Control of the Company, unless
such circumstances are fully corrected (effective retroactive to and including
the date the circumstances first occurred) within 30 days of the Company or
Employer receiving notice of the Member's termination:

            (A)   a reduction by the Company or Employer or a subsidiary, as
                  appropriate, in the Member's annual base salary, bonus
                  opportunity or benefits as the same may be increased from time
                  to time except for across-the-board salary, bonus opportunity
                  or benefit reductions similarly affecting all management
                  personnel of the Company, Employer and/or subsidiaries (and
                  all management personnel of any person in control of the
                  Company or Employer and of all persons, firms, corporations
                  and partnerships and other entities controlled by such
                  person); or

            (B)   the relocation of the Company's or Employer's (or
                  subsidiary's) offices at which the Member is principally
                  employed to a location more than 35 miles from such location.
                  or the Company's or Employer's (or subsidiary's) requiring the
                  Member to be based anywhere other than the Company's or
                  Employer's (or subsidiary's) offices at such location.

provided, however, that "good reason" shall also have the meaning specified in
the employment agreement between the Member and the Company.

3.3 Cessation of Benefits. Subject to the provisions of Sections 3.4, 3.5 and
3.6, all payments of supplementary retirement benefits hereunder shall cease
upon the death of the Member.

3.4 Form of Benefit. Subject to subsection (b) below, the standard form of the
supplementary retirement benefit payable hereunder shall be an immediate life
annuity; provided, however, that one of the following optional forms of payment
may also be elected:

      (a)   100% Joint Annuity. This option is an actuarially reduced benefit
            payable to a Member during his life and, after his death, payable
            for life to such person he shall have designated as his contingent
            annuitant.

      (b)   50% Joint and Survivor Annuity. This option is an actuarially
            reduced benefit payable to a Member during his life and, after his
            death, a benefit at one-half the rate of such actuarially reduced
            benefit payable for life to such person as he shall have designated
            as his contingent annuitant. Unless the Member's spouse consents to
            another optional form of

                                       11
<PAGE>
            payment, this will be the standard form of payment for a Member who
            is married at Retirement Date. The Member's spouse will be the
            contingent annuitant.

      (c)   Period Certain Annuity (10 years). This option is an actuarially
            reduced benefit payable to a Member during his life with periodic
            payments certain terminating at the end of ten years, with provision
            that if the Member dies before receiving all the periodic payments
            for such ten year period, (i) periodic payments for the remainder of
            such period shall be paid to a designated beneficiary, and (ii) if
            there is no such designated beneficiary, to his estate.

      (d)   Period Certain Annuity. (15 years). This option is an actuarially
            reduced benefit payable to a Member during his life with periodic
            payments certain terminating at the end of fifteen years, with
            provision that if the Member dies before receiving all the periodic
            payments for such fifteen year period, (i) periodic payments for the
            remainder of such period shall be paid to a designated beneficiary,
            and (ii) if there is no such designated beneficiary, to his estate.

The supplementary retirement benefit payable under an optional form shall be the
Actuarial Equivalent of the supplementary retirement benefit otherwise payable
in the form of an immediate life annuity.

3.5 Standard Payment Period. Supplementary retirement benefit payments shall be
made in monthly installments, except that the Committee may, in its discretion
at any time and from time to time prior or subsequent to retirement, direct that
such payments be made other than at monthly intervals, or direct that either a
lump sum settlement or a different form of payment be made equal to the
Actuarial Equivalent of the benefit or remainder thereof otherwise payable.

3.6 Limitation on Payments.

      (a) It is recognized that a Member's duties during the period of
employment with the Company or an Employer entail the receipt of confidential
information concerning not only the current operations and procedures of the
Company or an Employer but also its short-range and long-range plans. If (A) the
Member during any portion of the period of two (2) years following his
retirement (1) has an aggregate investment (as determined from time to time) in
a Competing Business equal to at least the greater of (i) $100,000, (ii) 1% in
value of such Competing Business or (iii) such greater amount as the Committee
may establish on a case by case basis or (2) personally renders services to a
Competing Business in any manner, including without limitation, as owner,
partner, director, trustee, officer, employee, consultant or advisor thereof,
and (B) the Committee determines, in its discretion, that such investment or
rendering of personal services is contrary to the best interests of the Company,
then all rights to receive any benefits under the Plan shall immediately cease
if the Member does not

                                       12
<PAGE>
reduce such aggregate investment to an amount permitted hereunder or cease
rendering such personal services, within 60 days of receipt of written notice of
such determination from the Committee. The term "value" as used herein shall
mean the net worth of such Competing Business, as disclosed by the balance sheet
of such Competing Business, as of the close of the last preceding fiscal year;
provided, however, that with respect to an investment in stock or other
securities of a Competing Business, if such stock or other securities are part
of a class of stock or other securities listed on any stock exchange, the term
"value" shall mean the market value of such class of stock or other securities
of such Competing Business, as of the date of any such determination by the
Committee.

