Document:

exv10w4

 

Exhibit 10.4

STOCK PLAN FOR NON-MANAGEMENT DIRECTORS

Effective May 4, 1996

Amended and restated March 29, 2007

 

 

STOCK PLAN FOR NON-MANAGEMENT DIRECTORS

OF

PAYLESS SHOESOURCE, INC.

I. GENERAL

     1. Purpose. The purpose of the Plan is to provide certain compensation to eligible directors
of the Corporation and to encourage the highest level of performance of non-management directors by
providing those directors with a proprietary interest in the Corporation’s success and
progress by granting them shares of the Corporation’s common stock or rights to purchase
shares of the Corporation’s common stock subject to the terms and conditions set forth below.

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

          (a) “Award” means an initial or annual grant of equity, as described in Section 6 of Part I
of the Plan.

          (b) “Award Agreement” means a document setting forth the terms and conditions applicable to
the Award granted to the Participant.

          (c)
“Board” means the Board of Directors of the Corporation.

          (d) “Committee” means the Board or such committee as may be designated by the Board from time
to time. Any such Committee must be comprised of at least one employee member of the Board and two
or more outside directors who are “non-employee directors” within the meaning of Rule 16b-3 under
the Exchange Act.

          (e) “Corporation” means Payless ShoeSource, Inc., a Delaware corporation and any successor
thereto.

          (f) “Disability” means a medically determinable physical or mental impairment which renders a
Participant substantially unable to function as a director of the Corporation.

          (g) “Dividend Equivalent” means an amount equal to the amount payable with respect to a share
of Stock after the date an Award is granted.

          (h) “Exchange Act” means the Securities Exchange Act of 1934, as amended. References
to a particular section of the Exchange Act include references to successor provisions.

 

 

          (i) “Fair Market Value” of Stock means 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 so traded,
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 the
exchange. If Stock, as later defined, 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.

          (j) “Option Award” means an option granted to a Participant pursuant to Section 6 of Part I of
the Plan.

          (k) “Participant” means a member of the Board (i) who is not at the time of grant an officer
or employee of the Corporation (ii) who has not during the immediately preceding 12 month period
been, an officer or employee of the Corporation or any subsidiary of the Corporation and (iii) to
whom an Award is made under the Plan.

          (l) “Plan” means the Restricted Stock Plan for Non-Management Directors of Payless ShoeSource,
Inc., amended, restated and renamed May 25, 2006 or such other date as approved by the stockholders
of the Corporation, as the Stock Plan for Non-Management Directors of Payless ShoeSource, Inc.

          (m) “Restricted Period” means the period from the vesting of the Stock Award or the receipt of
shares of Stock upon exercise of an Option Award until the earlier of (i) the cessation of the
Participant’s membership on the Board by reason of death or Disability and (ii) the later of
(a) the expiration of the six month period immediately following the Award grant or (b) the date
the Participant satisfies their stock ownership requirements as set forth in the Stock Ownership
Guidelines for Directors, as such guidelines may be amended from time to time.

          (n) “Stock” means the common stock of the Corporation, $.01 par value, or any other equity
securities of the Corporation designated by the Committee, including any attached rights.

          (o) “Stock Award” means a grant of Stock or of a right to receive Stock or its cash equivalent
(or both).

          (p) “Stock Ownership Guidelines” means the Stock Ownership Guidelines for Directors adopted by
the Company and as amended from time to time.

     3. Administration. The Plan shall be administered by the Committee. Subject to all the
applicable provisions of the Plan, the Committee is authorized: (i) to

3

 

exercise all of the powers granted to it under the Plan, (ii) to construe and interpret the
Plan, to prescribe, amend and rescind rules and regulations relating to the Plan, (iii) to make
all determinations and take all actions necessary or advisable for the Plan’s administration,
(iv) to correct any defect, supply any omission and reconcile any inconsistency in the Plan, (v) to
authorize any person to execute on behalf of the Corporation, any instrument required to effect the
grant of an Award made by the Committee and (vi) 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 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 conclusive and binding
on all persons. The Committee may obtain such advice or assistance as it deems appropriate from
persons not serving on the Committee including but not limited to accountants and counsel. 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.

     4. Shares of Stock Available Under the Plan. Effective May 25, 2006, if this amended and
restated Plan is approved by the stockholders of the Company, the Plan provides that there may be
granted under the Plan an aggregate of not more than 350,000 shares of Stock (the Maximum
Limit”), subject to adjustment as provided in Section 3 of Part II of the Plan.  

