Document:

exv10w21

 

EXHIBIT 10.21

2006 COLLECTIVE BRANDS, INC. STOCK INCENTIVE PLAN

AMENDED AUGUST 17, 2007

Section 1: Purpose

The purpose of the 2006 Collective Brands, Inc. Stock Incentive Plan as amended and restated (the
“Plan”) is to promote the interests of Collective Brands, Inc. (the “Company”), its Subsidiaries
and stockholders by (i) attracting and retaining individuals eligible to participate in the Plan;
(ii) motivating such individuals by providing incentive compensation; and (iii) aligning the
interests of such individuals with the interests of the Company’s stockholders.

Section 2: Definitions

The following terms, as used in the Plan, shall have the meanings specified below. Other
capitalized terms shall have the meanings specified in the Plan.

	 	a.	 	“Appreciation Value Award Vehicle” means an Award type structured to correlate
the realization of gains based on absolute Stock price appreciation. May include but
not be limited to Options, cash-settled stock appreciation rights and stock-settled
stock appreciation rights.
	 
	 	b.	 	“Award” means an award granted pursuant to Section 4.
	 
	 	c.	 	“Award Agreement” means a document described in Section 7 setting forth the
terms and conditions applicable to the Award granted to the Participant.
	 
	 	d.	 	“Board of Directors” means the Board of Directors of the Company, as it may be
comprised from time to time.
	 
	 	e.	 	“Change of Control” means Change of Control as defined in Section 11.
	 
	 	f.	 	“Code” means the Internal Revenue Code of 1986, and any successor statute, as
it or they may be amended from time to time.
	 
	 	g.	 	“Committee” means the Compensation, Nominating & Governance Committee of the
Board of Directors or such other committee as may be designated by the Board of
Directors from time to time. To the extent that compensation realized in respect of
Awards is intended to be “performance based” under Section 162(m) of the Code and the
Committee is not comprised solely of individuals who are “outside directors” within the
meaning of section 162(m) of the Code, or that any member of one Committee is not a
“non-employee director” within the meaning of Rule 16b-3 under the Exchange Act, the
Committee may from time to time delegate some or all of its functions under the Plan to
a committee or subcommittee composed of members that meet the relevant requirements.
The term “Committee” includes only such committee or subcommittee, to the extent of the
Committee’s delegation.
	 
	 	h.	 	“Company” means Collective Brands, Inc., a Delaware corporation, and any
successor thereto.

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	 	i.	 	“Confidential Information” means any and all non-public information pertaining
to the Company’s business. Confidential Information includes information disclosed by
the Company and its subsidiaries or affiliates to Participants, and information
developed or learned by Participants during the course of or as a result of employment
with the Company, or one of its subsidiaries. The Confidential Information includes,
without limitation, information and documents concerning the Company’s processes;
suppliers (including terms, conditions and other business arrangements with suppliers);
supplier and customer lists; advertising and marketing plans and strategies; profit
margins; seasonal plans, goals, objectives and projections; compilations, analyses and
projections regarding the Company and/or its subsidiaries divisions, stores, product
segments, product lines, suppliers, sales and expenses; files; trade secrets and patent
applications (prior to their being public); salary, staffing and employment information
(including information about performance of other employees); and “know-how,”
techniques or any technical information not of a published nature relating, for
example, to how the Company and its subsidiaries or affiliates conducts its business.
	 
	 	j.	 	“Covered Employee” means a covered employee within the meaning of Code section
162(m)(3).
	 
	 	k.	 	“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.
	 
	 	l.	 	“Dividend Equivalent” means an amount equal to the amount of cash dividends, if
any, payable with respect to a share of Stock after the date an Award is granted.
	 
	 	m.	 	“Employee” means any person employed by Collective Brands, Inc. or any of its
Subsidiaries and classified as a common law employee. Employee does not include
independent contractors or leased employees from third parties.
	 
	 	n.	 	“Exchange Act” means the Securities Exchange Act of 1934, and any successor
statute, as it may be amended from time to time.
	 
	 	o.	 	 “Fair Market Value” of a Stock (as defined below) 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

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	 	 	 	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
	 
	 	(iii)	 	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.

	 	p.	 	“Full Value Award Vehicle” means an Award type structured to provide equivalent
value of a share of Stock based on a ratio of 1:1. Full Value Award Vehicles may
include but not be limited to restricted Stock, Stock Equivalent Units and other Stock
Awards such as unrestricted Stock, restricted Stock unit grants and performance based
            shares.
	 
	 	q.	 	“Incentive Stock Option” means an Option that is intended to qualify as an
“incentive stock option” under Section 422 of the Code and which is so designated in
the applicable Award Agreement. Under no circumstances shall an Option that is not
specifically designated as an Incentive Stock Option be considered an Incentive Stock
Option.
	 
	 	r.	 	“Insider” means any person who is subject to Section 16 of the Exchange Act,
and any successor statutory provision, as it may be amended from time to time.
	 
	 	s.	 	“Non-Qualified Stock Option” means an Option that is not intended to qualify as
an “incentive stock option” under Section 422 of the Code.
	 
	 	t.	 	“Option” means an option granted pursuant to Section 4(a).
	 
	 	u.	 	“Participant” means any Employee who has been granted an Award.
	 
	 	v.	 	“Performance Goal” means with respect to the Performance Measure(s) selected by
the Committee, the goal or goals established by the Committee, for an Award, for a
Performance Period. Performance Goals may vary from Performance Period to Performance
Period and from Participant to Participant and may be established on a stand-alone
basis, in tandem or in the alternative.
	 
	 	w.	 	“Performance Measure” means one or more of the following, either alone or in
combination, selected by the Committee to measure individual Participant, Company or
one or more operating units, groups or any Subsidiary performance for a Performance
Period, whether in absolute or relative terms: cash flow; cash flow from
operations; total earnings; earnings per share, diluted or basic; earnings per share
from continuing operations, diluted or basic; earnings before interest and taxes;
earnings before interest, taxes, depreciation, and amortization; earnings from
continuing operations; net asset turnover; inventory turnover; net earnings; operating

