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<SEC-DOCUMENT>0001206774-08-002028.txt : 20081217
<SEC-HEADER>0001206774-08-002028.hdr.sgml : 20081217
<ACCEPTANCE-DATETIME>20081217153657
ACCESSION NUMBER:		0001206774-08-002028
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		5
CONFORMED PERIOD OF REPORT:	20081211
ITEM INFORMATION:		Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20081217
DATE AS OF CHANGE:		20081217

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			SHOE CARNIVAL INC
		CENTRAL INDEX KEY:			0000895447
		STANDARD INDUSTRIAL CLASSIFICATION:	RETAIL-SHOE STORES [5661]
		IRS NUMBER:				351736614
		STATE OF INCORPORATION:			IN
		FISCAL YEAR END:			0202

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-21360
		FILM NUMBER:		081254937

	BUSINESS ADDRESS:	
		STREET 1:		7500 EAST COLUMBIA STREET
		CITY:			EVANSVILLE
		STATE:			IN
		ZIP:			47715
		BUSINESS PHONE:		8128676471

	MAIL ADDRESS:	
		STREET 1:		7500 EAST COLUMBIA STREET
		CITY:			EVANSVILLE
		STATE:			IN
		ZIP:			47715
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>shoecarnival_8k.htm
<DESCRIPTION>CURRENT REPORT
<TEXT>

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<P align=center><B><FONT face=serif>UNITED STATES<BR></FONT></B><B><FONT face=serif>SECURITIES AND EXCHANGE COMMISSION <BR></FONT></B><FONT face=serif>Washington, D.C. 20549</FONT></P>
<P align=center><B><FONT face=serif size=4>FORM 8-K</FONT></B></P>
<P align=center><B><FONT face=serif>CURRENT REPORT<BR></FONT></B><B><FONT face=serif>PURSUANT TO SECTION 13 OR 15(d) OF THE<BR>SECURITIES EXCHANGE ACT OF
1934</FONT></B></P>
<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD noWrap align=left width="20%"><FONT face=serif size=2>Date of Report (Date of earliest event
      reported)</FONT>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="79%"><FONT face=serif size=2><FONT size=3>&nbsp;</FONT><STRONG>December 11,
      2008</STRONG></FONT>&nbsp;</TD></TR></TABLE><BR>
<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" align=center width="100%" colSpan=5><FONT face=serif size=2><FONT size=3>&nbsp;</FONT><STRONG>SHOE CARNIVAL,
      INC.</STRONG></FONT>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD align=center width="100%" colSpan=5><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>(Exact name
      of registrant as specified in its charter)</FONT>&nbsp;</TD></TR>
  <TR>
    <TD width="100%" colSpan=5>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="32%"><FONT face=serif size=2><FONT size=3>&nbsp;</FONT><STRONG>Indiana</STRONG></FONT>&nbsp;</TD>
    <TD noWrap align=center width="2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="32%"><FONT face=serif size=2><FONT size=3>&nbsp;</FONT><STRONG>0-21360</STRONG></FONT>&nbsp;</TD>
    <TD noWrap align=center width="2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="32%"><FONT face=serif size=2><FONT size=3>&nbsp;</FONT><STRONG>35-1736614</STRONG></FONT>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=center width="32%"><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>(State or other
      jurisdiction</FONT>&nbsp;</TD>
    <TD noWrap align=center width="2%"></TD>
    <TD noWrap align=center width="32%"><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>(Commission
    File</FONT>&nbsp;</TD>
    <TD noWrap align=center width="2%"></TD>
    <TD noWrap align=center width="32%"><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>(IRS
    Employer</FONT>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=center width="32%"><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>of
    incorporation)</FONT>&nbsp;</TD>
    <TD noWrap align=center width="2%"></TD>
    <TD noWrap align=center width="32%"><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>Number)</FONT>&nbsp;</TD>
    <TD noWrap align=center width="2%"></TD>
    <TD noWrap align=center width="32%"><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>Identification
      No.)</FONT>&nbsp;</TD></TR></TABLE><BR>
<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="64%"><B><FONT face=serif size=2>7500 East Columbia Street, Evansville,
      IN</FONT></B>&nbsp; </TD>
    <TD noWrap align=center width="4%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="32%"><FONT face=serif size=2><FONT size=3>&nbsp;</FONT><STRONG>47715</STRONG></FONT>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="64%"><FONT face=serif size=2>(Address of principal executive
      offices)</FONT>&nbsp; </TD>
    <TD noWrap align=center width="4%"></TD>
    <TD noWrap align=center width="32%"><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>(Zip
    Code)</FONT>&nbsp;</TD></TR></TABLE><BR>
<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD noWrap align=left width="20%"><FONT face=serif size=2>Registrant's telephone number,
      including area code</FONT>&nbsp; </TD>
    <TD noWrap align=center width="79%"><FONT face=serif size=2><FONT size=3>&nbsp;</FONT><STRONG>(812)
  867-6471</STRONG></FONT>&nbsp;</TD></TR></TABLE><BR>
<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" align=center width="100%"><FONT face=serif size=2><FONT size=3>&nbsp;</FONT><STRONG>Not
      Applicable</STRONG></FONT>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=center width="100%"><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>(Former name or former
      address if changed since last report)</FONT>&nbsp;</TD></TR></TABLE><BR>
<P align=left><FONT face=serif size=2>Check the appropriate box below if the
Form 8-K filing is intended to simultaneously satisfy the filing obligation of
the registrant under any of the following provisions (</FONT><I><FONT face=serif size=2>see </FONT></I><FONT face=serif size=2>General Instruction A.2.
below):</FONT></P>
<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD vAlign=top noWrap align=left width="1%"><FONT face=serif size=2>[&nbsp;&nbsp;
      ]</FONT></TD>
    <TD vAlign=top noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top align=left width="97%"><FONT face=serif size=2>Written
      communications pursuant to Rule 425 under the Securities Act (17 CFR
      230.425)</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD vAlign=top noWrap align=left width="1%"><FONT face=serif size=2>[&nbsp;&nbsp;
      ]</FONT></TD>
    <TD vAlign=top noWrap align=left width="1%"></TD>
    <TD vAlign=top align=left width="97%"><FONT face=serif size=2>Soliciting
      material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
      240.14a-12)</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD vAlign=top noWrap align=left width="1%"><FONT face=serif size=2>[&nbsp;&nbsp;
      ]</FONT></TD>
    <TD vAlign=top noWrap align=left width="1%">&nbsp;</TD>
    <TD vAlign=top align=left width="97%"><FONT face=serif size=2>Pre-commencement
      communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
      240.14d-2(b))</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD vAlign=top noWrap align=left width="1%"><FONT face=serif size=2>[&nbsp;&nbsp;
      ]</FONT></TD>
    <TD vAlign=top noWrap align=left width="1%"></TD>
    <TD vAlign=top align=left width="97%"><FONT face=serif size=2>Pre-commencement
      communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
      240.13e-4(c))</FONT></TD></TR></TABLE><BR>
<HR style="MARGIN-TOP: -2px" color=black SIZE=1>

<HR style="MARGIN-TOP: -10px" color=black SIZE=4>

<HR align=center width="100%" noShade SIZE=2>
<PAGE>
<P align=left><B><FONT face=serif size=2>Item 5.02. Departure of Directors or
Certain Officers; Election of Directors; Appointment of Certain Officers;
Compensatory Arrangements of Certain Officers.</FONT></B></P>
<P align=left><B><FONT face=serif size=2>(e)</FONT></B></P>
<P align=left><B><FONT face=serif size=2>Mark L. Lemond, President and Chief
Executive Officer</FONT></B></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>On December
11, 2008, Shoe Carnival, Inc. (the "Company") entered an Amended and Restated
Employment and Noncompetition Agreement with Mark L. Lemond, the Company's
President and Chief Executive Officer. This Amended and Restated Employment and
Noncompetition Agreement is an amendment and complete restatement of the
Employment and Noncompetition Agreement made and entered into as of December 31,
2006. This restatement is intended to conform the agreement to the applicable
provisions of the final regulations interpreting Section 409A of the Internal
Revenue Code of 1986, as amended (the "Code") and Revenue Ruling 2008-13, as
well as to conform the agreement to the requirements of Section 162(m) of the
Code. The term of the agreement is through January 31, 2011. Effective February
1, 2009, the term of the agreement will automatically be extended one year on
February 1st of each year unless either party gives notification not more than
90 and not less than 30 days prior to a February 1st, in which case the
agreement will terminate three years after such February 1st.</FONT></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>Under the agreement, Mr. Lemond is
entitled to his current base salary. The </FONT><FONT face=serif size=2>Compensation Committee of the Company&#146;s Board of Directors will review
his base salary on an annual basis during the term of the agreement to determine
whether the base salary should be adjusted upward. Any such upward adjustment
shall take effect at the beginning of each fiscal year. Mr. Lemond&#146;s base salary
may not be adjusted downward at any time during the term of the
agreement.</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>Mr. Lemond
is entitled to participate in the Company's 2006 Executive Incentive
Compensation Plan or any successor plan the Company may establish from time to
time.</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>Under the
agreement, employment will terminate upon Mr. Lemond's death and may be
terminated by the Company upon Mr. Lemond's disability, for "Cause" (as defined
in the agreement) or without Cause. Mr. Lemond may terminate his employment
voluntarily, by his retirement, or for "Good Reason" (defined as a material
diminution in base compensation, authority, duties, or responsibilities, or the
budget over which he retains authority; a material change in the geographic
location at which he must perform services; or any other action or inaction that
constitutes a material breach by the Company of the agreement).</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>If Mr.
Lemond is terminated due to his death or disability, or retires, he will receive
(i) earned but unpaid base salary plus (ii) seventy percent (70%) of his base
salary for the fiscal year in which the termination occurs, prorated for the
number of days elapsed through the termination. If Mr. Lemond is terminated for
Cause or voluntarily terminates his employment, he will receive earned but
unpaid base salary.</FONT></P>

<P align=center><FONT face=serif size=2>2</FONT></P>
<HR align=center width="100%" noShade SIZE=2>
<PAGE>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>If Mr.
Lemond is terminated by the Company without Cause or terminates for Good Reason,
subject to certain conditions, he will receive (i) earned but unpaid base
salary, (ii) seventy percent (70%) of his base salary for the fiscal year in
which the termination occurs, prorated for the number of days elapsed through
the termination, (iii) a lump-sum payment equal to three times one hundred
seventy percent (170%) of his base salary, and (iv) medical and dental benefits
for the lesser of a period of 36 months after the month in which the termination
occurs or until Mr. Lemond is reemployed and is covered under that employer&#146;s
health care coverage. All stock options granted to Mr. Lemond after the date of
this agreement shall automatically vest and all of such options shall be
exercisable during the remainder of their respective terms. In the event of
termination of this agreement without Cause or for Good Reason, such termination
shall not be deemed to be a voluntary termination for purposes of any stock
option or equity incentive plans of the Company, and any outstanding stock
options may be exercised at any time during the remainder of the term of the
option. In addition, all shares of restricted stock granted to Mr. Lemond after
the date of this agreement, which are not intended to qualify as &#147;performance
based compensation&#148; under Section 162(m) of the Code, shall immediately
vest.</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>If any
payment under the agreement would be subject to the excise tax under Section
4999 of the Code, Mr. Lemond would be entitled to receive additional
compensation from the Company to cover the excise taxes, interest and penalties
(if applicable) and other taxes arising from the additional compensation. Any
additional compensation shall be paid in a lump sum as soon as it can be
calculated, but in no event later than 30 days after the date Mr. Lemond remits
the related taxes.</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>Notwithstanding any other provisions of the agreement, if any amount
payable to Mr. Lemond under the agreement on account of his separation from
service with the Company constitutes deferred compensation within the meaning of
Section 409A of the Code, and he is a Specified Employee, within the meaning
given to that term in Section 409A(a)(2)(B)(i) of the Code, and interpretive
regulations, on the date of his separation from service, payment of the amount
shall be delayed until the first business day that is at least six months after
the date on which his separation from service occurred.</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>The benefits
to Mr. Lemond under the agreement are subject to certain conditions, including
the agreement by Mr. Lemond not to compete with the Company for a period of two
years following the termination of his employment (if but only if the agreement
was in effect at the time of such termination).</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>The
foregoing description of the Amended and Restated Employment and Noncompetition
Agreement does not purport to be complete and is qualified in its entirety by
reference to the Amended and Restated Employment and Noncompetition Agreement,
which is filed as Exhibit 10.1 hereto and is incorporated herein by
reference.</FONT></P>
<P align=center><FONT face=serif size=2>3</FONT></P>
<HR align=center width="100%" noShade SIZE=2>
<PAGE>
<P align=left><B><FONT face=serif size=2>Timothy Baker, Executive Vice
President, Operations, Clifton E. Sifford, Executive Vice President, General
Merchandise Manager, and W. Kerry Jackson, Executive Vice President and Chief
Financial Officer</FONT></B></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>On December
11, 2008, the Company entered into Amended and Restated Employment and
Noncompetition Agreements with Timothy Baker, Executive Vice President,
Operations, Clifton E. Sifford, Executive Vice President, General Merchandise
Manager, and W. Kerry Jackson, Executive Vice President and Chief Financial
Officer. These Amended and Restated Employment and Noncompetition Agreements are
amendments and complete restatements of the Employment and Noncompetition
Agreements made and entered into as of December 31, 2006. These restatements are
intended to conform the agreements to the applicable provisions of the final
regulations interpreting Section 409A of the Code, and Revenue Ruling 2008-13,
as well as to conform the agreements to the requirements of Section 162(m) of
the Code. The original term of the agreements is through January 31, 2009. The
agreements are automatically extended for successive one-year periods unless
either party gives notification not more than 90 and not less than 30 days prior
to a January 31st.</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>Under the
agreements the executives are entitled to their current base salaries, subject
to adjustment by the Compensation Committee of the Company's Board of
Directors.</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>Messrs.
Baker, Sifford and Jackson are each entitled to participate in the Company's
2006 Executive Incentive Compensation Plan or any successor plan the Company may
establish from time to time.</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>Under each
of the agreements, employment of the executive will terminate upon the
executive's death and may be terminated by the Company upon disability of the
executive, for "Cause" (as defined in the agreements) or without Cause. The
executive may terminate employment voluntarily or for "Good Reason" (defined as
a material reduction in base salary), subject to certain conditions.</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>If an
executive is terminated due to his death or disability, is terminated for Cause
or voluntarily terminates his employment, the executive will receive only
amounts that are earned and unpaid as of the date of termination.</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>If an
executive is terminated by the Company without Cause or terminates his
employment for Good Reason, at any time other than the two-year period
immediately following a "Change in Control" (as defined in the agreement), the
executive will receive (i) earned but unpaid base salary, (ii) fifty-five (55%)
of his base salary for the fiscal year in which the termination occurs, prorated
for the number of days elapsed through the termination, and (iii) a lump sum
payment equal to 150% of his base salary. He will also be paid a lump sum
payment in an amount equal to 18 times the monthly &#147;COBRA Premium Rate&#148; plus an
additional amount equal to the additional state and federal taxes that the
Company determines each executive will incur as a result of the payment of the
lump sum payment. Additionally, any unvested stock options granted after the
date of the agreement that would have vested within 12 months of termination and
all shares of restricted stock granted to the executive after the date of the
agreement, which are not intended to qualify as &#147;performance based compensation&#148;
under Section 162(m) of the Code, shall immediately vest.</FONT></P>
<P align=center><FONT face=serif size=2>4</FONT></P>
<HR align=center width="100%" noShade SIZE=2>
<PAGE>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>If an
executive is terminated by the Company without Cause or terminates his
employment for Good Reason within two years after a "Change in Control", the
executive will receive (i) earned but unpaid base salary, (ii) a lump sum
payment within 30 days of termination equal to two times one hundred fifty-five
percent (155%) of his base salary. He will also be paid a lump sum payment in an
amount equal to 18 times the monthly &#147;COBRA Premium Rate&#148; plus an additional
amount equal to the additional state and federal taxes that the Company
determines each executive will incur as a result of the payment of the lump sum
payment. The executive is also entitled to outplacement services not to exceed
$2,500.</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>If any
payment under any of the agreements would be subject to the excise tax under
Section 4999 of the Code, the executive would be entitled to receive additional
compensation from the Company to cover the excise taxes, interest and penalties
(if applicable) and other taxes arising from the additional compensation. Any
additional compensation shall be paid in a lump sum as soon as it can be
calculated, but in no event later than 30 days after the executive remits the
related taxes.</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>Notwithstanding any other provisions of the agreements, if any amount
payable to an executive under any of the agreements on account of the
executive's separation from service with the Company constitutes deferred
compensation within the meaning of Section 409A of the Code, and the executive
is a Specified Employee, within the meaning given to that term in Section
409A(a)(2)(B)(i) of the Code, on the date of his separation from service,
payment of the amount shall be delayed until the first business day that is at
least six months after the date on which the executive's separation from service
occurred.</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>The benefits
to each executive under the agreements are subject to certain conditions,
including the agreement by the executive not to compete with the Company for a
period of one year following the termination of the executive's employment,
whether such employment is pursuant to the agreement or is without an agreement.
However, if no agreement is in effect at the time of termination, the
noncompetition provisions will not be applicable unless the Company pays the
executive severance payments equal to the executive's base salary at the time of
termination.</FONT></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>The foregoing descriptions of the
Amended and Restated Employment and </FONT><FONT face=serif size=2>Noncompetition Agreements do not purport to be complete and are qualified
in their entirety by reference to the Amended and Restated Employment and
Noncompetition Agreements, which are filed as Exhibits 10.2, 10.3 and 10.4
hereto and are incorporated herein by reference.</FONT></P>
<P align=center><FONT face=serif size=2>5</FONT></P>
<HR align=center width="100%" noShade SIZE=2>
<PAGE>
<P align=left><B><FONT face=serif size=2>Item 9.01. Financial Statements and
Exhibits.</FONT></B></P>
<P align=left><FONT face=serif size=2>(d) Exhibits:</FONT></P>
<P align=left><FONT face=serif size=2>The following exhibits are being filed
herewith:</FONT></P>
<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD vAlign=top noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" vAlign=top noWrap align=left width="5%"><FONT face=serif size=2>Exhibit No.</FONT> </TD>
    <TD vAlign=top align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" vAlign=top align=left width="3%"><FONT face=serif size=2>Exhibits</FONT> </TD>
    <TD vAlign=top align=left width="89%">&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD vAlign=top noWrap align=left width="1%"></TD>
    <TD vAlign=top noWrap align=left width="5%" bgColor=#c0c0c0><FONT face=serif size=2>10.1</FONT></TD>
    <TD vAlign=top align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD vAlign=top align=left width="92%" bgColor=#c0c0c0 colSpan=2><FONT face=serif size=2>Amended and Restated Employment and Noncompetition
      Agreement dated as of December 11, 2008 between the Registrant and Mark L.
      Lemond</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD vAlign=top noWrap align=left width="1%"></TD>
    <TD vAlign=top noWrap align=left width="5%"><FONT face=serif size=2>10.2</FONT></TD>
    <TD vAlign=top align=left width="1%">&nbsp;</TD>
    <TD vAlign=top align=left width="92%" colSpan=2><FONT face=serif size=2>Amended and
      Restated Employment and Noncompetition Agreement dated as of December 11,
      2008 between the Registrant and Timothy Baker</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD vAlign=top noWrap align=left width="1%"></TD>
    <TD vAlign=top noWrap align=left width="5%" bgColor=#c0c0c0><FONT face=serif size=2>10.3</FONT></TD>
    <TD vAlign=top align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD vAlign=top align=left width="92%" bgColor=#c0c0c0 colSpan=2><FONT face=serif size=2>Amended and Restated Employment and Noncompetition
      Agreement dated as of December 11, 2008 between the Registrant and Clifton
      E. Sifford</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD vAlign=top noWrap align=left width="1%"></TD>
    <TD vAlign=top noWrap align=left width="5%"><FONT face=serif size=2>10.4</FONT></TD>
    <TD vAlign=top align=left width="1%">&nbsp;</TD>
    <TD vAlign=top align=left width="92%" colSpan=2><FONT face=serif size=2>Amended and
      Restated Employment and Noncompetition Agreement dated as of December 11,
      2008 between the Registrant and W. Kerry
Jackson</FONT></TD></TR></TABLE><BR>
<P align=center><FONT face=serif size=2>6</FONT></P>
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<PAGE>
<P align=center><B><FONT face=serif size=2>SIGNATURES</FONT></B></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>Pursuant to
the requirements of the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly
authorized.</FONT></P>
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  <TR vAlign=bottom>
    <TD noWrap align=left width="50%">&nbsp; </TD>
    <TD noWrap align=center width="50%" colSpan=2>&nbsp;<B><FONT face=serif size=2>SHOE CARNIVAL, INC.</FONT></B> </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="50%">&nbsp; </TD>
    <TD noWrap align=center width="50%" colSpan=2>&nbsp;<FONT face=serif size=2>(Registrant)</FONT> </TD></TR>
  <TR>
    <TD width="100%" colSpan=3>&nbsp; </TD></TR>
  <TR>
    <TD width="100%" colSpan=3>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="50%"><FONT face=serif size=2>Dated:&nbsp; December 17,
      2008</FONT>&nbsp; </TD>
    <TD noWrap align=left width="1%"><FONT face=serif size=2>By:</FONT>&nbsp;&nbsp; &nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="49%"><B><FONT face=serif size=2>/s/ W. Kerry Jackson</FONT></B>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="50%">&nbsp; </TD>
    <TD noWrap align=left width="1%">&nbsp; </TD>
    <TD noWrap align=left width="49%"><FONT face=serif size=2>W. Kerry Jackson</FONT>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="50%">&nbsp;</TD>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=left width="49%"><FONT face=serif size=2>Executive Vice President
      and</FONT>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="50%">&nbsp; </TD>
    <TD noWrap align=left width="1%">&nbsp; </TD>
    <TD noWrap align=left width="49%"><FONT face=serif size=2>Chief Financial Officer</FONT>&nbsp;
  </TD></TR></TABLE><BR>

<P align=center><FONT face=serif size=2>7</FONT></P>

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<P align=left><B><FONT face=serif size=2>EXHIBIT INDEX</FONT></B></P>
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    <TD noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="5%"><FONT face=serif size=2>Exhibit No.</FONT> </TD>
    <TD noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="3%"><FONT face=serif size=2>Exhibits</FONT> </TD>
    <TD noWrap align=left width="89%">&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"></TD>
    <TD vAlign=top noWrap align=left width="5%" bgColor=#c0c0c0><FONT face=serif size=2>10.1</FONT></TD>
    <TD vAlign=top noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD vAlign=top align=left width="92%" bgColor=#c0c0c0 colSpan=2><FONT face=serif size=2>Amended and Restated Employment and Noncompetition
      Agreement dated as of December 11, 2008 between the Registrant and Mark L.
      Lemond</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"></TD>
    <TD vAlign=top noWrap align=left width="5%"><FONT face=serif size=2>10.2</FONT></TD>
    <TD vAlign=top noWrap align=left width="1%">&nbsp;</TD>
    <TD vAlign=top align=left width="92%" colSpan=2><FONT face=serif size=2>Amended and
      Restated Employment and Noncompetition Agreement dated as of December 11,
      2008 between the Registrant and Timothy Baker</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"></TD>
    <TD vAlign=top noWrap align=left width="5%" bgColor=#c0c0c0><FONT face=serif size=2>10.3</FONT></TD>
    <TD vAlign=top noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD vAlign=top align=left width="92%" bgColor=#c0c0c0 colSpan=2><FONT face=serif size=2>Amended and Restated Employment and Noncompetition
      Agreement dated as of December 11, 2008 between the Registrant and Clifton
      E. Sifford</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"></TD>
    <TD vAlign=top noWrap align=left width="5%"><FONT face=serif size=2>10.4</FONT></TD>
    <TD vAlign=top noWrap align=left width="1%">&nbsp;</TD>
    <TD vAlign=top align=left width="92%" colSpan=2><FONT face=serif size=2>Amended and
      Restated Employment and Noncompetition Agreement dated as of December 11,
      2008 between the Registrant and W. Kerry
Jackson</FONT></TD></TR></TABLE><BR>
<P align=center><FONT face=serif size=2>8</FONT></P>
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<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>exhibit10-1.htm
<DESCRIPTION>AMENDED AND RESTATED EMPLOYMENT AND NONCOMPETITION AGREEMENT
<TEXT>