     For each Option Award issued, the Maximum Limit shall be decreased based on the term of the
grant as follows for each such Option Award granted:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	EXCHANGE RATIO TABLE
	Term of Grant	 	5 year	 	6 year	 	7 year	 	10 year
	Option Award
	 	 	[.549]	 	 	 	[.598]	 	 	 	[.641]	 	 	 	[.751]	 

Dividends or Dividend Equivalents, if any, shall be paid in shares of Stock, and shall be deducted
from the Plan Maximum Limit if such shares are available. If such shares to pay dividends are not
available under the Plan Maximum Limit, but are payable, then such dividends will be paid in cash.
Amounts paid entirely in cash shall not be counted against the Maximum Limit. 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

4

 

available for further Awards. For Stock Awards, if less than the maximum number of shares issuable
are actually issued, such difference shall be available for future Awards.

     Subject to Section 3 or Part II of the Plan, additional rules for determining the number of
shares of Stock granted under an Award may be adopted by the Committee, as it deems necessary and
appropriate and consistent with the overall limits set forth in the Plan. Shares of Stock granted
under the Plan shall be authorized and issued Stock held in the Corporation’s treasury or
previously authorized but unissued Stock. If any shares of Stock shall be returned to the
Corporation pursuant to the termination provisions described in Sections 7(b) & (g) of Part I of
the Plan, or in the instruments evidencing the making of Awards, such shares may again be granted
under the Plan.

5. Eligibility.

          The Committee may grant one or more Awards to any Participant designated by it to receive an
Award.

6. Awards.

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

	 	a.	 	Option Award. An Option is a right or rights to
purchase a specific number of shares of Stock exercisable at such time or
times and subject to such terms and conditions, including vesting schedule, as
the Committee may determine and specify in the applicable Award Agreement.
Options shall be settled in cash or Stock.
	 
	 	b.	 	Stock Award. Stock Awards may be granted either
alone, in addition to, or in tandem with other Awards granted under the Plan.
Stock Awards are subject to such terms and conditions, including vesting
schedules, as the Committee may determine and specify in the applicable Award
Agreement. Stock Awards shall be settled in Stock.

7. General Terms and Conditions

	 	a.	 	Term. The term of an Option Award shall not exceed seven years.
	 
	 	b.	 	Restrictions. Unless otherwise provided under the Plan or by the Committee,
during the Restricted Period, no Award shall be sold, exchanged, transferred,
assigned, pledged, hypothecated, 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

5

 

	 	 	 	distribution)and shall be exercisable and/or subject to receipt during the
Restricted Period only by the Participant. Each certificate evidencing shares of
Stock granted pursuant to a Stock Award or shares of Stock received upon exercise
of an Option shall bear an appropriate legend referring to the terms, conditions
and restrictions applicable to such Award. Any attempt to dispose of such shares of Stock
in contravention of such terms, conditions and restrictions shall be
ineffective. The Corporation itself will hold such shares in custody, until the
restrictions thereon shall have lapsed. The Corporation may delay the issuance of shares of Stock
covered by any Award and the delivery of a certificate for such shares of Stock until the shares of Stock to be issued in connection with the grant
or exercise of an Award, as applicable, are effectively registered under applicable
federal securities laws now in force or hereafter amended or until counsel for the
Corporation shall have given an opinion, which opinion shall not be unreasonably
conditioned or withheld, that such shares of Stock are exempt from registration
under applicable federal securities laws now in force or hereafter amended.
	 
	 	c.	 	Exercise Price. The exercise price of an Option Award shall not be less than
100% of the Fair Market Value of the Stock on the date such Option Award is granted
and the exercise opportunity may be capped if the Committee determines appropriate and
so specifies in the Award Agreement pertaining thereto.
	 
	 	d.	 	Repricing Prohibited. There shall be no grant of an Option Award to a
Participant in exchange for a Participant’s agreement to cancellation of a
higher-priced Option Award that was previously granted to such Participant.
	 
	 	e.	 	Payment of Taxes Related to Stock and Option Awards. The Corporation shall
have the right to require the payment (through withholding from any amount payable
from the Corporation to Participant) of any withholding taxes required by federal,
state or local law, if at all, in respect of an Award.
	 
	 	f.	 	Rights of Holders of Stock. A Participant shall have, after a certificate or
certificates for the number of shares of Stock granted have been issued in his or her
name, absolute ownership of such shares including the right to vote the same, subject,
however, to the terms, conditions and restrictions described in the Plan and in the
Award Agreement to such Participant. The Corporation will hold all certificates until
all restrictions on them have lapsed.

