EMPLOYMENT AGREEMENT

Exhibit 10.1

EMPLOYMENT AGREEMENT

     THIS AGREEMENT is made this       day of       , 2007 (the “Effective Date”), by and between PAYLESS SHOESOURCE, INC., a Delaware corporation, (“PSS”) and                      (“Executive”).

WITNESSETH :

     WHEREAS, Payless and its related entities are one of the leading retail companies in the United States with self service shoe stores throughout the United States, Puerto Rico and the U.S. Virgin Islands, Guam, Saipan and Canada.

     WHEREAS, PSS conducts its business in part through various direct and indirect subsidiaries (PSS and its subsidiaries and affiliates being collectively referred to as “Payless”).

     WHEREAS, Executive is employed by Payless as a Senior Vice President pursuant to that certain Amended and Restated Employment Agreement dated effective as of                      (the “Prior Employment Agreement”).

     WHEREAS, Executive recognizes and acknowledges that Executive’s position with Payless provides Executive with access to Payless’ proprietary, trade secret and other confidential information relating to its business.

     WHEREAS, Payless has expended a great deal of time, money and effort to develop and maintain its proprietary, trade secret and confidential information; this information, if misused or disclosed, could be very harmful to Payless’ business and its competitive position in the marketplace.

     WHEREAS, Executive recognizes and acknowledges that if Executive’s employment with Payless ceases, Payless needs certain protections to ensure that Executive does not misuse or disclose any proprietary, trade secret or confidential information entrusted to Executive during the course of employment or take any other action which could result in a loss of Payless’ good will that was generated on Payless’ behalf and at its expense, and, more generally, to prevent Executive from having an unfair competitive advantage over Payless.

     WHEREAS, Executive desires to be employed by Payless, to be eligible for potential compensation increases and to be given access to proprietary, trade secret and confidential information of Payless necessary for Executive to perform Executive’s job, but which Payless would not make available but for Executive’s signing and agreeing to abide by the terms of this Agreement.

     WHEREAS, the parties desire to terminate the Prior Employment Agreement in its entirety and to be subject to and bound by the terms and conditions of this Agreement.

     In consideration of the mutual promises and agreements herein contained, and other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1. Term . This Agreement shall commence on the Effective Date and shall expire on May 31, 2009 (the “Contract Term”), unless sooner terminated in accordance with Paragraph 8 hereof. Beginning on May 31, 2007, the Contract Term will be automatically extended each day by one day, until either party delivers to the other written notice of non-renewal.

2. Duties .

     (a) Executive shall perform all duties incident to the position of Senior Vice President, as well as any other duties as may be assigned from time to time by Payless, and agrees to abide by all the by-laws, policies, practices, procedures and rules of Payless. Executive agrees to use Executive’s best efforts, energies and skill to perform the duties and responsibilities of the position, and to this end will devote Executive’s full time and attention exclusively to the business of Payless. Executive may be assigned or transferred to another management position, as designated by Payless, which may or may not provide the same level of responsibility as the initial assignment. [Inasmuch as Executive is a licensed attorney, this Agreement is intended to take into account not only Payless’ needs and interests, but also Executive’s ethical and other duties and responsibilities as an attorney.—only in attorney agreements] This Agreement shall remain in effect and shall apply to Executive, without any need for re-execution, regardless of the Payless subsidiary or business division for which Executive works or provides services, or the duties to which Executive may in the future be assigned.

     (b) At all times during the Contract Term, Executive will maintain Executive’s residence within reasonable access to the Corporate Headquarters of Payless or any division to which Executive may be assigned.

3. Compensation; Benefits .

     (a)  Base Salary . Payless agrees to pay Executive a base salary during the Contract Term at the annual rate of $                      , less applicable taxes and withholding, payable in equal bi-weekly installments, which annual rate will be subject to an annual review, which may result in an increase or decrease in salary, during Payless’ regularly scheduled review time.

     (b)  Incentive Plans . Executive shall be eligible to participate in such annual and long-term plans, programs or arrangements established from time to time for senior executives of Payless (the “Incentive Plans”), in accordance with and subject to all of the terms and provisions of such Incentive Plans.

