Document:

exv10w12

 

EXHIBIT 10.12

THE STOCK APPRECIATION AND PHANTOM STOCK UNIT PLAN OF

COLLECTIVE BRANDS, INC. AND ITS SUBSIDIARIES

FOR

COLLECTIVE BRANDS INTERNATIONAL EMPLOYEES

AS

AMENDED AUGUST 17, 2007

 

 

THE STOCK APPRECIATION AND PHANTOM STOCK UNIT PLAN

OF

COLLECTIVE BRANDS, INC. AND ITS SUBSIDIARIES

FOR

COLLECTIVE BRANDS INTERNATIONAL EMPLOYEES

Amended August 17, 2007

PART I. GENERAL

          1. Purpose. The purpose of the Plan is to aid Collective Brands, Inc. and its subsidiaries in
attracting, retaining, motivating and rewarding certain management employees.

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

	 	a.	 	“Agreement” means the agreement between the Company or any
International Subsidiary and a Participant evidencing the award of Stock
Appreciation Units or Phantom Stock Units and containing the terms and conditions,
not inconsistent with the Plan, that are applicable to such Units.
	 
	 	b.	 	“Award” means an award of Units under the Plan.
	 
	 	c.	 	“Exercise Price” means, with respect to a Stock Appreciation Unit, the
Fair Market Value of a share of Stock on the date the Stock Appreciation Unit is
granted.
	 
	 	d.	 	“Board” means the Board of Directors of Collective Brands, Inc., a
Delaware corporation.
	 
	 	e.	 	“Committee” means a committee designated by the Board which shall
consist of not less than 2 members of the Board who shall be appointed by and serve
at the pleasure of the Board and who shall be “outside” directors within the
meaning of Section 162(m) of the Code.
	 
	 	f.	 	“Company” means Collective Brands, Inc., a Delaware corporation.
	 
	 	g.	 	“Disability” means a total and permanent disability which enables the
Participant to be eligible for and to receive disability benefits under (i) the
Social Security Act of the United States of America or (ii) under any comparable
governmental arrangements in the country in which the Participant resides.

 

 

	 	h.	 	“Fair Market Value” means:

	 	(i)	 	For Awards granted on or after May 25, 2007, the closing price of
the Stock on the New York Stock Exchange Composite Transaction Tape on the date
in question, (or if the Stock is not then traded on the New York Stock Exchange,
the closing price of the Stock on the stock exchange or over-the-counter market
on which the Stock is principally trading on such date) or, if no sale of the
Stock occurred on such exchange on that day, the closing price of the Stock on
the last preceding day when the Stock was sold on such exchange. In the event
that no sale of the Stock occurred on such exchange or over the counter market
on that day because the exchange was closed, then Fair Market Value shall be the
closing price of the Stock on the next day the exchange is open for trading; or
	 
	 	(ii)	 	For Awards granted prior to May 25, 2007, the average of
the high and low prices of the Stock on the New York Stock Exchange
Composite Transaction Tape on the date in question, (or if the Stock is
not then traded on the New York Stock Exchange, the average of the high
and low prices of the Stock on the stock exchange or over-the-counter
market on which the Stock is principally trading on such date) or, if
no sale of the Stock occurred on such exchange on that day, the average
of the high and low prices of the Stock on the last preceding day when
the Stock was sold on such exchange. In the event that no sale of the
Stock occurred on such exchange or over the counter market on that day
because the exchange was closed, then Fair Market Value shall be the
average of the high and low prices of the Stock on the next day the
exchange is open for trading; or if the Stock is no longer traded on
the New York Stock Exchange and if there is no public market for the
Stock, “Fair Market Value” shall be determined in good faith by the
Committee using other reasonable means.

i. “International Subsidiary” means any Subsidiary primarily engaged in business outside
of the United States of America.

j. “Participant” means an individual to whom an Award for Stock Appreciation Units or a
Phantom Stock Units is made under the Plan.

k. “Phantom Stock Unit” means a non-transferrable, non-assignable right described in
Part II of the Plan awarded by the Company or any Subsidiary and approved by the
Committee under or pursuant to the Plan which provides for the payment of an amount in
cash in accordance with such terms and conditions, not inconsistent with the Plan, that
are applicable to such Unit.

 

 

l. “Plan” means The Stock Appreciation and Phantom Stock Unit Plan of Collective Brands,
Inc. and Its Subsidiaries For Collective Brands International Employees.

m. “Retirement” means “retirement” as that word is defined in any retirement plan
sponsored by an International Subsidiary which is applicable to the Participant or, if
there is no such plan, as defined in the Company’s Profit Sharing Plan.

n. “Subsidiary” means any company owned, directly or indirectly by the Company or any
subsidiary thereof.

o. “Stock” means common stock of the Company.

p. “Stock Appreciation Unit” means a non-transferrable, non-assignable right described
in Part II of the Plan awarded by the Company or any Subsidiary and approved by the
Committee under or pursuant to the Plan which provides for the payment of an amount in
cash in accordance with such terms and conditions, not inconsistent with the Plan, that
are applicable to such Unit and whose Exercise Price is the Fair Market Value of a share
of Stock on the date of the Award.

q. “Unit” means a Stock Appreciation Unit or a Phantom Stock Unit. Each Phantom Stock
Unit shall represent the right to receive 100% of the value of a share of Stock on the
day the Unit vests. Each Stock Appreciation Unit shall represent the right to receive
the difference, if positive, between the Fair Market Value of a share of stock on the
date the Unit is exercised and the Exercise Price of the Unit. Units are not shares of
stock and do not entitle Participants to receive Stock or exercise any rights incident
to ownership of Stock, except that the Committee may provide in an agreement that
holders of Phantom Stock Units will receive dividend equivalents if any cash dividends
are paid on its Stock by the Company.