      (b) Any and all rights to benefits payable to or for the account of a
Member shall at all times be subject to termination (i) if the Committee shall
find such Member guilty of dishonesty or any other unlawful act causing injury
or harm to the Company or an Employer or their employees or customers, or (ii)
if such Member voluntarily terminates his employment without the written consent
of the Company or his Employer or in violation of a written contract of
employment.

      (c) Notwithstanding any other provisions of the Plan, in the event that
the aggregate amount of benefits paid under this Plan in any benefit year (the
period commencing on July 1 of any year and ending on the following June 30),
after taking into account the tax effect on the Company or an Employer, shall
exceed five percent (5%) of the average consolidated net earnings of the Company
as shown in the Company's annual report to shareowners for the three (3) most
recent consecutive fiscal years, ending prior to the conclusion of the benefit
year, then all benefits otherwise payable hereunder during the next following
benefit year shall be reduced or if necessary terminated. Such reduction shall
be made by reducing the benefits otherwise payable during such next following
benefit year in the same proportion that the benefits for the immediately
preceding benefit year (before the imposition of the limitations provided for by
this paragraph) would have had to have been reduced so that no excess would have
occurred during such immediately preceding benefit year.

      (d) Notwithstanding anything provided in this Section 3.6 or otherwise in
the Plan, to the contrary, the terms of subsections (a), (b) and (c) of this
Section 3.6 shall cease to apply and shall be null and void immediately upon the
occurrence of a Change in Control of the Company, as defined in Section 3.2(d)
of the Plan, or as otherwise provided in the employment agreement between the
Member and the Company.

3.7 Indirect Payment of Benefits. If any retired Member or his beneficiary is,
in the judgment of the Committee, legally, physically or mentally incapable or
incompetent, payment may be made to the guardian or other legal representative
of such retired Member or beneficiary or, if there be none, to such other person
or institution who or which, in the opinion of the Committee, based on
information furnished to the Committee, is then maintaining or has custody of
such retired Member or beneficiary. Such payment shall constitute a full
discharge with respect thereto.

                                       13
<PAGE>
3.8 Termination and Rehire. Except as provided in Section 3.2(a)(ii),
3.2(a)(iii) and 3.2(c), in the event a Member's employment is terminated prior
to eligibility for early retirement, as described in Section 3.2, or in the
event that a Member dies prior to the date as of which supplementary retirement
benefits hereunder would otherwise commence, then no benefits shall be payable
under this Plan. If a terminated Member is rehired under circumstances which
result in reinstatement of membership under the Payless Profit Sharing Plan,
reinstatement of membership under this Plan will occur at the same time. Such
reinstatement will result in cessation of payment of benefits under this Plan.
Upon the subsequent retirement of a Member whose benefits had ceased by reason
of this Section 3.8, supplementary retirement benefits shall again be payable
based upon such adjustments in amounts as the Committee may deem equitable.

3.9 Withholding. The Employer shall withhold from amounts otherwise payable
under this Plan any amounts required to be withheld under federal, state or
local law or regulations, such amounts to be remitted on a timely basis to the
appropriate governmental authorities.

SECTION 4. ADMINISTRATION OF THE PLAN.

4.1 The Committee. Except as otherwise provided herein, the Plan shall be
administered by the Committee constituted under the Payless Profit Sharing Plan.

4.2 Delegation of Duties. In the administration of the Plan, the Committee may,
from time to time, appoint agents and delegate to such agents and to the
Administrative Subcommittee such duties as it considers appropriate and to the
extent that such duties have been so delegated, the Administrative Subcommittee
or agent, as the case may be, shall be exclusively responsible for the proper
discharge of such duties. The Committee, the Administrative Subcommittee or any
agent may from time to time consult with counsel who may be counsel to the
Company.

4.3 Authority. Any decision or action of the Committee (or, with respect to any
duty delegated to it, any decision or action of the Administrative Subcommittee
or of a duly appointed agent) in respect of any question arising out of or in
connection with the administration, interpretation and application of the Plan
and the rules and regulations thereunder shall be in its absolute discretion and
shall be final, conclusive and binding upon all persons having any interest in
the Plan.