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	 	 	 	earnings; operating margin; return on equity; return on assets or net assets; return on
total assets; return on capital; return on investment; return on investment capital;
return on sales; revenues; sales; store for store sales; net or gross sales; income or
net income; operating income or net operating income; operating profit or net operating
profit; gross margin; operating margin or profit margin; market share; economic value
added; expense reduction levels; cost of capital; change in assets; stock price; total
shareholder return; capital expenditures; debt; debt reduction; working capital,
completion of acquisitions; business expansion; product diversification; productivity;
new or expanded market penetration and other financial and non-financial operating and
management performance objectives. For any Performance Period, Performance Measures may
be determined on an absolute basis or relative to internal goals or relative to levels
attained in a year or years prior to such Performance Period or relative to other
companies or indices or as ratios expressing relationships between two or more
Performance Measures. For any Performance Period, the Committee shall provide how any
Performance Measure shall be adjusted to the extent necessary to prevent dilution or
enlargement of any Award as a result of extraordinary events or circumstances, as
determined by the Committee, or to exclude the effects of extraordinary, unusual, or
non-recurring items; changes in applicable laws, regulations, or accounting principles;
currency fluctuations; discontinued operations; non-cash items, such as amortization,
depreciation, or reserves; or any recapitalization, restructuring, reorganization,
merger, acquisition, divestiture, consolidation, spin-off, split-up, combination,
liquidation, dissolution, sale of assets, or other similar corporate transaction, or
stock dividends, or stock splits or combinations. Unless otherwise specified by the
Committee, each such measure shall be determined in accordance with generally accepted
accounting principles as consistently applied by the Company. Performance Measures may
vary from Performance Period to Performance Period and from Participant to Participant
and may be established on a stand-alone basis, in tandem or in the alternative. Other
Performance Measures may be used by the Committee in its sole discretion, except that
the Performance Measures set forth above in this paragraph v shall be used if the
compensation under the Award (other than an Option) is intended to qualify as
performance based under Section 162(m) of the Code.
	 
	 	x.	 	“Performance Period” means one or more periods of time (of not less than 364
calendar days), as the Committee may designate, over which the attainment of one or
more Performance Goals will be measured for the purpose of determining a Participant’s
rights in respect of an Award.
	 
	 	y.	 	“Plan” means the 2006 Collective Brands, Inc. Stock Incentive Plan, as amended
from time to time.
	 
	 	z.	 	“Retirement” means a Participant’s termination of employment on or after age 55
and after completing at least five (5) years of service with the Company or a
Subsidiary of the Company.
	 
	 	aa.	 	“Stock” means common stock of the Company, $ .01 par value, or any other equity
securities of the Company designated by the Committee, including any attached rights.

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	 	bb.	 	“Stock Award” means a grant of Stock or the right to receive Stock or its cash
equivalent (or both).
	 
	 	cc.	 	“Subsidiary” means (i) any corporation or other entity in which the Company,
directly or indirectly, controls fifty percent (50%) or more of the total combined
voting power of such corporation or other entity or (ii) any other corporation or other
entity in which the Company has a significant equity interest, in either case as
determined by the Committee.
	 
	 	dd.	 	“Ten-percent Stockholder” means any person who owns, directly or indirectly, on
the relevant date, securities having ten percent (10%) or more of the combined voting
power of all classes of the Company’s securities or of its parent or subsidiaries. For
purposes of applying the foregoing ten percent (10%) limitation, the rules of Code
section 424(d) shall apply.

Section 3: Eligibility

The Committee may grant one or more Awards to any Employee designated by it to receive an Award as
the Committee shall select in its sole discretion. To the extent permitted under Delaware law, the
Committee may delegate to any Employee or Director of the Company the authority to grant Awards to
any Employee; provided, however, any grant to a Covered Employee must satisfy the requirement of
Code section 162(m).

Section 4: Awards

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

Appreciation Value Award Vehicles

	 	a.	 	Options. An Option is a right or rights (either an Incentive Stock
Option or a Non-Qualified Stock Option) to purchase a specific number of shares of
Stock exercisable at such time or times and subject to such terms and conditions as the
Committee may determine in its sole discretion subject to the Plan, including but not
limited to the achievement of specific Performance Goals. Options may be settled in
cash or stock.

	 	(1)	 	Incentive Stock Options shall be subject to the following provisions:

	 	A.	 	The aggregate Fair Market Value (determined on the date
that such Option is granted) of the shares of Stock subject to Incentive
Stock Options which are exercisable by one person for the first time during
a particular calendar year shall not exceed $100,000. To the extent that
the aggregate Fair Market Value (determined at the time of grant) of Stock
with respect to which Incentive Stock Options are exercisable for the first
time by any Option holder during any calendar year (under all plans of the
Company and its Subsidiaries) exceeds $100,000, or such other limit as may
be set by applicable law, the Options or portions thereof which exceed such
limit (according to the order in which they were granted) shall be treated
as Non-Qualified Stock Options.

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	 	B.	 	Each Award Agreement with respect to an Incentive Stock
Option shall set forth the periods during which the Option shall be
exercisable, whether in whole or in part. Such periods shall be determined
by the Committee in its discretion. No Incentive Stock Option may be
exercisable more than:

	 	(i)	 	in the case of an Employee who is
not a Ten-Percent Stockholder on the date that such Option is
granted, seven (7) years from the date the Option is granted or
such earlier period as otherwise specified in the Plan or an
Award Agreement, and
	 
	 	(ii)	 	in the case of an Employee who is
a Ten-Percent Stockholder on the date such Option is granted,
five (5) years from the date the Option is granted.

	 	C.	 	Each Award Agreement with respect to an Incentive Stock
Option shall set forth the price at which a share of Stock may be acquired
under the Option (the “Exercise Price”), which shall be at least 100% of
the Fair Market Value of a share of Stock on the date the option is granted
(except as permitted under Section 424(a) of the Code with respect to
Acquisition Awards (as defined in Section 4(i)). In the case of an Employee
who is a Ten-Percent Stockholder on the date that such Option is granted,
the Exercise Price of any Incentive Stock Option shall not be less than
110% of the Fair Market Value of the Stock subject to such Option on such
date.
	 
	 	D.	 	No Incentive Stock Option may be granted to an Employee
who is not a Employee of the Company or a Subsidiary (as defined in Section
2(bb) on the date that such Option is granted.
	 