          3. Administration. The Plan shall be administered by the Committee. Subject to all the
applicable provisions of the Plan, including, without limitation, Section 4 of Part I of the Plan,
the Committee is authorized to approve Awards of Units 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.

          4. Participants. The individuals who are eligible to receive Awards for Units hereunder shall
be limited to management employees of any Subsidiary who, on the date of the award of Units under
the Plan, are not citizens of the United States of America and who are employed and reside out of
the boundaries of the United States of America.

               From time to time the Committee shall in its sole discretion, but subject to all of the
provisions of the Plan, determine which eligible employees will receive Awards of Units

 

 

under the Plan and the size, terms and conditions of the Unit or Units to be awarded to each
Participant. In any year, the Committee may approve the award to any eligible employee of Units
subject to differing terms and conditions. Neither the Committee’s decision to approve the award
of a Unit to that employee in any other year or to any other employee in any other year, nor the
Committee’s decision with respect to the size, terms and conditions of the Award(s) to be made to
an employee in any year, require the Committee to approve the award of the Unit(s) of the same size
or with the same terms and conditions to such employee in any other year or to any other employee
in any year. The Committee shall not be precluded from approving the award of a Unit to any
eligible employee solely because such employee may previously have received an Award under the
Plan.

          5. Employment. In the absence of any specific agreement to the contrary, no Award of Units to
a Participant under the Plan shall affect any right of the Participant’s employer to terminate the
Participant’s employment at any time.

PART II. UNITS

     1. Units. The Committee may from time to time in its discretion approve the award of Units to
employees who are eligible to receive an Award in accordance with Section 4 of Part I of the Plan.
An Award shall be evidenced by an Agreement which shall contain such terms and conditions (which
may include vesting provisions and other restrictions not inconsistent with the Plan as the
Committee shall determine); provided, however, that an Award shall satisfy the requirements set
forth in Part II of the Plan.

     2. Grant. An Award may be granted by the Committee and shall be effective upon the date
approved by the Committee.

     3. Exercise and Vesting. Stock Appreciation Unit Awards may be exercised by the Participant
only at such time or times, and only upon such terms and conditions, as shall be set forth in the
Agreement relating to such Stock Appreciation Unit Award. A Phantom Stock Unit Award will vest on
the date or dates as are set forth in the Agreement respecting such Phantom Stock Unit Award.

     4. Amount of Payment. Upon the exercise of a Stock Appreciation Unit Award, a Participant
shall be entitled to receive the excess of the Fair Market Value of a share of Stock over the
Exercise Price of a Unit with respect to each Unit exercised. Upon vesting of a Phantom Stock
Unit, a participant shall be entitled to receive an amount for such Unit equal to the Fair Market
Value of a share of Stock on the date the Unit vests.

     5. Form of Payment. Any amount which becomes payable upon exercise or vesting of an Award
under the Plan shall be paid entirely in cash. The Committee may determine that amounts shall be
payable in United States dollars or in local currency, converted on such basis and at such
conversion rate as the Committee shall deem reasonable.

 

 

     6. Termination.

          (a) General. A Stock Appreciation Unit Award shall terminate as of the earlier of (i) the
date of exercise of Award, to the extent that it is exercised, or (ii) the expiration date
specified in the Agreement with respect to such Award. If an unexercised Stock Appreciation Unit
Award is otherwise exercisable on the date that it expires, and if the Fair Market Value of Stock
with respect to which it was granted, determined as of the date of such expiration, exceeds the
Exercise Price of the Units (under such Award as set forth in the Stock Appreciation Unit
Agreement), then the Award shall automatically be deemed to have been exercised as of the date of
such expiration.

          (b) Termination of Employment. If a Participant ceases to be an employee of the Company or of
a Subsidiary, for any reason other than such Participant’s Disability, Retirement or Death, then
any Award not theretofore exercised or vested, as applicable, shall immediately be terminated and
may not thereafter be exercised, and no payment shall be made hereunder pursuant to such Award.
Each Agreement shall provide that the Committee may terminate any Award prior to the date on which
the Unit is exercised or vested, as applicable, if the Participant engages during the life of the
Award in employment or activities contrary, in the opinion of the Committee, to the best interests
of the Company or of any Subsidiary.

          (c) Disability. If a Participant ceases to be an employee of the Company or of a Subsidiary
by reason of such Participant’s Disability, then the Participant’s rights under the Award after the
date of such Disability shall be determined by the provisions of the Agreement applicable to such
Award.