6

 

	 	g.	 	Death, Disability & Termination. Any provision of Section 7(h) of Part I of
the Plan to the contrary notwithstanding, if a Participant who has been a member of
the Board continuously since the date as of which an Award was made and such
Participant shall cease to be such a member of the Board by reason of death or
Disability, then an Option Award granted to such Participant may be exercised to the
extent exercisable on the date of death or Disability, within the earlier of (x) 360
days after the death or Disability of such person and (y) the date on which the Option
expires by its terms, by the estate of such person, or by any person or persons who
acquired the right to exercise such Option Award by beneficiary designation, will or
by the laws of descent and distribution. Unless the Committee determines otherwise, a
Stock Award Agreement shall provide for the forfeiture of the non-vested shares of
Stock underlying such Stock Award upon the Participant ceasing to be a Participant for
any reason, including death or Disability.
	 
	 	h.	 	Terms of Award Agreement. After the Committee determines that it will offer
an Option Award or Stock Award, it will advise the Participant in writing or
electronically, by means of an Award Agreement, of the terms, conditions and
restrictions, including vesting, if any, related to the Award grant, including the
number of shares of Stock that the Participant shall be entitled to receive or
purchase, the price to be paid, if any, and, if applicable, the time within which the
Participant must accept the Award grant. The Award grant shall be accepted by
execution of an Award Agreement in the manner determined by the Committee. Unless the
Committee determines otherwise, the Award Agreement shall provide for the forfeiture
of the non-vested shares of Stock underlying such Stock Award and for any such shares
of Stock that remain non-vested at the time the Participant ceases to be a
Participant, the cessation of Participant status shall cause an immediate sale of such
non-vested shares of Stock to the Corporation at the original price per share of
Stock, if any, paid by the Participant.
	 
	 	i.	 	No Future Entitlements. No Participant shall have any claim or right to be
granted an Award under this Plan. Having received an Award under this Plan shall not
give a Participant any right to receive any other Award under this Plan and the
Committee may determine that any or all Participant(s) are not eligible to receive an
Award under this Plan for an indefinite period or for a specified year or years.

7

 

	 	j.	 	Other. The Committee may establish such other terms and conditions for an
Award as it deems appropriate.

II. MISCELLANEOUS

     1. Effective Date. The Plan became effective on May 4, 1996, was first amended on April 20,
1998 and if so approved by the stockholders of the Corporation, is amended and restated effective
on May 25, 2006.

     2. Duration of Plan. Unless terminated pursuant to Section 5 of Part II, the Plan shall remain
in effect.

     3. Changes in Capital Structure. In the event of any change in the outstanding shares of Stock
by reason of a stock dividend greater than 5% of the Stock price, stock split or reverse stock
split, recapitalization, merger or consolidation (whether or not the Company is a surviving
Company), reorganization, combination, exchange or reclassification of shares, spin-off or other
similar corporate changes or an extraordinary dividend payable in cash or property, (i) 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, (ii) the price or exercise price for each share or right then
covered by an outstanding Award and (iii) the terms and conditions of each other outstanding Award
may be proportionally adjusted as the Committee deems equitable in its absolute discretion to
prevent dilution or enlargement of the rights of a Participant. Any adjustment made by the
Committee under this Section shall be final, binding and conclusive on all persons..

     4 Expenses of Plan. The expenses of the Plan shall be borne by the Corporation.

8

 

     5. Amendment or Termination. The Corporation 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 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 Corporation nor the Committee shall (except pursuant to Section 3 of Part
II) 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 4 of
Part I 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 or Rule 16b-3 of the Securities Exchange Act of 1934,
as amended.

     6. Nothing in this Plan shall be deemed to create any obligation on the part of the Board to
nominate any director for reelection as a director by the shareholders of the Corporation.

9exv10w6

 

EXHIBIT
- 10.6

PAYLESS SHOESOURCE, INC.