	 	E.	 	Notwithstanding any other provision of the Plan to the
contrary, the maximum aggregate number of shares of Stock that may be
issued under the Plan pursuant to Incentive Stock Options is 2 million
shares of Stock (the “ISO Limit”), subject to adjustments provided for in
Section 10 of the Plan.

	 	b.	 	Appreciation Rights. An Appreciation Right is a right to receive an
amount that is based on the increase in the Stock’s Fair Market Value after the grant
date, and that is payable entirely in cash, entirely in Stock or partly in cash and
partly in Stock and exercisable at such time or times and subject to such conditions
as the Committee may determine in its sole discretion subject to the Plan, including
but not limited to the achievement of specific Performance Goals.
	 
	 	c.	 	Other Awards. Subject to limitations under applicable law, the
Committee may from time to time grant other Awards under this Plan, using Appreciation
Value Award Vehicles, that provide the Participant with Stock or the right to purchase
Stock, or provide other incentive Awards that have a value derived from the value of
Stock, or an exercise or conversion privilege at a price related to Stock, or that are
otherwise payable in or convertible into shares of Stock. These Awards shall be in a
form and based upon the terms and conditions determined by the Committee (including but
not limited to the achievement of specific Performance Goals if determined by the

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	 	 	 	Committee), provided that the Award shall not be inconsistent with the other terms of
this Plan.

Full Value Award Vehicles

	 	d.	 	Stock Award. Stock Awards may include shares with or without
restrictions. Restricted Stock is Stock that is issued to a Participant subject to
restrictions on transfer and such other restrictions on incidents of ownership, and/or
other terms and conditions as the Committee may determine, including but not limited to
the achievement of specific Performance Goals. A certificate for the shares of
Restricted Stock, which certificate shall be registered in the name of the Participant,
shall bear an appropriate restrictive legend and shall be subject to appropriate
stop-transfer orders; provided, however, that the certificates representing shares of
Restricted Stock shall be held in custody by the Company until the restrictions
relating thereto otherwise lapse, and the Participant shall deliver to the Company a
stock power endorsed in blank relating to the Restricted Stock or other form as
appropriate.
	 
	 	e.	 	Stock Equivalent Units. A Stock Equivalent Unit is an Award based on
the Fair Market Value of one share of Stock. All or part of any Stock Equivalent Units
Award may be subject to conditions and restrictions established by the Committee,
including but not limited to the achievement of specific Performance Goals. Stock
Equivalent Units may be settled in Stock or cash or both as determined by the
Committee.
	 
	 	f.	 	Other Awards. Subject to limitations under applicable law, the
Committee may from time to time grant other Full Value Awards under this Plan that
provide the Participants with Stock or the right to purchase Stock, or provide other
incentive Awards that have a value derived from the value of Stock, or an exercise or
conversion privilege at a price related to Stock, or that are otherwise payable in or
convertible into shares of Stock. These Awards shall be in a form and based upon the
terms and conditions determined by the Committee (including but not limited to the
achievement of specific Performance Goals if determined by the Committee), provided
that the Award shall not be inconsistent with the other terms of this Plan.

Other Award Vehicles

	 	g.	 	Performance Units. A Performance Unit is an Award denominated in cash
or shares of Stock, the amount of which may be based on the achievement of specific
Performance Goals subject to terms and conditions established by the Committee. The
maximum number of Performance Units that may be granted to a single Participant in any
one calendar year may not exceed the limits established under Section 6a., Stock
Available Under Plan, below. Performance Units may be settled in Stock or cash or
both.

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	 	h.	 	Performance Compensation Awards.

	 	(1)	 	The Committee may, at the time of grant of an Award (other than an
Option), designate such Award as a Performance Compensation Award in order that
such Award constitute qualified performance-based compensation under Code section
162(m). With respect to each such Performance Compensation Award, the Committee
shall (on or before the ninetieth (90th) day of the applicable
Performance Period), establish, in writing, the Performance Goal or Goals.
	 
	 	(2)	 	A Participant shall be eligible to receive payment in respect of a
Performance Compensation Award only to the extent that the Performance Goal(s)
for such Award are achieved as certified by the Committee.

	 	i.	 	Acquisition Awards. An Acquisition Award is an Award granted under
this Plan in substitution for options, rights, and such other awards with respect to
the capital stock of another corporation which is merged into, consolidated with, or
all or a substantial portion of the property or stock of which is acquired by, the
Company or one of its Subsidiaries.
	 
	 	j.	 	Other Awards. Subject to limitations under applicable law and the
Plan, the Committee may from time to time grant other Awards under this Plan that
provide the Participants with Stock or the right to purchase Stock, or provide other
incentive Awards that have a value derived from the value of Stock, or an exercise or
conversion privilege at a price related to Stock, or that are otherwise payable in or
convertible into shares of Stock. The Awards shall be in a form and based upon the
terms and conditions determined by the Committee (including but not limited to the
achievement of specific Performance Goals), provided that the Awards shall not be
inconsistent with the other terms of this Plan.

     Section 5: Other General Terms and Conditions for Awards

     The term of an Award shall not exceed seven (7) years.

	 	a.	 	Unless otherwise provided under the Plan or by the Committee, no Award (or any
rights or obligations thereunder) may be sold, exchanged, transferred, assigned,
pledged, hypothecated hedged, or otherwise disposed of (other than upon the death of
the Participant, by beneficiary designation, by last will and testament or by the laws
of descent and distribution) and shall be exercisable and subject to receipt during the
Participant’s lifetime only by the Participant.
	 
	 	b.	 	The Award price for each Award that allows for the purchase of a share of Stock
under an Award shall be specified in an Award Agreement containing the terms and
conditions as determined by the Committee and subject to the provisions of Section 10,
shall not be less than Fair Market Value on the date the Award is granted; provided,
however, that in no event shall the Award price per share be less than the par value
thereof. The Exercise Price, as applicable, of an Award shall not be less than 100% of
the Fair Market Value of the Stock on the date such Award is granted and the exercise
opportunity may be capped if the Committee determines appropriate and so specifies in
the Award Agreement pertaining thereto.