          (d) Death. If a Participant ceases to be an employee of the Company or of a Subsidiary by
reason of the Participant’s death, the participant’s rights under the Award shall be determined by
the provisions of the Agreement applicable to such Award.

          (e) Retirement. If a Participant ceases to be an employee of the Company or of a Subsidiary
by reason of the Participant’s Retirement, any unvested Phantom Stock Units shall expire. The
right to exercise all or any portion of any Award of Stock Appreciation Units shall be determined
by the provisions of the Agreement applicable to such Award.

     7. Non-Assignability. An Award shall not be transferable (other than by will or the laws of
descent and distribution) and, during the Participant’s lifetime, shall be exercisable by, and
payable to, only the Participant.

     8. Restrictions. Awards shall be subject to the condition that if at any time the Company
shall determine in its discretion that the registration of the Plan with any regulatory authority,
the satisfaction of withholding tax or other withholding liabilities under the law of any
applicable jurisdiction or the consent or approval of any regulatory body is necessary or desirable
as a condition of, or in connection with, the exercise or vesting of such Award, then, in any such
event, such exercise or vesting shall not be effective unless such registrations withholding,
consent or approval shall have been effected or obtained free of any conditions not acceptable to
the Company.

 

 

     9. Repricing Prohibited. There shall be no grant of a Stock Appreciation Unit in exchange for
a Participant’s agreement to cancellation of a Stock Appreciation Unit with a higher Exercise Price
that was previously granted to such Participant.

PART III. CANCELLATION AND RESCISSION

	 	1.	 	Competition; Confidential Information.

	 	a.	 	Unless 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 Stock Appreciation Unit; or
	 
	 	(ii)	 	rescind any exercise of a Stock Appreciation Unit

	 	 	 	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

	 	(A)	 	engages in a Competing Business, as such term
is defined in the Agreement; or
	 
	 	(B)	 	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
	 
	 	(C)	 	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
	 
	 	(D)	 	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 Stock Appreciation Unit, 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 Stock
Appreciation Unit.

 

 

	 	 	 	Following receipt of such notice, the Participant shall have no further
rights with respect to such Stock Appreciation Unit.
	 
	 	d.	 	The Company shall notify the Participant in
writing of any rescission of an exercise of a Stock Appreciation Unit
within one year after the activity referred to in Part III, Section
1(a). Within ten days after receiving such a notice from the Company,
the Participant shall pay to the Company the excess of the Fair Market
Value of the Stock on the date of exercise of a Stock Appreciation Unit
over the Exercise Price for the Unit.

     2. Agreement by Participant Regarding Deduction. The Participant shall agree and consent to a
deduction from any amounts the Company or a Subsidiary 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 or a subsidiary), to the extent of the
amounts the Participant owes the Company under this Article III. 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 III, then the
Participant agrees to pay immediately the unpaid balance to the Company.

 

 

PART IV. MISCELLANEOUS

	 	1.	 	Effective Date. The Plan shall become effective on May 14, 1997.
	 
	 	2.	 	Duration of Plan. The Plan shall remain in effect until it is terminated by
the Company.
	 
	 	3.	 	Withholding. The Company or any Subsidiary shall have the right to deduct from
the amount of any payment arising from the exercise or vesting of an Award any taxes
required by applicable law to be withheld from such amount.
	 
	 	4.	 	Unfunded Plan. The Plan shall be unfunded. Neither the Company nor any
Subsidiary nor the Committee shall be required to segregate any assets that may at any
time be represented by Awards 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 an Award shall be based solely upon
any contractual obligations created by the Plan or an Agreement, and no such obligation
shall be deemed to be secured by any pledge or any encumbrance on any property of the
Company or of any Subsidiary.
	 
	 	5.	 	Changes in Capital Structure. In the event that there is any change in the
capital structure of the Company, through merger, consolidation, reorganization,
recapitalization, spinoff or otherwise, or if there shall be any dividend on the Stock,
payable in such Stock, or if there shall be a stock split or combination of shares, the
number and/or the Exercise Price of the Units shall be proportionately adjusted by the
Board as it deems equitable, in its absolute discretion, to prevent dilution or
enlargement of the Participant’s Award. 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 will result in fractional Units.
	 
	 	6.	 	Amendment or Termination. The Board may, by resolution, amend or terminate the
Plan at any time; provided, however, that the Board may not, without the consent of the
holder of the Unit, alter or impair any Award previously granted 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 United States Federal income tax purposes under Section 162(m) of the Code
without regard to the foregoing proviso and any such amendment shall be effective as of such
date as is necessary to make such income under the Plan so deductible.

	 	7.	 	Change of Control. If while unexercised awards 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 7, 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 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.

then from and after the date of the first of the foregoing events to occur, all outstanding Stock
Appreciation Unit Awards held by active employees on such date shall be exercised in full, whether
or not otherwise exercisable, and all outstanding Phantom Stock Unit Awards held by active
employees on such date shall vest in full, and shall be deemed fully payable.exv10w13

 

EXHIBIT 10.13

COLLECTIVE BRANDS, INC.