SUPPLEMENTARY RETIREMENT PLAN

As Amended December 12, 2006

 

TABLE OF CONTENTS

	 	 	 	 	 
	Section 1. Definitions
	 	 	1	 
	 
	 	 	 	 
	1.1 Act
	 	 	1	 
	 
	 	 	 	 
	1.2 Actuarial Equivalent
	 	 	1	 
	 
	 	 	 	 
	1.3 Annual Compensation
	 	 	1	 
	 
	 	 	 	 
	1.4 Annual Estimated Social Security Benefits
	 	 	1	 
	 
	 	 	 	 
	1.5 Annual Minimum Benefit Amount
	 	 	2	 
	 
	 	 	 	 
	1.6 Annual Retirement Income
	 	 	2	 
	 
	 	 	 	 
	1.7 Annual Retirement Benefits Offset
	 	 	2	 
	 
	 	 	 	 
	1.8 Average Annual Compensation
	 	 	3	 
	 
	 	 	 	 
	1.9 Associate
	 	 	3	 
	 
	 	 	 	 
	1.10 CEO
	 	 	3	 
	 
	 	 	 	 
	1.11 Committee
	 	 	4	 
	 
	 	 	 	 
	1.12 Company
	 	 	4	 
	 
	 	 	 	 
	1.13 Compensation
	 	 	4	 
	 
	 	 	 	 
	1.14 Competing Business
	 	 	4	 
	 
	 	 	 	 
	1.15 Effective Date
	 	 	4	 
	 
	 	 	 	 
	1.16 Employer
	 	 	4	 
	 
	 	 	 	 
	1.17 Gender
	 	 	4	 
	 
	 	 	 	 
	1.18 May
	 	 	4	 
	 
	 	 	 	 
	1.19 May Profit Sharing Plan
	 	 	4	 
	 
	 	 	 	 
	1.20 May Retirement Plan
	 	 	5	 
	 
	 	 	 	 
	1.21 Member
	 	 	5	 
	 
	 	 	 	 
	1.22 Payless
	 	 	5	 
	 
	 	 	 	 
	1.23 Payless Profit Sharing Plan
	 	 	5	 

 

 

	 	 	 	 	 
	1.24 Retirement Date
	 	 	5	 
	 
	 	 	 	 
	1.25 Plan Service
	 	 	5	 
	 
	 	 	 	 
	1.26 Termination Without Cause
	 	 	5	 
	 
	 	 	 	 
	1.27 Total Disability
	 	 	5	 
	 
	 	 	 	 
	Section 2. Membership
	 	 	6	 
	 
	 	 	 	 
	2.1 Eligibility for Membership
	 	 	6	 
	 
	 	 	 	 
	2.2 Eligibility for Benefits
	 	 	6	 
	 
	 	 	 	 
	Section 3. Benefits
	 	 	6	 
	 
	 	 	 	 
	3.1 Normal Retirement
	 	 	6	 
	 
	 	 	 	 
	3.2 Early Retirement
	 	 	6	 
	 
	 	 	 	 
	3.3 Cessation of Benefits
	 	 	11	 
	 
	 	 	 	 
	3.4 Form of Benefit
	 	 	11	 
	 
	 	 	 	 
	3.5 Standard Payment Period
	 	 	12	 
	 
	 	 	 	 
	3.6 Limitation on Payments
	 	 	12	 
	 
	 	 	 	 
	3.7 Indirect Payment of Benefits
	 	 	13	 
	 
	 	 	 	 
	3.8 Termination and Rehire
	 	 	13	 
	 
	 	 	 	 
	3.9 Withholding
	 	 	14	 
	 
	 	 	 	 
	Section 4. Administration of the Plan
	 	 	14	 
	 
	 	 	 	 
	4.1 The Committee
	 	 	14	 
	 
	 	 	 	 
	4.2 Delegation of Duties
	 	 	14	 
	 
	 	 	 	 
	4.3 Authority
	 	 	14	 
	 
	 	 	 	 
	Section 5. Certain Rights and Obligations
	 	 	14	 

 

 