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	 	c.	 	There shall be no grant of an Appreciation Value Award to a Participant in exchange for
a Participant’s agreement to the cancellation of a higher-priced Appreciation Value Award
that was previously granted to such Participant. Re-pricing of Appreciation Value Awards
is prohibited.
	 
	 	d.	 	The Exercise Price, as applicable, of an Award may be paid in cash, personal check
(subject to collection), bank draft or such other method as the Committee may determine
from time to time. The Exercise Price may also be paid by the tender, by either actual
delivery or attestation, of Stock acceptable to the Committee and valued at its Fair Market
Value on the date of exercise; through a combination of Stock and cash. Without limiting
the foregoing, to the extent permitted by applicable law: the Committee may, on such terms
and conditions as it may determine, permit a Participant to elect to pay the Exercise Price
by authorizing a third party, pursuant to a brokerage or similar arrangement approved in
advance by the Committee, to simultaneously sell all (or a sufficient portion) of the Stock
acquired upon exercise of such Award and to remit to the Company a sufficient portion of
the proceeds from such sale to pay the entire Exercise Price of such Award and any required
tax withholding resulting therefrom.
	 
	 	e.	 	No Award may be granted under this Plan on or after the tenth anniversary of the date
this Plan is approved by stockholders.
	 
	 	f.	 	The exercise or delivery of Stock or payment of cash pursuant to an Award 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 of Stock
otherwise deliverable 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 or delivery 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.
	 
	 	g.	 	Each Participant shall agree that, subject to the provisions of Section 5(i) below,

	 	(1)	 	no later than the date as of which the restrictions mentioned in
the instrument evidencing the Award 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
such Award, and
	 
	 	(2)	 	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 Award.

	 	h.	 	If any Participant properly elects, as permitted by Code Section 83b (or any successor
Code provisions) within thirty (30) days of the date of the 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 pursuant to an Award, such Participant shall pay to the Company, or
make arrangements satisfactory to the Committee to pay to the Company, any Federal,

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	 	 	 	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.
	 
	 	i.	 	Dividends or Dividend Equivalents may be granted with respect to all or part of an
Award. If dividends are granted they may be paid, as determined by the Committee (i) in
cash, (ii) in Dividend Equivalents or (iii) accumulated or reinvested in Stock and held
subject to the same restrictions as the Stock under the Award.
	 
	 	j.	 	Unless expressly provided otherwise in the Award Agreement (and as provided in Section
4d) no Participant shall have any rights as a stockholder with respect to any Stock covered
by an Award until the date the Participant becomes the holder of record thereof.
	 
	 	k.	 	With respect to each type of Award, the Committee may establish such Performance Goals
it deems appropriate, in its sole discretion. For each Award established with Performance
Goals, as soon as practicable after the close of each Performance Period, the Committee
shall review and certify in writing whether, and to what extent, the Performance Goals(s)
for the Performance Period have been achieved and, if so, determine and certify in writing
the amount of the Performance Compensation Award earned by the Participant for such
Performance Period based upon such Participant’s achievement of the Performance Goals. The
Committee shall then determine the actual amount of the Performance Compensation Award to
be paid to the Participant. In so doing, the Committee may use negative discretion to
decrease any Participant Award based upon such performance, but may not increase, the
amount of the Award otherwise payable to a Covered Employee based upon such performance.
The maximum Performance Compensation Award for any one Participant for any one Performance
Period shall be determined in accordance with Sections 4 and 6. If Performance Goals are
established for an Award to a Covered Employee, once established for a Performance Period,
such Performance Goals shall not be amended or otherwise modified to the extent such
amendment or modification would cause the compensation payable pursuant to the Award to
fail to constitute qualified performance-based compensation under Code section 162(m).
	 
	 	l.	 	Unless an Award Agreement specifies otherwise, the Committee may cancel at any time any
Award or rescind any prior delivery of shares or value of shares, cash or property, if the
Participant is not in compliance with all other applicable provisions of the Award
Agreement or the Plan or if, within sixth months or such longer period as specified with
respect to the Participant, in any noncompete entered into between the Participant and the
Company, after exercise, as applicable, the Participant:

	 	(1)	 	engages in a Competing Business, as such term is defined in the
Award Agreement; or
	 
	 	(2)	 	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

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	 	(3)	 	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
	 
	 	(4)	 	discloses to anyone outside of the Company, or uses in other than
the Company’s business, any Confidential Information.
	 
	 	 	 	The Company shall immediately notify the Participant in writing of any
cancellation of any unexercised or unvested Award. Following such notice, the
Participant shall have no further rights with respect to such Award. In the event
of the rescission of the exercise of an Award within six months (or such longer
period specified in any agreement between Participant and Company) after the
activity referred to above in this Section 5(m), the Company shall notify the
Participant in writing. Within ten (10) days after receiving such 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 Award over the
exercise price for the Award or the Fair Market Value of the Stock and/or cash
distributed to the Participant as a result of the exercise of an Award or (ii)
return the Stock received upon the exercise of an Award (in which case the Company
will return the exercise price to the Participant) or return the Stock and/or cash
delivered upon the exercise of this Award.

	 	m.	 	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 Section 5(m) above. 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 Section 5(m) above, then the Participant agrees to
pay immediately the unpaid balance to the Company.
	 
	 	n.	 	The Committee may establish such other terms and conditions for an Award as it deems
appropriate.
	 
	 	o.	 	 The Committee may, at any time and in its sole discretion, determine that any
outstanding Awards granted under the Plan will be canceled and terminated and that in
connection with such cancellation and termination the holder of such Awards may receive for
each share of Stock subject to such Award a cash payment (or the delivery of shares of
stock, other securities or a combination of cash, stock and securities equivalent to such
cash payment) as follows:

	 	(1)	 	Appreciation Value Award Vehicles-whether or not
exercisable, a cash payment (or the delivery of shares of stock, other securities
or a combination of cash, stock, and securities equivalent to such cash payment)
equal to the difference, if any, between the amount determined by the Committee
to be the Fair Market Value of the Stock and the exercise price per share
multiplied by the number of shares of Stock subject to such Award; provided that
if such product is zero or less or to the extent that the Award is not then
exercisable, the Awards will be canceled and terminated without payment
therefore.

11

 

	 	(2)	 	Full Value Award Vehicles-a cash payment equal to the Fair
Market Value of the shares of Stock under the Award, as designated by the
Committee.
	 
	 	(3)	 	Other Awards-a payment amount as determined in the sole
discretion of the Committee.