EMPLOYEE STOCK PURCHASE PLAN

(as amended August 17, 2007)

1. PURPOSE AND EFFECT OF PLAN

     The purpose of the Plan is to provide associates, including executive officers, an opportunity
to purchase Common Stock of Collective Brands, Inc. (the “Company”) through payroll deductions at a
discount on a tax deferred basis. It is believed that this will help attract, motivate and retain
highly qualified and talented associates who are important to the Company’s success. The Plan is
also intended to offer equity ownership in the Company to associates to encourage them to enhance
the value of the Company and therefore the price of the Company’s Common Stock and the shareowners’
return.

     The Plan is intended to comply with Code section 423 and to be a “tax conditioned plan” within
the meaning of SEC Rule 16b-3(c).

2. SHARES RESERVED FOR THE PLAN

     There shall be reserved for issuance and purchase by Eligible Associates under the Plan an
aggregate of 6,000,000 shares of Common Stock, subject to adjustment as provided in Section 16.
Shares purchased for the Plan shall be purchased in the open market or in private transactions, or
a combination thereof.

3. DEFINITIONS

     Where indicated by initial capital letters, the following terms shall have the following
meanings:

     ACT: The Securities Exchange Act of 1934.

     BASE COMPENSATION: The regular earnings of an Eligible Associate (before withholding or other
deductions), including overtime, after any salary reduction contributions pursuant to elections
under a plan subject to Code sections 125 or 401(k) and excluding bonuses and any other special
payments; provided, that the Committee may expand or narrow the definition of Base Compensation
from time to time so long as such definition is consistent with the requirements of Section 423 of
the Code.

     BOARD: The Board of Directors of the Company.

 

 

     BUSINESS DAY: Each day on which shares of Common Stock are or could be traded on the New York
Stock Exchange, or such other definition as the Committee may from time to time specify.

     CODE: The Internal Revenue Code of 1986, as amended, or any subsequently enacted federal
revenue law. A reference to a particular section of the Code shall include a reference to any
regulations issued under the section and to the corresponding section of any subsequently enacted
federal revenue law.

     COMMITTEE: The committee established pursuant to Section 13 to be responsible for the general
administration of the Plan.

     COMMON STOCK: The Company’s common stock, $.01 par value.

     COMPANY: Collective Brands, Inc., a Delaware corporation, and any successor by merger,
consolidation or otherwise.

     ELIGIBLE ASSOCIATE: Each employee, including each executive officer, of the Company and its
domestic Subsidiaries who meet the eligibility requirements of Section 4.

     EMPLOYER: A Participating Company that is the employer of a Participant.

     ENROLLMENT PROCEDURE: The procedure specified from time to time by the Committee to enable an
Eligible Associate to participate in the Plan and to authorize payroll deductions pursuant to
Section 5.

     FAIR MARKET VALUE: The weighted average price per share paid for all shares purchased on the
date in question with respect to a determination of the Purchase Price of Common Stock purchased
other than from the Company by an independent trustee or purchasing agent in arms-length
transactions. For all other purposes, Fair Market Value shall mean the average of the reported
lowest and highest sales prices per share for the Common Stock on the New York Stock Exchange on
the date in question, or, if there are no such sales on that date, the reported lowest and highest
sales prices per share for the Common Stock on the New York Stock Exchange for the last Business
Day prior to the date in question for which sales of the Common Stock were reported.

     INVESTMENT ACCOUNT: The account established for each Participating Associate to hold Common
Stock purchased under the Plan pursuant to Section 5.

 

 

     INVESTMENT DATE: The date on which the shares of Common Stock are purchased for the Plan.

     MONTH: A calendar month.

     PARENT: Any corporation (other than the Company) in an unbroken chain of corporations ending
with the Company if, as of an Investment Date, each of the corporations other than the Company owns
stock possessing 50% or more of the total combined voting power of all classes of stock in one of
the other corporations in such chain.

     PARTICIPATING COMPANIES: The Company and its domestic Subsidiaries.

     PARTICIPANT OR PARTICIPATING ASSOCIATE: Eligible Associates who elect to participate in the
Plan pursuant to Section 5.

     PAYROLL DEDUCTION ACCOUNT: The account established for a Participating Associate to hold
payroll deductions pursuant to Section 5.

     PLAN: The “Collective Brands, Inc. Employee Stock Purchase Plan” (formerly the Payless
ShoeSource, Inc. Stock Ownership Plan), as set forth herein and as amended from time to time.

     PURCHASE PRICE: The price for each whole and fractional share of Common Stock, including those
purchased by dividend reinvestment, which shall be 95% of the Fair Market Value of such whole or
fractional share on the Investment Date; provided, however, the Committee may change such purchase
price so long as the purchase price is not lower than the lesser of (i) 85% of the Fair Market
Value of the Common Stock on the first day of the applicable purchase period, and (ii) 85% of the
Fair Market Value of the Common Stock on the Investment Date.

     PURCHASE PERIOD: That period specified by the Committee during which payroll deductions shall
be accumulated for the purchase of Common Stock under the Plan; provided, that such period shall
not have a duration that exceeds the limitations provided in Section 423(b)(7) of the Code.

     RULE 16B-3: Rule 16b-3 of the Securities and Exchange Commission promulgated under the Act, as
now and hereafter amended.

