diff --git a/examples/osgkdtree/osgkdtree.cpp b/examples/osgkdtree/osgkdtree.cpp
index b5676dcd2..2e860d85c 100644
--- a/examples/osgkdtree/osgkdtree.cpp
+++ b/examples/osgkdtree/osgkdtree.cpp
@@ -16,6 +16,11 @@
 *  THE SOFTWARE.
 */
 
+  
+#include <osgDB/ReadFile>
+
+#define _GLIBCXX_DEBUG
+
 #include <osg/ArgumentParser>
 #include <osg/ApplicationUsage>
 #include <osg/Timer>
@@ -24,7 +29,6 @@
 #include <osg/io_utils>
 #include <osg/Geometry>
 
-#include <osgDB/ReadFile>
 
 #include <osgUtil/IntersectionVisitor>
 #include <osgUtil/LineSegmentIntersector>
@@ -35,6 +39,7 @@
 
 #include <iostream>
 
+
 namespace osg
 {
 
@@ -42,7 +47,22 @@ class KDNode
 {
     public:
     
-        typedef short value_type;
+        KDNode():
+            _leftChild(0),
+            _rightChild(0) {}
+    
+        KDNode(const KDNode& rhs):
+            _leftChild(rhs._leftChild),
+            _rightChild(rhs._rightChild) {}
+
+        KDNode& operator = (const KDNode& rhs)
+        {
+            _leftChild = rhs._leftChild;
+            _rightChild = rhs._rightChild;
+            return *this;
+        }
+
+        typedef int value_type;
 
         value_type _leftChild;
         value_type _rightChild;
@@ -52,7 +72,7 @@ class KDLeaf : public osg::Referenced
 {
     public:
     
-        KDLeaf();
+        KDLeaf() {}
     
         typedef unsigned int index_type;
         typedef std::vector< index_type > Indices;
@@ -79,6 +99,54 @@ class KDTree : public osg::Shape
         typedef std::vector< unsigned int > AxisStack;
         typedef std::vector< KDNode > KDNodeList;
         typedef std::vector< osg::ref_ptr<KDLeaf> > KDLeafList;
+        
+        
+        /// note, leafNum is negative to distinguish from nodeNum
+        int addLeaf(KDLeaf* leaf) { int num = _kdLeaves.size(); _kdLeaves.push_back(leaf); return -(num+1); }
+
+        int replaceLeaf(int leafNum, KDLeaf* leaf)
+        {
+            int num = -leafNum-1; 
+            
+            if (num>_kdLeaves.size()-1)
+            {
+                osg::notify(osg::NOTICE)<<"Warning: replaceChild("<<leafNum<<", leaf), num = "<<num<<" _kdLeaves.size()="<<_kdLeaves.size()<<std::endl;
+                return leafNum;
+            }
+            
+            _kdLeaves[num] = leaf; return leafNum;
+        }
+
+        /// note, leafNum is negative to distinguish from nodeNum
+        KDLeaf* getLeaf(int leafNum)
+        {
+            int num = -leafNum-1;
+            if (num<0 || num>_kdLeaves.size()-1)
+            {
+                osg::notify(osg::NOTICE)<<"Warning: getLeaf("<<leafNum<<", num = "<<num<<") _kdLeaves.size()="<<_kdLeaves.size()<<std::endl;
+                return 0;
+            }
+
+            return _kdLeaves[num].get();
+        }
+        
+        int addNode(const KDNode& node)
+        {
+            int num = _kdNodes.size(); 
+            _kdNodes.push_back(node); 
+            return num;
+        }
+
+        /// note, nodeNum is positive to distinguish from leftNum
+        KDNode& getNode(int nodeNum)
+        {
+            if (nodeNum<0 || nodeNum>_kdNodes.size()-1)
+            {
+                osg::notify(osg::NOTICE)<<"Warning: getNode("<<nodeNum<<") _kdNodes.size()="<<_kdNodes.size()<<std::endl;
+            }
+            return _kdNodes[nodeNum];
+        }
+
 
         osg::observer_ptr<osg::Geometry> _geometry;
 