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<P align=right><FONT face=serif size=2>Exhibit 10.1</font></p>
<P align=center><B><FONT face=serif size=2>AMENDED AND RESTATED EMPLOYMENT AND
NONCOMPETITION AGREEMENT </FONT></B></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>This
AMENDED AND RESTATED EMPLOYMENT AND </FONT><FONT face=serif size=2>NONCOMPETITION AGREEMENT (the "Agreement") is an amendment and complete
restatement of the Employment and Noncompetition Agreement made and entered into
as of the 31<SUP>st</SUP></FONT><FONT face=serif size=2> day of December, 2006,
by and between </FONT><B><FONT face=serif size=2>SHOE CARNIVAL,
INC</FONT></B><FONT face=serif size=2>., an Indiana corporation with its
principal offices located at 7500 East Columbia Street, Evansville, Indiana (the
"Company"), and </FONT><B><FONT face=serif size=2>MARK L. LEMOND</FONT></B><FONT face=serif size=2>, an individual residing at 2477 Hidden Oak Ct., Newburgh,
Indiana (the "Employee"). This restatement is intended to conform the Agreement
to the applicable provisions of the final regulations interpreting Section 409A
of the Internal Revenue Code of 1986, as amended ("Code") and Revenue Ruling
2008-13. </FONT></P>
<P align=center><B><U><FONT face=serif size=2>RECITALS</FONT></U></B><B><FONT face=serif size=2> </FONT></B></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>WHEREAS</FONT></B><FONT face=serif size=2>, the Company is one
of the leading retailers of family shoes in the United States;</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>WHEREAS</FONT></B><FONT face=serif size=2>, the Company
desires to retain the services of the Employee upon the terms and conditions set
forth herein; and</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>WHEREAS</FONT></B><FONT face=serif size=2>, the Employee
desires to be so employed by the Company, to be eligible for potential
compensation increases and the potential payments provided for herein;
and</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>WHEREAS</FONT></B><FONT face=serif size=2>, the Company and
the Employee desire to enter into this Agreement to set forth the terms and
conditions of the employment relationship between the Company and the Employee;
and</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>WHEREAS</FONT></B><FONT face=serif size=2>, in connection with
its business, the Company has expended a substantial amount of time, money, and
effort to develop and maintain its confidential, proprietary and trade secret
information, and that this information, if misused or disclosed, could be very
harmful to the Company&#146;s business and its competitive position in the
marketplace. </FONT></P>
<P align=center><B><U><FONT face=serif size=2>AGREEMENT</FONT></U></B><B><FONT face=serif size=2> </FONT></B></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><STRONG>1.</STRONG></FONT><FONT face=serif size=2> </FONT><B><U><FONT face=serif size=2>Term of
Employment</FONT></U></B><FONT face=serif size=2>. The Company hereby agrees to
employ </FONT><FONT face=serif size=2>Employee and Employee hereby agrees to be
employed by the Company, in accordance with the terms and conditions of this
Agreement. This Agreement shall become effective on </FONT><FONT face=serif size=2>December 31, 2006, and shall end on January 31, 2011. The term shall be
extended automatically for one (1) year on each February 1 ("Anniversary Date")
beginning February 1, 2009, unless either party hereto gives written notice to
the other party not more than ninety (90) days and not less than thirty (30)
days prior to an Anniversary Date, in which case no further automatic extension
shall occur and the term of this Agreement shall end three (3) years</FONT></P>
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<P align=left><FONT face=serif size=2>subsequent to the Anniversary Date
immediately following such written notice (such term, including any extension is
referred to as the "Term"). Notwithstanding the foregoing, the Term shall end on
the date of Employee's voluntary retirement from the Company as provided for in
Section 5.5.</FONT></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><STRONG>2.</STRONG></FONT><FONT face=serif size=2> </FONT><B><U><FONT face=serif size=2>Duties</FONT></U></B><FONT face=serif size=2>. The Employee is engaged by
the Company as its President and Chief
Executive Officer. Unless otherwise consented to by the Employee, the Employee's
positions with the Company shall be as its President and Chief Executive
Officer. The Employee shall have all the powers and agrees to perform all of the
duties associated with those positions, subject to the direction of the Chairman
of the Board and the Board of Directors of the Company, and to the provisions of
the Articles of Incorporation and Bylaws of the Company. The </FONT><FONT face=serif size=2>Employee shall have general executive charge of the Company
with all such powers as may be reasonably incident to such responsibilities; and
he shall have such other powers and duties as designated in accordance with the
Company's Bylaws and as may be assigned to him from time to time by the Chairman
of the Board and the Board of Directors. The Employee shall report directly to
the Company's Chairman of the Board and the Board of Directors and any executive
committee of the Board. The Company agrees to provide the Employee with such
accommodations as are suitable to the character of his positions with the
Company and adequate for the performance of his duties. </FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>During his employment under this Agreement, the Employee
agrees to devote substantially his full time, attention and energies to the
Company's business. This Agreement shall not be construed as preventing the
Employee from investing assets in such form or manner as will not require his
services in the daily operations of the affairs of the companies in which such
investments are made. This Agreement shall also not be construed as preventing
the Employee from serving as an outside director of up to two other for-profit
companies (and such additional companies as the Board of Directors may hereafter
approve) or from participating in charitable or other not-for-profit activities
as long as such activities do not materially interfere with his work for the
Company. </FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>3.</FONT></B><FONT face=serif size=2> </FONT><B><U><FONT face=serif size=2>Compensation of Employee</FONT></U></B><FONT face=serif size=2>. For all services rendered by the Employee under this Agreement, the
Company shall compensate the Employee as follows: </FONT></P>
<P style="PADDING-LEFT: 16px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>3.1</FONT></B><FONT face=serif size=2> </FONT><B><U><FONT face=serif size=2>Base Salary</FONT></U></B><FONT face=serif size=2>. The base
salary payable to the Employee under this Agreement shall be that amount set
forth in the minutes of the Compensation Committee of the Company&#146;s Board of
Directors dated March 13, 2006 for the period beginning January 29, 2006 and
ending February 3, 2007 ("Base Salary"), payable in accordance with the
Company's usual payroll procedures, and subject to all taxes, withholdings and
deductions as required by law and as the Employee may authorize. The
Compensation Committee of the Company&#146;s Board of Directors will review the Base
Salary on an annual basis during the Term to determine whether the Base Salary
should be adjusted upward. Any such upward adjustment shall take effect at the
beginning of each fiscal year. The Employee&#146;s Base Salary may not be adjusted
downward at any time during the Term.&nbsp;</FONT></P>
<P style="PADDING-LEFT: 16px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>3.2</FONT></B><FONT face=serif size=2> </FONT><B><U><FONT face=serif size=2>Incentive Bonus</FONT></U></B><FONT face=serif size=2>. The
Employee is entitled to participate in the Company&#146;s 2006 Executive Incentive
Compensation Plan in accordance with the terms contained therein, and in any
successor plan adopted by the Company from time to time. </FONT></P>
<P align=center><FONT face=serif size=2>- 2 - </FONT></P>
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<P style="PADDING-LEFT: 16px"><FONT face=serif size=2>However,
Employee agrees that the failure of the Company to award any such bonus and/or
other incentive compensation shall not give rise to any claim against the
Company. </FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>4.</FONT></B><FONT face=serif size=2> </FONT><B><U><FONT face=serif size=2>Additional Compensation, Benefits, and
Obligations</FONT></U></B><FONT face=serif size=2>. During his employment under
this Agreement, Employee is entitled to participate in any and all employee
welfare and health benefit plans (including, but not limited to, life insurance,
health and medical, dental and disability plans, and executive supplemental
medical coverage) and other employee benefit plans, including but not limited
to, qualified pension plans, stock purchase plans, and nonqualified deferred
compensation plans, established by the Company from time to time; provided,
however, the Employee's participation in such plans is subject to the
eligibility requirements and other terms of such plans. The Company may change,
amend or discontinue any of its employee welfare and health benefit plans at any
time during the Term, and nothing in this Agreement shall obligate the Company
to institute, maintain or refrain from changing, amending or discontinuing any
such plans or programs. </FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>5. </FONT></B><B><U><FONT face=serif size=2>Termination of
Employment</FONT></U></B><FONT face=serif size=2>. Employee&#146;s employment may be
terminated as follows: </FONT></P>
<P style="PADDING-LEFT: 16px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>5.1 </FONT></B><B><U><FONT face=serif size=2>Termination Due
to Death</FONT></U></B><B><FONT face=serif size=2>. </FONT></B><FONT face=serif size=2>If the Employee dies during the Term, this Agreement shall terminate as
of the date of the Employee's death and the Employee's benefits shall be
determined in accordance with the survivor's benefits, insurance and other
applicable programs of the Company then in effect. Within fifteen (15) business
days of the Employee's death, the Company shall pay the Employee's designee or
his estate (a) that portion of his then Base Salary which shall have been earned
through the termination date and (b) a lump sum payment in an amount determined
by multiplying seventy percent (70%) of his Base Salary for the fiscal year in
which the death occurs by a fraction, the numerator of which is the number of
days elapsed in such fiscal year through the termination date and the
denominator of which is 365.&nbsp;</FONT></P>
<P style="PADDING-LEFT: 16px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>5.2 </FONT></B><B><U><FONT face=serif size=2>Termination Due
to Disability</FONT></U></B><B><FONT face=serif size=2>. </FONT></B><FONT face=serif size=2>If the Employee suffers a Disability (as defined in Section
6.2) during the Term, the Company shall have the right to terminate this
Agreement by giving the Employee a Notice of Termination (as defined in Section
6.5), which has attached to it a copy of the medical opinion that forms the
basis of the determination of Disability. The Employee's employment shall
terminate at the close of business on the last day of the Notice Period (as
defined in Section 6.6).&nbsp;</FONT></P>
<P style="PADDING-LEFT: 16px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>Upon the termination of this Agreement because of Disability,
the Company shall pay the Employee within fifteen (15) business days of the
termination date (a) that portion of his then Base Salary which shall have been
earned through the termination date and (b) a lump sum payment in an amount
determined by multiplying seventy percent (70%) of his Base Salary for the
fiscal year in which the termination occurs by a fraction, the numerator of
which is the number of days elapsed in such fiscal year through the termination
date and the denominator of which is 365. The Employee shall also be entitled to
receive any applicable disability insurance benefits resulting from any
insurance or other employee benefit programs of the Company. </FONT></P>
<P align=center><FONT face=serif size=2>- 3 - </FONT></P>
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<P style="PADDING-LEFT: 16px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>5.3 </FONT></B><U><B><FONT face=serif size=2>Termination by
the Company for Cause or by the Employee</FONT></B><B><FONT face=serif size=2>
</FONT></B><B><FONT face=serif size=2>Without Good Reason</FONT></B></U><B><FONT face=serif size=2>. </FONT></B><FONT face=serif size=2>At any time during the
Term, the Company may terminate this Agreement for Cause (as defined in Section
6.1) by giving the Employee a Notice of Termination, which has attached to it
copies of the Board determination that forms the basis of the Company's action.
The Employee's employment shall terminate at the close of business on the last
day of the Notice Period.</FONT></P>
<P style="PADDING-LEFT: 16px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>At any time during the Term, the Employee may terminate this
Agreement without Good Reason (as defined in Section 6.3 hereof) by giving the
Board of Directors of the Company a Notice of Termination. The Employee's
employment by the Company shall terminate at the close of business on the last
day of the Notice Period.</FONT></P>
<P style="PADDING-LEFT: 16px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>Within fifteen (15) business days after such termination date,
the Company shall pay the Employee that portion of his then Base Salary which
shall have been earned through the termination date.</FONT></P>
<P style="PADDING-LEFT: 16px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>5.4 </FONT></B><U><B><FONT face=serif size=2>Termination by
the Company Without Cause or by the</FONT></B><B><FONT face=serif size=2>
</FONT></B><B><FONT face=serif size=2>Employee for Good
Reason</FONT></B></U><B><FONT face=serif size=2>. </FONT></B><FONT face=serif size=2>At any time during the Term, the Board of Directors of the Company may
terminate this Agreement without Cause by giving the Employee a Notice of
Termination, and the Employee's employment by the Company shall terminate at the
close of business on the last day of the Notice Period.</FONT></P>
<P style="PADDING-LEFT: 16px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>At any time during the Term, the Employee may terminate this
Agreement with Good Reason if all of the following conditions are satisfied: (a)
Employee gives the Company a Notice of Termination that describes the condition
claimed to constitute Good Reason within ninety (90) calendar days of the
initial existence of the condition; (b) the Company does not remedy the
condition within thirty (30) calendar days of the Company's receipt of the
Notice of Termination; and (c) Employee gives the Company another Notice of
Termination during the six (6) month period following the end of the cure period
described in clause (b). The Employee's employment shall terminate at the close
of business on the last day of the Notice Period of the second Notice of
Termination.</FONT></P>
<P style="PADDING-LEFT: 16px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>Within fifteen (15) business days after such termination date,
the Company shall pay to the Employee (a) that portion of his then Base Salary
which shall have been earned through the termination date; (b) a lump sum
payment in an amount equal to seventy percent (70%) of the product of (i) times
(ii), where (i) is his Base Salary for the fiscal year in which the termination
occurs, and (ii) is a fraction, the numerator of which is the number of days
elapsed in such fiscal year through the termination date and the denominator of
which is 365; and (c) an additional lump sum payment in an amount equal to three
times one hundred seventy percent (170%) of the Employee's Base Salary for the
fiscal year in which the termination occurs. The Company shall also provide the
Employee with the Medical and Dental </FONT></P>
<P style="PADDING-LEFT: 16px" align=center><FONT face=serif size=2>- 4 -
</FONT></P>
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<P style="PADDING-LEFT: 16px" align=left><FONT face=serif size=2>Benefits (as
defined in Section 6.4) for a period of thirty-six (36) calendar months after
the calendar month in which the termination date occurs or until the earlier
date on which the obligation to provide Medical and Dental Benefits ends
pursuant to Section 6.4. All of Employee's stock options granted after the date
of this Agreement shall contain provisions requiring that such options shall
automatically vest upon the termination of Employee under this Section 5.4 and
all of such options shall be exercisable by Employee during the remainder of
their respective terms. In the event of termination of this Agreement without
Cause or for Good Reason, such termination shall not be deemed to be a voluntary
termination by Employee for purposes of any stock option or equity incentive
plans of the Company, and any outstanding stock options may be exercised at any
time during the remainder of the term of the option. In addition, all shares of
restricted stock granted to the Employee after the date of this Agreement, which
are not intended to qualify as &#147;performance based compensation&#148; under Section
162(m) of the Code shall contain provisions which shall provide for immediate
vesting upon Termination without Cause or for Good Reason.</FONT></P>
<P style="PADDING-LEFT: 16px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>5.5</FONT></B><FONT face=serif size=2> </FONT><B><U><FONT face=serif size=2>Termination by the Employee Upon
Retirement</FONT></U></B><B><FONT face=serif size=2>. </FONT></B><FONT face=serif size=2>At any time during the Term, the Employee may terminate this
Agreement by giving the Company a Notice of Termination advising the Company
that he intends to voluntarily retire in accordance with the Company's
retirement policies on a date specified in the Notice of Termination. The
Employee's employment shall terminate on the date specified in the Notice of
Termination.&nbsp;</FONT></P>
<P style="PADDING-LEFT: 16px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>Subject to Section 5.12, within fifteen (15) business days
after such termination date, the Company shall pay the Employee (a) that portion
of his then Base Salary which shall have been earned through the termination
date; and (b) a lump sum payment in an amount equal to seventy percent (70%) of
the product of (i) times (ii), where (i) is Employee's Base Salary for the
fiscal year in which the termination occurs, and (ii) is a fraction, the
numerator of which is the number of days elapsed in such fiscal year through the
termination date and the denominator of which is 365.</FONT></P>
<P style="PADDING-LEFT: 16px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>5.6 </FONT></B><B><U><FONT face=serif size=2>Accrued
Compensation and Benefits</FONT></U></B><B><FONT face=serif size=2>.
</FONT></B><FONT face=serif size=2>Notwithstanding any other provision of this
Agreement, upon termination of Employee's employment for any reason, Employee
shall be entitled to receive all accrued but unpaid compensation, bonuses and
benefits under all of the Company's compensation, bonus and benefit plans in
which employee is a participant, all in accordance with the terms of such plans.
These plans include, without limitation, the Company's 401(k) plan, deferred
compensation plan and bonus plans which are earned in a fiscal year, but paid in
the following year.</FONT></P>
<P style="PADDING-LEFT: 16px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>5.7</FONT></B><FONT face=serif size=2> </FONT><B><U><FONT face=serif size=2>Internal Revenue Code Limits</FONT></U></B><B><FONT face=serif size=2>. </FONT></B><FONT face=serif size=2>Should any payments by the Company
to or for the benefit of Employee under this Agreement constitute an "excess
parachute payment" within the meaning of Section 280G of the Code, then the
Company shall pay Employee an additional amount of money (the "Gross-Up
Payment") that will equal the sum of (a) all excise or other taxes imposed upon
Employee by Section 4999 of the Code (excluding any penalties or interest) and
(b) all additional state and federal taxes, interest and/or penalties
attributable to the additional payments made to Employee pursuant to this
Section 5.7. If an excise tax is imposed pursuant to Section 4999 of the Code,
Employee agrees to immediately notify the Company within ten (10) days of the
event, in writing, and Employee hereby gives the Company the right to challenge
said</FONT></P>
<P align=center><FONT face=serif size=2>- 5 - </FONT></P>
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<P style="PADDING-LEFT: 16px" align=left><FONT face=serif size=2>imposition. Any Gross-Up
Payment due under this Section 5.7 shall be paid in a lump sum as soon as it can
be calculated, but in no event later than 30 days after the date the Employee
remits the related taxes.</FONT></P>
<P style="PADDING-LEFT: 16px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>5.8</FONT></B><FONT face=serif size=2> </FONT><B><U><FONT face=serif size=2>Payroll Withholdings</FONT></U></B><B><FONT face=serif size=2>. </FONT></B><FONT face=serif size=2>The Company may withhold from any
compensation or benefits payable under this Agreement all federal, state, city,
or other taxes or deductions as may be required pursuant to any law or
governmental regulation or ruling.</FONT></P>
<P style="PADDING-LEFT: 16px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>5.9</FONT></B><FONT face=serif size=2> </FONT><B><U><FONT face=serif size=2>Compliance With Post-Employment
Restrictions</FONT></U></B><FONT face=serif size=2>. If Employee breaches any of
the covenants or provisions set forth in Sections 7 and 8 of this Agreement,
then in such event the Company shall have the right immediately and permanently
to discontinue payment and provision of any of the severance compensation and
benefits payable under this Agreement. The Employee and the Company acknowledge
and agree that such remedy is in addition to, and not in lieu of, any and all
other legal and/or equitable remedies that may be available to the Company in
connection with the Employee's breach or threatened breach of any of the
covenants or provisions of this Agreement.</FONT></P>
<P style="PADDING-LEFT: 16px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>5.10 </FONT></B><B><U><FONT face=serif size=2>Mitigation or
Reduction of Benefits</FONT></U></B><B><FONT face=serif size=2>.
</FONT></B><FONT face=serif size=2>Employee shall not be required to mitigate
the amount of any payments provided for in this Section 5 by seeking other
employment or otherwise. Except as specifically set forth herein, the amount of
any payment for benefits provided in this Section 5 shall not be reduced by any
compensation or benefits or the amount paid to or earned by the Employee as a
result of employment by another employer after the Employee's termination date
or otherwise.</FONT></P>
<P style="PADDING-LEFT: 16px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>5.11 </FONT></B><B><U><FONT face=serif size=2>Release
Agreement</FONT></U></B><FONT face=serif size=2>. As a condition of receiving
the severance benefits described in Section 5, Employee will be required to sign
a standard release agreement acceptable to the Company in which he releases and
waives all claims which he may have against the Company or any affiliate,
employee, shareholder, officer, director, agent or representative of the Company
(except for his rights under this Agreement or any other vested rights Employee
may have under any insurance, pension, employee stock ownership or stock option
or equity incentive plans sponsored or made available by the Company). The
Company will provide such release agreement to Employee at the termination of
Employee's employment with the Company. As part of the release agreement,
Employee will be required (a) to agree to cooperate with the Company with
respect to any business matters about which he has knowledge, including any
litigation or threatened litigation, (b) agree not to cooperate with any
claimants against the Company unless required by law to do so, (c) agree not to
make any negative or derogatory comments about the Company or its executives and
(d) affirm his post-termination obligations under this Agreement, including
without limitation the obligations set forth in Sections 7 and 8.</FONT></P>
<P style="PADDING-LEFT: 16px" align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><STRONG>5.12
</STRONG></FONT><STRONG><U><FONT face=serif size=2>Delay of Separation Payments
to Specified Employee</FONT></U><FONT face=serif size=2>. </FONT></STRONG><FONT face=serif size=2>Notwithstanding any other provisions of this Agreement, if any
amount payable to Employee under this Agreement on account of Employee's
separation from service with</FONT></P>
<P align=center><FONT face=serif size=2>- 6 - </FONT></P>
<HR align=center width="100%" noShade SIZE=2>
<PAGE>

<P style="padding-left: 16px" align=left><FONT face=serif size=2>the Company constitutes deferred
compensation within the meaning of Code Section 409A, and Employee is a
Specified Employee on the date of his separation from service, payment of the
amount shall be delayed until the first business day that is at least six (6)
months after the date on which Employee's separation from service
occurred.</FONT></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><STRONG>6.
</STRONG></FONT><STRONG><U><FONT face=serif size=2>Definitions</FONT></U><FONT face=serif size=2>. </FONT></STRONG></P>
<P style="PADDING-LEFT: 16px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>6.1 </FONT></B><FONT face=serif size=2>"Cause" means the
occurrence of any one or more of the following events: (a) Employee's conviction
for a felony or other crime involving moral turpitude; (b) Employee's willful
engaging in illegal conduct or gross misconduct which is injurious to the
Company; (c) Employee's willful engaging in any fraudulent or dishonest conduct
in his dealings with, or on behalf of, the Company; (d) Employee's willful
failure or refusal to follow the lawful and reasonable instructions of the
Company's Chairman of the Board or the Board of Directors if such failure or
refusal continues for a period of ten (10) days after the Company delivers to
Employee a written notice stating the instructions which Employee has failed or
refused to follow; (e) Employee's willful material breach of any of his
obligations under this Agreement; (f) Employee's material breach of the
Company's policies; (g) Employee's use of alcohol or drugs which substantially
interferes with the performance of his duties for the Company or which
compromises the integrity or reputation of the Company; or (h) Employee's
willful engaging in any conduct, which as a result of such conduct, the
Company&#146;s integrity or reputation is substantially compromised. No act or
omission on the part of the Employee shall be considered "willful" unless it is
done or omitted in bad faith or without reasonable belief that the action or
omission was in the best interests of the Company. Notwithstanding the
foregoing, the Employee shall not be deemed to have been terminated for Cause
without (i) reasonable notice to the Employee setting forth the reasons for the
Company's intention to terminate for Cause, (ii) an opportunity for the
Employee, together with his counsel, to be heard before the Board of Directors,
and (iii) delivery to the Employee of a Notice of Termination from the Board of
Directors finding that in the good faith opinion of a majority of the Board of
Directors the Employee was guilty of conduct set forth in one or more of the
clauses above and specifying the particulars thereof in detail.</FONT></P>
<P style="PADDING-LEFT: 16px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>6.2 </FONT></B><FONT face=serif size=2>"Disability" means the
inability, in the written opinion of a licensed physician chosen by the Board of
Directors, of the Employee, because of injury, illness, disease or bodily or
mental infirmity to perform a substantial portion of his ordinary duties and
that this condition has existed for a least six months and will more probably
than not extend for an additional six months into the future.</FONT></P>
<P style="PADDING-LEFT: 16px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>6.3 </FONT></B><FONT face=serif size=2>"Good Reason" means one
or more of the following conditions, arising without Employee's consent:
</FONT></P>
<P style="PADDING-LEFT: 32px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>(a) a material diminution in Employee's base compensation;
</FONT></P>
<P style="PADDING-LEFT: 32px" align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>(b) a material diminution in the
Employee's authority, duties, or responsibilities;</FONT></P>
<P style="PADDING-LEFT: 32px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>(c) a material diminution in the budget over which Employee
retains authority;</FONT></P>
<P align=center><FONT face=serif size=2>- 7 - </FONT></P>
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<PAGE>

<P style="PADDING-LEFT: 32px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>(d) a material change in the geographic location at which
Employee must perform services; or </FONT></P>
<P style="PADDING-LEFT: 32px" align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>(e) any other action or inaction
that constitutes a material breach by the Company of this Agreement. </FONT></P>
<P style="PADDING-LEFT: 16px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>6.4 </FONT></B><FONT face=serif size=2>"Medical and Dental
Benefits" refers to the coverage for the Employee and his spouse and dependants
described in this Section 6.4 to be provided by the Company pursuant to and in
accordance with Section 5.4. The Company shall arrange to provide the Employee
and his spouse and dependants with insured medical and dental coverage that is
substantially similar to the coverage they were receiving under the Company&#146;s
group medical and dental plan immediately prior to the date of Employee&#146;s
termination, such benefits to be provided at the Company's expense by means of
purchasing individual insurance policies. If at any time after termination of
his employment, the Employee accepts employment with another employer and if the
Employee becomes covered under that employer's medical benefit plan, then
effective on the date that such coverage commences, the obligation of the
Company to provide any Medical and Dental benefits to the Employee and his
spouse and dependants, shall terminate. If Employee becomes covered under
another employer's medical benefit plan while he is receiving Medical and Dental
Benefits under this Agreement, Employee agrees to immediately notify the Company
in writing within ten (10) calendar days of the commencement of the other
coverage. The Medical and Dental benefits provided to the Employee and his
spouse and dependants after the date of the Employee's termination of employment
are intended by the parties to be in lieu of the rights of the Employee to
continuation coverage (commonly known as "COBRA") under Section 601 et seq. of
the Employee Retirement Income Security Act of 1974 (ERISA), and Section 4908B
of the Internal Revenue Code of 1986, as amended (the "Code"), as either of the
foregoing statutes may be amended.</FONT></P>
<P style="PADDING-LEFT: 16px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>6.5 </FONT></B><FONT face=serif size=2>"Notice of Termination"
means a written notice delivered by one party notifying the other party of the
notifying party's intention to terminate the Employee's employment pursuant to
this Agreement. A Notice of Termination shall not be effective unless (a) it
specifies the specific provision of Section 5 which forms the basis of the
proposed termination, (b) sets forth a proposed termination date not less than
fifteen (15) calendar days from the sending of the Notice of Termination, and
(c) otherwise complies with the requirements of this Agreement.</FONT></P>
<P style="PADDING-LEFT: 16px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>6.6 </FONT></B><FONT face=serif size=2>"Notice Period" means
the period between the sending of the Notice of Termination and the proposed
termination date set forth in such Notice.</FONT></P>
<P style="PADDING-LEFT: 16px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>6.7 </FONT></B><FONT face=serif size=2>"Specified Employee"
has the meaning given to that term in Code Section 409A(a)(2)(B)(i) and
interpretive regulations.</FONT><B><FONT face=serif size=2> </FONT></B></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><STRONG>7.</STRONG></FONT><FONT face=serif size=2> </FONT><B><U><FONT face=serif size=2>Non-competition</FONT></U></B><B><FONT face=serif size=2>.</FONT></B><FONT face=serif size=2> </FONT></P>
<P align=center><FONT face=serif size=2>- 8 - </FONT></P>
<HR align=center width="100%" noShade SIZE=2>
<PAGE>

<P style="PADDING-LEFT: 16px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>7.1</FONT></B><FONT face=serif size=2> </FONT><B><U><FONT face=serif size=2>General</FONT></U></B><FONT face=serif size=2>. Employee
acknowledges that his position with the Company is special, unique and
intellectual in character and his position in the Company places him in a
position of confidence and trust with employees and customers of the Company.
Employee further acknowledges, recognizes, and represents receipt of sufficient
consideration for these restraints in the form of the Base Salary and other
valuable consideration contained herein. The restrictions and obligations
contained in this Section 7 shall survive the term of this
Agreement.&nbsp;</FONT></P>
<P style="PADDING-LEFT: 16px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>7.2</FONT></B><FONT face=serif size=2> </FONT><B><U><FONT face=serif size=2>Non-competition</FONT></U></B><FONT face=serif size=2>.
Employee agrees that during his employment with the Company and for a period of
two (2) years</FONT><B><FONT face=serif size=2> </FONT></B><FONT face=serif size=2>immediately after the termination of Employee&#146;s employment with the
Company (if but only if this Agreement was in effect at the time of such
termination), thereafter Employee shall not:&nbsp;</FONT></P>
<P style="PADDING-LEFT: 32px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>7.2.1</FONT></B><FONT face=serif size=2> Either alone or in
concert with others, whether as director, officer, consultant, principal,
employee, agent or otherwise, engage in or contribute Employee&#146;s knowledge and
abilities to any business or entity in competition with the Company ("Competing
Business");</FONT></P>
<P style="PADDING-LEFT: 32px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>7.2.2</FONT></B><FONT face=serif size=2> Be employed by, work
for, consult with, or act in any other capacity for, any person or entity that
is engaged in any Competing Business if in such employment, work or capacity
Employee likely would, because of the nature of his position with, or work for,
the competitor and his knowledge of the Company's Confidential Information,
inevitably use and/or disclose any of the Company's Confidential Information in
his work for or with such competitor;</FONT></P>
<P style="PADDING-LEFT: 32px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>7.2.3</FONT></B><FONT face=serif size=2> Solicit, recruit,
hire, employ or attempt to hire or employ any person who is then or within the
preceding thirty (30) day period was, an employee of the Company, or otherwise
urge, induce or seek to induce any person to terminate his/her employment with
the Company;</FONT></P>
<P style="PADDING-LEFT: 32px" align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><STRONG>7.2.4</STRONG></FONT><FONT face=serif size=2> Solicit, urge, induce or seek to induce any of the
</FONT><FONT face=serif size=2>Company's independent contractors,
subcontractors, vendors, suppliers, customers or consultants to terminate their
relationship with, or representation of, the Company or to cancel, withdraw,
reduce, limit or in any manner modify any such person's or entity's business
with or representation of, the Company for whatever purpose or
reason;</FONT></P>
<P style="PADDING-LEFT: 32px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>7.2.5</FONT></B><FONT face=serif size=2> Take any action
intended to harm the Company or its reputation, which the Company reasonably
concludes could lead to unwanted or unfavorable publicity to the
Company;</FONT></P>
<P style="PADDING-LEFT: 32px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>7.2.6</FONT></B><FONT face=serif size=2> The restrictive time
periods set forth in this Section 7.2 shall not expire during any period in
which Employee is in violation of any of the restrictive covenants set forth in
this Section 7.2, and all restrictions shall automatically be extended by the
period Employee was in violation of any such restrictions;</FONT></P>
<P align=center><FONT face=serif size=2>- 9 - </FONT></P>
<HR align=center width="100%" noShade SIZE=2>
<PAGE>