     SUBSIDIARY OR SUBSIDIARIES: Any corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company if,

3

 

as of an Investment Date, each of the corporations
other than the last corporation in the unbroken chain owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other corporations in such chain.

     TRUSTEE: The trustee of the Plan designated by the Committee as provided in Section 13.

4. ELIGIBLE ASSOCIATES

     Participation in the Plan shall be open to each associate of a Participating Company
(including each executive officer of the Company) who has been continuously employed by one or more
Participating Companies for at least six months; provided, that the Committee may establish such
other or different employment requirements as it may deem appropriate so long as such other or
different requirements are consistent with the provisions of Section 423 of the Code. For purposes
of this section any break in service of less than thirty-one days shall not be deemed to constitute
a discontinuance of employment, unless the Committee shall otherwise provide.

     No director of the Company or of any its Subsidiaries who is not an associate shall be
eligible to participate in the Plan.

5. ELECTION TO PARTICIPATE; METHOD OF PURCHASE; INVESTMENT ACCOUNTS; DIVIDENDS

     5.1 ELECTION TO PARTICIPATE. Each Eligible Associate may become a Participant effective on
the first day of any Month coincident with or following the date the Participant becomes an
Eligible Associate by complying with the Enrollment Procedure authorizing specified regular payroll
deductions from the Participant’s Base Compensation. Such regular payroll deductions shall be
subject to a minimum deduction of $5.00 per weekly pay period and $10.00 per bi-weekly pay period
and a maximum deduction of $480.00 per weekly pay period and $960.00 per bi-weekly pay period;
provided, that the Committee may increase or decrease such minimum and maximum deductions from time
to time. All regular payroll deductions shall be credited to the Payroll Deduction Account that the
Company has established in the name of the Participant.

     5.2 PURCHASE OF COMMON STOCK. Each Participating Associate having eligible funds in the
Participant’s Payroll Deduction Account on an Investment Date shall be deemed, without any further
action, to have purchased the number of shares which the eligible funds in the Participant’s
Payroll Deduction Account could purchase at the Purchase Price on that Investment Date. All shares
purchased shall be maintained by the Trustee in separate Investment Accounts for Participating
Associates. Fractional shares will be allocated to accounts under the Plan unless the Committee
otherwise provides;

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provided that share certificates shall only be issued for whole shares. If
fractional shares are not allocated to accounts under the Plan, amounts that otherwise would have
been applied to the purchase of fractional shares will continue to be held for the Participant and
be applied towards the purchase of shares on the last day of the next Purchase Period.

     5.3 TIMING AND MANNER OF PURCHASE. The Committee shall designate Purchase Periods during which
funds shall be accumulated in Payroll Deduction Accounts for the purchase of Common Stock. Until
otherwise specified the Purchase Periods shall consist of each Month in a year. The Investment Date
shall occur during an interval immediately following the end of each Purchase Period having such
duration as the Committee shall from time to time specify, provided that until the Committee
otherwise specifies, such interval shall be the ten Business Days immediately following the end of
the Purchase Period. However, nothing contained in this Plan shall authorize the Committee, the
Company or any affiliate of the Company to exercise any direct or indirect control or influence
over the times when, or the prices at which, the Trustee or its independent agent may purchase the
Common Stock for the Plan, the amounts of the Common Stock to be purchased, the manner in which the
Common Stock is to be purchased, or the selection of a broker or dealer (other than the Trustee)
through which purchases may be executed; provided, that the Company, the Committee and affiliates
of the Company, shall not be deemed to have such control or influence solely because the Committee
revises not more than once in any three month period the basis for determining the amount of the
Company’s contributions to the Plan, the basis for determining the frequency of the Company’s
allocations to the Plan, or any formula in the Plan that determines the amount or timing of shares
to be purchased by the Trustee.

     5.4 DIVIDENDS AND OTHER DISTRIBUTIONS. All cash dividends paid with respect to the whole and
fractional shares of the Common Stock and shares so purchased shall be reinvested in Common Stock
on the immediately following Investment Date and added to the shares held for a Participating
Associate in the Participant’s Investment Account. Stock dividends and stock splits received by the
Plan will be credited to Participants having Common Stock allocated to their Investment Account to
the extent that they are attributable to such allocated Common Stock. Property, other than shares
of Common Stock or cash, received by the Trustee as a distribution with respect to Common Stock
allocated to Participant Common Stock accounts will be distributed in kind to Participants in
proportion to the number of shares of Common Stock contained in their Investment Account.

     5.5 STOCK PURCHASES. The Trustee shall effect purchases of Common Stock on the open market or
in private transactions. Purchases shall be made using total amounts contained in all Payroll
Deduction Accounts immediately preceding the purchase. The Company will pay the difference

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between
the Purchase Price and the price at which such shares are purchased for the Plan on or prior to the
required closing date for the purchase. Expenses incurred in the purchase of shares shall also be
paid by the Company.

     5.6 PAYMENT OF DEDUCTIONS TO THE TRUSTEE. Participating Companies shall pay to the
Trustee or to the order of the Trustee payroll
deductions made during a Month prior to the time required for the closing of purchases of
Common Stock for the Plan, as directed by the Committee. Interest shall not accrue on any amount
paid to the Trustee or otherwise allocated to an Investment Account pending investment in Common
Stock or other distribution.