SECTION 5. CERTAIN RIGHTS AND OBLIGATIONS.

5.1 Rights of Members, Members' Spouses and Beneficiaries. The rights of the
Members, their spouses, their beneficiaries and other persons are hereby
expressly limited as set forth herein and shall be determined solely in
accordance with the provisions of the Plan.

5.2 Employer-Associate Relationship. The establishment of the Plan shall not be
construed as conferring any legal or other rights upon any Associate or any
other person for a continuation of employment or as interfering with or
affecting in any manner the right of the

                                       14
<PAGE>
Company or any Employer to discharge any Associate or otherwise act with
relation to such Associate. The Company or an Employer may take action
(including discharge) with respect to any Associate or other person and may
treat him without regard to the effect which such action or treatment might have
upon him under the Plan.

5.3 Unfunded Nature of Plan. The Plan shall be unfunded. Neither an Employer nor
the Committee shall be required to segregate any assets in connection with
benefits provided by the Plan. Neither the Company, an Employer nor the
Committee shall be deemed to be atrustee of any amounts to be paid under the
Plan. Any liability of the Company or an Employer to any person with respect to
benefits payable under the Plan shall be based solely upon such contractual
obligations, if any, as shall be created by the Plan and shall be only a claim
against the general assets of the Company or the Employer, and no such liability
shall be deemed to be secured by any pledge or any other encumbrance on any
specific property of the Company or any Employer.

SECTION 6. NON-ALIENATION OF BENEFITS.

6.1 Provisions with Respect to Assignment and Levy. No benefit payable under the
Plan shall be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, levy or charge, and any attempt so to
anticipate, alienate, sell, transfer, assign, pledge, encumber, levy upon or
charge the same shall be void; nor shall any such benefit be in any manner
liable for or, subject to the debts, contracts, liabilities, engagements or
torts of the person entitled to such benefit, except as specifically provided
herein.

6.2 Alternate Application. If any Member, Member's spouse or beneficiary under
the Plan becomes bankrupt or attempts to anticipate, alienate, sell, transfer,
assign, pledge, encumber or charge any benefit under the Plan, except as
specifically provided herein, or any benefit shall be levied upon, garnished or
attached, then such benefit shall, in the discretion of the Committee, cease,
and in that event the Committee may hold or apply the same or any part thereof
to or for the benefit of such Member, Member's spouse or beneficiary, children
or other dependents, or any of them, or in such other manner and in such
proportion as the Committee may deem proper.

SECTION 7. AMENDMENT AND TERMINATION.

7.1 Company's Rights. The Company reserves the right at any time and from time
to time in its sole discretion to modify or amend in whole or in part any or all
of the provisions of the Plan, provided that no amendment shall reduce any
supplementary retirement benefit with respect to a Member who had already
retired and no amendment shall reduce the amount of any supplementary retirement
benefit with respect to a Member who, at the time of amendment, was eligible for
retirement under the terms of the Plan, to a level below that determined as if
retirement were effective at the time of amendment.

Notwithstanding anything provided to the contrary in this Section 7.1 or the
next Section 7.2, following a Change in Control of the Company the Plan may not
be amended or terminated in

                                       15
<PAGE>
a manner that would adversely affect the rights of any Member to his vested
annual supplementary retirement benefits. Without limiting the generality of the
foregoing, Section 3.2(c) through (e) may not be amended or deleted following a
Change of Control of the Company.

7.2 Rights to Terminate. Except as provided in the previous Section 7.1, the
Company reserves the right at any time and from time to time in its sole
discretion to terminate the Plan, in whole or in part. In the event the Plan is
terminated, the Employer shall be under no further obligation to provide
benefits under the Plan, except to the extent of any supplementary retirement
benefit with respect to a Member who had already retired and to the extent of
any supplementary retirement benefit with respect to a Member who, at the time
of termination, was eligible for retirement under the terms of the Plan,
including Sections 3.2(a)(i), 3.2(a)(ii), 3.2(a)(iii) and 3.2(c), determined as
if retirement were effective at the time of Plan termination. If the Plan is
partially terminated, the preceding sentence shall apply to Members in the class
with respect to which the Plan is terminated.

SECTION 8. CONSTRUCTION.

The provisions of the Plan shall be construed, regulated, administered and
enforced according to the laws of the State of Kansas.

                                       16

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