<P style="PADDING-LEFT: 32px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>7.2.7</FONT></B><FONT face=serif size=2> The restrictive
covenants contained in this Section 7.2 prohibit Employee from engaging in
certain activities directly or indirectly, whether on his own behalf or on
behalf of any other person or entity.</FONT></P>
<P style="PADDING-LEFT: 32px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>7.2.8</FONT></B><FONT face=serif size=2> The covenants and
restrictions in this Section 7.2 are separate and divisible, and to the extent
any covenant, provision or portion of Section 7.2 is determined to be
unenforceable or invalid for any reason, such unenforceability or invalidity
shall not affect the enforceability or validity of the remainder of the
Agreement. Should any particular covenant, restriction, provision or portion of
Section 7.2 be held unreasonable or unenforceable for any reason, including,
without limitation, the time period, geographical area, and/or scope of activity
covered by any restrictive covenant, provision or clause, such covenant,
provision or clause shall automatically be deemed reformed such that the
contested covenant, provision or portion will have the closest effect permitted
by applicable law to the original form and shall be given effect and enforced as
so reformed to the extent reasonable and enforceable under applicable
law.</FONT></P>
<P style="PADDING-LEFT: 16px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>7.3</FONT></B><FONT face=serif size=2> </FONT><B><U><FONT face=serif size=2>Definition of "Competing Business</FONT></U></B><B><FONT face=serif size=2>"</FONT></B><FONT face=serif size=2>: The term "Competing
Business" shall mean:&nbsp;</FONT></P>
<P style="PADDING-LEFT: 32px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>7.3.1</FONT></B><FONT face=serif size=2> The retail footwear
business of Collective Brands, Inc.; Brown Shoe Company, Inc.; Designer Shoe
Warehouse; Rack Room (dba); Kohls Corporation; Shoe Station (dba); Shoe City
(dba); Shoe Pavilion, Inc., Shoe Department (dba); Finish Line, Inc.; Foot
Locker, Inc.; Dick&#146;s Sporting Goods, Inc.; The Sports Authority, Inc.; Off
Broadway Shoe Warehouse; and any other company which sells footwear at retail to
consumers within 25 miles of any Company store at price points competitive, or
likely to be competitive, with the Company, where the footwear sales of such
other company constitute at least fifteen percent (15%) of such company's annual
revenues.&nbsp;</FONT></P>
<P style="PADDING-LEFT: 32px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>7.3.2</FONT></B><FONT face=serif size=2> Ownership of an
investment of less than 5% of any class of equity or debt security of a
publicly-held Competing Business shall not constitute ownership or participation
in violation of the above.&nbsp;</FONT></P>
<P style="PADDING-LEFT: 16px" align=left><FONT face=serif size=2></FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>7.4</FONT></B><FONT face=serif size=2> </FONT><B><U><FONT face=serif size=2>Acknowledgment Regarding Restrictions</FONT></U></B><FONT face=serif size=2>. Employee acknowledges and agrees that he understands the
restrictions in Section 7; that they are reasonable and enforceable, in view of,
among other things, the Employee&#146;s position within the Company, the highly
competitive nature of the Company's business, and the confidential nature of the
information the Employee has been provided. Employee further agrees that the
Company would not have adequate protection if Employee were permitted to work
for its competitors in violation of the terms of this Agreement since the
Company would be unable to verify whether its Confidential Information was being
disclosed and/ or misused, and whether Employee was involved in diverting the
Company&#146;s customers and/or its customer goodwill. </FONT></P>
<P align=center><FONT face=serif size=2>- 10 - </FONT></P>
<HR align=center width="100%" noShade SIZE=2>
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<P style="PADDING-LEFT: 16px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>7.5</FONT></B><FONT face=serif size=2> </FONT><B><U><FONT face=serif size=2>Disclosures Concerning New Employment</FONT></U></B><FONT face=serif size=2>. Employee agrees that he (a) will immediately, within ten
(10) days, notify the Company in writing of his employment, engagement or other
affiliation with any other business or entity during the two (2) years
immediately following the termination of Employee's employment with the Company
and (b) will provide a copy of Section 6 and 7 of this Agreement to any
prospective employer before accepting employment or other work engagement with
any such employer. </FONT></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><STRONG>8.
</STRONG></FONT><STRONG><U><FONT face=serif size=2>Confidential or Proprietary
Information</FONT></U><FONT face=serif size=2> </FONT></STRONG></P>
<P style="PADDING-LEFT: 16px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>8.1</FONT></B><FONT face=serif size=2> </FONT><B><U><FONT face=serif size=2>Confidentiality</FONT></U></B><FONT face=serif size=2>. As
used in this Agreement, the term "Confidential Information" means any and all of
the Company's trade secrets, confidential and proprietary information and all
other information and data of the Company that is not generally known to third
persons who could derive economic value from its use or disclosure, including,
without limitation, the Company's profile of prospective or current vendors or
customers, business methods and structure, details of the Company's contracts
and business matters, employee compensation, personnel information, marketing
strategies and plans, business plans, pricing information and strategies, costs
information, and financial data, whether or not reduced to writing or other
tangible medium of expression, including work product created by Employee in
rendering services to the Company. During his employment with the Company and
thereafter, Employee will not use or disclose to others any of the Confidential
Information except as authorized in writing by the Company or in the performance
of work assigned Employee by the Company. Employee also will abide by the
Company's policies protecting the Confidential Information. Employee's
confidentiality obligations shall continue as long as the Confidential
Information remains confidential, and shall not apply to information which
becomes generally known to the public through no fault or action of Employee.
Employee agrees that the Company owns the Confidential </FONT><FONT face=serif size=2>Information and Employee has no rights, title or interest in any of the
Confidential Information. At the Company's request or upon termination of
Employee's employment with the Company for any reason, Employee will immediately
deliver to the Company all materials (including all copies and electronically
stored data) containing any Confidential Information in Employee's possession,
custody or control.</FONT></P>
<P style="PADDING-LEFT: 16px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>8.2</FONT></B><FONT face=serif size=2> </FONT><B><U><FONT face=serif size=2>Trade Secrets-Developments</FONT></U></B><FONT face=serif size=2>. All improvements, developments, concepts, and ideas ("Developments")
relating to the Company's business, or capable of beneficial use by the Company,
including, but not limited to, marketing, confidential and trade secret
information, techniques, discoveries, slogans, designs, artwork, and writings,
which the Employee has made or will make during his employment with the Company
are the sole and exclusive property of the Company without charge to the Company
other than the Employee's compensation.</FONT></P>
<P style="PADDING-LEFT: 16px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>8.3</FONT></B><FONT face=serif size=2> </FONT><B><U><FONT face=serif size=2>Acknowledgement</FONT></U></B><FONT face=serif size=2>.
Employee agrees that the restrictions set forth in Sections 8.1 and 8.2 are
reasonable and necessary to protect the trade secrets, confidential information,
intellectual property rights and goodwill of the Company. The restrictions and
obligations contained in this Section 8 shall survive the term of this
Agreement. </FONT></P>
<P align=center><FONT face=serif size=2>- 11 - </FONT></P>
<HR align=center width="100%" noShade SIZE=2>
<PAGE>

<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>9.</FONT></B><FONT face=serif size=2> </FONT><B><U><FONT face=serif size=2>Remedies</FONT></U></B><FONT face=serif size=2>. In the event
of a breach or threatened breach by the Employee of any of the provisions of
Sections 7 or 8, the Company shall be entitled to an injunction restraining
Employee from such breach, in addition to all other remedies which the Company
shall be entitled to pursue. The Company also shall be entitled to recover from
Employee all litigation costs and attorneys' fees incurred by the Company in any
action or proceeding relating to enforcement of the provisions of Sections 7 or
8 this Agreement in which the Company prevails. Nothing herein shall be
construed as prohibiting the Company from pursuing any other remedies available
for such breach, threatened breach, or any breach of this Agreement. </FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>10.</FONT></B><FONT face=serif size=2> </FONT><B><U><FONT face=serif size=2>Survival of Post-Termination Obligations</FONT></U></B><FONT face=serif size=2>. Employee acknowledges and agrees that his post-termination
obligations under this Agreement, including without limitation Employee's
non-competition and confidentiality obligations set forth in Sections 7 and 8 of
this Agreement, shall survive the termination of Employee's employment with the
Company, regardless whether such termination is voluntary or involuntary, or is
with or without cause. </FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>11.</FONT></B><FONT face=serif size=2> </FONT><B><U><FONT face=serif size=2>Notices</FONT></U></B><FONT face=serif size=2>. All notices,
requests, consents, and other communications under this Agreement shall be in
writing and shall be deemed to have been delivered on the date personally
delivered or the dated mailed, postage prepaid, by certified mail, return
receipt requested, or telegraphed and confirmed, or faxed and confirmed, if
addressed to the respective parties as follows; </FONT></P>

<TABLE cellSpacing=0 cellPadding=0 width="50%" border=0>

  <TR>
    <TD width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="48%"><FONT face=serif size=2>To Employee:</FONT>&nbsp;&nbsp;</TD>
    <TD width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="50%"><FONT face=serif size=2>Mark L. Lemond</FONT>&nbsp;</TD></TR>
  <TR>
    <TD width="1%"></TD>
    <TD width="48%"></TD>
    <TD width="1%"></TD>
    <TD width="50%"><FONT face=serif size=2>2477 Hidden Oak Ct.</FONT>&nbsp;</TD></TR>
  <TR>
    <TD width="1%"></TD>
    <TD width="48%"></TD>
    <TD width="1%"></TD>
    <TD width="50%"><FONT face=serif size=2>Newburgh, Indiana 47630</FONT>&nbsp;</TD></TR>
  <TR>
    <TD width="1%">&nbsp;</TD>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%"></TD>
    <TD width="50%">&nbsp;</TD></TR>
  <TR>
    <TD width="1%"></TD>
    <TD width="48%"><FONT face=serif size=2>To Company:</FONT>&nbsp;</TD>
    <TD width="1%"></TD>
    <TD width="50%"><FONT face=serif size=2>Chairman&nbsp;</FONT>&nbsp;</TD></TR>
  <TR>
    <TD width="1%"></TD>
    <TD width="48%"></TD>
    <TD width="1%"></TD>
    <TD width="50%"><FONT face=serif size=2>Shoe Carnival, Inc.</FONT>&nbsp;</TD></TR>
  <TR>
    <TD width="1%"></TD>
    <TD width="48%"></TD>
    <TD width="1%"></TD>
    <TD width="50%"><FONT face=serif size=2>7500 East Columbia
    Street&nbsp;</FONT>&nbsp;</TD></TR>
  <TR>
    <TD width="1%"></TD>
    <TD width="48%"></TD>
    <TD width="1%"></TD>
    <TD width="50%"><FONT face=serif size=2>Evansville, Indiana
  47715</FONT>&nbsp;</TD></TR></TABLE>
<P align=left><FONT face=serif size=2>&nbsp;</FONT><FONT face=serif size=2>Either party hereto may designate a different address by providing
written notice of such new address to the other party hereto. </FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>12.</FONT></B><FONT face=serif size=2> </FONT><B><U><FONT face=serif size=2>Waiver</FONT></U></B><FONT face=serif size=2>. The failure or
delay of any party at any time or times to require performance of, or to
exercise any of its powers, rights or remedies with respect to, any term or
provision of this Agreement shall not affect such party's right to later enforce
any such term or provision. </FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>13.</FONT></B><FONT face=serif size=2> </FONT><B><U><FONT face=serif size=2>Entire Agreement</FONT></U></B><FONT face=serif size=2>. This
Agreement cancels and supersedes all prior negotiations, discussions,
commitments and understandings between the parties relating hereto, whether oral
or written. This Agreement embodies the entire agreement and understanding
between such parties with respect to the matters covered hereby. Neither party
shall be bound by any term or condition other than as is expressly set forth
herein. This Agreement may not be amended, supplemented or modified except by a
written document signed by both Employee and a duly authorized officer of the
Company. </FONT></P>
<P align=center><FONT face=serif size=2>- 12 - </FONT></P>
<HR align=center width="100%" noShade SIZE=2>
<PAGE>

<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><STRONG>14.
</STRONG></FONT><STRONG><U><FONT face=serif size=2>Assignment</FONT></U><FONT face=serif size=2>.</FONT></STRONG><FONT face=serif size=2> </FONT></P>
<P style="PADDING-LEFT: 16px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>14.1 </FONT></B><B><U><FONT face=serif size=2>Assignment by
Company</FONT></U></B><B><FONT face=serif size=2>. </FONT></B><FONT face=serif size=2>The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
capital stock, business and/or assets of the Company, by agreement in form and
substance satisfactory to the Employee, expressly to assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. Failure of the
Company to obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle the Employee to
terminate this Agreement for Good Reason pursuant to Section 5.4. In addition,
if the Company fails to obtain, prior to the effective date of any such
succession, the successor's express agreement to assume and perform this
Agreement, and the succession constitutes a change in the ownership or effective
control of the Company within the meaning of Code Section 409A(a)(2)(A)(v), then
Employee shall receive compensation from the Company in the same amount and on
the same terms that to which the Employee would be entitled hereunder if the
Employee terminated his employment for Good Reason, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the termination date. As used in this Agreement,
"Company" shall mean the Company and any successor to its business and/or assets
which executes and delivers the agreement provided for in this Section 14.1 or
which otherwise becomes bound by all the terms and provisions of this Agreement
by operation of law.</FONT></P>
<P style="PADDING-LEFT: 16px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>14.2 </FONT></B><B><U><FONT face=serif size=2>Assignment by
Employee</FONT></U></B><B><FONT face=serif size=2>. </FONT></B><FONT face=serif size=2>The services to be provided by the Employee to the Company hereunder are
personal to the Employee, and the Employee's duties may not be assigned by the
Employee; provided, however that this Agreement shall inure to the benefit of
and be enforceable by the Employee's personal or legal representatives,
executors, and administrators, successors, heirs, distributees, devisees and
legatees. If the Employee dies while any amounts payable to the Employee
hereunder remain outstanding, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to the
Employee's devisee, legatee, or other designee or, in the absence of such
designee, to the Employee's estate. </FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>15. </FONT></B><B><U><FONT face=serif size=2>Code Section 409A
Standards</FONT></U></B><B><FONT face=serif size=2>. </FONT></B><FONT face=serif size=2>This Agreement, and all other nonqualified deferred compensation plans in
which the Employee participates, are intended to comply with the standards for
nonqualified deferred compensation plans established by Code Section 409A and
its interpretive regulations and other regulatory guidance (the "Section 409A
Standards"), to the extent applicable, and this Agreement shall be construed
accordingly. In construing or interpreting any vague or ambiguous provision of
this Agreement, the interpretation that will prevail is the interpretation that
will cause this Agreement to comply with the Section 409A Standards. Any
provision of this Agreement, or any deferred compensation provided under it,
that would fail to satisfy the Section 409A Standards shall not have any force
or effect until it is amended to comply with the applicable Section 409A
Standards, which amendment may be retroactive to the extent permissible under
the Section 409A Standards. </FONT></P>
<P align=center><FONT face=serif size=2>- 13 - </FONT></P>
<HR align=center width="100%" noShade SIZE=2>
<PAGE>