6. CHANGE IN PARTICIPATION, WITHDRAWALS AND DISTRIBUTIONS

     6.1 PERIOD OF PARTICIPATION. After an Eligible Associate has become a Participant in the Plan,
such participation will continue thereafter, so long as the Plan continues in effect, until the
employment of the Participant with all Participating Companies terminates, the Participant ceases
to make contributions to the Plan and makes a complete withdrawal from the Plan, or the Participant
ceases to be an Eligible Associate.

     6.2 CHANGE IN PARTICIPATION. A Participant may change the amount of the Participant’s payroll
deductions in accordance with rules established by the Committee.

     6.3 PARTIAL WITHDRAWALS. The Trustee shall deliver whole shares allocated to a Participant’s
Investment Account upon written request for a partial withdrawal received in accordance with rules
established by the Committee so long as the Participant’s Investment Account following such
delivery contains at least one share or such other amount as the Committee may from time to time
require. Deliveries shall be made as soon as practicable after the request is received.

     6.4 COMPLETE WITHDRAWAL, TERMINATION OF EMPLOYMENT, DEATH. A Participant may effect a complete
withdrawal from the Plan by giving notice in accordance with rules established by the Committee. A
withdrawal from the Plan shall also be deemed to occur at such time as the Participant ceases to be
an Eligible Associate for any reason, including death, or upon the occurrence of such other event
as may herein be specified as one which triggers a withdrawal. The Employer shall give prompt
notice to the Trustee of such withdrawal. Upon any such withdrawal the Participant, or the
Participant’s beneficiary or estate in the case of death, shall be entitled to receive from the
Trustee, as soon as practicable after the Trustee shall have completed its purchases of Common
Stock hereunder with all funds attributable to amounts received by the Trustee with respect to the
part of the Purchase Period that precedes the effective date of such withdrawal: (a) the number of
whole shares

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of Common Stock credited to the account of such Participant, (b) cash in the amount of
any fractional share credited to the Participant’s Investment Account and (c) any cash balance
credited to such Participant’s Accounts which has not been invested by the Trustee. In the case of
the death of the Participant the deliveries shall be made to the beneficiary designated by the
Participating Associate in a writing filed with the Company. If no beneficiary has been designated,
or if the designated
beneficiary does not survive the Participating Associate, such amount and all shares shall be
delivered to the Participant’s estate.

     6.5 PLAN RE-ENTRY; SUSPENSION DURING APPROVED LEAVE. A Participant who withdraws from
the Plan and continues to otherwise be an Eligible Associate may re-enter the Plan in accordance
with such rules as the Committee may establish; provided that until the Committee otherwise
specifies, re-entry may be effected at any time in accordance with the Enrollment Procedure. A
Participant whose contributions under the Plan shall have been temporarily discontinued shall not
be considered to have withdrawn from the Plan.

7. REGISTRATION OF SHARES

     The shares to be delivered to a Participant will be issued in such registration as shall have
been specified by the Participant in accordance with procedures established by the Committee. The
Committee may, in its discretion, restrict the use of any form of registration other than
registration solely in the name of the Participant and may permit such other registrations as may
be permitted under Section 423 of the Code and related Code sections and rules. The shares of a
Participant who is a minor may, with the consent of the Committee, and upon written instructions by
such associate, be registered in the name of an adult as custodian for such minor associate.

8. REQUIRED NOTICE OF SUBSEQUENT SALE

     As a condition of participation in the Plan, each Participating Associate agrees to notify the
Company if the Participant sells or otherwise disposes of any of the Participant’s shares of Common
Stock within two years of the Investment Date on which such shares were purchased.

9. STATEMENT OF ACCOUNT

     As soon as practicable after the end of each calendar quarter each Participant will receive
from the Trustee or the Company a statement of the Participant’s account with respect to such
period, subject to the right of the Committee to prescribe the form and content of such statement
and to otherwise change the frequency, coverage and delivery of such statement.

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10. EXERCISE OF VOTING AND OTHER RIGHTS

     Prior to the time when the Trustee makes delivery to the Participating Associate of the
shares of Common Stock held in the Participant’s Investment Account, the Trustee will exercise all
voting rights pertaining to the shares of Common Stock allocated to the Investment Account of each
Participant only in accordance with written directions, if any, given to the Trustee by such
Participant prior to the date fixed for the exercise of such voting rights. In the absence of
such direction, the Trustee shall not vote allocated shares but may vote any unallocated Common
Stock in its discretion. All stock rights or offers received by the Trustee with respect to any
Common Stock held by it hereunder shall be exercised by the Trustee to the extent appropriately
specified in writing by Participants with respect to Common Stock allocated to the Investment
Accounts of such Participants. Rights or offers relating to any unallocated Common Stock shall be
exercised or otherwise disposed of by the Trustee in its discretion.