     (c)  Expenses . Payless shall reimburse Executive for all items of normal business expense incurred by Executive as an employee of Payless in accordance with Payless’ reimbursement policies in effect from time to time.

     (d)  Benefits . Payless has adopted certain welfare benefit plans (including, but not limited to, medical, prescription drug, dental, disability, and life insurance) and has established certain perquisites which may, from time to time, confer rights and benefits on Executive in accordance with their terms. Payless may also, in the future, adopt additional welfare benefit plans, establish additional perquisites, or amend, modify or terminate any of the aforesaid welfare benefit plans and arrangements, all in accordance with their terms and in accordance with applicable law. Unless effectively waived, Executive shall be entitled to whatever rights

and benefits which may be conferred on Executive, from time to time in accordance with the terms of such plans and arrangements.

     (e)  Stock . Executive will be eligible for future grants of restricted stock, stock-settled stock appreciation rights, stock options, or performance units, if any, as may be granted under the terms of the Payless ShoeSource, Inc. 2006 Stock Incentive Plan, in accordance with the criteria established from time to time by the Compensation Committee of the Payless ShoeSource, Inc. Board of Directors.

     (f)  Automobile Allowance . Executive shall be eligible for an automobile allowance as determined by Payless from time to time, paid monthly upon written request. The portion of the allowance that is substantiated as business-related will not be considered taxable.

4. Noncompete .

     (a) At all times during the Contract Term, and for a period of two (2) years immediately following Executive’s last day of employment with Payless, Executive will not directly or indirectly:

     (i) own, manage, operate, finance, join, control, or participate in the ownership, management, operation, financing, or control of, or be a partner in, be employed by, or act as an advisor, consultant, agent, officer, director, or independent contractor for, or otherwise have an interest in, a Competing Business; or

     (ii) solicit, induce, hire, or attempt to aid or assist any person or entity other than Payless in soliciting for employment, offering employment to, or hiring, any employee of Payless or any person who, at any time during the 12 months prior to the solicitation, was employed by Payless.

Nothing in this Paragraph 4(a) shall prevent Executive, however, from performing Executive’s duties and responsibilities for Payless. In addition, ownership of an investment of less than the greater of $25,000 or 1% of any class of equity or debt security of a Competing Business shall not constitute ownership or participation in ownership in violation of Paragraph 4(a)(i). [ Provided Paragraph 4(a) shall not apply to Executive if Executive is employed by or acting as an advisor to a Competing Business solely in Executive’s capacity as a lawyer.—only in attorney agreements]

     (b) The term “Competing Business” shall include, but not be limited to:

     (i) any retail business with gross sales or revenue in the prior fiscal year of more than $25 million (or which is a subsidiary, affiliate or joint venture partner of a business with gross sales or revenue in the prior fiscal year of more than $25 million) which sells footwear or accessories in whole or in part competitive to that sold by Payless (“Competitive Footwear”) (including, without limitation, Wal-Mart Stores, Inc.; Sears Holdings Corporation; Target Corporation; Foot Star, Inc.; DSW, Inc.; Aldo Shoes, Inc.; Ross Stores, Inc.; T.J. Maxx; Off-Broadway Shoes; Burlington Coat Factory Warehouse Corporation; Gennesco Inc.; Brown Shoe Company, Inc.; Shoe Carnival, Inc.; Kohl’s

Corporation; Liz Claiborne, Inc.; Big 5 Sporting Goods Corporation; J.C. Penney Company; Shoe Zone, Limited; Bata, Limited; Shoes.com; Zappos.com) within 10 miles of any Payless store or the store of any wholesale customer of Payless in the United States, or anywhere in any foreign country in which Payless has retail stores or wholesale customers;

     (ii) any franchising or wholesaling business with gross sales or revenues in the prior fiscal year of more than $25 million (or which is a subsidiary, affiliate or joint venture partner of a business with gross sales or revenues in the prior fiscal year of more than $25 million) which sells Competitive Footwear at wholesale to franchisees, retailers or other footwear distributors located within 10 miles of any Payless store or the store of any wholesale customer of Payless in the United States, or anywhere in any foreign country in which Payless has retail stores or wholesale customers;