<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>16. </FONT></B><B><U><FONT face=serif size=2>Dispute
Resolution</FONT></U></B><B><FONT face=serif size=2>. </FONT></B><FONT face=serif size=2>Except as otherwise contemplated by Section 9, the Employee
agrees that any dispute or controversy arising under or in connection with this
Agreement shall be submitted to binding arbitration. </FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>Such arbitration proceeding shall be conducted before an
arbitrator selected by mutual agreement of the Employee and the Company and
shall be governed by the Employment Dispute Resolution Rules of the American
Arbitration Association then in effect. If the parties are unable to select an
arbitrator by mutual agreement within thirty (30) days, the arbitrator shall be
selected in accordance with the Employment Dispute Resolution Rules of the
American Arbitration Association then in effect. Such arbitration shall take
place in Evansville, Indiana. Judgment may be entered on the award of the
arbitrator in any court having competent jurisdiction; provided, however, that
the Employee shall be entitled to seek specific performance of his right to any
payments or benefits to be provided until the date of termination of his
employment during the pendency of any dispute or controversy arising under or in
connection with this Agreement. All of the Employee's costs and expenses of
arbitration, including attorney's fees, shall be borne by the Company and paid
as incurred, whether or not the Employee prevails in the arbitration. Payment of
those costs and expenses will be made within fifteen (15) business days after
the Company's receipt of the Employee's written request for payment, accompanied
by such evidence of the fees and expenses incurred as the Company may reasonably
require. </FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>17.</FONT></B><FONT face=serif size=2> </FONT><B><U><FONT face=serif size=2>Governing Law: Forum Selection</FONT></U></B><FONT face=serif size=2>. This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Indiana, without regard to the conflicts of
law rules thereof. Any legal action relating to this Agreement shall be
commenced and maintained exclusively before any appropriate state court of
record in Vanderburgh County, Indiana, or, if necessary because of a federal
question mandating jurisdiction in the federal courts is involved, the United
States District Court for the Southern District of Indiana, Evansville Division,
and the parties hereby submit to the jurisdiction of such courts and waive any
right to challenge or otherwise raise questions of personal jurisdiction or
venue in any action commenced or maintained in such courts. </FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>18.</FONT></B><FONT face=serif size=2> </FONT><B><U><FONT face=serif size=2>Severability</FONT></U></B><FONT face=serif size=2>. The
parties intend that the provisions of this Agreement shall be enforced to the
fullest extent permissible under the applicable law. Should any provision of
this Agreement be unenforceable or invalid for any reason, such unenforceability
or invalidity shall not affect the enforceability or validity of the remainder
of the Agreement. </FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>IN WITNESS WHEREOF, the parties hereto have executed this
Amended and Restated Employment and Noncompetition Agreement on this 11th. day
of December 2008. </FONT></P>
<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD noWrap align=left width="45%" colSpan=2><FONT face=serif size=2>SHOE
      CARNIVAL, INC.: "Company"</FONT>&nbsp; </TD>
    <TD noWrap align=left width="10%">&nbsp;</TD>
    <TD noWrap align=left width="44%" colSpan=2><FONT face=serif size=2>MARK
      L. LEMOND: "Employee"</FONT>&nbsp; </TD></TR>
  <TR>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=left width="44%"></TD>
    <TD noWrap align=right width="10%"></TD>
    <TD noWrap align=left width="44%" colSpan=2></TD></TR>
  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #ffffff 1pt solid" noWrap align=left width="1%"><FONT face=serif size=2>By:</FONT>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="44%"><FONT face=serif size=2>&nbsp; /s/ J. Wayne Weaver</FONT>&nbsp;
    </TD>
    <TD noWrap align=right width="10%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="44%" colSpan=2><FONT face=serif size=2><FONT size=3>&nbsp;
      </FONT>/s/</FONT>&nbsp; <FONT face=serif size=2>Mark L.
      Lemond</FONT>&nbsp; </TD></TR>
  <TR>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=left width="44%"></TD>
    <TD noWrap align=right width="10%"></TD>
    <TD noWrap align=left width="44%" colSpan=2></TD></TR>
  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #ffffff 1pt solid" noWrap align=left width="1%"><FONT face=serif size=2>Its:</FONT>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="44%"><FONT face=serif size=2>&nbsp; Chairman</FONT>&nbsp;
    </TD>
    <TD noWrap align=right width="10%"></TD>
    <TD style="BORDER-BOTTOM: #ffffff 1pt solid" noWrap align=left width="1%"><FONT face=serif size=2>Date:<FONT size=3>&nbsp;&nbsp;</FONT></FONT>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="43%"><FONT face=serif size=2>&nbsp; December 11, 2008</FONT>&nbsp;
    </TD></TR>
  <TR>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=left width="44%"></TD>
    <TD noWrap align=right width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="43%"></TD></TR>
  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #ffffff 1pt solid" noWrap align=left width="1%"><FONT face=serif size=2>Date:<FONT size=3>&nbsp;&nbsp;</FONT></FONT>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="44%"><FONT face=serif size=2>&nbsp; December 11, 2008</FONT>&nbsp;
    </TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%">&nbsp; </TD>
    <TD noWrap align=left width="43%">&nbsp;
</TD></TR></TABLE>
<BR>
<P align=center><FONT face=serif size=2>- 14 - </FONT></P>
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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>3
<FILENAME>exhibit10-2.htm
<DESCRIPTION>AMENDED AND RESTATED EMPLOYMENT AND NONCOMPETITION AGREEMENT
<TEXT>
<HTML>
<HEAD>
<TITLE></TITLE>
</HEAD>
<BODY bgcolor="#ffffff">
<P align=right><FONT face=serif size=2>Exhibit 10.2</font></p>
<P align=center><B><FONT face=serif size=2>AMENDED AND RESTATED EMPLOYMENT AND
NONCOMPETITION AGREEMENT </FONT></B></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>This AMENDED AND RESTATED EMPLOYMENT AND </FONT><FONT face=serif size=2>NONCOMPETITION AGREEMENT (the "Agreement") is an amendment and
complete restatement of the Employment and Noncompetition Agreement made and
entered into as of the 31st day of December, 2006, by and between
</FONT><B><FONT face=serif size=2>SHOE CARNIVAL, INC</FONT></B><FONT face=serif size=2>., an Indiana corporation with its principal offices located at 7500 East
Columbia Street, Evansville, Indiana (the "Company"), and </FONT><B><FONT face=serif size=2>TIMOTHY BAKER</FONT></B><FONT face=serif size=2>, an
individual residing at 3243 Brookfield Drive, Newburgh, Indiana (the
"Employee"). This restatement is intended to conform the Agreement to the
applicable provisions of the final regulations interpreting Section 409A of the
Internal Revenue Code of 1986, as amended (&#147;Code&#148;) and Revenue Ruling 2008-13.
</FONT></P>
<P align=center><B><U><FONT face=serif size=2>RECITALS</FONT></U></B><B><FONT face=serif size=2> </FONT></B></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><STRONG>WHEREAS</STRONG></FONT><FONT face=serif size=2>, the Company is one of the leading retailers of family shoes
in the United States;</FONT></P>
<P align=left><FONT face=serif size=2></FONT><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><STRONG>WHEREAS</STRONG></FONT><FONT face=serif size=2>, the Company desires to retain the services of the Employee
upon the terms and conditions set forth herein; and</FONT></P>
<P align=left><FONT face=serif size=2></FONT><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><STRONG>WHEREAS</STRONG></FONT><FONT face=serif size=2>, the Employee desires to be so employed by the Company, to be
eligible for opportunities of advancement, potential compensation increases and
the potential payments provided for herein; and</FONT></P>
<P align=left><FONT face=serif size=2></FONT><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><STRONG>WHEREAS</STRONG></FONT><FONT face=serif size=2>, the Company and the Employee desire to enter into this
Agreement to set forth the terms and conditions of the employment relationship
between the Company and the Employee; and</FONT></P>
<P align=left><FONT face=serif size=2></FONT><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><STRONG>WHEREAS</STRONG></FONT><FONT face=serif size=2>, in connection with its business, the Company has expended a
substantial amount of time, money, and effort to develop and maintain its
confidential, proprietary and trade secret information, and that this
information, if misused or disclosed, could be very harmful to Company&#146;s
business and its competitive position in the marketplace. </FONT></P>
<P align=center><B><U><FONT face=serif size=2>AGREEMENT</FONT></U></B><B><FONT face=serif size=2> </FONT></B></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>1.
</FONT><B><U><FONT face=serif size=2>Term of Employment</FONT></U></B><FONT face=serif size=2>. The Company hereby agrees to employ </FONT><FONT face=serif size=2>Employee and Employee hereby agrees to be employed by the Company, in
accordance with the terms and conditions herein, for a period commencing on the
effective date of this Agreement up to and through January 31, 2009, subject,
however, to earlier termination as expressly provided in this Agreement (such
term, including any extension thereof, shall herein be referred to as the
"Term"). This Agreement shall be renewed automatically for successive terms of
one (1) year each unless either party provides written notice of non-renewal to
the other party not more than ninety (90) days and not less than thirty (30)
days before the end of the then current Term.</FONT></P>
<HR align=center width="100%" noShade SIZE=2>
<PAGE>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>2. </FONT><B><U><FONT face=serif size=2>Scope of
Duties</FONT></U></B><FONT face=serif size=2>. The Employee is currently serving
in the position of Executive Vice President, Operations. During the Term, the
Employee agrees to perform such other services for the Company as may be
directed by any superior officer of the Company, and to assume such other title,
duties, and/or responsibilities as the Board of Directors may determine. The
Employee shall be supportive of the Company's business and its best interests
and shall not, directly or indirectly, take any action which could reasonably be
expected to have an adverse effect upon the business or best interests of the
Company. The Employee covenants that he will at all times honestly and fairly
conduct his duties, and will at all times maintain the highest of professional
standards in representing the interests of the Company. The Employee will comply
with Company policies, decisions, and instructions, which may be changed by the
Company over time. Employee shall perform all duties incident to his position,
as well as any other duties as may from time to time be assigned by the
President of the Company or his designee, and agrees to abide by all By-laws,
policies, practices, procedures or rules of the Company.</FONT></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>3.
</FONT><B><U><FONT face=serif size=2>Compensation of
Employee</FONT></U></B><FONT face=serif size=2>. For all services rendered by
the Employee under this Agreement, the Company shall compensate the Employee as
follows: </FONT></P>
<P align=left>
<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR>
    <TD width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="99%">
      <P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>3.1
      </FONT><B><U><FONT face=serif size=2>Base Salary</FONT></U></B><FONT face=serif size=2>. The base salary payable to the Employee under this
      Agreement shall be that amount of base salary payable as of the effective
      date of this Agreement ("Base Salary"), payable in accordance with the
      Company's usual payroll procedures, and subject to all taxes, withholdings
      and deductions as required by law and as the Employee may authorize. The
      Company will review the Base Salary on a periodic basis, approximately
      annually, during the Term to determine, in the discretion of the Company,
      whether the Base Salary should be adjusted, and if so, the amount of such
      adjustment and the time at which such adjustment should take effect.
      </FONT></P>
      <P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>3.2
      </FONT><B><U><FONT face=serif size=2>Incentive Bonus</FONT></U></B><FONT face=serif size=2>. The Employee is entitled to participate in the
      Company&#146;s 2006 Executive Incentive Compensation Plan in accordance with
      the terms contained therein, and in any successor plan adopted by the
      Company from time to time. However, Employee agrees that the failure of
      the Company to award any such bonus and/or other incentive compensation
      shall not give rise to any claim against the Company.
  </FONT></P></TD></TR></TABLE>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>4.
</FONT><B><U><FONT face=serif size=2>Additional Compensation, Benefits, and
Obligations</FONT></U></B><FONT face=serif size=2>. During the Term, and so long
as the Employee serves in the position of Executive Vice President, Employee is
entitled to participate in any and all employee welfare and health benefit plans
(including, but not limited to, life insurance, health and medical, dental and
disability plans, and executive supplemental medical coverage) and other
employee benefit plans, including but not limited to, qualified pension plans,
stock purchase plans, and nonqualified deferred compensation plans, established
by the Company from time to time for the benefit of executives at his level and
position; provided, however, the Employee's participation in such plans is
subject to the eligibility requirements and other terms of such plans. The
Company may change, amend or discontinue any of its employee welfare and health
benefit plans at any time during the Term, and nothing in this Agreement shall
obligate the Company to institute, maintain or refrain from changing, amending
or discontinuing any such plans or programs.</FONT></P>
<P align=center><FONT face=serif size=2>-2- </FONT></P>
<HR align=center width="100%" noShade SIZE=2>
<PAGE>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>5. </FONT><B><U><FONT face=serif size=2>Termination of
Employment</FONT></U></B><FONT face=serif size=2>. Employee&#146;s employment may be
terminated as follows: </FONT></P>
<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR>
    <TD width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="99%">
      <P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>5.1
      </FONT><B><U><FONT face=serif size=2>For Cause</FONT></U></B><FONT face=serif size=2>. The Company may terminate Employee&#146;s employment at any
      time effective immediately for "Cause." As used in this Agreement, the
      term "Cause" means the occurrence of any one or more of the following
      events: (i) Employee's conviction for a felony or other crime involving
      moral turpitude; (ii) Employee's engaging in illegal conduct or gross
      misconduct which is injurious to the Company; (iii) Employee's engaging in
      any fraudulent or dishonest conduct in his dealings with, or on behalf of,
      the Company; (iv) Employee's failure or refusal to follow the lawful and
      reasonable instructions of the Company's Chief Executive Officer,
      President, or other executive officer to whom Employee reports, if such
      failure or refusal continues for a period of ten (10) days after the
      Company delivers to Employee a written notice stating the instructions
      which Employee has failed or refused to follow; (v) Employee's material
      breach of any of his obligations under this Agreement; (vi) Employee's
      material breach of the Company's policies; (vii) Employee's use of alcohol
      or drugs which interferes with the performance of his duties for the
      Company or which compromises the integrity or reputation of the Company;
      or (viii) Employee's engaging in any conduct tending to bring the Company
      into public disgrace or disrepute. </FONT></P>
      <P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>5.2
      </FONT><B><U><FONT face=serif size=2>Unilateral &#150; The
      Company</FONT></U></B><FONT face=serif size=2>. The Company may terminate
      Employee&#146;s employment at any time without Cause. </FONT></P>
      <P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>5.3
      </FONT><B><U><FONT face=serif size=2>Unilateral -
      Employee</FONT></U></B><FONT face=serif size=2>. Employee may terminate
      his employment at any time with the Company by providing the Company with
      thirty (30) days' advance written notice of such termination. At the sole
      option of the Company, such termination will be considered effective on
      the date such notice is given. </FONT></P>
      <P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>5.4
      </FONT><B><U><FONT face=serif size=2>For Good Reason -
      Employee</FONT></U></B><FONT face=serif size=2>. At any time during the
      Term, Employee may terminate this Agreement for Good Reason if all of the
      following conditions are satisfied: (a) Employee gives the Company a
      written notice of termination, which describes in reasonable detail the
      condition claimed to constitute Good Reason, within thirty (30) calendar
      days of the initial existence of the condition claimed to constitute Good
      Reason; (b) the Company does not remedy the condition within thirty (30)
      calendar days of the Company&#146;s receipt of Employee&#146;s written notice of
      termination (the &#147;Good Reason Cure Period&#148;); and (c) Employee gives the
      Company a second written notice of termination within thirty (30) calendar
      days following the expiration of the Good Reason Cure Period. For purposes
      of this Agreement, for &#147;Good Reason" means the occurrence, without
      Employee&#146;s written consent, of a material reduction by the Company in
      Employee&#146;s Base Salary . Termination of this Agreement without Cause or
      for Good Reason shall not be deemed to be a voluntary termination by
      Employee for purposes of any stock option or equity incentive plans of the
      Company.</FONT></P>
      <P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>5.5
      </FONT><B><U><FONT face=serif size=2>Disability or
      Death</FONT></U></B><FONT face=serif size=2>. If Employee suffers a
      "Disability," the Company shall have the right to terminate Employee's
      employment by delivering to </FONT></P></TD></TR></TABLE>
<P align=center><FONT face=serif size=2>-3- </FONT></P>
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      <P align=left><FONT face=serif size=2>Employee a written notice of the
      Company's intent to terminate for Disability, specifying in such notice a
      termination date not less than ten (10) calendar days after the giving of
      the notice (the "Disability Notice Period"). The Employee's employment
      shall terminate at the close of business on the last day of the Disability
      Notice Period. For purpose of this Agreement, the term "Disability" shall
      mean either (a) when Employee is deemed disabled in accordance with the
      long-term disability insurance policy or plan of the Company in effect at
      the time of the illness or injury causing the Disability, or (b) the
      inability of Employee, because of injury, illness, disease or bodily or
      mental infirmity, to perform the essential functions of his job (with
      reasonable accommodation) for more than one hundred twenty (120)
      consecutive days. The existence of a Disability shall be determined by the
      Company. If the Employee should die during the Term, this </FONT><FONT face=serif size=2>Agreement shall terminate as of the date of Employee's
      death. </FONT></P>
      <P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>5.6 </FONT><B><U><FONT face=serif size=2>Compensation
      Upon Termination</FONT></U></B><FONT face=serif size=2>. In the event of
      termination of Employee&#146;s employment as set forth herein, and subject to
      any lawful right of offset the Company may have against any such benefits,
      compensation, or severance amounts owed to Employee, whether the result of
      promissory notes, loans, or other financial arrangements the Company may
      have entered into with or on the Employee&#146;s behalf, and which are or would
      become due and payable on or after the termination date, to include the
      principal and interest pursuant to such arrangements (which right of
      offset cannot be inconsistent with the standards for nonqualified deferred
      compensation plans under Code Section 409A, to the extent applicable), the
      Parties agree that the following terms shall be the exclusive severance
      arrangements: </FONT></P></TD></TR>
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      <P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>5.6.1
      In the event of termination of Employee's employment by the Company for
      Cause pursuant to Section 5.1 or unilateral termination by the Employee
      pursuant to Section 5.3, the Company's obligation to pay and provide
      Employee compensation and benefits under this Agreement shall immediately
      terminate, except: (a) Employee shall be entitled to receive that portion
      of his then Base Salary which shall have been earned through the
      termination date; and (b) the Company shall pay or provide Employee such
      other payments and benefits, if any, which had accrued hereunder before
      the termination date. Other than the foregoing, the Company shall have no
      further obligations to Employee under this Agreement. </FONT></P>
      <P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>5.6.2 In the event the Company
      terminates Employee's employment without Cause pursuant to Section 5.2 or
      Employee terminates for Good Reason pursuant to Section 5.4 within thirty
      (30) calendar days of the expiration of the Good Reason Cure Period , at
      any time other than the two (2) year period immediately following a
      "Change in Control," the Company's obligation to pay and provide Employee
      compensation and benefits under this Agreement shall immediately
      terminate, except: (a) Employee shall be entitled to receive that portion
      of his then Base Salary which shall have been earned through the
      termination date; (b) the Company shall pay to Employee, within thirty
      (30) calendar days following the date of termination, a lump sum amount
      equal to fifty-five percent (55%) of the product of (i) times (ii), where
      (i) is his annual </FONT></P></TD></TR></TABLE>
<P align=center><FONT face=serif size=2>-4- </FONT></P>
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      <P align=left><FONT face=serif size=2>Base Salary for the fiscal year in
      which the termination occurs, and (ii) is a fraction, the numerator of
      which is the number of days elapsed in such fiscal year through the date
      of termination and the denominator of which is 365; (c) the Company shall
      pay or provide Employee such other payments and benefits, if any, which
      had accrued hereunder before the termination date; (d) the Company shall
      pay to Employee, within thirty (30) calendar days following the
      termination date, a lump sum payment in an amount equal to one hundred
      fifty percent (150%) of Employee's Base Salary for the fiscal year in
      which the termination occurs; (e) the Company shall pay Employee, within
      thirty (30) calendar days following the termination date, a lump sum
      payment in an amount equal to a total of (i) plus (ii), where (i) equals
      eighteen (18) times the monthly &#147;COBRA Premium Rate&#148; (which is the monthly
      amount charged, as of the termination date, for COBRA continuation
      coverage under the Company&#146;s group medical and dental plans for the
      coverage options and coverage levels applicable to Employee and his
      covered dependents immediately prior to the termination date); and (ii) is
      an additional amount equal to the additional state and federal taxes that
      the Company determines Employee will incur as a result of the payment of
      the lump sum payment provided under this Section 5.6.2(e); (f) with
      respect to Company stock options granted after the date of this Agreement,
      Employee would immediately vest in any option that would have vested
      within twelve (12) months of Employee&#146;s termination date had Employee not
      been terminated, and such option may be exercised pursuant to the
      provisions of the then current Company Stock Option and Incentive Plan
      (&#147;Stock Option Plan&#148;) as if the option were vested at the date of
      termination; and (g) all shares of restricted stock granted to the
      Employee after the date of this Agreement, which are not intended to
      qualify as &#147;performance based compensation&#148; under Section 162(m) of the
      Code shall contain provisions which shall provide for immediate vesting
      upon Termination without Cause or for Good Reason. Payment of the
      severance compensation described in subpart (d) and (e) of this Section
      5.6.2 is subject to the requirements of Sections 5.9 and 5.10. Other than
      the foregoing, the Company shall have no further obligations to Employee
      under this Agreement. </FONT></P>
      <P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>5.6.3
      In the event Employee's employment is terminated as a result of Employee's
      Death or Disability pursuant to Section 5.5, the Company's obligation to
      pay and provide the Employee compensation and benefits under this
      Agreement shall immediately terminate except: (a) Employee shall be
      entitled to receive that portion of his then Base Salary which shall have
      been earned through the termination date; and (b) the Company shall pay or
      provide Employee such other payments and benefits, if any, which had
      accrued hereunder before the termination date. Other than the foregoing,
      the Company shall have no further obligations to Employee under this
      Agreement. </FONT></P>
      <P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>5.6.4 In the event of a
      "Qualifying Termination" within two (2) years immediately following a
      "Change In Control," then, in lieu of all other benefits under this
      Agreement, the Company's obligation to pay and provide Employee
      compensation and benefits under this Agreement shall immediately
      terminate,</FONT></P></TD></TR></TABLE>
<P align=center><FONT face=serif size=2>-5- </FONT></P>
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      <P align=left><FONT face=serif size=2>except: (a) Employee shall be
      entitled to receive that portion of his then Base Salary which shall have
      been earned through the termination date; (b) the Company shall pay or
      provide Employee such other payments and benefits, if any, which had
      accrued hereunder before the termination date; (c) the Company shall pay
      to Employee in a lump sum not later than thirty (30) calendar days after
      the termination date an amount equal to two times one hundred fifty-five
      percent (155%) of his annual Base Salary for the fiscal year in which the
      termination occurs; (d) the Company shall pay Employee, in a lump sum not
      later than thirty (30) calendar days after the termination date, an amount
      equal to (i) plus (ii), where (i) equals eighteen (18) times the COBRA
      Premium Rate; and (ii) is an additional amount equal to the additional
      state and federal taxes that the Company determines Employee will incur as
      a result of the payment of the lump sum payment provided under this
      Section 5.6.4(d); (e) the Company shall provide Employee with reasonable
      and appropriate out-placement services, as determined and coordinated by
      the Company, by paying a fee, not to exceed Two Thousand Five Hundred
      Dollars ($2,500.00), to an outplacement services provider selected by the
      Company, provided that such services shall not extend past the end of the
      second taxable year following the taxable year in which the Qualifying
      Termination occurs; and (f) Employee shall be allowed to exercise
      available stock options in accordance with the Stock Option Plan as if he
      were terminated without cause pursuant to the Stock Option Plan. Payment
      or provision of the severance compensation or benefits described in
      subparts (c), (d) and (e) of this Section 5.6.4 is subject to the
      requirements of Sections 5.9 and 5.10. Other than the foregoing, the
      Company shall have no further obligations to Employee under this
      Agreement. </FONT></P>
      <P align=left><FONT face=serif size=2>For purposes of this Agreement, a
      "Qualifying Termination" shall mean either (i) a unilateral termination of
      Employee by the Company without Cause pursuant to Section 5.2 or (ii) a
      termination by Employee for Good Reason pursuant to Section 5.4 within
      thirty (30) calendar days of the expiration of the Good Reason Cure
      Period. </FONT></P>
      <P align=left><FONT face=serif size=2>For purposes of this Agreement,
      "Change In Control" of the Company shall mean and shall be deemed to have
      occurred as of the first day any one or more of the following conditions
      shall have been satisfied:</FONT></P>
      <P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>(A)
      The acquisition, within a 12-month period ending on the date of the most
      recent acquisition, by 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") of beneficial ownership (within
      the meaning of Rule 13d-3 promulgated under the Exchange Act as in effect
      from time to time) of thirty percent (30%) or more of either (i) the then
      outstanding shares of common stock of the Company or (ii) the combined
      voting power of the then outstanding voting securities of the Company
      entitled to vote generally in the election of directors; provided,
      however, that the following acquisitions shall not constitute an
      acquisition of control: (a) any acquisition directly from the
    </FONT></P></TD></TR></TABLE>
<P align=center><FONT face=serif size=2>-6- </FONT></P>
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      <P align=left><FONT face=serif size=2>Company (excluding an acquisition by
      virtue of the exercise of a conversion privilege), (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 corporation
      controlled by the Company, (d) any acquisition by any corporation pursuant
      to a reorganization, merger or consolidation, if, following such
      reorganization, merger or consolidation, the conditions described in
      clauses (i), (ii) and (iii) of subsection (C) of this Section 5.6.4 are
      satisfied, (e) any acquisition by any Person who, immediately before the
      commencement of the twelve (12) month period, already held beneficial
      ownership of thirty percent (30%) or more of the outstanding voting
      securities of the Company ("Affiliated Person") or (f) upon the death of
      any shareholder who, on the date of this Agreement, is the beneficial
      owner of 10% or more of the outstanding voting securities of the Company,
      any acquisition triggered by the death of such shareholder by operation of
      law, by any testamentary bequest or by the terms of any trust or other
      contractual arrangement established by such shareholder; or</FONT></P>
      <P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>(B)
      Individuals who, as of the date hereof, constitute the Board of Directors
      of the Company (the "Incumbent Board") cease for any reason to constitute
      at least a majority of the Board of Directors of the Company (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 shareholders, 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 either an actual or threatened
      election contest (as such terms are used in Rule 14a-11 of Regulation 14A
      promulgated under the Exchange Act) or other actual or threatened
      solicitation of proxies or consents by or on behalf of a Person other than
      the Board; or</FONT></P>
      <P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>(C) Approval by the
      shareholders of the Company of a reorganization, merger or consolidation,
      in each case, unless, following such reorganization, merger or
      consolidation, (i) more than fifty percent (50%) of, respectively, the
      then outstanding shares of common stock of the corporation resulting from
      such reorganization, merger or consolidation and the combined voting power
      of the then outstanding voting securities of such corporation entitled to
      vote generally in the election of directors is then beneficially owned,
      directly or indirectly, by all or substantially all of the individuals and
      entities who were the beneficial owners, respectively, of the outstanding
      Company common stock and outstanding Company voting securities immediately
      prior to such reorganization, merger or consolidation in substantially the
      same proportions as their ownership, immediately prior to such
      reorganization, merger or consolidation, of the outstanding Company stock
      and outstanding Company voting securities, as the case may be, (ii) no
      Person (excluding the Company, any employee benefit plan or related trust
      of the Company or such corporation resulting from such reorganization,
      merger or consolidation and any Person beneficially owning,
  </FONT></P></TD></TR></TABLE>
<P align=center><FONT face=serif size=2>-7- </FONT></P>
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      <P align=left><FONT face=serif size=2>immediately prior to such
      reorganization, merger or consolidation, directly or indirectly, [thirty
      percent (30%)] or more of the outstanding Company common stock or
      outstanding voting securities, as the case may be) beneficially owns,
      directly or indirectly, [thirty percent (30%)] or more of, respectively,
      the then outstanding shares of common stock of the corporation resulting
      from such reorganization, merger or consolidation or the combined voting
      power of the then outstanding voting securities of such corporation
      entitled to vote generally in the election of directors and (iii) at least
      a majority of the members of the board of directors of the corporation
      resulting from such reorganization, merger or consolidation were members
      of the Incumbent Board at the time of the execution of the initial
      agreement providing for such reorganization, merger or consolidation;
      or</FONT></P>
      <P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>(D)
      Approval by the shareholders of the Company of (i) a complete liquidation
      or dissolution of the Company or (ii) the sale or other disposition of all
      or substantially all of the assets of the Company, other than to a
      corporation with respect to which following such sale or other disposition
      (a) more than fifty percent (50%) of, respectively, the then outstanding
      shares of common stock of such corporation and the combined voting power
      of the then outstanding voting securities of such corporation entitled to
      vote generally in the election of directors is then beneficially owned,
      directly or indirectly, by all or substantially all of the individuals and
      entities who were the beneficial owners, respectively, of the outstanding
      Company common stock and outstanding Company voting securities immediately
      prior to such sale or other disposition in substantially the same
      proportion as their ownership, immediately prior to such sale or other
      disposition, of the outstanding Company common stock and outstanding
      Company voting securities, as the case may be, (b) no Person (excluding
      the Company and any employee benefit plan or related trust of the Company
      or such corporation, any Affiliated Person and any Person beneficially
      owning, immediately prior to such sale or other disposition, directly or
      indirectly, [thirty percent (30%)] or more of the outstanding Company
      common stock or outstanding Company voting securities, as the case may be)
      beneficially owns, directly or indirectly, [thirty percent (30%)] or more
      of, respectively, the then outstanding shares of common stock of such
      corporation and the combined voting power of the then outstanding voting
      securities of such corporation entitled to vote generally in the election
      of directors and (c) at least a majority of the members of the board of
      directors of such corporation were members of the Incumbent Board at the
      time of the execution of the initial agreement or action of the Board
      providing for such sale or other disposition of assets of the Company.
      </FONT></P>
      <P align=left><FONT face=serif size=2>Notwithstanding any other provision
      of this Section 5.6.4 to the contrary, an occurrence shall not constitute
      a Change in Control if it does not constitute a change in the ownership or
      effective control of, or in the ownership of a substantial portion of the
      assets of, the Company, within the meaning of Code Section
      409A(a)(2)(A)(v) and its interpretive regulations.
  </FONT></P></TD></TR></TABLE>
<P align=center><FONT face=serif size=2>-8- </FONT></P>
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      <P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>5.7 </FONT><B><U><FONT face=serif size=2>Internal
      Revenue Code Limits</FONT></U></B><B><FONT face=serif size=2>.
      </FONT></B><FONT face=serif size=2>Should any payments by the Company to
      or for the benefit of Employee under this Agreement constitute an "excess
      parachute payment" within the meaning of Section 280G of the Internal
      Revenue Code of 1986, as amended (the "Code"), then the Company shall pay
      Employee an additional amount of money (the &#147;Gross-Up Payment&#148;) that will
      equal the sum of (a) all excise or other taxes imposed upon Employee by
      Section 4999 of the Code (excluding any penalties or interest) and (b) all
      additional state and federal taxes, interest and/or penalties attributable
      to the additional payments made to Employee pursuant to this Section 5.7.
      If an excise tax is imposed pursuant to Section 4999 of the Code, Employee
      agrees to immediately notify the Company within ten (10) days of the
      event, in writing, and Employee hereby gives the Company the right to
      challenge said imposition. Any Gross-Up Payment due under this Section 5.7
      shall be paid in a lump sum as soon as it can be calculated, but in no
      event later than 30 days after the date the Employee remits the related
      taxes. </FONT></P>
      <P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>5.8
      </FONT><B><U><FONT face=serif size=2>Payroll
      Withholdings</FONT></U></B><B><FONT face=serif size=2>. </FONT></B><FONT face=serif size=2>The Company may withhold from any compensation or
      benefits payable under this Agreement all federal, state, city, or other
      taxes or deductions as may be required pursuant to any law or governmental
      regulation or ruling.</FONT></P>
      <P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>5.9
      </FONT><B><U><FONT face=serif size=2>Compliance With Post-Employment
      Restrictions</FONT></U></B><FONT face=serif size=2>. If Employee breaches,
      or threatens to breach any of the covenants or provisions set forth in
      Sections 6 and 7 of this Agreement, then in such event the Company shall
      have the right immediately and permanently to discontinue payment and
      provision of any of the severance compensation and benefits payable under
      this Agreement. The Employee and Company acknowledge and agree that such
      remedy is in addition to, and not in lieu of, any and all other legal
      and/or equitable remedies that may be available to the Company in
      connection with the Employee's breach or threatened breach of any of the
      covenants or provisions of this Agreement. </FONT></P>
      <P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>5.10
      </FONT><B><U><FONT face=serif size=2>Release Agreement</FONT></U></B><FONT face=serif size=2>. As a condition of receiving the severance benefits
      described in Sections 5.6.2(c), 5.6.2(d), 5.6.4(c), 5.6.4(d), or 5.6.4(e),
      Employee will be required to sign a standard release agreement acceptable
      to the Company in which he releases and waives all claims which he may
      have against the Company or any affiliate, employee, shareholder, officer,
      director, agent or representative of the Company (except for his rights
      under this Agreement or any other vested rights Employee may have under
      any insurance, pension, employee stock ownership or stock option plans
      sponsored or made available by the Company). The Company will provide such
      release agreement to Employee at the termination of Employee's employment
      with the Company. As part of the release agreement, Employee will be
      required (a) to agree to cooperate with the Company with respect to any
      business matters about which he has knowledge, including any litigation or
      threatened litigation, (b) agree not to cooperate with any claimants
      against the Company unless required by law to do so, (c) agree not to make
      any negative or derogatory comments about the Company or its executives
      and (d) affirm his post-termination obligations under this Agreement,
      including without limitation the obligations set forth in Sections 6 and
      7. </FONT></P></TD></TR></TABLE>
<P align=center><FONT face=serif size=2>-9- </FONT></P>
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      <P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>5.11 </FONT><B><U><FONT face=serif size=2>Delay of
      Separation Payments to Specified Employee</FONT></U></B><FONT face=serif size=2>. Notwithstanding any other provisions of this Agreement, if any
      amount payable to Employee under this Agreement on account of Employee&#146;s
      separation from service with the Company constitutes deferred compensation
      within the meaning of Code Section 409A, and Employee is a specified
      employee, within the meaning of Code Section 409A(a)(2)(B)(i), on the date
      of his separation from service, payment of the amount shall be delayed
      until the first business day that is at least six (6) months after the
      date on which Employee&#146;s separation from service occurred.
  </FONT></P></TD></TR>
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      <P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>6.
      </FONT><B><U><FONT face=serif size=2>Non-competition</FONT></U></B><B><FONT face=serif size=2>.</FONT></B><FONT face=serif size=2> </FONT></P></TD></TR>
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      <P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>6.1
      </FONT><B><U><FONT face=serif size=2>General</FONT></U></B><FONT face=serif size=2>. Employee acknowledges that his position with the
      Company is special, unique and intellectual in character and his position
      in the Company places him in a position of confidence and trust with
      employees and customers of the Company. Employee further acknowledges,
      recognizes, and represents receipt of sufficient consideration for these
      restraints in the form of the Base Salary and other valuable consideration
      contained herein. The restrictions and obligations contained in this
      Section 6 shall survive the Term of this Agreement. Notwithstanding the
      above, if the Company terminates, or elects not to renew this Agreement,
      and subsequently terminates Employee&#146;s employment without the payment of
      severance payments equivalent to 100% of Employee&#146;s Base Salary in effect
      at the time of termination, which shall be payable in lump sum, the
      Employee will not be subject to the restrictions and obligations of this
      Section 6.</FONT></P>
      <P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>6.2
      </FONT><B><U><FONT face=serif size=2>Non-competition</FONT></U></B><FONT face=serif size=2>. Employee agrees that during his employment with the
      Company and for a period of one (1) year</FONT><B><FONT face=serif size=2>
      </FONT></B><FONT face=serif size=2>immediately after the termination of
      Employee&#146;s employment with the Company, whether such employment is
      pursuant to this Agreement or is without an Agreement, thereafter Employee
      shall not: </FONT></P></TD></TR>
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      <P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>6.2.1
      Either alone or in concert with others, whether as director, officer,
      consultant, principal, employee, agent or otherwise, engage in or
      contribute Employee&#146;s knowledge and abilities to any business or entity in
      competition with the Company (&#147;Competing Business&#148;);</FONT></P>
      <P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>6.2.2 Be employed by, work
      for, consult with, or act in any other capacity for, any person or entity
      that is engaged in any Competing Business if in such employment, work or
      capacity Employee likely would, because of the nature of his position
      with, or work for, the competitor and his knowledge of the Company's
      Confidential Information, inevitably use and/or disclose any of the
      Company's Confidential Information in his work for or with such
      competitor;</FONT></P>
      <P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>6.2.3 Solicit, recruit, hire,
      employ or attempt to hire or employ any person who is then or within the
      proceeding one (1) year period was, an employee of the Company, or
      otherwise urge, induce or seek to induce any person to terminate his/her
      employment with the Company;</FONT></P></TD></TR></TABLE>
<P align=center><FONT face=serif size=2>-10- </FONT></P>
<HR align=center width="100%" noShade SIZE=2>
<PAGE><BR>
<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR>
    <TD width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="97%">
      <P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>6.2.4
      Solicit, urge, induce or seek to induce any of the Company's independent
      contractors, subcontractors, vendors, suppliers, customers or consultants
      to terminate their relationship with, or representation of, the Company or
      to cancel, withdraw, reduce, limit or in any manner modify any such
      person's or entity's business with or representation of, the Company for
      whatever purpose or reason;</FONT></P>
      <P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>6.2.5 Take any action intended
      to harm the Company or its reputation, which the Company reasonably
      concludes could lead to unwanted or unfavorable publicity to the
      Company;</FONT></P>
      <P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>6.2.6 The restrictive time
      periods set forth in this Section 6.2 shall not expire during any period
      in which Employee is in violation of any of the restrictive covenants set
      forth in this Section 6.2, and all restrictions shall automatically be
      extended by the period Employee was in violation of any such
      restrictions;</FONT></P>
      <P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>6.2.7 The restrictive
      covenants contained in this Section 6.2 prohibit Employee from engaging in
      certain activities directly or indirectly, whether on his own behalf or on
      behalf of any other person or entity.</FONT></P>
      <P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>6.2.8 The covenants and
      restrictions in this Section 6.2 are separate and divisible, and to the
      extent any covenant, provision or portion of Section 6.2 is determined to
      be unenforceable or invalid for any reason, such unenforceability or
      invalidity shall not affect the enforceability or validity of the
      remainder of the Agreement. Should any particular covenant, restriction,
      provision or portion of Section 6.2 be held unreasonable or unenforceable
      for any reason, including, without limitation, the time period,
      geographical area, and/or scope of activity covered by any restrictive
      covenant, provision or clause, such covenant, provision or clause shall
      automatically be deemed reformed such that the contested covenant,
      provision or portion will have the closest effect permitted by applicable
      law to the original form and shall be given effect and enforced as so
      reformed to the extent reasonable and enforceable under applicable
      law.</FONT></P></TD></TR>
  <TR>
    <TD width="1%"></TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="97%">&nbsp;</TD></TR>
  <TR>
    <TD width="1%"></TD>
    <TD width="98%" colSpan=2>
      <P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>6.3 </FONT><B><U><FONT face=serif size=2>Definition of
      &#147;Competing Business</FONT></U></B><B><FONT face=serif size=2>&#148;</FONT></B><FONT face=serif size=2>: The term &#147;Competing Business&#148;
      shall mean: </FONT></P></TD></TR>
  <TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="97%">&nbsp;</TD></TR>
  <TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="97%">
      <P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>6.3.1
      The retail footwear business of Collective Brands, Inc.; Brown Shoe
      Company, Inc.; Designer Shoe Warehouse; Rack Room (dba); Kohls
      Corporation; Shoe Station (dba); Shoe City (dba); Shoe Pavilion, Inc.,
      Shoe Department (dba); Finish Line, Inc.; Foot Locker, Inc.; Dick&#146;s
      Sporting Goods, Inc.; The Sports Authority, Inc.; Off Broadway Shoe
      Warehouse; and any other company which sells footwear at retail to
      consumers within 25 miles of any Company store at price points
      competitive, or likely to be competitive, with the
  </FONT></P></TD></TR></TABLE>
<P align=center><FONT face=serif size=2>-11- </FONT></P>
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<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR>
    <TD width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="97%">
      <P align=left><FONT face=serif size=2>Company, where the footwear sales of
      such other company constitute at least fifteen percent (15%) of such
      company's annual revenues. </FONT></P>
      <P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>6.3.2 Ownership of an
      investment of less than 5% of any class of equity or debt security of a
      publicly-held Competing Business shall not constitute ownership or
      participation in violation of the above. </FONT></P></TD></TR>
  <TR>
    <TD width="1%"></TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="97%"></TD></TR>
  <TR>
    <TD width="1%"></TD>
    <TD width="98%" colSpan=2>
      <P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>6.4</FONT><FONT face=sans-serif size=2>
      </FONT><B><U><FONT face=serif size=2>Acknowledgment Regarding
      Restrictions</FONT></U></B><FONT face=serif size=2>. Employee acknowledges
      and agrees that he understands the restrictions in Section 6, and that
      they are reasonable and enforceable, in view of, among other things, the
      Employee&#146;s position within the Company, the highly competitive nature of
      the Company's business, and the confidential nature of the information the
      Employee has been provided. Employee further agrees that the Company would
      not have adequate protection if Employee were permitted to work for its
      competitors in violation of the terms of this Agreement since the Company
      would be unable to verify whether its Confidential Information was being
      disclosed and/ or misused, and whether Employee was involved in diverting
      the Company&#146;s customers and/or its customer goodwill. </FONT></P>
      <P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>6.5 </FONT><B><U><FONT face=serif size=2>Disclosures
      Concerning New Employment</FONT></U></B><FONT face=serif size=2>. Employee
      agrees that he (a) will immediately, within ten (10) days, notify the
      Company in writing of his employment, engagement or other affiliation with
      any other business or entity during the two (2) years immediately
      following the termination of Employee's employment with the Company and
      (b) will provide a copy of Section 6 and 7 of this Agreement to any
      prospective employer before accepting employment or other work engagement
      with any such employer. </FONT></P></TD></TR>
  <TR>
    <TD width="1%"></TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="97%"></TD></TR>
  <TR>
    <TD width="99%" colSpan=3>
      <P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>7.
      </FONT><B><U><FONT face=serif size=2>Confidential or Proprietary
      Information</FONT></U></B><B><FONT face=serif size=2>
</FONT></B></P></TD></TR>
  <TR>
    <TD width="1%"></TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="97%"></TD></TR>
  <TR>
    <TD width="1%"></TD>
    <TD width="98%" colSpan=2>
      <P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>7.1
      </FONT><B><U><FONT face=serif size=2>Confidentiality</FONT></U></B><FONT face=serif size=2>. As used in this Agreement, the term "Confidential
      Information" means any and all of the Company's trade secrets,
      confidential and proprietary information and all other information and
      data of the Company that is not generally known to third persons who could
      derive economic value from its use or disclosure, including, without
      limitation, the Company's profile of prospective or current vendors or
      customers, business methods and structure, details of the Company's
      contracts and business matters, employee compensation, personnel
      information, marketing strategies and plans, business plans, pricing
      information and strategies, costs information, and financial data, whether
      or not reduced to writing or other tangible medium of expression,
      including work product created by Employee in rendering services to the
      Company. During his employment with the Company and thereafter, Employee
      will not use or disclose to others any of the Confidential Information
      except as authorized in writing by the Company or in the performance of
      work assigned Employee by the Company. Employee also will abide by the
      Company's policies protecting the Confidential Information. Employee's
      confidentiality obligations shall continue as long as the Confidential
      Information remains confidential, and shall not apply to information which
      becomes generally known to the public through no fault or action of
      Employee. Employee agrees that the Company owns the Confidential
      </FONT></P></TD></TR></TABLE>
<P align=center><FONT face=serif size=2>-12- </FONT></P>
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<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR>
    <TD width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="99%">
      <P align=left><FONT face=serif size=2>Information and Employee has no
      rights, title or interest in any of the Confidential Information. At the
      Company's request or upon termination of Employee's employment with the
      Company for any reason, Employee will immediately deliver to the Company
      all materials (including all copies and electronically stored data)
      containing any Confidential Information in Employee's possession, custody
      or control. </FONT></P>
      <P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>7.2 </FONT><B><U><FONT face=serif size=2>Trade
      Secrets-Developments</FONT></U></B><FONT face=serif size=2>. All
      improvements, developments, concepts, and ideas ("Developments") relating
      to the Company's business, or capable of beneficial use by the Company,
      including, but not limited to, marketing, confidential and trade secret
      information, techniques, discoveries, slogans, designs, artwork, and
      writings, which the Employee has made or will make during his employment
      with the Company are the sole and exclusive property of the Company
      without charge to the Company other than the Employee's compensation.
      </FONT></P>
      <P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>7.3
      </FONT><B><U><FONT face=serif size=2>Acknowledgement</FONT></U></B><FONT face=serif size=2>. Employee agrees that the restrictions set forth in
      Sections 7.1 and 7.2 are reasonable and necessary to protect the trade
      secrets, confidential information, intellectual property rights and
      goodwill of the Company. The restrictions and obligations contained in
      this Section 7 shall survive the term of this Agreement.
  </FONT></P></TD></TR></TABLE>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>8.
</FONT><B><U><FONT face=serif size=2>Remedies</FONT></U></B><FONT face=serif size=2>. In the event of a breach or threatened breach by the Employee of any of
the above provisions, the Company shall be entitled to an injunction restraining
Employee from such breach, in addition to all other remedies which the Company
shall be entitled to pursue. The Company also shall be entitled to recover from
Employee all litigation costs and attorneys' fees incurred by the Company in any
action or proceeding relating to this Agreement in which the Company prevails,
including, but not limited to, any action or proceeding in which the Company
seeks enforcement of this Agreement or seeks relief from Employee's violation of
this Agreement. Nothing herein shall be construed as prohibiting the Company
from pursuing any other remedies available for such breach, threatened breach,
or any breach of this Agreement. </FONT></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>9.
</FONT><B><U><FONT face=serif size=2>Survival of Post-Termination
Obligations</FONT></U></B><FONT face=serif size=2>. Employee acknowledges and
agrees that his post-termination obligations under this Agreement, including
without limitation Employee's non-competition and confidentiality obligations
set forth in Sections 6 and 7 of this Agreement, shall survive the termination
of Employee's employment with the Company, regardless whether such termination
is voluntary or involuntary, or is with or without Cause. </FONT></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>10.
</FONT><B><U><FONT face=serif size=2>Notices</FONT></U></B><FONT face=serif size=2>. All notices, requests, consents, and other communications under this
Agreement shall be in writing and shall be deemed to have been delivered on the
date personally delivered or the dated mailed, postage prepaid, by certified
mail, return receipt requested, or telegraphed and confirmed, or faxed and
confirmed, if addressed to the respective parties as follows; </FONT></P>
<P align=left>
<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR>
    <TD vAlign=top noWrap width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top noWrap width="1%"><FONT size=2>To
      Employee:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
    <TD vAlign=top width="98%">
      <P align=left><FONT face=serif size=2>Timothy Baker<BR>3243 Brookfield
      Drive<BR>Newburgh, Indiana 47630 </FONT></P></TD></TR></TABLE>
<P align=center><FONT face=serif size=2>-13- </FONT></P>
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<PAGE><BR>
<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR>
    <TD vAlign=top width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top noWrap width="1%">
      <P align=left><FONT face=serif size=2>To
      Company:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P></TD>
    <TD vAlign=top width="97%">
      <P align=left><FONT face=serif size=2>Chief Executive Officer<BR>Shoe
      Carnival, Inc.<BR>7500 East Columbia Street<BR>Evansville, Indiana 47715
      </FONT></P></TD></TR></TABLE>
<P align=left><FONT face=serif size=2>Either party hereto may designate a
different address by providing written notice of such new address to the other
party hereto. </FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>11. </FONT><B><U><FONT face=serif size=2>Waiver</FONT></U></B><FONT face=serif size=2>. The failure or delay of
the Company at any time or times to require performance of, or to exercise any
of its powers, rights or remedies with respect to, any term or provision of this
Agreement or any other aspect of Employee&#146;s conduct or employment shall not
affect the Company&#146;s right to later enforce any such term or provision.
</FONT></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>12.
</FONT><B><U><FONT face=serif size=2>Assignment</FONT></U></B><FONT face=serif size=2>. The Company shall have the right to assign this Agreement. This
Agreement shall inure to the benefit of, may be enforced by, and shall be
binding on, any and all successors and assigns of the Company, including,
without limitation, by asset assignment, stock sale, merger, consolidation or
other corporate reorganization, and shall be binding on Employee, his executors,
administrators, personal representatives and other successors in interest.
Employee shall not have the right to assign this Agreement nor any of his
rights, powers, duties or obligations hereunder. </FONT></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>13.
</FONT><B><U><FONT face=serif size=2>Code Section 409A
Standards</FONT></U></B><B><FONT face=serif size=2>. </FONT></B><FONT face=serif size=2>This Agreement, and all other nonqualified deferred compensation plans in
which the Employee participates, are intended to comply with the standards for
nonqualified deferred compensation plans established by Code Section 409A and
its interpretive regulations and other regulatory guidance (the &#147;Section 409A
Standards&#148;), to the extent applicable, and this Agreement shall be construed
accordingly. In construing or interpreting any vague or ambiguous provisions of
this Agreement, the interpretation that will prevail is the interpretation that
will cause this Agreement to comply with the Section 409A Standards. Any
provision of this Agreement, or any deferred compensation provided under it,
that would fail to satisfy the Section 409A Standards shall not have any force
or effect until it is amended to comply with the applicable Section 409A
Standards, which amendment may be retroactive to the extent permissible under
the Section 409A Standards. </FONT></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>14.
</FONT><B><U><FONT face=serif size=2>Entire Agreement</FONT></U></B><FONT face=serif size=2>. This Agreement cancels and supersedes all prior
negotiations, discussions, commitments and understandings between the parties
relating hereto, whether oral or written. This Agreement embodies the entire
agreement and understanding between such parties with respect to the matters
covered hereby. Neither party shall be bound by any term or condition other than
as is expressly set forth herein. </FONT></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>15.
</FONT><B><U><FONT face=serif size=2>Amendment</FONT></U></B><FONT face=serif size=2>. This Agreement may be amended only by an instrument in writing executed
by the parties hereto. </FONT></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>16.
</FONT><B><U><FONT face=serif size=2>Governing Law: Forum
Selection</FONT></U></B><FONT face=serif size=2>. This Agreement shall be
construed and enforced in accordance with and governed by the laws of the State
of Indiana, without regard to the conflicts of law rules thereof. Any legal
action relating to this Agreement shall be</FONT></P>
<P align=center><FONT face=serif size=2>-14- </FONT></P>
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<P align=left><FONT face=serif size=2>commenced and maintained exclusively
before any appropriate state court of record in Vanderburgh County, Indiana, or,
if necessary because of a federal question mandating jurisdiction in the federal
courts is involved, the United States District Court for the Southern District
of Indiana, Evansville Division, and the parties hereby submit the jurisdiction
of such courts and waive any right to challenge or otherwise raise questions of
personal jurisdiction or venue in any action commenced or maintained in such
courts. </FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>17. </FONT><B><U><FONT face=serif size=2>Severability</FONT></U></B><FONT face=serif size=2>. The parties intend
that the provisions of this Agreement shall be enforced to the fullest extent
permissible under the applicable law. Should any provision of this Agreement be
unenforceable or invalid for any reason, such unenforceability or invalidity
shall not affect the enforceability or validity of the remainder of the
Agreement. </FONT></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>IN
WITNESS WHEREOF, the parties hereto have executed this Amended and Restated
Employment and Noncompetition Agreement on this 11th. day of December, 2008.
</FONT></P>
<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD noWrap align=left width="49%" colSpan=2><FONT face=serif size=2>SHOE CARNIVAL,
      INC.: "Company"</FONT> </TD>
    <TD noWrap align=left width="2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD noWrap align=left width="49%" colSpan=2><FONT face=serif size=2>TIMOTHY BAKER:
      "Employee"</FONT> </TD></TR>
  <TR>
    <TD width="100%" colSpan=5>&nbsp;</TD></TR>
  <TR>
    <TD width="100%" colSpan=5>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="2%"><FONT face=serif size=2>By:</FONT> </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="47%"><FONT face=serif size=2>&nbsp; /s/ Mark L. Lemond</FONT> </TD>
    <TD noWrap align=left width="2%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="49%" colSpan=2><FONT face=serif size=2>&nbsp; /s/ </FONT><FONT face=serif size=2>Timothy Baker</FONT> </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="2%">&nbsp;</TD>
    <TD noWrap align=left width="47%"></TD>
    <TD noWrap align=left width="2%"></TD>
    <TD noWrap align=left width="2%"></TD>
    <TD noWrap align=left width="47%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="2%"><FONT face=serif size=2>Its:</FONT> </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="47%"><FONT face=serif size=2>&nbsp; CEO and President</FONT> </TD>
    <TD noWrap align=left width="2%"></TD>
    <TD noWrap align=left width="2%"><FONT face=serif size=2>Date:&nbsp;&nbsp;</FONT> </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="47%"><FONT face=serif size=2>&nbsp; December 11, 2008</FONT> </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="2%">&nbsp;</TD>
    <TD noWrap align=left width="47%"></TD>
    <TD noWrap align=left width="2%"></TD>
    <TD noWrap align=left width="2%"></TD>
    <TD noWrap align=left width="47%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="2%"><FONT face=serif size=2>Date:&nbsp;&nbsp;</FONT> </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="47%"><FONT face=serif size=2>&nbsp; December 11, 2008</FONT> </TD>
    <TD noWrap align=left width="2%"></TD>
    <TD noWrap align=left width="2%"></TD>
    <TD noWrap align=left width="47%"></TD></TR></TABLE><BR>
<P align=center><FONT face=serif size=2>-15- </FONT></P>
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<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>4
<FILENAME>exhibit10-3.htm
<DESCRIPTION>AMENDED AND RESTATED EMPLOYMENT AND NONCOMPETITION AGREEMENT
<TEXT>