11. DESIGNATION OF BENEFICIARY

     A Participant may file with the Company a written designation of a beneficiary with respect to
the assets in the accounts of the Participant in the event of the Participant’s death, provided
that no such designation shall be effective unless so filed prior to the death of the Participant.
The written designation of a beneficiary filed with the Company may be changed or revoked by the
sole action of the Participant unless such action is precluded by statute. If upon the death of a
Participant there is doubt as to the right of any beneficiary to receive any amount, the Committee
may direct the Trustee to retain such amount, without liability for any interest thereon, until the
rights thereto are determined, or the Committee may direct the Trustee to distribute such amount
into any court of appropriate jurisdiction, in either of which events neither the Trustee nor the
Committee nor any Employer shall be under any further liability to anyone with respect to such
amount.

12. SALE OF SHARES

     A Participating Associate shall have the right to direct the Trustee to sell shares in the
Participant’s Investment Account in lieu of a withdrawal or distribution of the shares in kind;
provided that the Committee may adopt rules regulating such elections, the timing of such sales,
and requirements that sales be aggregated with other sales. The Committee may also choose to
completely or temporarily suspend or terminate such rights. Upon any permitted direction to sell,
the Trustee will sell all shares allocated to the Investment Account that are covered by the
direction together with any fractional interest that may be aggregated with other fractional
interests into a whole share, and remit the

8

 

proceeds of such sale, less brokerage commissions and
other selling expenses to the Participant or other permitted distributee. The Trustee may,
consistent with applicable securities laws, sell the shares in private transactions, in the open
market, or to the Company. If so directed the Trustee shall sell the shares to the Company. Any
sale of shares to the Company shall be effected at Fair Market Value on the date of purchase.

13. ADMINISTRATION OF THE PLAN

     13.1 THE COMMITTEE. The Plan shall be administered by the Committee, which shall consist of
not less than two members appointed by the Board. Committee members shall be directors, officers or
salaried employees of the Company. The Board from time to time may appoint members previously
appointed and may fill vacancies, however caused, in the Committee.

     13.2 THE TRUSTEE. The Committee will designate one or more individuals, a bank, trust
company or investment firm having trust powers to act as trustee under the Plan (the “Trustee”),
with the right in the Committee to change such designation in its discretion. The Trustee will hold
all funds received by it under the Plan and, until delivery thereof to the Participants hereunder,
all shares of Common Stock acquired by the Trustee under the Plan. The Trustee may rely on all
orders, requests, and instructions with respect to the Plan given in writing and signed by any
person authorized by the Committee or the Company’s Board of Directors, and the Trustee shall not
be liable to any person for any action taken in accordance therewith. The Trustee or such other
agent as the Trustee may appoint to effect purchases under the Plan shall be an “agent independent
of the issuer” within the meaning of Regulation M of the Securities and Exchange Commission, as
amended.

     13.3 AUTHORITY OF THE COMMITTEE. Subject to the express provisions of the Plan, the Committee
shall have the authority to take any and all actions (including directing the Trustee as to the
acquisition of shares) necessary to implement the Plan, to interpret the Plan, to prescribe, amend
and rescind rules and regulations relating to it, and to make all other determinations necessary or
advisable in administering the Plan. All of such determinations shall be final and binding upon all
persons. A quorum of the Committee shall consist of a majority of its members and the Committee may
act by vote of a majority of its members at a meeting at which a quorum is present, or without a
meeting by a written consent to the action taken signed by all members of the Committee. The
Committee may request advice or assistance or employ such other persons as are necessary for proper
administration of the Plan. To the extent that the Committee exercises discretionary authority with
respect to the establishment and modification of rules, regulations and guidelines for the
administration of the Plan, such rules and rule changes shall be made to apply uniformly to all
Participants, consistent with the requirements of Section 423 of the Code.

9

 

14. LIMITATION ON PURCHASES

     No Participating Associate may purchase during any one calendar year under the Plan (or under
any other plan of the Company, a Parent or Subsidiary qualified under Code section 423) shares of
Common Stock having an aggregate Fair Market Value (determined by reference to the Fair Market
Value on each Investment Date) in excess of the limitations of Code section 423(b)(8).

     A Participating Associate’s Payroll Deduction Account may not be used to purchase Common Stock
on any Investment Date to the extent that after such purchase the Participating Associate would own
(or be considered as owning within the meaning of Code section 424(d)) stock possessing 5 percent
or more of the total combined voting power of the Company or its Parent or Subsidiary. For this
purpose, Common Stock which the Participating Associate may purchase under any outstanding rights
to purchase shall be treated as owned by such Participating Associate. As of the first Investment
Date on which this paragraph limits a Participating Associate’s ability to purchase Common Stock,
the associate shall cease to be an Eligible Associate.

15 RIGHTS NOT TRANSFERABLE

     Rights under the Plan are not transferable by a Participating Associate otherwise than by will
or the laws of descent and distribution, and are exercisable, during the Associate’s lifetime, only
by the Associate.

16. CHANGE IN CAPITAL STRUCTURE

     In the event of a stock dividend, stock split or combination of shares, recapitalization or
merger in which the Company is the surviving corporation or other change in the Company’s capital
stock (including, but not limited to, the creation or issuance to shareholders generally of rights,
options or warrants for the purchase of Common Stock or preferred stock of the Company), the
number and kind of shares of stock or securities of the Company to be subject to the Plan, the
maximum number of shares or securities which may be delivered under the Plan, the selling price and
other relevant provisions shall be appropriately adjusted by the Committee, whose determination
shall be binding on all persons.