@@ -93,38 +161,66 @@ class KDTreeTraverser
 {
     public:
     
-        void traverse(KDTree& tree, KDNode::value_type nodeIndex, unsigned int level)
+    
+        std::ostream& output(unsigned int level)
         {
             for(unsigned int i=0; i<level; ++i)
             {
                 osg::notify(osg::NOTICE)<<"  ";
             }
-            osg::notify(osg::NOTICE)<<"traverse("<<nodeIndex<<", "<< level<<") { "<<std::endl;
+            return osg::notify(osg::NOTICE);
+        }
+    
+
+        void traverse(KDLeaf& leaf, unsigned int level)
+        {
+            output(level)<<"leaf("<<level<<") { ";
+
+            for(unsigned int i=0; i<leaf._vertexIndices.size(); ++i)
+            {
+                if (i==0) osg::notify(osg::NOTICE)<<leaf._vertexIndices[i];
+                else osg::notify(osg::NOTICE)<<", "<<leaf._vertexIndices[i];                
+            }
+
+            osg::notify(osg::NOTICE)<<"}"<<std::endl;;
+            
+        }
+
+        void traverse(KDTree& tree, KDNode::value_type nodeIndex, unsigned int level)
+        {
+            output(level)<<"traverse("<<nodeIndex<<", "<< level<<") { "<<std::endl;
             
             if (nodeIndex>=0)
             {        
                 KDNode& node = tree._kdNodes[nodeIndex];
-                traverse(tree,node._leftChild,level+1);
-                traverse(tree,node._rightChild,level+1);
+                if (node._leftChild) traverse(tree,node._leftChild,level+1);
+                else output(level+1)<<"empty left child()"<<std::endl;
+                
+                if (node._rightChild) traverse(tree,node._rightChild,level+1);
+                else output(level+1)<<"empty right child()"<<std::endl;
             }
             else 
             {
                 KDNode::value_type leafIndex = -nodeIndex-1;
                 KDLeaf& leaf = *(tree._kdLeaves[leafIndex]);
+                traverse(leaf, level);
             }
 
-            for(unsigned int i=0; i<level; ++i)
-            {
-                osg::notify(osg::NOTICE)<<"  ";
-            }
-            osg::notify(osg::NOTICE)<<"}"<<std::endl;;
+            output(level)<<"}"<<std::endl;;
         }
 
 
         void traverse(KDTree& tree)
         {
             osg::notify(osg::NOTICE)<<"traverse(tree)"<<std::endl;
-            if (!tree._kdNodes.empty()) traverse(tree,0,0);
+            if (!tree._kdNodes.empty()) 
+            {
+                traverse(tree,0,0);
+            }
+            else if (!tree._kdLeaves.empty())
+            {
+                traverse(*tree._kdLeaves.front(), 0);
+            }
         }
     
 };
@@ -135,7 +231,11 @@ class KDTreeBuilder : public osg::NodeVisitor
     public:
     
         KDTreeBuilder():
-            osg::NodeVisitor(osg::NodeVisitor::TRAVERSE_ALL_CHILDREN) {}
+            osg::NodeVisitor(osg::NodeVisitor::TRAVERSE_ALL_CHILDREN),
+            _maxNumLevels(24),
+            _targetNumVerticesPerLeaf(8)            
+        {            
+        }
     
     
         void apply(osg::Geode& geode)
@@ -151,20 +251,200 @@ class KDTreeBuilder : public osg::NodeVisitor
         }
     
         KDTree* createKDTree(osg::Geometry* geometry);
+        
+        void computeDivisions(KDTree& kdTree);
+        
+        int divide(KDTree& kdTree, osg::BoundingBox& bb, int nodeIndex, unsigned int level);
+
+        unsigned int _maxNumLevels;
+        unsigned int _targetNumVerticesPerLeaf;        
+
 };
 