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<P align=right><FONT face=serif size=2>Exhibit 10.3</font></p>
<P align=center><B><FONT face=serif size=2>AMENDED AND RESTATED EMPLOYMENT AND
NONCOMPETITION<BR>AGREEMENT</FONT></B></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>This AMENDED AND RESTATED EMPLOYMENT AND </FONT><FONT face=serif size=2>NONCOMPETITION AGREEMENT (the "Agreement") is an amendment and
complete restatement of the Employment and Noncompetition Agreement made and
entered into as of the 31st day of December, 2006, by and between
</FONT><B><FONT face=serif size=2>SHOE CARNIVAL, INC</FONT></B><FONT face=serif size=2>., an Indiana corporation with its principal offices located at 7500 East
Columbia Street, Evansville, Indiana (the "Company"), and </FONT><B><FONT face=serif size=2>CLIFTON E. SIFFORD</FONT></B><FONT face=serif size=2>, an
individual residing at 3255 Brookfield Drive, Newburgh, Indiana (the
"Employee"). This restatement is intended to conform the Agreement to the
applicable provisions of the final regulations interpreting Section 409A of the
Internal Revenue Code of 1986, as amended ("Code") and Revenue Ruling
2008-13.</FONT></P>
<P align=center><B><U><FONT face=serif size=2>RECITALS</FONT></U></B></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><STRONG>WHEREAS</STRONG></FONT><FONT face=serif size=2>, the Company is one of the leading retailers of family shoes
in the United States;</FONT></P>
<P align=left><FONT face=serif size=2></FONT><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><STRONG>WHEREAS</STRONG></FONT><FONT face=serif size=2>, the Company desires to retain the services of the Employee
upon the terms and conditions set forth herein; and</FONT></P>
<P align=left><FONT face=serif size=2></FONT><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><STRONG>WHEREAS</STRONG></FONT><FONT face=serif size=2>, the Employee desires to be so employed by the Company, to be
eligible for opportunities of advancement, potential compensation increases and
the potential payments provided for herein; and</FONT></P>
<P align=left><FONT face=serif size=2></FONT><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><STRONG>WHEREAS</STRONG></FONT><FONT face=serif size=2>, the Company and the Employee desire to enter into this
Agreement to set forth the terms and conditions of the employment relationship
between the Company and the Employee; and</FONT></P>
<P align=left><FONT face=serif size=2></FONT><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><STRONG>WHEREAS</STRONG></FONT><FONT face=serif size=2>, in connection with its business, the Company has expended a
substantial amount of time, money, and effort to develop and maintain its
confidential, proprietary and trade secret information, and that this
information, if misused or disclosed, could be very harmful to Company&#146;s
business and its competitive position in the marketplace.</FONT></P>
<P align=center><B><U><FONT face=serif size=2>AGREEMENT</FONT></U></B></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>1.
</FONT><U><FONT face=serif size=2><STRONG>Term of
Employment</STRONG></FONT></U><FONT face=serif size=2><STRONG>. </STRONG>The
Company hereby agrees to employ </FONT><FONT face=serif size=2>Employee and
Employee hereby agrees to be employed by the Company, in accordance with the
terms and conditions herein, for a period commencing on the effective date of
this Agreement up to and through January 31, 2009, subject, however, to earlier
termination as expressly provided in this Agreement (such term, including any
extension thereof, shall herein be referred to as the "Term"). This Agreement
shall be renewed automatically for successive terms of one (1) year each unless
either party provides written notice of non-renewal to the other party not more
than ninety (90) days and not less than thirty (30) days before the end of the
then current Term.</FONT></P>
<HR align=center width="100%" noShade SIZE=2>
<PAGE>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>2. </FONT><U><FONT face=serif size=2><STRONG>Scope of
Duties</STRONG></FONT></U><FONT face=serif size=2><STRONG>.</STRONG> The
Employee is currently serving in the position of Executive Vice President,
General Merchandise Manager. During the Term, the Employee agrees to perform
such other services for the Company as may be directed by any superior officer
of the Company, and to assume such other title, duties and/or responsibilities
as the Board of Directors may determine. The Employee shall be supportive of the
Company's business and its best interests and shall not, directly or indirectly,
take any action which could reasonably be expected to have an adverse effect
upon the business or best interests of the Company. The Employee covenants that
he will at all times honestly and fairly conduct his duties, and will at all
times maintain the highest of professional standards in representing the
interests of the Company. The Employee will comply with Company policies,
decisions, and instructions, which may be changed by the Company over time.
Employee shall perform all duties incident to his position, as well as any other
duties as may from time to time be assigned by the President of the Company or
his designee, and agrees to abide by all By-laws, policies, practices,
procedures or rules of the Company.</FONT></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>3.
</FONT><U><FONT face=serif size=2><STRONG>Compensation of
Employee</STRONG></FONT></U><FONT face=serif size=2><STRONG>.</STRONG> For all
services rendered by the Employee under this Agreement, the Company shall
compensate the Employee as follows:</FONT></P>
<DIV style="PADDING-LEFT: 15pt">
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>3.1
</FONT><U><FONT face=serif size=2><STRONG>Base Salary</STRONG></FONT></U><FONT face=serif size=2><STRONG>.</STRONG> The base salary payable to the Employee
under this Agreement shall be that amount of base salary payable as of the
effective date of this Agreement ("Base Salary"), payable in accordance with the
Company's usual payroll procedures, and subject to all taxes, withholdings and
deductions as required by law and as the Employee may authorize. The Company
will review the Base Salary on a periodic basis, approximately annually, during
the Term to determine, in the discretion of the Company, whether the Base Salary
should be adjusted, and if so, the amount of such adjustment and the time at
which such adjustment should take effect.</FONT></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>3.2
</FONT><U><FONT face=serif size=2><STRONG>Incentive
Bonus</STRONG></FONT></U><FONT face=serif size=2><STRONG>.</STRONG> The Employee
is entitled to participate in the Company&#146;s 2006 Executive Incentive
Compensation Plan in accordance with the terms contained therein, and in any
successor plan adopted by the Company from time to time. However, Employee
agrees that the failure of the Company to award any such bonus and/or other
incentive compensation shall not give rise to any claim against the
Company.</FONT></P></DIV>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>4.
</FONT><U><FONT face=serif size=2><STRONG>Additional Compensation, Benefits, and
Obligations</STRONG></FONT></U><FONT face=serif size=2><STRONG>.</STRONG> During
the Term, and so long as the Employee serves in the position of Executive Vice
President, Employee is entitled to participate in any and all employee welfare
and health benefit plans (including, but not limited to, life insurance, health
and medical, dental and disability plans, and executive supplemental medical
coverage) and other employee benefit plans, including but not limited to,
qualified pension plans, stock purchase plans, and nonqualified deferred
compensation plans, established by the Company from time to time for the benefit
of executives at his level and position; provided, however, the Employee's
participation in such plans is subject to the eligibility requirements and other
terms of such plans. The Company may change, amend or discontinue any of its
employee welfare and health benefit plans at any time during the Term, and
nothing in this Agreement shall obligate the Company to institute, maintain or
refrain from changing, amending or discontinuing any such plans or
programs.</FONT></P>
<P align=center><FONT face=serif size=2>-2-</FONT></P>
<HR align=center width="100%" noShade SIZE=2>
<PAGE>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>5. </FONT><U><FONT face=serif size=2><STRONG>Termination of
Employment</STRONG></FONT></U><FONT face=serif size=2><STRONG>.</STRONG>
Employee&#146;s employment may be terminated as follows:</FONT></P>
<DIV style="PADDING-LEFT: 15pt">
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>5.1
</FONT><U><FONT face=serif size=2><STRONG>For Cause</STRONG></FONT></U><FONT face=serif size=2><STRONG>.</STRONG> The Company may terminate Employee&#146;s
employment at any time effective immediately for "Cause." As used in this
Agreement, the term "Cause" means the occurrence of any one or more of the
following events: (i) Employee's conviction for a felony or other crime
involving moral turpitude; (ii) Employee's engaging in illegal conduct or gross
misconduct which is injurious to the Company; (iii) Employee's engaging in any
fraudulent or dishonest conduct in his dealings with, or on behalf of, the
Company; (iv) Employee's failure or refusal to follow the lawful and reasonable
instructions of the Company's Chief Executive Officer, President, or other
executive officer to whom Employee reports, if such failure or refusal continues
for a period of ten (10) days after the Company delivers to Employee a written
notice stating the instructions which Employee has failed or refused to follow;
(v) Employee's material breach of any of his obligations under this Agreement;
(vi) Employee's material breach of the Company's policies; (vii) Employee's use
of alcohol or drugs which interferes with the performance of his duties for the
Company or which compromises the integrity or reputation of the Company; or
(viii) Employee's engaging in any conduct tending to bring the Company into
public disgrace or disrepute.</FONT></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>5.2
</FONT><U><FONT face=serif size=2><STRONG>Unilateral - The
Company</STRONG></FONT></U><FONT face=serif size=2><STRONG>.</STRONG> The
Company may terminate Employee&#146;s employment at any time without
Cause.</FONT></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>5.3
</FONT><U><FONT face=serif size=2><STRONG>Unilateral -
Employee</STRONG></FONT></U><FONT face=serif size=2><STRONG>.</STRONG> Employee
may terminate his employment at any time with the Company by providing the
Company with thirty (30) days' advance written notice of such termination. At
the sole option of the Company, such termination will be considered effective on
the date such notice is given.</FONT></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>5.4
</FONT><U><FONT face=serif size=2><STRONG>For Good Reason -
Employee</STRONG></FONT></U><FONT face=serif size=2><STRONG>.</STRONG> At any
time during the Term, Employee may terminate this Agreement for Good Reason if
all of the following conditions are satisfied: (a) Employee gives the Company a
written notice of termination, which describes in reasonable detail the
condition claimed to constitute Good Reason, within thirty (30) calendar days of
the initial existence of the condition claimed to constitute Good Reason; (b)
the Company does not remedy the condition within thirty (30) calendar days of
the Company&#146;s receipt of Employee&#146;s written notice of termination (the &#147;Good
Reason Cure Period&#148;); and (c) Employee gives the Company a second written notice
of termination within thirty (30) calendar days following the expiration of the
Good Reason Cure Period. For purposes of this Agreement, for &#147;Good Reason" means
the occurrence, without Employee&#146;s written consent, of a material reduction by
the Company in Employee&#146;s Base Salary . Termination of this Agreement without
Cause or for Good Reason shall not be deemed to be a voluntary termination by
Employee for purposes of any stock option or equity incentive plans of the
Company.</FONT></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>5.5
</FONT><U><FONT face=serif size=2><STRONG>Disability or
Death</STRONG></FONT></U><FONT face=serif size=2><STRONG>.</STRONG> If Employee
suffers a "Disability," the Company shall have the right to terminate Employee's
employment by delivering to</FONT></P></DIV>
<P align=center><FONT face=serif size=2>-3-</FONT></P>
<HR align=center width="100%" noShade SIZE=2>
<PAGE>
<P style="PADDING-LEFT: 15pt" align=left><FONT face=serif size=2>Employee a
written notice of the Company's intent to terminate for Disability, specifying
in such notice a termination date not less than ten (10) calendar days after the
giving of the notice (the "Disability Notice Period"). The Employee's employment
shall terminate at the close of business on the last day of the Disability
Notice Period. For purpose of this Agreement, the term "Disability" shall mean
either (a) when Employee is deemed disabled in accordance with the long-term
disability insurance policy or plan of the Company in effect at the time of the
illness or injury causing the Disability, or (b) the inability of Employee,
because of injury, illness, disease or bodily or mental infirmity, to perform
the essential functions of his job (with reasonable accommodation) for more than
one hundred twenty (120) consecutive days. The existence of a Disability shall
be determined by the Company. If the Employee should die during the Term, this
</FONT><FONT face=serif size=2>Agreement shall terminate as of the date of
Employee's death.</FONT></P>
<P style="PADDING-LEFT: 15pt"align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>5.6 </FONT><U><FONT face=serif size=2><STRONG>Compensation
Upon Termination</STRONG></FONT></U><FONT face=serif size=2><STRONG>.</STRONG>
In the event of termination of Employee&#146;s employment as set forth herein, and
subject to any lawful right of offset the Company may have against any such
benefits, compensation, or severance amounts owed to Employee, whether the
result of promissory notes, loans, or other financial arrangements the Company
may have entered into with or on the Employee&#146;s behalf, and which are or would
become due and payable on or after the termination date, to include the
principal and interest pursuant to such arrangements (which right of offset
cannot be inconsistent with the standards for nonqualified deferred compensation
plans under Code Section 409A, to the extent applicable), the Parties agree that
the following terms shall be the exclusive severance arrangements:</FONT></P>
<P style="PADDING-LEFT: 30pt" align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>5.6.1 In the event of termination of
Employee's employment by the Company for Cause pursuant to Section 5.1 or
unilateral termination by the Employee pursuant to Section 5.3, the Company's
obligation to pay and provide Employee compensation and benefits under this
Agreement shall immediately terminate, except: (a) Employee shall be entitled to
receive that portion of his then Base Salary which shall have been earned
through the termination date; and (b) the Company shall pay or provide Employee
such other payments and benefits, if any, which had accrued hereunder before the
termination date. Other than the foregoing, the Company shall have no further
obligations to Employee under this Agreement.</FONT></P>
<P style="PADDING-LEFT: 30pt" align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>5.6.2 In the event the Company
terminates Employee's employment without Cause pursuant to Section 5.2 or
Employee terminates for Good Reason pursuant to Section 5.4 within thirty (30)
calendar days of the expiration of the Good Reason Cure Period, at any time
other than the two (2) year period immediately following a "Change in Control,"
the Company's obligation to pay and provide Employee compensation and benefits
under this Agreement shall immediately terminate, except: (a) Employee shall be
entitled to receive that portion of his then Base Salary which shall have been
earned through the termination date; (b) the Company shall pay to Employee,
within thirty (30) calendar days following the date of termination, a lump sum
amount equal to fifty-five percent (55%) of the product of (i) times (ii), where
(i) is his annual</FONT></P>
<P align=center><FONT face=serif size=2>-4-</FONT></P>
<HR align=center width="100%" noShade SIZE=2>
<PAGE>
<P style="PADDING-LEFT: 30pt" align=left><FONT face=serif size=2>Base Salary for
the fiscal year in which the termination occurs, and (ii) is a fraction, the
numerator of which is the number of days elapsed in such fiscal year through the
date of termination and the denominator of which is 365; (c) the Company shall
pay or provide Employee such other payments and benefits, if any, which had
accrued hereunder before the termination date; (d) the Company shall pay to
Employee, within thirty (30) calendar days following the termination date, a
lump sum payment in an amount equal to one hundred fifty percent (150%) of
Employee's Base Salary for the fiscal year in which the termination occurs; (e)
the Company shall pay Employee, within thirty (30) calendar days following the
termination date, a lump sum payment in an amount equal to the total of (i) plus
(ii), where (i) equals eighteen (18) times the monthly "COBRA Premium Rate"
(which is the monthly amount charged, as of the termination date, for COBRA
continuation coverage under the Company's group medical and dental plans for the
coverage options and coverage levels applicable to Employee and his covered
dependents immediately prior to the termination date); and (ii) is an additional
amount equal to the additional state and federal taxes that the Company
determines Employee will incur as a result of the payment of the lump sum
payment provided under this Section 5.6.2(e); (f) with respect to Company stock
options granted after the date of this Agreement, Employee would immediately
vest in any option that would have vested within twelve (12) months of
Employee&#146;s termination date had Employee not been terminated, and such option
may be exercised pursuant to the provisions of the then current Company Stock
Option and Incentive Plan (&#147;Stock Option Plan&#148;) as if the option were vested at
the date of termination; and (g) all shares of restricted stock granted to the
Employee after the date of this Agreement, which are not intended to qualify as
&#147;performance based compensation&#148; under Section 162(m) of the Code shall contain
provisions which shall provide for immediate vesting upon Termination without
Cause or for Good Reason. Payment of the severance compensation described in
subpart (d) and (e) of this Section 5.6.2 is subject to the requirements of
Sections 5.9 and 5.10. Other than the foregoing, the Company shall have no
further obligations to Employee under this Agreement.</FONT></P>
<P style="PADDING-LEFT: 30pt" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>5.6.3 In the event Employee's employment is terminated as a
result of Employee's Death or Disability pursuant to Section 5.5, the Company's
obligation to pay and provide the Employee compensation and benefits under this
Agreement shall immediately terminate except: (a) Employee shall be entitled to
receive that portion of his then Base Salary which shall have been earned
through the termination date; and (b) the Company shall pay or provide Employee
such other payments and benefits, if any, which had accrued hereunder before the
termination date. Other than the foregoing, the Company shall have no further
obligations to Employee under this Agreement.</FONT></P>
<P style="PADDING-LEFT: 30pt" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>5.6.4 In the event of a "Qualifying Termination" within two
(2) years immediately following a "Change In Control," then, in lieu of all
other benefits under this Agreement, the Company's obligation to pay and provide
Employee compensation and benefits under this Agreement shall immediately
terminate,</FONT></P>
<P align=center><FONT face=serif size=2>-5-</FONT></P>
<HR align=center width="100%" noShade SIZE=2>
<PAGE>
<DIV style="PADDING-LEFT: 30pt">
<P align=left><FONT face=serif size=2>except: (a) Employee shall be entitled to
receive that portion of his then Base Salary which shall have been earned
through the termination date; (b) the Company shall pay or provide Employee such
other payments and benefits, if any, which had accrued hereunder before the
termination date; (c) the Company shall pay to Employee in a lump sum not later
than thirty (30) calendar days after the termination date an amount equal to two
times one hundred fifty-five percent (155%) of his annual Base Salary for the
fiscal year in which the termination occurs; (d) the Company shall pay Employee,
in a lump sum not later than thirty (30) calendar days after the termination
date, an amount equal to (i) plus (ii), where (i) equals eighteen (18) times the
COBRA Premium Rate; and (ii) is an additional amount equal to the additional
state and federal taxes that the Company determines Employee will incur as a
result of the payment of the lump sum payment provided under this Section
5.6.4(d); (e) the Company shall provide Employee with reasonable and appropriate
out-placement services, as determined and coordinated by the Company, by paying
a fee, not to exceed Two Thousand Five Hundred Dollars ($2,500.00), to an
outplacement services provider selected by the Company, provided that such
services shall not extend past the end of the second taxable year following the
taxable year in which the Qualifying Termination occurs; and (f) Employee shall
be allowed to exercise available stock options in accordance with the Stock
Option Plan as if he were terminated without cause pursuant to the Stock Option
Plan. Payment or provision of the severance compensation or benefits described
in subparts (c), (d) and (e) of this Section 5.6.4 is subject to the
requirements of Sections 5.9 and 5.10. Other than the foregoing, the Company
shall have no further obligations to Employee under this Agreement. </FONT></P>
<P align=left><FONT face=serif size=2>For purposes of this Agreement, a
"Qualifying Termination" shall mean either (i) a unilateral termination of
Employee by the Company without Cause pursuant to Section 5.2 or (ii) a
termination by Employee for Good Reason pursuant to Section 5.4 within thirty
(30) calendar days of the expiration of the Good Reason Cure Period. </FONT></P>
<P align=left><FONT face=serif size=2>For purposes of this Agreement, "Change In
Control" of the Company shall mean and shall be deemed to have occurred as of
the first day any one or more of the following conditions shall have been
satisfied:</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>(A) The
acquisition, within a 12-month period ending on the date of the most recent
acquisition, by 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") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act as in effect from time to time) of
thirty percent (30%) or more of either (i) the then outstanding shares of common
stock of the Company or (ii) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the election of
directors; provided, however, that the following acquisitions shall not
constitute an acquisition of control: (a) any acquisition directly from the
</FONT></P></DIV>
<P align=center><FONT face=serif size=2>-6-</FONT></P>
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<PAGE>