Section 6: Stock Available Under Plan

	 	a.	 	Subject to the adjustment provisions of Section 10, the number of shares of
Stock with respect to which Awards may be granted (or, in the cases of Awards that may
be settled in cash or Stock) under the Plan shall not exceed 4.3 million shares of
Stock (the “Maximum Limit). The following amounts shall be reserved against the
Maximum Limit for each type of Award:
	 
	 	 	 	RESERVES
	 
	 	 	 	Full Value Award Vehicles 
	 
	 	 	 	The greater of (i) one share of Stock for each Full Value Award or (ii) the maximum
potential issuable pursuant to each Award.
	 
	 	 	 	Appreciation Value Award Vehicle (other than Stock Settled Stock Appreciation
Rights)
	 
	 	 	 	The amount calculated based on the ratio set forth in the below Exchange Ratio table.
	 
	 	 	 	Stock Settled Stock Appreciation Rights (“SSSAR”)
	 
	 	 	 	The lesser of (i) 1 share of Stock for each SSSAR granted under an Award or (ii) the
maximum potential of shares issuable upon exercise of a SSSAR.
	 
	 	 	 	Other Awards
	 
	 	 	 	The maximum number of shares of Stock authorized to be issued pursuant to such Other
Award Vehicle.
	 
	 	 	 	No single Participant shall receive, in any one calendar year, Awards in the form of (i)
Appreciation Value Award Vehicles with respect to more than 500,000 shares of Stock,
(ii) Full Value Award Vehicles for more than 500,000 shares of Stock, and/or (iii) Other
Awards Vehicles with respect to more than 500,000 shares of Stock; provided, however,
the aggregate number of Appreciation Value Award Vehicles, Full Value Award Vehicles and
Other Award Vehicles that may be granted to a single Participant in one calendar year
may not exceed 500,000 shares of Stock. For purposes of calculating the maximum
aggregate number of Awards that may be granted under this Plan during a calendar year,
shares of Stock will be counted based upon the appropriate reserve under this Plan for
the respective Award.

EXCHANGE RATIO TABLE

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Term of Grant	 	5 year	 	6 year	 	7 year
	Appreciation
Value Vehicle Awards (other than SSSAR)
	 	 	.549	 	 	 	.598	 	 	 	.641	 
	
	 	 	 	 	 	 	 	 	 	 	 	 

12

 

	 	ACTUALS
	 
	 	Upon exercise of each Award, all shares of Stock reserved for such Award shall be released
and the Maximum Limit shall be reduced by the number following:
	 
	 	Full Value Awards & Other Awards- by the shares of Stock actually issued pursuant to such
Award.
	 
	 	Appreciation Value Awards (other than a SSSAR) — by the number set forth in the Exchange
Ratio table above.
	 
	 	SSSAR — by the amount of shares actually issued under the Award.
	 
	 	b.	 	Awards payable entirely in cash shall not be counted against the Maximum Limit.
	 
	 	c.	 	If at the time of payment of dividends or Dividend Equivalents there are shares
of Stock available that have not been previously reserved, then upon payment they will
be deducted from the Plan Maximum Limit. If such shares to pay dividends are not
available because all shares of Stock are currently reserved under the Plan Maximum
Limit, then such dividends will be paid in cash.
	 
	 	d.	 	Shares of Stock covered by the unexercised or terminated or forfeited portion
of any Award that did not result in the delivery of Stock shall be available for
further Awards. Subject to Section 10, additional rules for determining the number of
shares of Stock granted under an Award type under the Plan may be adopted by the
Committee, as it deems necessary and appropriate and consistent with the overall limits
set forth in the Plan.
	 
	 	e.	 	The Stock that may be issued pursuant to an Award under the Plan may be
authorized and issued Stock held in the Company’s treasury or authorized but unissued
Stock, or Stock may be acquired, subsequently or in anticipation of the transaction, in
the open market to satisfy the requirements of the Plan.
	 
	 	f.	 	If any stock based award granted under the Company’s 1996 Stock Incentive Plan
shall for any reason subsequent to April 30, 2006 (i) expire, be cancelled or otherwise
terminate, in whole or in part, without having been exercised or redeemed in full, or
(ii) be reacquired by the Company prior to issuance without restriction to the holder
of such Award will be added to the Maximum Limit and will become available for issuance
under this Plan based on the following formula: Full Value Award Vehicles made
available under this provision shall increase the Maximum Limit on a ratio of 1:1.
Appreciation Value Vehicle Awards, including SSSARs under this provision shall increase
the Maximum Limit by 1/3 for each share of Stock covered by an Appreciation Value
Vehicle Award.
	 
	 	g.	 	Any shares of Stock delivered by the Company, any shares of Stock with respect
to which Awards are made by the Company and any shares of Stock with respect to which
the Company becomes obligated to make Awards, through the assumption of, or in
substitution for, outstanding awards previously granted by an acquired entity, shall
not be counted against the shares of Stock available for Awards under this Plan.

13

 

	 	h.	 	The Committee may direct that any stock certificate evidencing shares issued
pursuant to the Plan shall bear a legend setting forth such restrictions on
transferability as may apply to such shares pursuant to the Plan.

Section 7: Award Agreements

Each Award granted under the Plan shall be evidenced by an Award Agreement. Each Award Agreement
shall set forth the terms and conditions applicable to the Award, as determined by the Committee in
its discretion and subject to the Plan, including but not limited to provisions describing the
treatment of an Award in the event of the termination of a Participant’s status as an Employee for
reasons of Retirement, death or otherwise, or in the event of Participant’s Disability or in the
event the Participant engages in a “competing business” as such term shall be defined in the Award
Agreement. The Committee may deliver the Award Agreement by interoffice mail, U.S. mail, email or
other electronic means (including posting on a web site maintained by the Company or by a third
party under contract with the Company) all documents relating to the Plan or any Award thereunder
and other documents that the Company is required to deliver to its security holders unless
otherwise prohibited by law. A Participant shall have no rights with respect to an Award unless
such Participant accepts the Award within such period as the Committee shall specify by executing
an Award Agreement in such form as the Committee shall determine and, if the Committee shall so
require, makes payment to the Company in such amount as the Committee may determine.