 
 KDTree* KDTreeBuilder::createKDTree(osg::Geometry* geometry)
 {
-    KDTree* kdTree = new KDTree;
+    osg::notify(osg::NOTICE)<<"osg::KDTreeBuilder::createKDTree()"<<std::endl;
+
+    osg::Vec3Array* vertices = dynamic_cast<osg::Vec3Array*>(geometry->getVertexArray());
+    if (!vertices) return 0;
+
+    osg::ref_ptr<KDTree> kdTree = new KDTree;
     kdTree->_geometry = geometry;
     kdTree->_bb = kdTree->_geometry->getBound();
     
-    osg::notify(osg::NOTICE)<<"osg::KDTreeBuilder::createKDTree()"<<std::endl;
     
-    return kdTree;
+    unsigned int estimatedSize = (unsigned int)(float(vertices->size())/float(_targetNumVerticesPerLeaf)*1.5);
+
+    osg::notify(osg::NOTICE)<<"kdTree->_kdNodes.reserve()="<<estimatedSize<<std::endl<<std::endl;
+
+    kdTree->_kdNodes.reserve(estimatedSize);
+    kdTree->_kdLeaves.reserve(estimatedSize);
+    
+    computeDivisions(*kdTree);
+
+    // create initial leaf list    
+    osg::ref_ptr<KDLeaf> leaf = new KDLeaf;
+    leaf->_vertexIndices.reserve(vertices->size());
+    for(unsigned int i=0; i<vertices->size(); ++i)
+    {
+        leaf->_vertexIndices.push_back(i);
+    }
+
+    osg::BoundingBox bb = kdTree->_bb;
+    
+    int leafNum = kdTree->addLeaf(leaf.get());
+    int nodeNum = divide(*kdTree, bb, leafNum, 0);
+    
+    osg::notify(osg::NOTICE)<<"Root nodeNum="<<nodeNum<<std::endl;
+    
+    
+    KDTreeTraverser traverser;
+    traverser.traverse(*kdTree);
+    
+    osg::notify(osg::NOTICE)<<"Final kdTree->_kdNodes.size()="<<kdTree->_kdNodes.size()<<std::endl;
+    osg::notify(osg::NOTICE)<<"Final kdTree->_kdLeaves.size()="<<kdTree->_kdLeaves.size()<<std::endl;
+
+    osg::notify(osg::NOTICE)<<"osg::KDTreeBuilder::createKDTree() completed"<<std::endl<<std::endl;
+
+    return kdTree.release();
 }    
 