<DIV style="padding-left: 30pt">

<P align=left><FONT face=serif size=2>Company (excluding an acquisition by
virtue of the exercise of a conversion privilege), (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 corporation controlled by the
Company, (d) any acquisition by any corporation pursuant to a reorganization,
merger or consolidation, if, following such reorganization, merger or
consolidation, the conditions described in clauses (i), (ii) and (iii) of
subsection (C) of this Section 5.6.4 are satisfied, (e) any acquisition by any
Person who, immediately before the commencement of the 12-month period, already
held beneficial ownership of thirty percent (30%) or more of the outstanding
voting securities of the Company ("Affiliated Person") or (f) upon the death of
any shareholder who, on the date of this Agreement, is the beneficial owner of
10% or more of the outstanding voting securities of the Company, any acquisition
triggered by the death of such shareholder by operation of law, by any
testamentary bequest or by the terms of any trust or other contractual
arrangement established by such shareholder; or</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>(B) Individuals who, as of the date
hereof, constitute the Board of Directors of the Company (the "Incumbent Board")
cease for any reason to constitute at least a majority of the Board of Directors
of the Company (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 shareholders, 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 either an actual or threatened election contest (as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board; or</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>(C) Approval by the shareholders of the
Company of a reorganization, merger or consolidation, in each case, unless,
following such reorganization, merger or consolidation, (i) more than fifty
percent (50%) of, respectively, the then outstanding shares of common stock of
the corporation resulting from such reorganization, merger or consolidation and
the combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
outstanding Company common stock and outstanding Company voting securities
immediately prior to such reorganization, merger or consolidation in
substantially the same proportions as their ownership, immediately prior to such
reorganization, merger or consolidation, of the outstanding Company stock and
outstanding Company voting securities, as the case may be, (ii) no Person
(excluding the Company, any employee benefit plan or related trust of the
Company or such corporation resulting from such reorganization, merger or
consolidation and any Person beneficially owning,</FONT></P></DIV>
<P align=center><FONT face=serif size=2>-7-</FONT></P>
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<PAGE>
<DIV style="PADDING-LEFT: 30pt">
<P align=left><FONT face=serif size=2>immediately prior to such reorganization,
merger or consolidation, directly or indirectly, [thirty percent (30%)] or more
of the outstanding Company common stock or outstanding voting securities, as the
case may be) beneficially owns, directly or indirectly, [thirty percent (30%)]
or more of, respectively, the then outstanding shares of common stock of the
corporation resulting from such reorganization, merger or consolidation or the
combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors and (iii) at
least a majority of the members of the board of directors of the corporation
resulting from such reorganization, merger or consolidation were members of the
Incumbent Board at the time of the execution of the initial agreement providing
for such reorganization, merger or consolidation; or</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>(D) Approval
by the shareholders of the Company of (i) a complete liquidation or dissolution
of the Company or (ii) the sale or other disposition of all or substantially all
of the assets of the Company, other than to a corporation with respect to which
following such sale or other disposition (a) more than fifty percent (50%) of,
respectively, the then outstanding shares of common stock of such corporation
and the combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
outstanding Company common stock and outstanding Company voting securities
immediately prior to such sale or other disposition in substantially the same
proportion as their ownership, immediately prior to such sale or other
disposition, of the outstanding Company common stock and outstanding Company
voting securities, as the case may be, (b) no Person (excluding the Company and
any employee benefit plan or related trust of the Company or such corporation,
any Affiliated Person and any Person beneficially owning, immediately prior to
such sale or other disposition, directly or indirectly, [thirty percent (30%)]
or more of the outstanding Company common stock or outstanding Company voting
securities, as the case may be) beneficially owns, directly or indirectly,
[thirty percent (30%)] or more of, respectively, the then outstanding shares of
common stock of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote generally in
the election of directors and (c) at least a majority of the members of the
board of directors of such corporation were members of the Incumbent Board at
the time of the execution of the initial agreement or action of the Board
providing for such sale or other disposition of assets of the
Company.</FONT></P>
<P align=left><FONT face=serif size=2>Notwithstanding any other provision of
this Section 5.6.4 to the contrary, an occurrence shall not constitute a Change
in Control if it does not constitute a change in the ownership or effective
control of, or in the ownership of a substantial portion of the assets of, the
Company, within the meaning of Code Section 409A(a)(2)(A)(v) and its
interpretive regulations.</FONT></P></DIV>
<P align=center><FONT face=serif size=2>-8-</FONT></P>
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<PAGE>

<DIV style="padding-left: 15pt">

<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>5.7 </FONT><B><U><FONT face=serif size=2>Internal Revenue Code Limits</FONT></U></B><B><FONT face=serif size=2>.
</FONT></B><FONT face=serif size=2>Should any payments by the Company to or for
the benefit of Employee under this Agreement constitute an "excess parachute
payment" within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), then the Company shall pay Employee an additional
amount of money (the "Gross-Up Payment") that will equal the sum of (a) all
excise or other taxes imposed upon Employee by Section 4999 of the Code
(excluding any penalties or interest) and (b) all additional state and federal
taxes, interest and/or penalties attributable to the additional payments made to
Employee pursuant to this Section 5.7. If an excise tax is imposed pursuant to
Section 4999 of the Code, Employee agrees to immediately notify the Company
within ten (10) days of the event, in writing, and Employee hereby gives the
Company the right to challenge said imposition. Any Gross-Up Payment due under
this Section 5.7 shall be paid in a lump sum as soon as it can be calculated,
but in no event later than 30 days after the date the Employee remits the
related taxes.</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>5.8 </FONT><B><U><FONT face=serif size=2>Payroll Withholdings</FONT></U></B><B><FONT face=serif size=2>.
</FONT></B><FONT face=serif size=2>The Company may withhold from any
compensation or benefits payable under this Agreement all federal, state, city,
or other taxes or deductions as may be required pursuant to any law or
governmental regulation or ruling.</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>5.9 </FONT><U><FONT face=serif size=2><STRONG>Compliance With Post-Employment
Restrictions</STRONG></FONT></U><FONT face=serif size=2><STRONG>.</STRONG> If
Employee breaches, or threatens to breach any of the covenants or provisions set
forth in Sections 6 and 7 of this Agreement, then in such event the Company
shall have the right immediately and permanently to discontinue payment and
provision of any of the severance compensation and benefits payable under this
Agreement. The Employee and Company acknowledge and agree that such remedy is in
addition to, and not in lieu of, any and all other legal and/or equitable
remedies that may be available to the Company in connection with the Employee's
breach or threatened breach of any of the covenants or provisions of this
Agreement.</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>5.10 </FONT><U><FONT face=serif size=2><STRONG>Release Agreement</STRONG></FONT></U><FONT face=serif size=2><STRONG>.</STRONG> As a condition of receiving the severance benefits
described in Sections 5.6.2(c), 5.6.2(d), 5.6.4(c), 5.6.4(d), or 5.6.4(e),
Employee will be required to sign a standard release agreement acceptable to the
Company in which he releases and waives all claims which he may have against the
Company or any affiliate, employee, shareholder, officer, director, agent or
representative of the Company (except for his rights under this Agreement or any
other vested rights Employee may have under any insurance, pension, employee
stock ownership or stock option plans sponsored or made available by the
Company). The Company will provide such release agreement to Employee at the
termination of Employee's employment with the Company. As part of the release
agreement, Employee will be required (a) to agree to cooperate with the Company
with respect to any business matters about which he has knowledge, including any
litigation or threatened litigation, (b) agree not to cooperate with any
claimants against the Company unless required by law to do so, (c) agree not to
make any negative or derogatory comments about the Company or its executives and
(d) affirm his post-termination obligations under this Agreement, including
without limitation the obligations set forth in Sections 6 and 7.</FONT></P></DIV>
<P align=center><FONT face=serif size=2>-9-</FONT></P>
<HR align=center width="100%" noShade SIZE=2>
<PAGE>
<P style="padding-left: 15pt" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>5.11 </FONT><B><FONT face=serif size=2><U>Delay of Separation
Payments to Specified Employee.</U> </FONT></B><FONT face=serif size=2>Notwithstanding any other provisions of this Agreement, if any amount
payable to Employee under this Agreement on account of Employee's separation
from service with the Company constitutes deferred compensation within the
meaning of Code Section 409A, and Employee is a specified employee, within the
meaning of Code Section 409A(a)(2)(B)(i), on the date of his separation from
service, payment of the amount shall be delayed until the first business day
that is at least six (6) months after the date on which Employee's separation
from service occurred. </FONT></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>6.
</FONT><B><U><FONT face=serif size=2>Non-competition</FONT></U></B><B><FONT face=serif size=2>.</FONT></B><FONT face=serif size=2> </FONT></P>
<P style="padding-left: 15pt" align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>6.1
</FONT><U><FONT face=serif size=2><STRONG>General</STRONG></FONT></U><FONT face=serif size=2><STRONG>.</STRONG> Employee acknowledges that his position
with the Company is special, unique and intellectual in character and his
position in the Company places him in a position of confidence and trust with
employees and customers of the Company. Employee further acknowledges,
recognizes, and represents receipt of sufficient consideration for these
restraints in the form of the Base Salary and other valuable consideration
contained herein. The restrictions and obligations contained in this Section 6
shall survive the Term of this Agreement. Notwithstanding the above, if the
Company terminates, or elects not to renew this Agreement, and subsequently
terminates Employee&#146;s employment without the payment of severance payments
equivalent to 100% of Employee&#146;s Base Salary in effect at the time of
termination, which shall be payable in lump sum, the Employee will not be
subject to the restrictions and obligations of this Section 6.</FONT></P>
<P style="padding-left: 15pt" align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>6.2
</FONT><U><FONT face=serif size=2><STRONG>Non-competition</STRONG></FONT></U><FONT face=serif size=2><STRONG>.</STRONG> Employee agrees that during his employment with the
Company and for a period of one (1) year</FONT><B><FONT face=serif size=2>
</FONT></B><FONT face=serif size=2>immediately after the termination of
Employee&#146;s employment with the Company, whether such employment is pursuant to
this Agreement or is without an Agreement, thereafter Employee shall
not:</FONT></P>
<P style="padding-left: 30pt" align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>6.2.1 Either alone or in concert
with others, whether as director, officer, consultant, principal, employee,
agent or otherwise, engage in or contribute Employee&#146;s knowledge and abilities
to any business or entity in competition with the Company (&#147;Competing
Business&#148;);</FONT></P>
<P style="padding-left: 30pt" align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>6.2.2 Be employed by, work for,
consult with, or act in any other capacity for, any person or entity that is
engaged in any Competing Business if in such employment, work or capacity
Employee likely would, because of the nature of his position with, or work for,
the competitor and his knowledge of the Company's Confidential Information,
inevitably use and/or disclose any of the Company's Confidential Information in
his work for or with such competitor;</FONT></P>
<P style="padding-left: 30pt" align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>6.2.3 Solicit, recruit, hire, employ
or attempt to hire or employ any person who is then or within the proceeding one
(1) year period was, an employee of the Company, or otherwise urge, induce or
seek to induce any person to terminate his/her employment with the
Company;</FONT></P>
<P align=center><FONT face=serif size=2>-10-</FONT></P>
<HR align=center width="100%" noShade SIZE=2>
<PAGE>
<P style="PADDING-LEFT: 30pt" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>6.2.4 Solicit, urge, induce or seek to induce any of the
Company's independent contractors, subcontractors, vendors, suppliers, customers
or consultants to terminate their relationship with, or representation of, the
Company or to cancel, withdraw, reduce, limit or in any manner modify any such
person's or entity's business with or representation of, the Company for
whatever purpose or reason;</FONT></P>
<P style="PADDING-LEFT: 30pt" align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>6.2.5 Take any action intended to
harm the Company or its reputation, which the Company reasonably concludes could
lead to unwanted or unfavorable publicity to the Company;</FONT></P>
<P style="PADDING-LEFT: 30pt" align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>6.2.6 The restrictive time periods
set forth in this Section 6.2 shall not expire during any period in which
Employee is in violation of any of the restrictive covenants set forth in this
Section 6.2, and all restrictions shall automatically be extended by the period
Employee was in violation of any such restrictions;</FONT></P>
<P style="PADDING-LEFT: 30pt" align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>6.2.7 The restrictive covenants
contained in this Section 6.2 prohibit Employee from engaging in certain
activities directly or indirectly, whether on his own behalf or on behalf of any
other person or entity.</FONT></P>
<P style="PADDING-LEFT: 30pt" align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>6.2.8 The covenants and restrictions
in this Section 6.2 are separate and divisible, and to the extent any covenant,
provision or portion of Section 6.2 is determined to be unenforceable or invalid
for any reason, such unenforceability or invalidity shall not affect the
enforceability or validity of the remainder of the Agreement. Should any
particular covenant, restriction, provision or portion of Section 6.2 be held
unreasonable or unenforceable for any reason, including, without limitation, the
time period, geographical area, and/or scope of activity covered by any
restrictive covenant, provision or clause, such covenant, provision or clause
shall automatically be deemed reformed such that the contested covenant,
provision or portion will have the closest effect permitted by applicable law to
the original form and shall be given effect and enforced as so reformed to the
extent reasonable and enforceable under applicable law.</FONT></P>
<P style="padding-left: 15pt" align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>6.3
</FONT><STRONG><U><FONT face=serif size=2>Definition of &#147;Competing
Business</FONT></U><FONT face=serif size=2>&#148;</FONT></STRONG><FONT face=serif size=2>: The term &#147;Competing Business&#148; shall mean:</FONT></P>
<P style="PADDING-LEFT: 30pt" align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>6.3.1 The retail footwear business
of Collective Brands, Inc.; Brown Shoe Company, Inc.; Designer Shoe Warehouse;
Rack Room (dba); Kohls Corporation; Shoe Station (dba); Shoe City (dba); Shoe
Pavilion, Inc., Shoe Department (dba); Finish Line, Inc.; Foot Locker, Inc.;
Dick&#146;s Sporting Goods, Inc.; The Sports Authority, Inc.; Off Broadway Shoe
Warehouse; and any other company which sells footwear at retail to consumers
within 25 miles of any Company store at price points competitive, or likely to
be competitive, with the</FONT></P>
<P align=center><FONT face=serif size=2>-11-</FONT></P>
<HR align=center width="100%" noShade SIZE=2>
<PAGE>
<P style="padding-left: 30pt" align=left><FONT face=serif size=2>Company, where the footwear sales of
such other company constitute at least fifteen percent (15%) of such company's
annual revenues.</FONT></P>
<P style="padding-left: 30pt" align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>6.3.2 Ownership of an investment
of less than 5% of any class of equity or debt security of a publicly-held
Competing Business shall not constitute ownership or participation in violation
of the above.</FONT></P>
<P style="padding-left: 15pt" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>6.4</FONT><FONT face=sans-serif> </FONT><U><FONT face=serif size=2><STRONG>Acknowledgment Regarding Restrictions</STRONG></FONT></U><FONT face=serif size=2><STRONG>. </STRONG>Employee acknowledges and agrees that he
understands the restrictions in Section 6, and that they are reasonable and
enforceable, in view of, among other things, the Employee&#146;s position within the
Company, the highly competitive nature of the Company's business, and the
confidential nature of the information the Employee has been provided. Employee
further agrees that the Company would not have adequate protection if Employee
were permitted to work for its competitors in violation of the terms of this
Agreement since the Company would be unable to verify whether its Confidential
Information was being disclosed and/ or misused, and whether Employee was
involved in diverting the Company&#146;s customers and/or its customer
goodwill.</FONT></P>
<P style="padding-left: 15pt" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>6.5 </FONT><U><FONT face=serif size=2><STRONG>Disclosures
Concerning New Employment</STRONG></FONT></U><FONT face=serif size=2><STRONG>.
</STRONG>Employee agrees that he (a) will immediately, within ten (10) days,
notify the Company in writing of his employment, engagement or other affiliation
with any other business or entity during the two (2) years immediately following
the termination of Employee's employment with the Company and (b) will provide a
copy of Section 6 and 7 of this Agreement to any prospective employer before
accepting employment or other work engagement with any such employer.</FONT></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>7.
</FONT><B><U><FONT face=serif size=2>Confidential or Proprietary
Information</FONT></U></B></P>
<P style="padding-left: 15pt" align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>7.1
</FONT><U><FONT face=serif size=2><STRONG>Confidentiality</STRONG></FONT></U><FONT face=serif size=2><STRONG>.</STRONG> As used in this Agreement, the term "Confidential
Information" means any and all of the Company's trade secrets, confidential and
proprietary information and all other information and data of the Company that
is not generally known to third persons who could derive economic value from its
use or disclosure, including, without limitation, the Company's profile of
prospective or current vendors or customers, business methods and structure,
details of the Company's contracts and business matters, employee compensation,
personnel information, marketing strategies and plans, business plans, pricing
information and strategies, costs information, and financial data, whether or
not reduced to writing or other tangible medium of expression, including work
product created by Employee in rendering services to the Company. During his
employment with the Company and thereafter, Employee will not use or disclose to
others any of the Confidential Information except as authorized in writing by
the Company or in the performance of work assigned Employee by the Company.
Employee also will abide by the Company's policies protecting the Confidential
Information. Employee's confidentiality obligations shall continue as long as
the Confidential Information remains confidential, and shall not apply to
information which becomes generally known to the public through no fault or
action of Employee. Employee agrees that the Company owns the
Confidential</FONT></P>
<P align=center><FONT face=serif size=2>-12- </FONT></P>
<HR align=center width="100%" noShade SIZE=2>
<PAGE>
<DIV style="PADDING-LEFT: 15pt">
<P align=left><FONT face=serif size=2>Information and Employee has no rights,
title or interest in any of the Confidential Information. At the Company's
request or upon termination of Employee's employment with the Company for any
reason, Employee will immediately deliver to the Company all materials
(including all copies and electronically stored data) containing any
Confidential Information in Employee's possession, custody or
control.</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>7.2 </FONT><U><FONT face=serif size=2><STRONG>Trade
Secrets-Developments</STRONG></FONT></U><FONT face=serif size=2><STRONG>.</STRONG> All improvements, developments, concepts, and ideas
("Developments") relating to the Company's business, or capable of beneficial
use by the Company, including, but not limited to, marketing, confidential and
trade secret information, techniques, discoveries, slogans, designs, artwork,
and writings, which the Employee has made or will make during his employment
with the Company are the sole and exclusive property of the Company without
charge to the Company other than the Employee's compensation.</FONT></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>7.3
</FONT><U><FONT face=serif size=2><STRONG>Acknowledgement</STRONG></FONT></U><FONT face=serif size=2><STRONG>.</STRONG> Employee agrees that the restrictions set forth in
Sections 7.1 and 7.2 are reasonable and necessary to protect the trade secrets,
confidential information, intellectual property rights and goodwill of the
Company. The restrictions and obligations contained in this Section 7 shall
survive the term of this Agreement.</FONT></P></DIV>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>8.
</FONT><U><FONT face=serif size=2><STRONG>Remedies</STRONG></FONT></U><FONT face=serif size=2><STRONG>.</STRONG> In the event of a breach or threatened
breach by the Employee of any of the above provisions, the Company shall be
entitled to an injunction restraining Employee from such breach, in addition to
all other remedies which the Company shall be entitled to pursue. The Company
also shall be entitled to recover from Employee all litigation costs and
attorneys' fees incurred by the Company in any action or proceeding relating to
this Agreement in which the Company prevails, including, but not limited to, any
action or proceeding in which the Company seeks enforcement of this Agreement or
seeks relief from Employee's violation of this Agreement. Nothing herein shall
be construed as prohibiting the Company from pursuing any other remedies
available for such breach, threatened breach, or any breach of this
Agreement.</FONT></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>9.
</FONT><U><FONT face=serif size=2><STRONG>Survival of Post-Termination
Obligations</STRONG></FONT></U><FONT face=serif size=2><STRONG>.</STRONG>
Employee acknowledges and agrees that his post-termination obligations under
this Agreement, including without limitation Employee's non-competition and
confidentiality obligations set forth in Sections 6 and 7 of this Agreement,
shall survive the termination of Employee's employment with the Company,
regardless whether such termination is voluntary or involuntary, or is with or
without Cause.</FONT></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>10.
</FONT><B><U><FONT face=serif size=2>Notices</FONT></U></B><FONT face=serif size=2><B>.</B> All notices, requests, consents, and other communications under this
Agreement shall be in writing and shall be deemed to have been delivered on the
date personally delivered or the dated mailed, postage prepaid, by certified
mail, return receipt requested, or telegraphed and confirmed, or faxed and
confirmed, if addressed to the respective parties as follows;</FONT></P>
<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD noWrap align=left width="5%"><FONT face=serif size=2>To Employee:</FONT>&nbsp; </TD>
    <TD noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD noWrap align=left width="93%"><FONT face=serif size=2>Clifton E. Sifford</FONT>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="5%">&nbsp; </TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="93%"><FONT face=serif size=2>3255 Brookfield Drive</FONT>&nbsp;
  </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="5%">&nbsp; </TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="93%"><FONT face=serif size=2>Newburgh, Indiana 47630</FONT>&nbsp;
  </TD></TR></TABLE><BR>
<P align=center><FONT face=serif size=2>-13-</FONT></P>
<HR align=center width="100%" noShade SIZE=2>
<PAGE><BR>
<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD noWrap align=left width="5%"><FONT face=serif size=2>To Company:</FONT> </TD>
    <TD noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD noWrap align=left width="93%"><FONT face=serif size=2>Chief Executive Officer</FONT>&nbsp;
  </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="5%">&nbsp; </TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="93%"><FONT face=serif size=2>Shoe Carnival, Inc.</FONT>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="5%">&nbsp; </TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="93%"><FONT face=serif size=2>7500 East Columbia Street</FONT>&nbsp;
    </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="5%">&nbsp; </TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="93%"><FONT face=serif size=2>Evansville, Indiana 47715</FONT>&nbsp;
    </TD></TR></TABLE><BR>
<P align=left><FONT face=serif size=2>Either party hereto may designate a
different address by providing written notice of such new address to the other
party hereto.</FONT></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>11.
</FONT><U><FONT face=serif size=2><STRONG>Waiver</STRONG></FONT></U><FONT face=serif size=2><STRONG>.</STRONG> The failure or delay of the Company at any
time or times to require performance of, or to exercise any of its powers,
rights or remedies with respect to, any term or provision of this Agreement or
any other aspect of Employee&#146;s conduct or employment shall not affect the
Company&#146;s right to later enforce any such term or provision.</FONT></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>12.
</FONT><U><FONT face=serif size=2><STRONG>Assignment</STRONG></FONT></U><FONT face=serif size=2><STRONG>.</STRONG> The Company shall have the right to assign
this Agreement. This Agreement shall inure to the benefit of, may be enforced
by, and shall be binding on, any and all successors and assigns of the Company,
including, without limitation, by asset assignment, stock sale, merger,
consolidation or other corporate reorganization, and shall be binding on
Employee, his executors, administrators, personal representatives and other
successors in interest. Employee shall not have the right to assign this
Agreement nor any of his rights, powers, duties or obligations
hereunder.</FONT></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>13.
</FONT><B><U><FONT face=serif size=2>Code Section 409A
Standards</FONT></U></B><B><FONT face=serif size=2>. </FONT></B><FONT face=serif size=2>This Agreement, and all other nonqualified deferred compensation plans in
which the Employee participates, are intended to comply with the standards for
nonqualified deferred compensation plans established by Code Section 409A and
its interpretive regulations and other regulatory guidance (the "Section 409A
Standards), to the extent applicable, and this Agreement shall be construed
accordingly. In construing or interpreting any vague or ambiguous provisions of
this Agreement, the interpretation that will prevail is the interpretation that
will cause this Agreement to comply with the Section 409A Standards. Any
provision of this Agreement, or any deferred compensation provided under it,
that would fail to satisfy the Section 409A Standards shall not have any force
or effect until it is amended to comply with the applicable Section 409A
Standards, which amendment may be retroactive to the extent permissible under
the Section 409A Standards.</FONT></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>14.
</FONT><U><FONT face=serif size=2><STRONG>Entire
Agreement</STRONG></FONT></U><FONT face=serif size=2><STRONG>.</STRONG> This
Agreement cancels and supersedes all prior negotiations, discussions,
commitments and understandings between the parties relating hereto, whether oral
or written. This Agreement embodies the entire agreement and understanding
between such parties with respect to the matters covered hereby. Neither party
shall be bound by any term or condition other than as is expressly set forth
herein.</FONT></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>15.
</FONT><U><FONT face=serif size=2><STRONG>Amendment</STRONG></FONT></U><FONT face=serif size=2><STRONG>.</STRONG> This Agreement may be amended only by an
instrument in writing executed by the parties hereto.</FONT></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>16.
</FONT><U><FONT face=serif size=2><STRONG>Governing Law: Forum
Selection</STRONG></FONT></U><FONT face=serif size=2><STRONG>.</STRONG> This
Agreement shall be construed and enforced in accordance with and governed by the
laws of the State of Indiana, without regard to the conflicts of law rules
thereof. Any legal action relating to this Agreement shall be</FONT></P>
<P align=center><FONT face=serif size=2>-14-</FONT></P>
<HR align=center width="100%" noShade SIZE=2>
<PAGE>
<P align=left><FONT face=serif size=2>commenced and maintained exclusively
before any appropriate state court of record in Vanderburgh County, Indiana, or,
if necessary because of a federal question mandating jurisdiction in the federal
courts is involved, the United States District Court for the Southern District
of Indiana, Evansville Division, and the parties hereby submit the jurisdiction
of such courts and waive any right to challenge or otherwise raise questions of
personal jurisdiction or venue in any action commenced or maintained in such
courts.</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>17. </FONT><U><FONT face=serif size=2><STRONG>Severability</STRONG></FONT></U><FONT face=serif size=2><STRONG>.</STRONG> The parties intend that the provisions of this
Agreement shall be enforced to the fullest extent permissible under the
applicable law. Should any provision of this Agreement be unenforceable or
invalid for any reason, such unenforceability or invalidity shall not affect the
enforceability or validity of the remainder of the Agreement.</FONT></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>IN
WITNESS WHEREOF, the parties hereto have executed this Amended and Restated
Employment and Noncompetition Agreement on this 11th. day of December,
2008.</FONT></P>
<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD noWrap align=left width="45%" colSpan=2><FONT face=serif size=2>SHOE
      CARNIVAL, INC.: "Company"</FONT>&nbsp; </TD>
    <TD noWrap align=left width="11%"></TD>
    <TD noWrap align=left width="44%" colSpan=2><FONT face=serif size=2>CLIFTON E. SIFFORD: "Employee"</FONT>&nbsp; </TD></TR>
  <TR>
    <TD width="100%" colSpan=5>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"><FONT face=serif size=2>By:</FONT>&nbsp;
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="44%"><FONT face=serif size=2>&nbsp; /s/ Mark L. Lemond</FONT>&nbsp;
    </TD>
    <TD noWrap align=left width="11%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="44%" colSpan=2><FONT size=2><FONT face=serif>&nbsp; /s/ Clifton E.
      Sifford</FONT></FONT>&nbsp; </TD></TR>
  <TR>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=left width="44%"></TD>
    <TD noWrap align=left width="11%"></TD>
    <TD noWrap align=left width="44%" colSpan=2></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"><FONT face=serif size=2>Its:</FONT>&nbsp;
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="44%"><FONT face=serif size=2>&nbsp; CEO and President</FONT>&nbsp;
    </TD>
    <TD noWrap align=left width="11%">&nbsp;&nbsp;&nbsp; &nbsp;&nbsp; </TD>
    <TD noWrap align=left width="1%"><FONT face=serif size=2>Date:</FONT>&nbsp;&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="43%"><FONT face=serif size=2>&nbsp; December 11, 2008</FONT>&nbsp;
    </TD></TR>
  <TR>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=left width="44%"></TD>
    <TD noWrap align=left width="11%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="43%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"><FONT face=serif size=2>Date:</FONT>&nbsp;&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="44%"><FONT face=serif size=2>&nbsp; December 11, 2008</FONT>&nbsp;
    </TD>
    <TD noWrap align=left width="11%"></TD>
    <TD noWrap align=left width="1%">&nbsp; </TD>
    <TD noWrap align=left width="43%">&nbsp;</TD></TR></TABLE>