Section 8: Amendment and Termination

The Board of Directors may at any time amend, suspend or terminate the Plan, in whole or in part,
and the Committee may, subject to the Plan, at any time alter or amend any or all Award Agreements
to the extent permitted by applicable law and the Plan; provided that no such action shall impair
the rights of any holder of an Award without the holder’s consent. For purposes of the Plan, any
action of the Board of Directors or the Committee that alters or affects the tax treatment of any
Award shall not be considered to materially impair any rights of any holder. Notwithstanding the
foregoing, neither the Board of Directors nor the Committee shall (except pursuant to Section 10)
amend the Plan or any Award Agreement, without the approval of the stockholders of the Company to
(i) increase the number of shares of Stock available for Awards as set forth in Section 6 or (ii)
decrease the Exercise Price of any Award or (iii) make any other amendments to the Plan or Award
Agreement which would require stockholder approval under the General Corporation Law of the State
of Delaware, New York Stock Exchange Rules or such other rules as may govern the trading or
quotation of the Company’s Stock, Rule 16b-3 of the Securities Exchange Act of 1934, as amended, or
Section 162(m) of the Code.
Notwithstanding the above, 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 and any such amendment shall be effective as
of such date as is necessary to make such income under the Plan so deductible.
Notwithstanding anything to the contrary in this Section, the Board of Directors or the Committee
shall have full discretion to amend the Plan to the extent necessary to preserve fixed accounting
treatment with respect to any Award and any outstanding Award Agreement shall be deemed to be so
amended to the same extent, without obtaining the consent of any holder, without regard to whether
such amendment adversely affects a holder’s rights under the Plan or such Award Agreement.

14

 

Section 9: Administration

	 	a.	 	The Plan and all Awards shall be administered by the Committee, provided that,
in the absence of the Committee or to the extent determined by the Board of Directors,
any action that could be taken by the Committee may be taken by the non-employee
members of the Board of Directors. A majority of the members of the Committee shall
constitute a quorum. The majority of non-employee Board of Director members shall
constitute a quorum of the Board. The vote of a majority of a quorum shall constitute
action by the Committee and/or the Board.
	 
	 	b.	 	The Committee shall have full and complete authority, in its sole and absolute
discretion, (i) to exercise all of the powers granted to it under the Plan, (ii) to
construe, interpret and implement the Plan, any Award Agreement and any related
document, (iii) to prescribe, amend and rescind rules relating to the Plan including
rules governing its own operation, (iv) to make all determinations necessary or
advisable in administering the Plan, (v) to correct any defect, supply any omission and
reconcile any inconsistency in the Plan, (vi) to authorize any person to execute on
behalf of the Company any instrument required to effect the grant of an Award
previously granted by the Committee, (vii) to impose such restrictions, conditions or
limitations as it determines appropriate as to the timing and manner of any resales by
a Participant or other subsequent transfers by the Participant of any shares of Stock
issued as a result of or under an Award, including without limitation, restrictions
under the Company’s Trading in Securities Policy as may be amended from time to time,
(viii) to amend the Plan to reflect changes in applicable law, and (ix) to determine
whether, to what extent and under what circumstances Awards may be settled or exercised
in cash, shares of Stock, other securities, other Awards or other property, or
canceled, forfeited or suspended and the method or methods by which Awards may be
settled, canceled, forfeited or suspended. The actions and determinations of the
Committee on all matters relating to the Plan and any Awards will be final and
conclusive. The Committee’s determinations under the Plan need not be uniform and may
be made by it selectively among Employees and Participants who receive, or who are
eligible to receive, Awards under the Plan, whether or not such persons are similarly
situated.
	 
	 	c.	 	The Committee and others to whom the Committee has allocated or delegated
authority or duties shall keep a record of all their proceedings and actions and shall
maintain all such books of account, records and other data as shall be necessary for
the proper administration of the Plan.
	 
	 	d.	 	The Committee may appoint such accountants, counsel, and other experts as it
deems necessary or desirable in connection with the administration of the Plan.
	 
	 	e.	 	The Company shall pay all reasonable expenses of administering the Plan,
including, but not limited to, the payment of professional fees.
	 
	 	f.	 	It is the intent of the Company that this Plan and Awards hereunder satisfy,
and be interpreted in a manner that satisfy, (i) in the case of Participants who are or
may be Insiders, the applicable requirements of Rule 16b-3 of the Exchange Act, so that
such persons will be entitled to the benefits of Rule 16b-3, or other exemptive rules
under Section 16, and will not be subjected to avoidable liability thereunder and (ii)
in the case of Performance Compensation Awards, the applicable requirements of Code

15

 

	 	 	 	section 162(m). If any provision of this Plan or of any Award Agreement would otherwise
frustrate or conflict with the intent expressed in this Section 9(f), that provision to
the extent possible shall be interpreted and deemed amended so as to avoid such
conflict. To the extent of any remaining irreconcilable conflict with such intent, such
provision shall be deemed void as applicable to Insiders and/or Covered Employees, as
applicable.
	 
	 	g.	 	Except to the extent prohibited by applicable law or otherwise, the Committee
may from time to time allocate to one or more of its members and delegate to one or
more Employees all or any portion of its authority and duties, provided that the
Committee may not allocate or delegate any discretionary authority with respect to
substantive decisions or functions regarding the Plan or Awards to the extent
inconsistent with the intent expressed in Section 9(f).
	 
	 	h.	 	No member of the Board of Directors or the Committee or any employee of the
Company or any of its subsidiaries or affiliates (each such person a “Covered Person”)
shall have any liability to any person (including, without limitation, any Participant)
for any action taken or omitted to be taken or any determination made in good faith
with respect to the Plan or any Award. Each Covered Person shall be indemnified and
held harmless by the Company against and from any loss, cost, liability or expense
(including attorneys’ fees) that may be imposed upon or incurred by such Covered Person
in connection with or resulting from any action, suit or proceeding to which such
Covered Person may be a party or in which such Covered Person may be involved by reason
of any action taken or omitted to be taken under the Plan and against and from any and
all amounts paid by such Covered Person, with the Company’s approval, in settlement
thereof, or paid by such Covered Person in satisfaction of any judgment in any such
action, suit or proceeding against such Covered Person, provided that the Company shall
have the right, at its own expense, to assume and defend any such action, suit or
proceeding and, once the Company gives notice of its intent to assume the defense, the
Company shall have sole control over such defense with counsel of the Company’s choice.
The foregoing right of indemnification shall not be available to a Covered Person to
the extent that a court of competent jurisdiction in a final judgment or other final
adjudication, in either case, not subject to further appeal, determines that the acts
or omissions of such Covered Person giving rise to the indemnification claim resulted
from such Covered Person’s bad faith, fraud or willful criminal act or omission. The
foregoing right of indemnification shall not be exclusive of any other rights of
indemnification to which Covered Persons may be entitled under the Company’s
Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or any other
power that the Company may have to indemnify such persons or hold them harmless.