	 	 	 	 	 
	5.1 Rights of Members, Members’ Spouses and Beneficiaries
	 	 	14	 
	 
	 	 	 	 
	5.2 Employer-Associate Relationship
	 	 	14	 
	 
	 	 	 	 
	5.3 Unfunded Nature of Plan
	 	 	14	 
	 
	 	 	 	 
	Section 6. Non-Alienation of Benefits
	 	 	15	 
	 
	 	 	 	 
	6.1 Provisions with Respect to Assignment and Levy
	 	 	15	 
	 
	 	 	 	 
	6.2 Alternate Application
	 	 	15	 
	 
	 	 	 	 
	Section 7. Amendment and Termination
	 	 	15	 
	 
	 	 	 	 
	7.1 Company’s Rights
	 	 	15	 
	 
	 	 	 	 
	7.2 Rights to Terminate
	 	 	15	 
	 
	 	 	 	 
	Section 8. Construction
	 	 	16	 

 

 

Payless ShoeSource, Inc. Supplementary Retirement Plan

This document constitutes and sets forth the terms of the Payless ShoeSource, Inc.
Supplementary Retirement Plan (hereinafter referred to as the “Plan”), effective as of the date
Payless ShoeSource, Inc. was “spun-off” from and ceased to be a subsidiary of The May Department
Stores Company, May 4, 1996 (the “Effective Date”). The Plan was amended December 12, 2006 to
clarify under Section 1.13, the type of cash incentives that will be deemed “compensation” for
purposes of the Plan. Capitalized terms, not otherwise defined herein, which are defined in the
Payless Profit Sharing Plan shall have the meanings set forth in such plan.

Section 1. Definitions.

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

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

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

1.4 Annual Estimated Social Security Benefits means:

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

     (b) the estimated initial annual amount of benefit to which the Member would be
entitled under any public pension or welfare system of any country other than the United States of
America which is similar to the Primary Insurance Amount or the

 

 

Disability Insurance benefit under the Act, as determined by the Committee in its sole and
absolute discretion.

1.5 Annual Minimum Benefit Amount means:

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

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

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

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

2

 

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

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

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

	 	(i)	 	for each calendar year that the Member was eligible to
participate as a Member of the May Profit Sharing Plan and for such period of
time that the Member is eligible to share in Company matching contributions
under the Payless Profit Sharing Plan, the Company Contribution and
forfeitures allocated to the Member’s Company Accounts were and are deemed to
be in an amount equal to the product of the May or Company matching rate (as
applicable) actually applicable to such year or period of time multiplied by
the maximum basic contributions under the May or Payless Profit Sharing
Plan(s) which could have been contributed by the Member for such calendar year
or other period of time,
	 
	 	(ii)	 	appropriate adjustments on account of investment experience
were made to such amount based on the actual investment experience of the May
Profit Sharing Plan, as the Committee shall determine;

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

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

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

3

 

	1.10	 	CEO means the Company’s Chief Executive Officer as of February 15, 2001, and any
successive Chief Executive Officer of the Company to whom the Board grants the benefits
specifically set forth in this Plan for the CEO.
	 
	1.11	 	Committee means the committee established by Section 4 of this Plan.

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

1.13 Compensation means, unless otherwise provided in the employment agreement between the
Associate and the Company, the total compensation from an Employer (or, for the period prior to the
date Payless ceases to be a subsidiary of May, from an Employer or from any member of the
controlled group of corporations determined in accordance with Section 414(b) of the Code or is a
trade or business under common control in accordance with Section 414(c) of the Code, which
includes an Employer) with respect to an Associate for services rendered prior to the Associate’s
actual Retirement Date, including all regular pay, commissions, overtime pay, cash incentives
(excluding cash long-term incentive payments beginning with the 2005-2007 performance period but
including for those Members who were Members as of December 12, 2006, any earned cash long-term
incentive payment for the 2004-2006 performance period. The amount included for the 2004-2006
performance period, if any, is to be allocated to the third year of the performance period) , prize
awards, amounts which an Associate elected to have the Employer contribute directly to the May or
Payless Profit Sharing Plans on the Associate’s behalf in accordance with Section 4.01(b) of each
such Plan, amounts not otherwise includable in the Associate’s taxable income pursuant to Section
125 of the Code, and amounts subject to the Payless ShoeSource, Inc. Deferred Compensation Plan or
the Payless ShoeSource, Inc. Deferred Compensation 401(k) Mirror Plan. Compensation shall not
include a pension, retirement allowance, severance pay, retainer or fee under contract, any special
payments, cash or otherwise, relating to the spinoff of Payless or distributions from the Profit
Sharing Plan.