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<DOCUMENT>
<TYPE>EX-10.4
<SEQUENCE>5
<FILENAME>exhibit10-4.htm
<DESCRIPTION>AMENDED AND RESTATED EMPLOYMENT AND NONCOMPETITION AGREEMENT
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<P align=right><FONT face=serif size=2>Exhibit 10.4</font></p>
<P align=center><B><FONT face=serif size=2>AMENDED AND RESTATED EMPLOYMENT AND
NONCOMPETITION AGREEMENT </FONT></B></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>This
AMENDED AND RESTATED EMPLOYMENT AND </FONT><FONT face=serif size=2>NONCOMPETITION AGREEMENT (the "Agreement") is an amendment and complete
restatement of the Employment and Noncompetition Agreement made and entered into
as of the 31st day of December, 2006, by and between </FONT><B><FONT face=serif size=2>SHOE CARNIVAL, INC</FONT></B><FONT face=serif size=2>., an Indiana
corporation with its principal offices located at 7500 East Columbia Street,
Evansville, Indiana (the "Company"), and </FONT><B><FONT face=serif size=2>W.
KERRY JACKSON</FONT></B><FONT face=serif size=2>, an individual residing at 6666
Hillsgate Court, Newburgh, Indiana (the "Employee"). This restatement is
intended to conform the Agreement to the applicable provisions of the final
regulations interpreting Section 409A of the Internal Revenue Code of 1986, as
amended ("Code") and Revenue Ruling 2008-13. </FONT></P>
<P align=center><B><U><FONT face=serif size=2>RECITALS</FONT></U></B><B><FONT face=serif size=2> </FONT></B></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><STRONG>WHEREAS</STRONG></FONT><FONT face=serif size=2>, the Company is one of the leading retailers of family shoes
in the United States;</FONT></P>
<P align=left><FONT face=serif size=2></FONT><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><STRONG>WHEREAS</STRONG></FONT><FONT face=serif size=2>, the Company desires to retain the services of the Employee
upon the terms and conditions set forth herein; and</FONT></P>
<P align=left><FONT face=serif size=2></FONT><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><STRONG>WHEREAS</STRONG></FONT><FONT face=serif size=2>, the Employee desires to be so employed by the Company, to be
eligible for opportunities of advancement, potential compensation increases and
the potential payments provided for herein; and</FONT></P>
<P align=left><FONT face=serif size=2></FONT><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><STRONG>WHEREAS</STRONG></FONT><FONT face=serif size=2>, the Company and the Employee desire to enter into this
Agreement to set forth the terms and conditions of the employment relationship
between the Company and the Employee; and</FONT></P>
<P align=left><FONT face=serif size=2></FONT><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><STRONG>WHEREAS</STRONG></FONT><FONT face=serif size=2>, in connection with its business, the Company has expended a
substantial amount of time, money, and effort to develop and maintain its
confidential, proprietary and trade secret information, and that this
information, if misused or disclosed, could be very harmful to Company&#146;s
business and its competitive position in the marketplace. </FONT></P>
<P align=center><B><U><FONT face=serif size=2>AGREEMENT</FONT></U></B><B><FONT face=serif size=2> </FONT></B></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>1.
</FONT><B><U><FONT face=serif size=2>Term of Employment</FONT></U></B><FONT face=serif size=2>. The Company hereby agrees to employ </FONT><FONT face=serif size=2>Employee and Employee hereby agrees to be employed by the Company, in
accordance with the terms and conditions herein, for a period commencing on the
effective date of this Agreement up to and through January 31, 2009, subject,
however, to earlier termination as expressly provided in this Agreement (such
term, including any extension thereof, shall herein be referred to as the
"Term"). This Agreement shall be renewed automatically for successive terms of
one (1) year each unless either party provides written notice of non-renewal to
the other party not more than ninety (90) days and not less than thirty (30)
days before the end of the then current Term.</FONT></P>
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<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>2.
</FONT><B><U><FONT face=serif size=2>Scope of Duties</FONT></U></B><FONT face=serif size=2>. The Employee is currently serving in the position of
Executive Vice President, Chief Financial Officer. During the Term, the Employee
agrees to perform such other services for the Company as may be directed by any
superior officer of the Company, and to assume such other title, duties and/or
responsibilities as the Board of Directors may determine. The Employee shall be
supportive of the Company's business and its best interests and shall not,
directly or indirectly, take any action which could reasonably be expected to
have an adverse effect upon the business or best interests of the Company. The
Employee covenants that he will at all times honestly and fairly conduct his
duties, and will at all times maintain the highest of professional standards in
representing the interests of the Company. The Employee will comply with Company
policies, decisions, and instructions, which may be changed by the Company over
time. Employee shall perform all duties incident to his position, as well as any
other duties as may from time to time be assigned by the President of the
Company or his designee, and agrees to abide by all By-laws, policies,
practices, procedures or rules of the Company.</FONT></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>3.
</FONT><B><U><FONT face=serif size=2>Compensation of
Employee</FONT></U></B><FONT face=serif size=2>. For all services rendered by
the Employee under this Agreement, the Company shall compensate the Employee as
follows: </FONT></P>
<P style="PADDING-LEFT: 16px" align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>3.1
</FONT><B><U><FONT face=serif size=2>Base Salary</FONT></U></B><FONT face=serif size=2>. The base salary payable to the Employee under this Agreement shall be
that amount of base salary payable as of the effective date of this Agreement
("Base Salary"), payable in accordance with the Company's usual payroll
procedures, and subject to all taxes, withholdings and deductions as required by
law and as the Employee may authorize. The Company will review the Base Salary
on a periodic basis, approximately annually, during the Term to determine, in
the discretion of the Company, whether the Base Salary should be adjusted, and
if so, the amount of such adjustment and the time at which such adjustment
should take effect.</FONT></P>
<P style="PADDING-LEFT: 16px" align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>3.2
</FONT><B><U><FONT face=serif size=2>Incentive Bonus</FONT></U></B><FONT face=serif size=2>. The Employee is entitled to participate in the Company&#146;s
2006 Executive Incentive Compensation Plan in accordance with the terms
contained therein, and in any successor plan adopted by the Company from time to
time. However, Employee agrees that the failure of the Company to award any such
bonus and/or other incentive compensation shall not give rise to any claim
against the Company. </FONT></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>4.
</FONT><B><U><FONT face=serif size=2>Additional Compensation, Benefits, and
Obligations</FONT></U></B><FONT face=serif size=2>. During the Term, and so long
as the Employee serves in the position of Executive Vice President, Employee is
entitled to participate in any and all employee welfare and health benefit plans
(including, but not limited to, life insurance, health and medical, dental and
disability plans, and executive supplemental medical coverage) and other
employee benefit plans, including but not limited to, qualified pension plans,
stock purchase plans, and nonqualified deferred compensation plans, established
by the Company from time to time for the benefit of executives at his level and
position; provided, however, the Employee's participation in such plans is
subject to the eligibility requirements and other terms of such plans. The
Company may change, amend or discontinue any of its employee welfare and health
benefit plans at any time during the Term, and nothing in this Agreement shall
obligate the Company to institute, maintain or refrain from changing, amending
or discontinuing any such plans or programs. </FONT></P>
<P align=center><FONT face=serif size=2>-2- </FONT></P>
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<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>5.
</FONT><B><U><FONT face=serif size=2>Termination of
Employment</FONT></U></B><FONT face=serif size=2>. Employee&#146;s employment may be
terminated as follows: </FONT></P>
<P style="PADDING-LEFT: 16px" align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>5.1
</FONT><B><U><FONT face=serif size=2>For Cause</FONT></U></B><FONT face=serif size=2>. The Company may terminate Employee&#146;s employment at any time effective
immediately for "Cause." As used in this Agreement, the term "Cause" means the
occurrence of any one or more of the following events: (i) Employee's conviction
for a felony or other crime involving moral turpitude; (ii) Employee's engaging
in illegal conduct or gross misconduct which is injurious to the Company; (iii)
Employee's engaging in any fraudulent or dishonest conduct in his dealings with,
or on behalf of, the Company; (iv) Employee's failure or refusal to follow the
lawful and reasonable instructions of the Company's Chief Executive Officer,
President, or other executive officer to whom Employee reports, if such failure
or refusal continues for a period of ten (10) days after the Company delivers to
Employee a written notice stating the instructions which Employee has failed or
refused to follow; (v) Employee's material breach of any of his obligations
under this Agreement; (vi) Employee's material breach of the Company's policies;
(vii) Employee's use of alcohol or drugs which interferes with the performance
of his duties for the Company or which compromises the integrity or reputation
of the Company; or (viii) Employee's engaging in any conduct tending to bring
the Company into public disgrace or disrepute.</FONT></P>
<P style="PADDING-LEFT: 16px" align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>5.2
</FONT><B><U><FONT face=serif size=2>Unilateral &#150; The
Company</FONT></U></B><FONT face=serif size=2>. The Company may terminate
Employee&#146;s employment at any time without Cause.</FONT></P>
<P style="PADDING-LEFT: 16px" align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>5.3
</FONT><B><U><FONT face=serif size=2>Unilateral - Employee</FONT></U></B><FONT face=serif size=2>. Employee may terminate his employment at any time with the
Company by providing the Company with thirty (30) days' advance written notice
of such termination. At the sole option of the Company, such termination will be
considered effective on the date such notice is given.</FONT></P>
<P style="PADDING-LEFT: 16px" align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>5.4
</FONT><B><U><FONT face=serif size=2>For Good Reason -
Employee</FONT></U></B><FONT face=serif size=2>. At any time during the Term,
Employee may terminate this Agreement for Good Reason if all of the following
conditions are satisfied: (a) Employee gives the Company a written notice of
termination, which describes in reasonable detail the condition claimed to
constitute Good Reason, within thirty (30) calendar days of the initial
existence of the condition claimed to constitute Good Reason; (b) the Company
does not remedy the condition within thirty (30) calendar days of the Company&#146;s
receipt of Employee&#146;s written notice of termination (the &#147;Good Reason Cure
Period&#148;); and (c) Employee gives the Company a second written notice of
termination within thirty (30) calendar days following the expiration of the
Good Reason Cure Period. For purposes of this Agreement, for &#147;Good Reason" means
the occurrence, without Employee&#146;s written consent, of a material reduction by
the Company in Employee&#146;s Base Salary. Termination of this Agreement without
Cause or for Good Reason shall not be deemed to be a voluntary termination by
Employee for purposes of any stock option or equity incentive plans of the
Company.</FONT></P>
<P style="PADDING-LEFT: 16px" align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>5.5
</FONT><B><U><FONT face=serif size=2>Disability or Death</FONT></U></B><FONT face=serif size=2>. If Employee suffers a "Disability," the Company shall have
the right to terminate Employee's employment by delivering to </FONT></P>
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<P style="PADDING-LEFT: 16px" align=left><FONT face=serif size=2>Employee a
written notice of the Company's intent to terminate for Disability, specifying
in such notice a termination date not less than ten (10) calendar days after the
giving of the notice (the "Disability Notice Period"). The Employee's employment
shall terminate at the close of business on the last day of the Disability
Notice Period. For purpose of this Agreement, the term "Disability" shall mean
either (a) when Employee is deemed disabled in accordance with the long-term
disability insurance policy or plan of the Company in effect at the time of the
illness or injury causing the Disability, or (b) the inability of Employee,
because of injury, illness, disease or bodily or mental infirmity, to perform
the essential functions of his job (with reasonable accommodation) for more than
one hundred twenty (120) consecutive days. The existence of a Disability shall
be determined by the Company. If the Employee should die during the Term, this
</FONT><FONT face=serif size=2>Agreement shall terminate as of the date of
Employee's death.</FONT></P>
<P style="PADDING-LEFT: 16px" align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>5.6
</FONT><B><U><FONT face=serif size=2>Compensation Upon
Termination</FONT></U></B><FONT face=serif size=2>. In the event of termination
of Employee&#146;s employment as set forth herein, and subject to any lawful right of
offset the Company may have against any such benefits, compensation, or
severance amounts owed to Employee, whether the result of promissory notes,
loans, or other financial arrangements the Company may have entered into with or
on the Employee&#146;s behalf, and which are or would become due and payable on or
after the termination date, to include the principal and interest pursuant to
such arrangements (which right of offset cannot be inconsistent with the
standards for nonqualified deferred compensation plans under Code Section 409A,
to the extent applicable), the Parties agree that the following terms shall be
the exclusive severance arrangements:&nbsp;</FONT></P>
<P style="PADDING-LEFT: 32px" align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>5.6.1 In the event of termination
of Employee's employment by the Company for Cause pursuant to Section 5.1 or
unilateral termination by the Employee pursuant to Section 5.3, the Company's
obligation to pay and provide Employee compensation and benefits under this
Agreement shall immediately terminate, except: (a) Employee shall be entitled to
receive that portion of his then Base Salary which shall have been earned
through the termination date; and (b) the Company shall pay or provide Employee
such other payments and benefits, if any, which had accrued hereunder before the
termination date. Other than the foregoing, the Company shall have no further
obligations to Employee under this Agreement.&nbsp;</FONT></P>
<P style="PADDING-LEFT: 32px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>5.6.2 In the event the Company terminates Employee's
employment without Cause pursuant to Section 5.2 or Employee terminates for Good
Reason pursuant to Section 5.4 within thirty (30) calendar days of the
expiration of the Good Reason Cure Period , at any time other than the two (2)
year period immediately following a "Change in Control," the Company's
obligation to pay and provide Employee compensation and benefits under this
Agreement shall immediately terminate, except: (a) Employee shall be entitled to
receive that portion of his then Base Salary which shall have been earned
through the termination date; (b) the Company shall pay to Employee, within
thirty (30) calendar days following the date of termination, a lump sum amount
equal to fifty-five percent (55%) of the product of (i) times (ii), where (i) is
his annual </FONT></P>
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<P style="PADDING-LEFT: 32px" align=left><FONT face=serif size=2>Base Salary for
the fiscal year in which the termination occurs, and (ii) is a fraction, the
numerator of which is the number of days elapsed in such fiscal year through the
date of termination and the denominator of which is 365; (c) the Company shall
pay or provide Employee such other payments and benefits, if any, which had
accrued hereunder before the termination date; (d) the Company shall pay to
Employee, within thirty (30) calendar days following the termination date, a
lump sum payment in an amount equal to one hundred fifty percent (150%) of
Employee's Base Salary for the fiscal year in which the termination occurs; (e)
the Company shall pay Employee, within thirty (30) calendar days following the
termination date, a lump sum payment in an amount equal to the total of (i) plus
(ii), where (i) equals eighteen (18) times the monthly &#147;COBRA Premium Rate&#148;
(which is the monthly amount charged, as of the termination date, for COBRA
continuation coverage under the Company's group medical and dental plans for the
coverage options and coverage levels applicable to Employee and his covered
dependents immediately prior to the termination date), and (ii) is an additional
amount equal to the additional state and federal taxes that the Company
determines Employee will incur as a result of the payment of the lump sum
payment provided under this Section 5.6.2(e); (f) with respect to Company stock
options granted after the date of this Agreement, Employee would immediately
vest in any option that would have vested within twelve (12) months of
Employee&#146;s termination date had Employee not been terminated, and such option
may be exercised pursuant to the provisions of the then current Company Stock
Option and Incentive Plan (&#147;Stock Option Plan&#148;) as if the option were vested at
the date of termination; and (g) all shares of restricted stock granted to the
Employee after the date of this Agreement, which are not intended to qualify as
&#147;performance based compensation&#148; under Section 162(m) of the Code shall contain
provisions which shall provide for immediate vesting upon Termination without
Cause or for Good Reason. Payment of the severance compensation described in
subpart (d) and (e) of this Section 5.6.2 is subject to the requirements of
Sections 5.9 and 5.10. Other than the foregoing, the Company shall have no
further obligations to Employee under this Agreement.</FONT></P>
<P style="PADDING-LEFT: 32px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>5.6.3 In the event Employee's employment is terminated as a
result of Employee's Death or Disability pursuant to Section 5.5, the Company's
obligation to pay and provide the Employee compensation and benefits under this
Agreement shall immediately terminate except: (a) Employee shall be entitled to
receive that portion of his then Base Salary which shall have been earned
through the termination date; and (b) the Company shall pay or provide Employee
such other payments and benefits, if any, which had accrued hereunder before the
termination date. Other than the foregoing, the Company shall have no further
obligations to Employee under this Agreement.</FONT></P>
<P style="PADDING-LEFT: 32px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>5.6.4 In the event of a "Qualifying Termination" within two
(2) years immediately following a "Change In Control," then, in lieu of all
other benefits under this Agreement, the Company's obligation to pay and provide
Employee compensation and benefits under this Agreement shall immediately
terminate, </FONT></P>
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<P style="PADDING-LEFT: 32px" align=left><FONT face=serif size=2>except: (a)
Employee shall be entitled to receive that portion of his then Base Salary which
shall have been earned through the termination date; (b) the Company shall pay
or provide Employee such other payments and benefits, if any, which had accrued
hereunder before the termination date; (c) the Company shall pay to Employee in
a lump sum not later than thirty (30) calendar days after the termination date
an amount equal to two times one hundred fifty-five percent (155%) of his annual
Base Salary for the fiscal year in which the termination occurs; (d) the Company
shall pay Employee, in a lump sum not later than thirty (30) calendar days after
the termination date, an amount equal to (i) plus (ii), where (i) equals
eighteen (18) times the COBRA Premium Rate and (ii) is an additional amount
equal to the additional state and federal taxes that the Company determines
Employee will incur as a result of the payment of the lump sum payment provided
under this Section 5.6.4(d); (e) the Company shall provide Employee with
reasonable and appropriate out-placement services, as determined and coordinated
by the Company, by paying a fee, not to exceed Two Thousand Five Hundred Dollars
($2,500.00), to an outplacement services provider selected by the Company,
provided that such services shall not extend past the end of the second taxable
year following the taxable year in which the Qualifying Termination occurs; and
(f) Employee shall be allowed to exercise available stock options in accordance
with the Stock Option Plan as if he were terminated without cause pursuant to
the Stock Option Plan. Payment or provision of the severance compensation or
benefits described in subparts (c), (d) and (e) of this Section 5.6.4 is subject
to the requirements of Sections 5.9 and 5.10. Other than the foregoing, the
Company shall have no further obligations to Employee under this Agreement.
</FONT></P>
<P style="PADDING-LEFT: 32px" align=left><FONT face=serif size=2>For purposes of
this Agreement, a "Qualifying Termination" shall mean either (i) a unilateral
termination of Employee by the Company without Cause pursuant to Section 5.2 or
(ii) a termination by Employee for Good Reason pursuant to Section 5.4 within
thirty (30) calendar days of the expiration of the Good Reason Cure Period.
</FONT></P>
<P style="PADDING-LEFT: 32px" align=left><FONT face=serif size=2>For purposes of
this Agreement, "Change In Control" of the Company shall mean and shall be
deemed to have occurred as of the first day any one or more of the following
conditions shall have been satisfied:</FONT></P>
<P style="PADDING-LEFT: 32px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>(A) The acquisition, within a 12-month period ending on the
date of the most recent acquisition, by 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") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act as in
effect from time to time) of thirty percent (30%) or more of either (i) the then
outstanding shares of common stock of the Company or (ii) the combined voting
power of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors; provided, however, that the following
acquisitions shall not constitute an acquisition of control: (a) any acquisition
directly from the </FONT></P>
<P align=center><FONT face=serif size=2>-6- </FONT></P>
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<P style="PADDING-LEFT: 32px" align=left><FONT face=serif size=2>Company
(excluding an acquisition by virtue of the exercise of a conversion privilege),
(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
corporation controlled by the Company, (d) any acquisition by any corporation
pursuant to a reorganization, merger or consolidation, if, following such
reorganization, merger or consolidation, the conditions described in clauses
(i), (ii) and (iii) of subsection (C) of this Section 5.6.4 are satisfied, (e)
any acquisition by any Person who, immediately before the commencement of the
twelve (12) month period, already held beneficial ownership of thirty percent
(30%) or more of the outstanding voting securities of the Company ("Affiliated
Person") or (f) upon the death of any shareholder who, on the date of this
Agreement, is the beneficial owner of 10% or more of the outstanding voting
securities of the Company, any acquisition triggered by the death of such
shareholder by operation of law, by any testamentary bequest or by the terms of
any trust or other contractual arrangement established by such shareholder;
or</FONT></P>
<P style="PADDING-LEFT: 32px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>(B) Individuals who, as of the date hereof, constitute the
Board of Directors of the Company (the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board of Directors of the Company (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
shareholders, 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 either an actual or threatened election contest (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or
other actual or threatened solicitation of proxies or consents by or on behalf
of a Person other than the Board; or</FONT></P>
<P style="PADDING-LEFT: 32px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>(C) Approval by the shareholders of the Company of a
reorganization, merger or consolidation, in each case, unless, following such
reorganization, merger or consolidation, (i) more than fifty percent (50%) of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such reorganization, merger or consolidation and the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then beneficially
owned, directly or indirectly, by all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the outstanding
Company common stock and outstanding Company voting securities immediately prior
to such reorganization, merger or consolidation in substantially the same
proportions as their ownership, immediately prior to such reorganization, merger
or consolidation, of the outstanding Company stock and outstanding Company
voting securities, as the case may be, (ii) no Person (excluding the Company,
any employee benefit plan or related trust of the Company or such corporation
resulting from such reorganization, merger or consolidation and any Person
beneficially owning, </FONT></P>
<P align=center><FONT face=serif size=2>-7- </FONT></P>
<HR align=center width="100%" noShade SIZE=2>
<PAGE>