Section 10: Adjustment Provisions

	 	a.	 	Except as otherwise provided in this Section 10 below, in the event of a (i)
stock dividend or multiple stock dividends that, in the aggregate, equal ten percent
(10%) or more of the Stock’s Fair Market Value on the date such stock dividend is
declared (or in the case of multiple stock dividends, the date on which the dividend
causing the ten percent (10%) threshold to be met or exceeded is declared), (ii) stock
split, (iii) reverse stock split, (iv) recapitalization, (v) reorganization, (vi)
exchange or reclassification of shares, (vii) spin-off, (viii) extraordinary dividend,
greater than ten percent (10%) of the Fair Market Value of shares of Stock on the date
of dividend,

16

 

	 	 	 	payable in cash or property, or (ix) any similar corporate transaction that affects the
value of all outstanding shares of Company Stock and is determined by the Committee to
warrant an adjustment under this Section 10, the Committee shall make a corresponding
adjustment to (1) the number of shares of Stock (or other securities) then remaining
subject to this Plan, including those that are then covered by outstanding Awards, and
the maximum number of shares of Stock that may be issued, or with respect to which
Awards may be granted, to any single Participant or in the aggregate pursuant to this
Plan, (2) the price or exercise price for each share or right then covered by an
outstanding Award, and/or (3) the terms and conditions of each outstanding Award, in
each case solely to prevent dilution or enlargement of the Participants’ rights under
this Plan and the value of an Award granted to a Participant. No such adjustment shall
be made by the Committee, however, for any of the following corporate transactions:

	 	(1)	 	The issuance of Stock as compensation to any Company employee,
director, consultant or other service provider;
	 
	 	(2)	 	The issuance of Stock pursuant to an “Incentive Stock Option” under
Section 422 of the Code;
	 
	 	(3)	 	The issuance or sale of Stock to a third-party at an arm’s length
price that is negotiated and agreed to between the Company and such third-party;
	 
	 	(4)	 	The issuance or sale of Stock to a Company employee or director at
a discount pursuant to a plan maintained in accordance with, and to the extent
permitted under, Section 423 of the Code; or
	 
	 	(5)	 	A redemption of Stock by the Company at a price equal to the Fair
Market Value of the Stock on the date of such redemption.

	 	 	 	Notwithstanding the forgoing, no such adjustment shall be made or authorized to the
extent such adjustment would cause the Plan or any Option or Award to violate Section
422 (in the case of an Incentive Stock Option) or Section 409A of the Code. Any
adjustment made pursuant to this Section 10 shall be made in accordance with the rules
of any securities exchange, stock market or stock quotation system to which the Company
is subject. Any adjustment made by the Committee under this Section shall be final,
binding and conclusive on all persons.
	 
	 	b.	 	The existence of the Plan and the Awards granted hereunder shall not affect or
restrict in any way the right or power of the Board of Directors or the stockholders of
the Company to make or authorize any adjustment, recapitalization, reorganization or
other capital structure of its business, any merger or consolidation of the Company,
any issuance of bonds, debentures, preferred or prior preference stock ahead of or
affecting the Stock or the rights thereof, the dissolution or liquidation of the
Company or any sale or transfer of all or any part of its assets or business, or any
other corporate act or proceeding, or any similar transaction.
	 
	 	c.	 	No fractional shares of Stock will be issued or accepted. Any fractional
shares will be paid in the equivalent amount of cash. The Committee may impose such
other conditions, restrictions and contingencies with respect to shares of Stock
delivered pursuant to the exercise of an Award as it deems desirable.

17

 

Section 11: Change of Control

	 	a.	 	In the event of a Change of Control, in addition to any action required or
authorized by the terms of an Award Agreement, the Committee may, in its sole
discretion, take any of the following actions as a result, or in anticipation, of any
such event to assure fair and equitable treatment of Participants:

	 	(1)	 	accelerate time periods for purposes of vesting in, or realizing
gain from, any outstanding Award made pursuant to this Plan and/or extend the
time during which an Award may be exercised following a Participant’s termination
of employment;
	 
	 	(2)	 	offer to purchase any outstanding Award made pursuant to this Plan
from the holder for its equivalent cash value, as determined by the Committee, as
of the date of the Change of Control; or
	 
	 	(3)	 	make adjustments or modifications to outstanding Awards as the
Committee deems appropriate to maintain and protect the rights and interests of
Participants following such Change of Control.

	 	b.	 	“Change of Control” means:

	 	(1)	 	Any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of 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 11, 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

18

 

	 	(2)	 	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; or
	 
	 	(3)	 	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 whether 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, (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
	 
	 	(4)	 	The stockholders of the Company approve of a complete liquidation
or dissolution of the Company.

Section 12: Miscellaneous

	 	a.	 	Other Payments or Awards. Nothing contained in the Plan shall be deemed in any
way to limit or restrict the Company or a Subsidiary from making any award or

19

 

	 	 	 	payment to any person under any other plan, arrangement or understanding, whether now
existing or hereafter in effect.
	 
	 	b.	 	Unfunded Plan. The Plan shall be unfunded. No provision of the Plan or any
Award Agreement shall require the Committee, the Company or a Subsidiary, for the
purpose of satisfying any obligations under the Plan, to purchase assets or place any
assets in a trust or other entity to which contributions are made or otherwise to
segregate any assets, nor shall the Company or a Subsidiary maintain separate bank
accounts, books, records or other evidence of the existence of a segregated or
separately maintained or administered fund for such purposes. Participants shall have
no rights under the Plan other than as unsecured general creditors of the Company or a
Subsidiary.
	 
	 	c.	 	Limits of Liability. Any liability of the Company or a Subsidiary to any
Participant with respect to an Award shall be based solely upon contractual obligations
created by the Plan and the Award Agreement.
	 