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

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

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

4

 

1.17 Gender. Wherever applicable, the masculine pronoun as used herein shall include the feminine
pronoun.

1.18 May means The May Department Stores Company.

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

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

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

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

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

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

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

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

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

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

5

 

Section 2. Membership.

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

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

Section 3. Benefits.

3.1 Normal Retirement.

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

	 	(i)	 	such Members Annual Retirement Income, over
	 
	 	(ii)	 	the sum of:

	 	X	 	his Annual Estimated Social Security Benefits, and
	 
	 	X	 	his Annual Retirement Benefits Offset.

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

3.2 Early Retirement.

     (a)(i) A Member may retire early under this Plan at any time after attaining age 55 and
completing 5 years of Plan Service. Subject to the remaining provisions of this Section 3, the
annual supplementary retirement benefit determined under Sections 3.1(a) and 3.1(b) above, payable
to a Member who retires prior to attaining age 65 shall be first computed on the basis provided by
Section 3.1(a), taking into account only years of Plan

6

 

Service and Average Annual Compensation to the Member’s Retirement Date or, if applicable, on
the basis provided by Section 3.1(b), which amount shall be reduced as follows:

	 	 	 
	Age at Retirement	 	Reduction in Payment
	65 or older

	 	No reduction
	64

	 	2.0% of Average Annual Compensation
	63

	 	4.0% of Average Annual Compensation
	62

	 	6.0% of Average Annual Compensation
	61

	 	6.5% of Average Annual Compensation
	60

	 	7.0% of Average Annual Compensation
	59

	 	7.5% of Average Annual Compensation
	58

	 	8.0% of Average Annual Compensation
	57

	 	8.5% of Average Annual Compensation
	56

	 	9.0% of Average Annual Compensation
	55

	 	9.5% of Average Annual Compensation
	54

	 	10% of Average Annual Compensation
	53

	 	10.5% of Average Annual Compensation
	52

	 	11% of Average Annual Compensation
	51

	 	11.5% of Average Annual Compensation

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

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

     (b) Notwithstanding the other provisions of this Section 3.2, if a Member’s retirement occurs
prior to his 62nd birthday, then during the period between his Retirement Date and the Member’s
62nd birthday only, in the calculation of the Member’s supplementary retirement benefit, such
Member’s supplementary retirement benefit shall not be reduced by his Annual Estimated Social
Security Benefits.

7

 

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

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

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

8

 

	 	 	 	owned by any Person to 20% or more of the Outstanding Company Common Stock
or Outstanding Company Voting Securities; provided, however, that, if such
Person shall thereafter become the beneficial owner of any additional shares of Outstanding
Company Common Stock or Outstanding Company Voting
Securities and beneficially owns 20% or more of either the Outstanding
Company Common Stock or the Outstanding Company Voting Securities, then
such additional acquisition shall constitute a Change of Control; or
	 
	 	(ii)	 	Individuals who, as of the date hereof, constitute the Board
(the “Incumbent Board”) cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by
the Company’s stockholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, but excluding,
for this purpose, any such individual whose initial assumption of office
occurs as a result of an actual or threatened election contest with respect to
the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board;
	 
	 	(iii)	 	A reorganization, merger, consolidation or sale or other
disposition of all or substantially all of the assets of the Company (a
“Business Combination”) is consummated, in each case, unless, immediately
following such Business Combination, (A), more than 50%, respectively, of the
then-outstanding shares of common stock and the combined voting power of the
then-outstanding voting securities entitled to vote generally in the election
of directors, as the case may be, of (x) the corporation resulting from such
Business Combination or (y) a corporation that, as a result of such
transaction, owns the Company or all or substantially all of the Company’s
assets either directly or through one or more subsidiaries, is represented
by the Outstanding Company Common Stock and the Outstanding Company Voting
Securities (or, if applicable, is represented by shares into which
Outstanding Company Common Stock or Outstanding Company Voting 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

9

 

	 	 	 	Combination or any employee
benefit plan (or related trust) of the Company or such corporation
resulting from such Business Combination) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then-outstanding shares of
common stock of the corporation resulting from such Business Combination
or the combined voting power of the then-outstanding voting securities of
such corporation, except to the extent that such ownership existed prior
to the Business Combination, and (C) at least a majority of the members of
the board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the
execution of the initial agreement or of the action of the Board providing
for such Business Combination; or
	 
	 	(iv)	 	The stockholders of the Company approve of a complete
liquidation or dissolution of the Company