<P style="PADDING-LEFT: 32px" align=left><FONT face=serif size=2>immediately
prior to such reorganization, merger or consolidation, directly or indirectly,
[thirty percent (30%)] or more of the outstanding Company common stock or
outstanding voting securities, as the case may be) beneficially owns, directly
or indirectly, [thirty percent (30%)] or more of, respectively, the then
outstanding shares of common stock of the corporation resulting from such
reorganization, merger or consolidation or the combined voting power of the then
outstanding voting securities of such corporation entitled to vote generally in
the election of directors and (iii) at least a majority of the members of the
board of directors of the corporation resulting from such reorganization, merger
or consolidation were members of the Incumbent Board at the time of the
execution of the initial agreement providing for such reorganization, merger or
consolidation; or</FONT></P>
<P style="PADDING-LEFT: 32px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>(D) Approval by the shareholders of the Company of (i) a
complete liquidation or dissolution of the Company or (ii) the sale or other
disposition of all or substantially all of the assets of the Company, other than
to a corporation with respect to which following such sale or other disposition
(a) more than fifty percent (50%) of, respectively, the then outstanding shares
of common stock of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who were the beneficial
owners, respectively, of the outstanding Company common stock and outstanding
Company voting securities immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately prior to such
sale or other disposition, of the outstanding Company common stock and
outstanding Company voting securities, as the case may be, (b) no Person
(excluding the Company and any employee benefit plan or related trust of the
Company or such corporation, any Affiliated Person and any Person beneficially
owning, immediately prior to such sale or other disposition, directly or
indirectly, [thirty percent (30%)] or more of the outstanding Company common
stock or outstanding Company voting securities, as the case may be) beneficially
owns, directly or indirectly, [thirty percent (30%)] or more of, respectively,
the then outstanding shares of common stock of such corporation and the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors and (c) at least a
majority of the members of the board of directors of such corporation were
members of the Incumbent Board at the time of the execution of the initial
agreement or action of the Board providing for such sale or other disposition of
assets of the Company. </FONT></P>
<P style="PADDING-LEFT: 32px" align=left><FONT face=serif size=2>Notwithstanding
any other provision of this Section 5.6.4 to the contrary, an occurrence shall
not constitute a Change in Control if it does not constitute a change in the
ownership or effective control of, or in the ownership of a substantial portion
of the assets of, the Company, within the meaning of Code Section
409A(a)(2)(A)(v) and its interpretive regulations. </FONT></P>
<P align=center><FONT face=serif size=2>-8- </FONT></P>
<HR align=center width="100%" noShade SIZE=2>
<PAGE>

<P style="PADDING-LEFT: 16px" align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>5.7
</FONT><B><U><FONT face=serif size=2>Internal Revenue Code
Limits</FONT></U></B><B><FONT face=serif size=2>. </FONT></B><FONT face=serif size=2>Should any payments by the Company to or for the benefit of Employee
under this Agreement constitute an "excess parachute payment" within the meaning
of Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"),
then the Company shall pay Employee an additional amount of money (the "Gross-Up
Payment") that will equal the sum of (a) all excise or other taxes imposed upon
Employee by Section 4999 of the Code (excluding any penalties or interest) and
(b) all additional state and federal taxes, interest and/or penalties
attributable to the additional payments made to Employee pursuant to this
Section 5.7. If an excise tax is imposed pursuant to Section 4999 of the Code,
Employee agrees to immediately notify the Company within ten (10) days of the
event, in writing, and Employee hereby gives the Company the right to challenge
said imposition. Any Gross-Up Payment due under this Section 5.7 shall be paid
in a lump sum as soon as it can be calculated, but in no event later than 30
days after the date the Employee remits the related taxes.&nbsp;</FONT></P>
<P style="PADDING-LEFT: 16px" align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>5.8
</FONT><B><U><FONT face=serif size=2>Payroll Withholdings</FONT></U></B><B><FONT face=serif size=2>. </FONT></B><FONT face=serif size=2>The Company may withhold
from any compensation or benefits payable under this Agreement all federal,
state, city, or other taxes or deductions as may be required pursuant to any law
or governmental regulation or ruling.</FONT></P>
<P style="PADDING-LEFT: 16px" align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>5.9
</FONT><B><U><FONT face=serif size=2>Compliance With Post-Employment
Restrictions</FONT></U></B><FONT face=serif size=2>. If Employee breaches, or
threatens to breach any of the covenants or provisions set forth in Sections 6
and 7 of this Agreement, then in such event the Company shall have the right
immediately and permanently to discontinue payment and provision of any of the
severance compensation and benefits payable under this Agreement. The Employee
and Company acknowledge and agree that such remedy is in addition to, and not in
lieu of, any and all other legal and/or equitable remedies that may be available
to the Company in connection with the Employee's breach or threatened breach of
any of the covenants or provisions of this Agreement.&nbsp;</FONT></P>
<P style="PADDING-LEFT: 16px" align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>5.10
</FONT><B><U><FONT face=serif size=2>Release Agreement</FONT></U></B><FONT face=serif size=2>. As a condition of receiving the severance benefits described
in Sections 5.6.2(c), 5.6.2(d), 5.6.4(c), 5.6.4(d), or 5.6.4(e), Employee will
be required to sign a standard release agreement acceptable to the Company in
which he releases and waives all claims which he may have against the Company or
any affiliate, employee, shareholder, officer, director, agent or representative
of the Company (except for his rights under this Agreement or any other vested
rights Employee may have under any insurance, pension, employee stock ownership
or stock option plans sponsored or made available by the Company). The Company
will provide such release agreement to Employee at the termination of Employee's
employment with the Company. As part of the release agreement, Employee will be
required (a) to agree to cooperate with the Company with respect to any business
matters about which he has knowledge, including any litigation or threatened
litigation, (b) agree not to cooperate with any claimants against the Company
unless required by law to do so, (c) agree not to make any negative or
derogatory comments about the Company or its executives and (d) affirm his
post-termination obligations under this Agreement, including without limitation
the obligations set forth in Sections 6 and 7. </FONT></P>
<P align=center><FONT face=serif size=2>-9- </FONT></P>
<HR align=center width="100%" noShade SIZE=2>
<PAGE>

<P style="PADDING-LEFT: 16px" align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>5.11
</FONT><B><FONT face=serif size=2><U>Delay of Separation Payments to Specified
Employee</U>. </FONT></B><FONT face=serif size=2>Notwithstanding any other
provisions of this Agreement, if any amount payable to Employee under this
Agreement on account of Employee's separation from service with the Company
constitutes deferred compensation within the meaning of Code Section 409A, and
Employee is a specified employee, within the meaning of Code Section
409A(a)(2)(B)(i), on the date of his separation from service, payment of the
amount shall be delayed until the first business day that is at least six (6)
months after the date on which Employee's separation from service
occurred.</FONT></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>6.
</FONT><B><U><FONT face=serif size=2>Non-competition</FONT></U></B><B><FONT face=serif size=2>.</FONT></B><FONT face=serif size=2> </FONT></P>
<P style="PADDING-LEFT: 16px" align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>6.1
</FONT><B><U><FONT face=serif size=2>General</FONT></U></B><FONT face=serif size=2>. Employee acknowledges that his position with the Company is special,
unique and intellectual in character and his position in the Company places him
in a position of confidence and trust with employees and customers of the
Company. Employee further acknowledges, recognizes, and represents receipt of
sufficient consideration for these restraints in the form of the Base Salary and
other valuable consideration contained herein. The restrictions and obligations
contained in this Section 6 shall survive the Term of this Agreement.
Notwithstanding the above, if the Company terminates, or elects not to renew
this Agreement, and subsequently terminates Employee&#146;s employment without the
payment of severance payments equivalent to 100% of Employee&#146;s Base Salary in
effect at the time of termination, which shall be payable in lump sum, the
Employee will not be subject to the restrictions and obligations of this Section
6.</FONT></P>
<P style="PADDING-LEFT: 16px" align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>6.2
</FONT><B><U><FONT face=serif size=2>Non-competition</FONT></U></B><FONT face=serif size=2>. Employee agrees that during his employment with the Company
and for a period of one (1) year</FONT><B><FONT face=serif size=2>
</FONT></B><FONT face=serif size=2>immediately after the termination of
Employee&#146;s employment with the Company, whether such employment is pursuant to
this Agreement or is without an Agreement, thereafter Employee shall
not:&nbsp;</FONT></P>
<P style="PADDING-LEFT: 32px" align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>6.2.1 Either alone or in concert
with others, whether as director, officer, consultant, principal, employee,
agent or otherwise, engage in or contribute Employee&#146;s knowledge and abilities
to any business or entity in competition with the Company (&#147;Competing
Business&#148;);</FONT></P>
<P style="PADDING-LEFT: 32px" align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>6.2.2 Be employed by, work for,
consult with, or act in any other capacity for, any person or entity that is
engaged in any Competing Business if in such employment, work or capacity
Employee likely would, because of the nature of his position with, or work for,
the competitor and his knowledge of the Company's Confidential Information,
inevitably use and/or disclose any of the Company's Confidential Information in
his work for or with such competitor;</FONT></P>
<P style="PADDING-LEFT: 32px" align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>6.2.3 Solicit, recruit, hire, employ
or attempt to hire or employ any person who is then or within the proceeding one
(1) year period was, an employee of the Company, or otherwise urge, induce or
seek to induce any person to terminate his/her employment with the
Company;</FONT></P>
<P align=center><FONT face=serif size=2>-10- </FONT></P>
<HR align=center width="100%" noShade SIZE=2>
<PAGE>

<P style="PADDING-LEFT: 32px" align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>6.2.4 Solicit, urge, induce or seek
to induce any of the Company's independent contractors, subcontractors, vendors,
suppliers, customers or consultants to terminate their relationship with, or
representation of, the Company or to cancel, withdraw, reduce, limit or in any
manner modify any such person's or entity's business with or representation of,
the Company for whatever purpose or reason;</FONT></P>
<P style="PADDING-LEFT: 32px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>6.2.5 Take any action intended to harm the Company or its
reputation, which the Company reasonably concludes could lead to unwanted or
unfavorable publicity to the Company;</FONT></P>
<P style="PADDING-LEFT: 32px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>6.2.6 The restrictive time periods set forth in this Section
6.2 shall not expire during any period in which Employee is in violation of any
of the restrictive covenants set forth in this Section 6.2, and all restrictions
shall automatically be extended by the period Employee was in violation of any
such restrictions;</FONT></P>
<P style="PADDING-LEFT: 32px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>6.2.7 The restrictive covenants contained in this Section 6.2
prohibit Employee from engaging in certain activities directly or indirectly,
whether on his own behalf or on behalf of any other person or entity.</FONT></P>
<P style="PADDING-LEFT: 32px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>6.2.8 The covenants and restrictions in this Section 6.2 are
separate and divisible, and to the extent any covenant, provision or portion of
Section 6.2 is determined to be unenforceable or invalid for any reason, such
unenforceability or invalidity shall not affect the enforceability or validity
of the remainder of the Agreement. Should any particular covenant, restriction,
provision or portion of Section 6.2 be held unreasonable or unenforceable for
any reason, including, without limitation, the time period, geographical area,
and/or scope of activity covered by any restrictive covenant, provision or
clause, such covenant, provision or clause shall automatically be deemed
reformed such that the contested covenant, provision or portion will have the
closest effect permitted by applicable law to the original form and shall be
given effect and enforced as so reformed to the extent reasonable and
enforceable under applicable law.</FONT></P>
<P style="PADDING-LEFT: 16px" align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>6.3
</FONT><B><U><FONT face=serif size=2>Definition of &#147;Competing
Business</FONT></U></B><B><FONT face=serif size=2>&#148;</FONT></B><FONT face=serif size=2>: The term &#147;Competing Business&#148; shall mean: </FONT></P>
<P style="PADDING-LEFT: 32px" align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>6.3.1 The retail footwear business
of Collective Brands, Inc.; Brown Shoe Company, Inc.; Designer Shoe Warehouse;
Rack Room (dba); Kohls Corporation; Shoe Station (dba); Shoe City (dba); Shoe
Pavilion, Inc., Shoe Department (dba); Finish Line, Inc.; Foot Locker, Inc.;
Dick&#146;s Sporting Goods, Inc.; The Sports Authority, Inc.; Off Broadway Shoe
Warehouse; and any other company which sells footwear at retail to consumers
within 25 miles of any Company store at price points competitive, or likely to
be competitive, with the </FONT></P>
<P align=center><FONT face=serif size=2>-11- </FONT></P>
<HR align=center width="100%" noShade SIZE=2>
<PAGE>

<P style="PADDING-LEFT: 32px" align=left><FONT face=serif size=2>Company, where the footwear sales of
such other company constitute at least fifteen percent (15%) of such company's
annual revenues. </FONT></P>
<P style="PADDING-LEFT: 32px" align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>6.3.2 Ownership of an investment of
less than 5% of any class of equity or debt security of a publicly-held
Competing Business shall not constitute ownership or participation in violation
of the above. </FONT></P>
<P style="PADDING-LEFT: 16px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>6.4</FONT><FONT face=sans-serif size=2> </FONT><B><U><FONT face=serif size=2>Acknowledgment Regarding Restrictions</FONT></U></B><FONT face=serif size=2>. Employee acknowledges and agrees that he understands the
restrictions in Section 6, and that they are reasonable and enforceable, in view
of, among other things, the Employee&#146;s position within the Company, the highly
competitive nature of the Company's business, and the confidential nature of the
information the Employee has been provided. Employee further agrees that the
Company would not have adequate protection if Employee were permitted to work
for its competitors in violation of the terms of this Agreement since the
Company would be unable to verify whether its Confidential Information was being
disclosed and/ or misused, and whether Employee was involved in diverting the
Company&#146;s customers and/or its customer goodwill.&nbsp;</FONT></P>
<P style="PADDING-LEFT: 16px" align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>6.5 </FONT><B><U><FONT face=serif size=2>Disclosures
Concerning New Employment</FONT></U></B><FONT face=serif size=2>. Employee
agrees that he (a) will immediately, within ten (10) days, notify the Company in
writing of his employment, engagement or other affiliation with any other
business or entity during the two (2) years immediately following the
termination of Employee's employment with the Company and (b) will provide a
copy of Section 6 and 7 of this Agreement to any prospective employer before
accepting employment or other work engagement with any such employer.
</FONT></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>7.
</FONT><B><U><FONT face=serif size=2>Confidential or Proprietary
Information</FONT></U></B><B><FONT face=serif size=2> </FONT></B></P>
<P style="PADDING-LEFT: 16px" align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>7.1
</FONT><B><U><FONT face=serif size=2>Confidentiality</FONT></U></B><FONT face=serif size=2>. As used in this Agreement, the term "Confidential
Information" means any and all of the Company's trade secrets, confidential and
proprietary information and all other information and data of the Company that
is not generally known to third persons who could derive economic value from its
use or disclosure, including, without limitation, the Company's profile of
prospective or current vendors or customers, business methods and structure,
details of the Company's contracts and business matters, employee compensation,
personnel information, marketing strategies and plans, business plans, pricing
information and strategies, costs information, and financial data, whether or
not reduced to writing or other tangible medium of expression, including work
product created by Employee in rendering services to the Company. During his
employment with the Company and thereafter, Employee will not use or disclose to
others any of the Confidential Information except as authorized in writing by
the Company or in the performance of work assigned Employee by the Company.
Employee also will abide by the Company's policies protecting the Confidential
Information. Employee's confidentiality obligations shall continue as long as
the Confidential Information remains confidential, and shall not apply to
information which becomes generally known to the public through no fault or
action of Employee. Employee agrees that the Company owns the Confidential
</FONT></P>
<P align=center><FONT face=serif size=2>-12- </FONT></P>
<HR align=center width="100%" noShade SIZE=2>
<PAGE>

<P style="PADDING-LEFT: 16px" align=left><FONT face=serif size=2>Information and
Employee has no rights, title or interest in any of the Confidential
Information. At the Company's request or upon termination of Employee's
employment with the Company for any reason, Employee will immediately deliver to
the Company all materials (including all copies and electronically stored data)
containing any Confidential Information in Employee's possession, custody or
control.&nbsp;</FONT></P>
<P style="PADDING-LEFT: 16px" align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>7.2
</FONT><B><U><FONT face=serif size=2>Trade
Secrets-Developments</FONT></U></B><FONT face=serif size=2>. All improvements,
developments, concepts, and ideas ("Developments") relating to the Company's
business, or capable of beneficial use by the Company, including, but not
limited to, marketing, confidential and trade secret information, techniques,
discoveries, slogans, designs, artwork, and writings, which the Employee has
made or will make during his employment with the Company are the sole and
exclusive property of the Company without charge to the Company other than the
Employee's compensation.&nbsp;</FONT></P>
<P style="PADDING-LEFT: 16px" align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>7.3
</FONT><B><U><FONT face=serif size=2>Acknowledgement</FONT></U></B><FONT face=serif size=2>. Employee agrees that the restrictions set forth in Sections
7.1 and 7.2 are reasonable and necessary to protect the trade secrets,
confidential information, intellectual property rights and goodwill of the
Company. The restrictions and obligations contained in this Section 7 shall
survive the term of this Agreement. </FONT></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>8.
</FONT><B><U><FONT face=serif size=2>Remedies</FONT></U></B><FONT face=serif size=2>. In the event of a breach or threatened breach by the Employee of any of
the above provisions, the Company shall be entitled to an injunction restraining
Employee from such breach, in addition to all other remedies which the Company
shall be entitled to pursue. The Company also shall be entitled to recover from
Employee all litigation costs and attorneys' fees incurred by the Company in any
action or proceeding relating to this Agreement in which the Company prevails,
including, but not limited to, any action or proceeding in which the Company
seeks enforcement of this Agreement or seeks relief from Employee's violation of
this Agreement. Nothing herein shall be construed as prohibiting the Company
from pursuing any other remedies available for such breach, threatened breach,
or any breach of this Agreement. </FONT></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>9.
</FONT><B><U><FONT face=serif size=2>Survival of Post-Termination
Obligations</FONT></U></B><FONT face=serif size=2>. Employee acknowledges and
agrees that his post-termination obligations under this Agreement, including
without limitation Employee's non-competition and confidentiality obligations
set forth in Sections 6 and 7 of this Agreement, shall survive the termination
of Employee's employment with the Company, regardless whether such termination
is voluntary or involuntary, or is with or without Cause. </FONT></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>10.
</FONT><B><U><FONT face=serif size=2>Notices</FONT></U></B><FONT face=serif size=2>. All notices, requests, consents, and other communications under this
Agreement shall be in writing and shall be deemed to have been delivered on the
date personally delivered or the dated mailed, postage prepaid, by certified
mail, return receipt requested, or telegraphed and confirmed, or faxed and
confirmed, if addressed to the respective parties as follows; </FONT></P>
<TABLE cellSpacing=0 cellPadding=0 width="50%" border=0>

  <TR vAlign=bottom>
    <TD noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD noWrap align=left width="49%"><FONT face=serif size=2>To Employee:</FONT>&nbsp; </TD>
    <TD noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD noWrap align=left width="48%"><FONT face=serif size=2>W. Kerry Jackson</FONT>&nbsp;
  </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="49%">&nbsp; </TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="48%"><FONT face=serif size=2>6666 Hillsgate
      Court</FONT>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="49%">&nbsp; </TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="48%"><FONT face=serif size=2>Newburgh, Indiana
      47630</FONT>&nbsp; </TD></TR></TABLE><BR>
<P align=center><FONT face=serif size=2>-13- </FONT></P>
<HR align=center width="100%" noShade SIZE=2>
<PAGE>
<BR>
<TABLE cellSpacing=0 cellPadding=0 width="50%" border=0>

  <TR vAlign=bottom>
    <TD noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD noWrap align=left width="49%"><FONT face=serif size=2>To Company:</FONT>&nbsp; </TD>
    <TD noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD noWrap align=left width="49%"><FONT face=serif size=2>Chief Executive
      Officer</FONT>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="49%">&nbsp; </TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="49%"><FONT face=serif size=2>Shoe Carnival, Inc.</FONT>&nbsp;
    </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="49%">&nbsp; </TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="49%"><FONT face=serif size=2>7500 East Columbia
      Street</FONT>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="49%">&nbsp;&nbsp;</TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="49%"><FONT face=serif size=2>Evansville, Indiana
      47715</FONT>&nbsp; </TD></TR></TABLE><BR>
<P align=left><FONT face=serif size=2>Either party hereto may designate a
different address by providing written notice of such new address to the other
party hereto. </FONT></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT>11.
</FONT><B><U><FONT face=serif size=2>Waiver</FONT></U></B><FONT face=serif size=2>. The failure or delay of the Company at any time or times to require
performance of, or to exercise any of its powers, rights or remedies with
respect to, any term or provision of this Agreement or any other aspect of
Employee&#146;s conduct or employment shall not affect the Company&#146;s right to later
enforce any such term or provision. </FONT></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT>12.
</FONT><B><U><FONT face=serif size=2>Assignment</FONT></U></B><FONT face=serif size=2>. The Company shall have the right to assign this Agreement. This
Agreement shall inure to the benefit of, may be enforced by, and shall be
binding on, any and all successors and assigns of the Company, including,
without limitation, by asset assignment, stock sale, merger, consolidation or
other corporate reorganization, and shall be binding on Employee, his executors,
administrators, personal representatives and other successors in interest.
Employee shall not have the right to assign this Agreement nor any of his
rights, powers, duties or obligations hereunder. </FONT></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT>13.
</FONT><B><U><FONT face=serif size=2>Code Section 409A
Standards</FONT></U></B><B><FONT face=serif size=2>. </FONT></B><FONT face=serif size=2>This Agreement, and all other nonqualified deferred compensation plans in
which the Employee participates, are intended to comply with the standards for
nonqualified deferred compensation plans established by Code Section 409A and
its interpretive regulations and other regulatory guidance (the "Section 409A
Standards"), to the extent applicable, and this Agreement shall be construed
accordingly. In construing or interpreting any vague or ambiguous provisions of
this Agreement, the interpretation that will prevail is the interpretation that
will cause this Agreement to comply with the Section 409A Standards. Any
provision of this Agreement, or any deferred compensation provided under it,
that would fail to satisfy the Section 409A Standards shall not have any force
or effect until it is amended to comply with the applicable Section 409A
Standards, which amendment may be retroactive to the extent permissible under
the Section 409A Standards. </FONT></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT>14.
</FONT><B><U><FONT face=serif size=2>Entire Agreement</FONT></U></B><FONT face=serif size=2>. This Agreement cancels and supersedes all prior
negotiations, discussions, commitments and understandings between the parties
relating hereto, whether oral or written. This Agreement embodies the entire
agreement and understanding between such parties with respect to the matters
covered hereby. Neither party shall be bound by any term or condition other than
as is expressly set forth herein. </FONT></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT>15.
</FONT><B><U><FONT face=serif size=2>Amendment</FONT></U></B><FONT face=serif size=2>. This Agreement may be amended only by an instrument in writing executed
by the parties hereto. </FONT></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT>16.
</FONT><B><U><FONT face=serif size=2>Governing Law: Forum
Selection</FONT></U></B><FONT face=serif size=2>. This Agreement shall be
construed and enforced in accordance with and governed by the laws of the State
of Indiana, without regard to the conflicts of law rules thereof. Any legal
action relating to this Agreement shall be </FONT></P>
<P align=center><FONT face=serif size=2>-14- </FONT></P>
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<PAGE>

<P align=left><FONT face=serif size=2>commenced and maintained exclusively
before any appropriate state court of record in Vanderburgh County, Indiana, or,
if necessary because of a federal question mandating jurisdiction in the federal
courts is involved, the United States District Court for the Southern District
of Indiana, Evansville Division, and the parties hereby submit the jurisdiction
of such courts and waive any right to challenge or otherwise raise questions of
personal jurisdiction or venue in any action commenced or maintained in such
courts. </FONT></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT>17.
</FONT><B><U><FONT face=serif size=2>Severability</FONT></U></B><FONT face=serif size=2>. The parties intend that the provisions of this Agreement shall be
enforced to the fullest extent permissible under the applicable law. Should any
provision of this Agreement be unenforceable or invalid for any reason, such
unenforceability or invalidity shall not affect the enforceability or validity
of the remainder of the Agreement. </FONT></P>
<P align=left><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT>IN WITNESS
WHEREOF, the parties hereto have executed this Amended and Restated Employment
and Noncompetition Agreement on this 11th. day of December, 2008. </FONT></P>
<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD noWrap align=left width="45%" colSpan=2><FONT face=serif size=2>SHOE
      CARNIVAL, INC.: "Company"</FONT>&nbsp; </TD>
    <TD noWrap align=left width="10%">&nbsp;</TD>
    <TD noWrap align=left width="44%" colSpan=2><FONT face=serif size=2>W.
      KERRY JACKSON: "Employee"</FONT>&nbsp; </TD></TR>
  <TR>
    <TD width="99%" colSpan=5>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #ffffff 1pt solid" noWrap align=left width="1%"><FONT face=serif size=2>By:</FONT>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="44%"><FONT face=serif size=2>&nbsp; /s/ Mark L. Lemond</FONT>&nbsp;
    </TD>
    <TD noWrap align=left width="10%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="44%" colSpan=2><FONT size=2>&nbsp; <FONT face=serif>/s/</FONT></FONT>&nbsp;
      <FONT face=serif size=2>W. Kerry Jackson</FONT>&nbsp; </TD></TR>
  <TR>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=left width="44%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="43%"></TD></TR>
  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #ffffff 1pt solid" noWrap align=left width="1%"><FONT face=serif size=2>Its:</FONT>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="44%"><FONT face=serif size=2>&nbsp; CEO and President</FONT>&nbsp;
    </TD>
    <TD noWrap align=left width="10%"></TD>
    <TD style="BORDER-BOTTOM: #ffffff 1pt solid" noWrap align=left width="1%"><FONT face=serif size=2>Date:<FONT size=3>&nbsp;</FONT></FONT>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="43%"><FONT face=serif size=2>&nbsp; December 11, 2008</FONT>&nbsp;
    </TD></TR>
  <TR>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="44%">&nbsp;</TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="43%"></TD></TR>
  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #ffffff 1pt solid" noWrap align=left width="1%"><FONT face=serif size=2>Date:<FONT size=3>&nbsp;</FONT></FONT>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="44%"><FONT face=serif size=2>&nbsp; December 11, 2008</FONT>&nbsp;
    </TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%">&nbsp; </TD>
    <TD noWrap align=left width="43%">&nbsp;
</TD></TR></TABLE>
<BR>
<P align=center><FONT face=serif size=2>-15- </FONT></P>
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