	 	d.	 	Rights of Employees. Status as an eligible Employee shall not be construed as a
commitment that any Award shall be made under this Plan to such eligible Employee or to
eligible Employees generally. Nothing contained in this Plan or in any Award Agreement
shall confer upon any Employee or Participant any right to continue in the employ or
other service of the Company or a Subsidiary or constitute any contract or limit in any
way the right of the Company or a Subsidiary to change such person’s compensation or
other benefits or to terminate the employment or other service of such person with or
without cause. Except as provided otherwise in an Award Agreement, an Employee’s (i)
transfer from the Company to a Subsidiary or affiliate of the Company, whether or not
incorporated, or visa versa, or from one Subsidiary to another or (ii) leave of
absence, duly authorized in writing by the Company or a Subsidiary, shall not be deemed
a termination of such Employee’s employment or other service.
	 
	 	e.	 	Section Headings. The section headings contained herein are for the purpose of
convenience only, and in the event of any conflict, the text of the Plan, rather than
the section headings, shall control.
	 
	 	f.	 	Construction. In interpreting the Plan, the masculine gender shall include the
feminine, the neuter gender shall include the masculine or feminine, and the singular
shall include the plural unless the context clearly indicates otherwise.
	 
	 	g.	 	Invalidity. If any term or provision contained herein or in any Award Agreement
shall to any extent be invalid or unenforceable, such term or provision will be
reformed so that it is valid, and such invalidity or unenforceability shall not affect
any other provision or part thereof.
	 
	 	h.	 	Applicable Law. The Plan, the Award Agreements and all actions taken hereunder
or thereunder shall be governed by, and construed in accordance with, the laws of the
State of Delaware without regard to the conflict of law principles thereof.
	 
	 	i.	 	Supplementary Plans. The Committee may authorize Supplementary Plans
applicable to Employees subject to the tax laws of one or more countries other than the
United States and providing for the grant of Awards to such Employees on terms

20

 

	 	 	 	and conditions, consistent with the Plan, determined by the Committee which may differ
from the term and conditions of such Awards pursuant to the Plan for the purpose of
complying with the conditions for qualification of Awards for favorable treatment under
foreign tax and/or securities laws. Notwithstanding any other provision hereof, Options
granted under any Supplementary Plan shall include provisions that conform with Sections
4(a); and Restricted Stock granted under any Supplementary Plan shall include provisions
that conform with Section 4(d).
	 
	 	j.	 	Effective Date and Term. The Plan was adopted by the Board of Directors
effective as of May 25, 2006, subject to approval by the Company’s stockholders. The
Committee may grant Awards prior to stockholder approval, provided, however, that
Awards granted prior to such stockholder approval are automatically canceled if
stockholder approval is not obtained at or prior to the period ending twelve months
after the date the Plan is effective and provided further that no Award may be settled
prior to the date stockholder approval is obtained. Unless sooner terminated, the Plan
shall remain in effect until May 25, 2016. Termination of the Plan shall not affect
any Award previously made.
	 
	 	k.	 	No Third Party Beneficiaries. Except as expressly provided therein, neither
the Plan nor any Award Agreement shall confer on any person other than the Company and
the grantee of any Award any rights or remedies thereunder.
	 
	 	l.	 	Successors and Assigns. The terms of this Plan shall be binding upon and
inure to the benefit of the Company and its successors and assigns.

21exv10w23

 

EXHIBIT 10.23

PRIVILEGED AND CONFIDENTIAL

June 4, 2007               

Mr. Matthew E. Rubel,

2100 West 59th Street,

Mission Hills, KS 66208-1110

               Re:      Employment Agreement Amendment

Dear Matt:

          This is an Amendment to Your Employment Agreement (this “Amendment”) with Payless
ShoeSource, Inc., a Delaware corporation (the “Company”). You and the Company entered into an
employment agreement, dated May 20, 2005 (your “Employment Agreement”). In accordance with the
provisions set forth in Section 13(g) of your Employment Agreement, you and the Company hereby
amend your Employment Agreement, effective on the date hereof, as set forth below.

	 	1.	 	Section 3(f) of your Employment Agreement is amended in its entirety and
replaced with the following:
	 
	 	 	 	“Other Executive Compensation Plans and Additional Compensation. During your
employment, you will be eligible to participate in all of the Group’s executive
compensation plans, including any management incentive plans, deferred compensation
plans (but you will not be entitled to any benefits under the Payless ShoeSource, Inc.
Supplementary Retirement Plan, nor any successor plan (the “SRP”), unless you are
expressly made eligible by resolution of the Board or a committee thereof), and equity
plans, in which senior executives of the Company participate.”
	 
	 	2.	 	Section 4(a) of your Employment Agreement is amended in its entirety and
replaced with the following:
	 
	 	 	 	“Employee Benefit Plans. During your employment, you will be eligible to participate
in the Group’s employee benefit and welfare plans, including plans providing retirement
benefits (other than the SRP), medical, dental, hospitalization,

 

 

	 	 	 	life or disability
insurance, on a basis that is at least as favorable as that provided to senior
executives of the Company.”
	 
	 	3.	 	Section 6(b)(7) is deleted in its entirety and Section 6(b)(8) is renumbered to
be Section 6(b)(7).

     All terms and conditions of the Employment Agreement (except as specifically set forth in this
Amendment) will remain in full force and effect. This Amendment may be executed in counterparts,
each of which will constitute an original and all of which, when taken together, will constitute
one agreement.

	 	 	 	 	 
	 

	 	Very truly yours,	 	 
	 
	 	 	 	 
	 

	 	 

Jay A. Lentz 

Senior Vice President-Human Resources
	 	 

BY SIGNING THIS AMENDMENT, I HEREBY CERTIFY THAT I (A) HAVE RECEIVED A COPY OF THIS AMENDMENT FOR
REVIEW AND STUDY BEFORE SIGNING IT, (B) HAVE READ THIS AMENDMENT CAREFULLY BEFORE SIGNING IT, (C)
HAVE HAD SUFFICIENT OPPORTUNITY TO REVIEW THE AMENDMENT WITH ANY ADVISOR I DESIRED TO CONSULT,
INCLUDING LEGAL COUNSEL,
(D) HAVE HAD SUFFICIENT OPPORTUNITY BEFORE SIGNING IT TO ASK ANY QUESTIONS ABOUT THIS AMENDMENT AND
HAVE RECEIVED SATISFACTORY ANSWERS TO ALL SUCH QUESTIONS, AND (E) UNDERSTAND MY RIGHTS AND
OBLIGATIONS UNDER THIS AMENDMENT.

Accepted and agreed to:

	 	 	 
	 

Matthew E. Rubel

	 	 
	June 4, 2007
	 	 

2

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