     (iii) any footwear manufacturing business with gross sales or revenue in the prior fiscal year of more than $25 million (or which is a subsidiary, affiliate or joint venture partner of a business with gross sales or revenue in the prior fiscal year of more than $25 million) which sells Competitive Footwear to retailers, wholesale customers, or other footwear distributors located within 10 miles of any Payless store or the store of any wholesale customer of Payless in the United States, or anywhere in any foreign country in which Payless has retail stores or wholesale customers (including, without limitation, Nine West Shoes; Dexter Shoe Company; Liz Claiborne, Inc.; Wolverine Worldwide, Inc.; Timberland Company; Nike, Inc.; Reebok International, Ltd.; K-Swiss, Inc.; and adidas-Salomon AG); or

     (iv) any business which provides buying office services to any store or group of stores or businesses referred to in Paragraph 4(b).

     (c) Background of non-compete restrictions:

     (i) In connection with its business, Payless has expended a great deal of time, money and effort to develop and maintain its proprietary, trade secret and confidential information; this information, if misused or disclosed, could be very harmful to Payless’ business and its competitive position in the marketplace;

     (ii) Executive recognizes and acknowledges that Executive’s position with Payless provides Executive with access to Payless’ proprietary, trade secret, and confidential information;

     (iii) Payless compensates its employees to, among other things, develop and preserve goodwill and relationships on Payless’ behalf and to develop and preserve business information for Payless’ exclusive ownership and use;

     (iv) long-term customer and supplier relationships often can be difficult to develop and require a significant investment of time, effort and expense; and

     (v) Executive recognizes and acknowledges that if Executive’s employment with Payless were to cease, Payless would need certain protections in order to ensure that Executive does not appropriate or use any confidential and proprietary trade secret information entrusted to Executive during the course of employment or take any other action which could result in a loss of Payless’ goodwill that was generated on Payless’ behalf and at its expense, and, more generally, to prevent Executive from having an unfair competitive advantage over Payless.

     (d) Reasonableness of non-compete restrictions. Executive acknowledges and agrees that the restrictions in Paragraph 4 are reasonable and that such restrictions are enforceable in view of the background for the non-compete restrictions set forth in the Paragraph 4(c), and in view of, among other things, the following:

     (i) the markets in which Payless operates its businesses;

     (ii) the proprietary, trade secret, and other confidential business information to which Executive has or will have access;

     (iii) Executive’s training and background, which are such that neither Payless nor Executive believes that the restraint will pose an undue hardship on the Executive or prevent Executive from finding suitable non-competitive employment during the specified period of non-competition;

     (iv) a Competing Business could benefit greatly if it were to obtain Payless’ proprietary, trade secret, and other confidential business information;

     (v) Payless would not have adequate protection if Executive is permitted to work for any Competing Business in violation of this Agreement since Payless would be unable to verify whether its proprietary, trade secret, and other confidential business information was being disclosed or misused;

     (vi) the limited duration and limited scope of, and the limited activities prohibited by, the restrictions in Paragraph 4; and

     (vii) Payless’ legitimate interests in protecting its proprietary, trade secret, and other confidential business information, goodwill and relationships.

     (e) If Executive violates Executive’s obligations under Paragraph 4, then Payless shall be entitled to all legal and equitable rights and remedies under this Agreement, including all of its rights and remedies referred to in Paragraph 10 of this Agreement. Further, any time in which Executive is in violation of Executive’s obligations shall not count toward satisfying the time during which any injunctive restriction shall apply. For example, if Executive were to join a competitor in violation of the restrictions in Paragraph 4(a) and work for such competitor for one month before a court enjoined such violation, then the two year time period of the restriction would begin when such injunction were issued; the one month in which Executive violated the restriction would not count toward the time that the restriction applies.

     (f) Executive agrees to provide a copy of this Agreement (with Paragraph 3(a) redacted, if desired) to any prospective