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

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

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

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

10

 

	 	(A)	 	a reduction by the Company or Employer or a subsidiary, as
appropriate, in the Member’s annual base salary, bonus opportunity or benefits
as the same may be increased from time to time except for across-the-board
salary, bonus opportunity or benefit reductions similarly affecting all
management personnel of the Company, Employer and/or subsidiaries (and all
management personnel of any person in control of the Company or Employer and
of all persons, firms, corporations and partnerships and other entities
controlled by such person); or
	 
	 	(B)	 	the relocation of the Company’s or Employer’s (or subsidiary’s) offices
at which the Member is principally employed to a location more than 35 miles
from such location. or the Company’s or Employer’s (or subsidiary’s) requiring
the Member to be based anywhere other than the Company’s or Employer’s (or
subsidiary’s) offices at such location.

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

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

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

	 	(a)	 	100% Joint Annuity. This option is an actuarially reduced benefit
payable to a Member during his life and, after his death, payable for life to such
person he shall have designated as his contingent annuitant.
	 
	 	(b)	 	50% Joint and Survivor Annuity. This option is an actuarially
reduced benefit payable to a Member during his life and, after his death, a benefit at
one-half the rate of such actuarially reduced benefit payable for life to such person
as he shall have designated as his contingent annuitant. Unless the Member’s spouse
consents to another optional form of payment, this will be the standard form of
payment for a Member who is married at Retirement Date. The Member’s spouse will be
the contingent annuitant.
	 
	 	(c)	 	Period Certain Annuity (10 years). This option is an actuarially
reduced benefit payable to a Member during his life with periodic
payments certain terminating at the end of ten years, with provision that if the Member dies before
receiving all the periodic payments for such ten year period, (i)

11

 

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

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

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

3.6 Limitation on Payments.

     (a) It is recognized that a Member’s duties during the period of employment with the Company
or an Employer entail the receipt of confidential information concerning not only the current
operations and procedures of the Company or an Employer but also its short-range and long-range
plans. If (A) the Member during any portion of the period of two (2) years following his
retirement (1) has an aggregate investment (as determined from time to time) in a Competing
Business equal to at least the greater of (i) $100,000, (ii) 1% in value of such Competing Business
or (iii) such greater amount as the Committee may establish on a case by case basis or (2)
personally renders services to a Competing Business in any manner, including without limitation, as
owner, partner, director, trustee, officer, employee, consultant or advisor thereof, and (B) the
Committee determines, in its discretion, that such investment or rendering of personal services is
contrary to the best interests of the Company, then all rights to receive any benefits under the
Plan shall immediately cease if the Member does not reduce such aggregate investment to an amount
permitted hereunder or cease rendering such personal services, within 60 days of receipt of written
notice of such determination from the Committee. The term “value” as used herein shall mean the
net worth of such Competing Business, as disclosed by the balance sheet of such Competing Business,
as of the close of the last preceding fiscal year; provided, however, that with respect to an
investment in stock or other securities of a Competing Business, if such stock or other securities
are part of a class of stock or other securities listed on any stock exchange,
the term “value” shall mean the market value of such class of stock or other securities of
such Competing Business, as of the date of any such determination by the Committee.

12

 

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

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

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

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

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

13

 

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

Section 4. Administration of the Plan.

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

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

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

Section 5. Certain Rights and Obligations.

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

5.2 Employer-Associate Relationship. The establishment of the Plan shall not be construed as
conferring any legal or other rights upon any Associate or any other person for a continuation of
employment or as interfering with or affecting in any manner the right of the Company or any
Employer to discharge any Associate or otherwise act with relation to such Associate. The Company
or an Employer may take action (including discharge) with respect to any Associate or other person
and may treat him without regard to the effect which such action or treatment might have upon him
under the Plan.

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

14

 

Section 6. Non-Alienation of Benefits.

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

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

Section 7. Amendment and Termination.

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

Notwithstanding anything provided to the contrary in this Section 7.1 or the next Section 7.2,
following a Change in Control of the Company the Plan may not be amended or terminated in a manner
that would adversely affect the rights of any Member to his vested annual supplementary retirement
benefits. Without limiting the generality of the foregoing, Section 3.2(c) through (e) may not be
amended or deleted following a Change of Control of the Company.

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

15

 

Section 8. Construction.

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

16

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