     If the Company is a party to a consolidation or a merger in which the Company is not the
surviving corporation, a transaction that results in the acquisition of substantially all of the
Company’s outstanding stock by a single person or entity, or a sale or transfer of substantially
all of the Company’s assets, the Committee may take such actions with respect to the Plan as the
Committee deems appropriate.

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     Notwithstanding anything in the Plan to the contrary, the Committee may take the foregoing
actions without the consent of any Participant, and the Committee’s determination shall be
conclusive and binding on all persons for all purposes.

17. AMENDMENT OF THE PLAN

     The Board of Directors may at any time, or from time to time, amend the Plan in any respect;
provided, however, that the shareholders of the Company must approve any amendment that would (i)
increase the number of securities
that may be issued under the Plan, or (ii) modify the requirements as to eligibility for
participation in the Plan.

18. TERMINATION OF THE PLAN

     The Plan and all rights of associates hereunder shall terminate:

          a. on the Investment Date that Participating Associates become entitled to
purchase a number of shares greater than the number of reserved shares remaining available for
purchase; or

          b. at any date at the discretion of the Board of Directors.

     In the event that the Plan terminates under circumstances described in (a) above, reserved
shares remaining as of the termination date shall be issued to Participating Associates on a pro
rata basis. Upon termination of the Plan, all amounts in an associate’s Payroll Deduction Account
that are not used to purchase Common Stock will be refunded.

19. EFFECTIVE DATE OF PLAN

     The Plan was approved by the Board of Directors on March 20, 1997, and shall become effective
on August 1, 1997, subject to receiving shareholder approval.

20. GOVERNMENT AND OTHER REGULATIONS

     The Plan, and the grant and exercise of the rights to purchase shares hereunder, and the
Company’s obligation to sell and deliver shares upon the exercise of rights to purchase shares,
shall be subject to all applicable federal, state and foreign laws, rules and regulations, and to
such approvals by any regulatory or government agency as may, in the opinion of counsel for the
Company, be required.

11

 

21. INDEMNIFICATION AND LIABILITY OF COMMITTEE AND TRUSTEE

     The Committee and all persons employed by each Participating Company who are engaged in
administering the Plan shall be entitled to rely upon all valuations, certificates and reports
furnished by the Trustee or by any accountant or actuary selected by the Committee and upon all
opinions given by any legal counsel selected by the Committee. The members of the Committee, the
Trustee, each Participating Company, and all persons employed by each Participating Company and the
Trustee who are engaged in administering the Plan (a) shall be fully protected with respect to any
action taken by them in good faith and all actions so taken shall be conclusive and binding upon
all persons having or claiming to have any interest under the Plan; and (b) shall not be personally
liable
by reason of any instrument made or executed by them or on their behalf or in the course of
administering the Plan or for any mistake of judgment made by them or any other person, or for any
neglect, omission or wrongdoing of any other person or for any loss to the Plan unless resulting
from their own willful misconduct. No member of the Committee shall have any liability to any
person for any action or omission except each for his own individual willful misconduct.

     Service on the Committee shall constitute service as a director of the Company so that
members of the Committee shall be entitled to indemnification and reimbursement as directors of the
Company pursuant to its Articles of Incorporation and Bylaws.

     In addition to the foregoing, each member of the Committee, the Trustee, and each director and
officer of each Participating Company shall be indemnified by the Company against all expenses
(including costs and attorneys fees) actually and necessarily incurred or paid by such person in
connection with the defense of any action, suit or proceeding in any way relating to or arising
from the Plan to which the Participant may be made a party by reason of the party being or having
been such member of the Committee, Trustee, director or officer or by reason of any action or
omission or alleged action or omission by him in such capacity, and against any amount or amounts
which may be paid by him (other than to the Employer) in reasonable settlement of any such action,
suit or proceeding, where the Company has consented to such settlement. In cases where such action,
suit or proceeding shall proceed to final adjudication, such indemnification shall not extend to
matters as to which it shall be adjudged that such member of the Committee, Trustee, director or
officer is liable for willful misconduct in the performance of the duties of such person as such.
The right of indemnification herein provided shall not be exclusive of other rights to which any
member of the Committee, Trustee, director or officer may now or hereafter be entitled, shall
continue as to a person who has ceased to be such member of the Committee, Trustee, director or
officer and shall inure to the benefit of the heirs, executors, administrators, successor or
assigns of such members of the Committee, director or officer.

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22. APPLICABLE LAW

     The place of administration of the Plan shall conclusively be deemed to be within the State of
Kansas and the validity, construction, interpretation and administration of the Plan and of any
rules or regulations or determinations or decisions made thereunder, and the rights of any and all
persons having or claiming to have any interest therein or thereunder, shall be governed by and be
determined exclusively and solely in accordance with, the laws of the State of Kansas. Without
limiting the generality of the foregoing, the period within which any action arising under or in
connection with the Plan, or any payment or award
made or purportedly made under or in connection therewith, must be commenced shall be governed
by the laws of the State of Kansas, irrespective of the place where the act or omission complained
of took place and of the residence of any party to such action and irrespective of the place where
the action may be brought.

13

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