+void KDTreeBuilder::computeDivisions(KDTree& kdTree)
+{
+
+
+    osg::Vec3 dimensions(kdTree._bb.xMax()-kdTree._bb.xMin(),
+                         kdTree._bb.yMax()-kdTree._bb.yMin(),
+                         kdTree._bb.zMax()-kdTree._bb.zMin());
+
+    osg::notify(osg::NOTICE)<<"computeDivisions("<<_maxNumLevels<<") "<<dimensions<< " { "<<std::endl;
+
+    kdTree._axisStack.reserve(_maxNumLevels);
+ 
+    int level = 0;
+    for(unsigned int level=0; level<_maxNumLevels; ++level)
+    {
+        int axis = 0;
+        if (dimensions[0]>=dimensions[1])
+        {
+            if (dimensions[0]>=dimensions[2]) axis = 0;
+            else axis = 2;
+        }
+        else if (dimensions[1]>=dimensions[2]) axis = 1;
+        else axis = 2;
+
+        kdTree._axisStack.push_back(axis);
+        dimensions[axis] /= 2.0f;
+
+        osg::notify(osg::NOTICE)<<"  "<<level<<", "<<dimensions<<", "<<axis<<std::endl;
+    }
+
+    osg::notify(osg::NOTICE)<<"}"<<std::endl;
+}
+
+int KDTreeBuilder::divide(KDTree& kdTree, osg::BoundingBox& bb, int nodeIndex, unsigned int level)
+{
+    if (kdTree._axisStack.size()<=level) return nodeIndex;
+
+
+    int axis = kdTree._axisStack[level];
+
+    osg::notify(osg::NOTICE)<<"divide("<<nodeIndex<<", "<<level<< "), axis="<<axis<<std::endl;
+
+    if (nodeIndex>=0)
+    {
+        osg::notify(osg::NOTICE)<<"  divide node"<<std::endl;
+        KDNode& node = kdTree.getNode(nodeIndex);
+        return nodeIndex;
+    }
+    else
+    {    
+        if (kdTree.getLeaf(nodeIndex)->_vertexIndices.size()<=_targetNumVerticesPerLeaf) return nodeIndex;
+    
+        osg::notify(osg::NOTICE)<<"  divide leaf"<<std::endl;
+        
+        int nodeNum = kdTree.addNode(KDNode());
+
+        float original_min = bb._min[axis];
+        float original_max = bb._max[axis];
+
+        float mid = (original_min+original_max)*0.5f;
+
+        {
+            osg::ref_ptr<KDLeaf> leaf = kdTree.getLeaf(nodeIndex);
+
+            // create new node, and add two leaves to it.
+            osg::ref_ptr<KDLeaf> leftLeaf = new KDLeaf;
+            osg::ref_ptr<KDLeaf> rightLeaf = new KDLeaf;
+
+
+            osg::Vec3Array* vertices = dynamic_cast<osg::Vec3Array*>(kdTree._geometry->getVertexArray());
+
+            osg::notify(osg::NOTICE)<<"  divide leaf->_vertexIndices.size()="<<leaf->_vertexIndices.size()<<std::endl;
+
+            unsigned int estimatedSize = leaf->_vertexIndices.size();
+            leftLeaf->_vertexIndices.reserve(estimatedSize);
+            rightLeaf->_vertexIndices.reserve(estimatedSize);
+
+            for(unsigned int i=0; i<leaf->_vertexIndices.size(); ++i)
+            {
+                unsigned int vi = leaf->_vertexIndices[i];
+                osg::Vec3& v = (*vertices)[vi];
+                if (v[axis] <= mid) leftLeaf->_vertexIndices.push_back(vi);
+                else rightLeaf->_vertexIndices.push_back(vi);
+            }
+
+            if (leftLeaf->_vertexIndices.empty())
+            {
+                osg::notify(osg::NOTICE)<<"LeftLeaf empty"<<std::endl;
+                kdTree.getNode(nodeNum)._leftChild = 0;
+                kdTree.getNode(nodeNum)._rightChild = kdTree.replaceLeaf(nodeIndex, rightLeaf.get());
+            }
+            else if (rightLeaf->_vertexIndices.empty())
+            {
+                osg::notify(osg::NOTICE)<<"RightLeaf empty"<<std::endl;
+                kdTree.getNode(nodeNum)._leftChild = kdTree.replaceLeaf(nodeIndex, leftLeaf.get());
+                kdTree.getNode(nodeNum)._rightChild = 0;
+            }
+            else
+            {
+                kdTree.getNode(nodeNum)._leftChild = kdTree.replaceLeaf(nodeIndex, leftLeaf.get());
+                kdTree.getNode(nodeNum)._rightChild = kdTree.addLeaf(rightLeaf.get());
+            }
+
+
+        }
+        
+        int originalLeftChildIndex = kdTree.getNode(nodeNum)._leftChild;
+        int originalRightChildIndex = kdTree.getNode(nodeNum)._rightChild;
+
+
+        float restore = bb._max[axis];
+        bb._max[axis] = mid;
+
+        osg::notify(osg::NOTICE)<<"  divide leftLeaf "<<kdTree.getNode(nodeNum)._leftChild<<std::endl;
+        int leftChildIndex = divide(kdTree, bb, originalLeftChildIndex, level+1);
+
+        bb._max[axis] = restore;
+        
+        restore = bb._min[axis];
+        bb._min[axis] = mid;
+
+        osg::notify(osg::NOTICE)<<"  divide rightLeaf "<<kdTree.getNode(nodeNum)._rightChild<<std::endl;
+        int rightChildIndex = divide(kdTree, bb, originalRightChildIndex, level+1);
+        
+        bb._min[axis] = restore;
+        
+        kdTree.getNode(nodeNum)._leftChild = leftChildIndex;
+        kdTree.getNode(nodeNum)._rightChild = rightChildIndex; 
+        
+        return nodeNum;        
+    }
+
+
+}
+
 }
 
 int main(int argc, char **argv)