Exhibit 10.3
NS GROUP, INC. NON-EMPLOYEE DIRECTOR EQUITY PLAN
(Amended and Restated Effective February 17, 2005)
NONQUALIFIED STOCK OPTION AGREEMENT
Notice of Stock Option Grant
     NS Group, Inc., a Kentucky corporation (the “Company”), grants to the
Optionee named below, in accordance with the terms of the NS Group, Inc.
Non-Employee Director Equity Plan (the “Plan”) and this Nonqualified Stock
Option Agreement (the “Agreement”), an option (the “Option Right”) to purchase
the number of Common Shares at the option price per share (“Option Price) as
follows:

     
      Name of Optionee:
   
 
   
      Number of Common Shares:
   
 
   
      Option Price:
                       per share
 
   
      Date of Grant:
   

Terms of Agreement
     1. Grant of Option Right. Subject to and upon the terms, conditions and
restrictions set forth in this Agreement and in the Plan, the Company hereby
grants to the Optionee as of the Date of Grant the Option Right to purchase the
number of Common Shares at the Option Price as set forth above. This Option
Right is intended to be a nonqualified stock option and shall not be treated as
an “incentive stock option” within the meaning of that term under Section 422 of
the Code.
     2. Vesting and Exercise of Option Right.
          (a) Unless and until terminated as hereinafter provided, the Option
Right shall vest and become exercisable if the Optionee shall have continued to
serve on the Board through the vesting dates set forth below with respect to the
portion of Common Shares set forth next to such date:

          Portion of Common Shares Vesting Date   Vested and Exercisable
 
   
The earlier of (i) May 9, 2007, or (ii) the annual meeting of the Company’s
stockholders in 2007
  1/3
 
   
The earlier of (i) May 9, 2008, or (ii) the annual meeting of the Company’s
stockholders in 2008
  1/3
 
   
The earlier of (i) May 9, 2009, or (ii) the annual meeting of the Company’s
stockholders in 2009
  1/3

          (b) Notwithstanding the provisions of Section 2(a), the Option Right
will become immediately vested and exercisable in full if, prior to the date the
Option Right becomes fully

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NS GROUP, INC. NON-EMPLOYEE DIRECTOR EQUITY PLAN
(Amended and Restated Effective February 17, 2005)
NONQUALIFIED STOCK OPTION AGREEMENT
exercisable pursuant to Section 2(a), and while the Optionee serves on the
Board, (i) the Optionee dies or becomes permanently disabled (as determined by
the Board), or (ii) a Change in Control occurs.
          (c) To the extent that the Option Right becomes vested and exercisable
in accordance with this Section 2, it may be exercised in whole or in part from
time to time by written notice to the Company stating the number of Common
Shares for which the Option Right is being exercised and the intended manner of
payment.
     3. Forfeiture of Option Right. The Option Right (or portion thereof) that
has not yet vested pursuant to Section 2 above shall be forfeited automatically
without further notice if the Optionee ceases to serve on the Board other than
as provided in Section 2(b)(i).
     4. Payment of Option Price. The Option Price is payable (a) in cash or by
certified or cashier’s check or other cash equivalent acceptable to the Company
payable to the order of the Company, (b) with the Board’s approval, by surrender
of Common Shares (including by attestation) owned by the Optionee, or (c) by a
combination of surrender of Common Shares, and cash or certified or cashier’s
check.
     5. Term of Option Right. The Option Right will terminate on the earliest of
the following dates:
          (a) Two years after the Optionee ceases to serve on the Board as a
result of his death, permanent disability (as determined by the Board) or
Retirement;
          (b) Ninety days after the Optionee ceases to serve on the Board for
any reason other than as described in Section 5(a); or
          (c) Ten years from the Date of Grant.
          Notwithstanding anything contained in this Section 5 to the contrary,
in the event of a Change in Control, the Option Right will terminate on the
earliest of the following dates: (i) five years after the Change in Control or
(ii) ten years from the Date of Grant.
          For purposes of this Section 5, the term Retirement shall mean a
voluntary resignation from the Board by the Optionee at any time after at least
five years of service as a Non-Employee Director.
     6. Issuance of Common Shares. Subject to the terms and conditions of this
Agreement, Common Shares shall be issuable to the Optionee as soon as
administratively practicable following the date the Optionee exercises the
Option Right in accordance with Section 2 hereof and makes full payment to the
Company of the Option Price. The Optionee shall not possess any incidents of
ownership (including, without limitation, dividend and voting rights) in the
Common Shares until such Common Shares have been issued to the Optionee in
accordance with this Section 6.
     7. Transferability. Except with the consent of the Board, the Option Right
may not be sold, exchanged, assigned, transferred, pledged, encumbered or
otherwise disposed of by the Optionee; provided, however, that the Optionee’s
rights with respect to such Option Right may be transferred by

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NS GROUP, INC. NON-EMPLOYEE DIRECTOR EQUITY PLAN
(Amended and Restated Effective February 17, 2005)
NONQUALIFIED STOCK OPTION AGREEMENT
will or pursuant to the laws of descent and distribution. Any purported transfer
or encumbrance in violation of the provisions of this Section 7 shall be void,
and the other party to any such purported transaction shall not obtain any
rights to or interest in such Option Right. The Option Right may be exercised,
during the lifetime of the Optionee, only by the Optionee, or in the event of
his legal incapacity, by his guardian or legal representative acting on behalf
of the Optionee in a fiduciary capacity under state law and court supervision.
     8. No Right to Reelection. Nothing contained in this Agreement shall confer
upon the Optionee any right to be nominated for reelection by the Company’s
stockholders, or any right to remain a member of the Board for any period of
time, or at any particular rate of compensation.
     9. Taxes and Withholding. To the extent that the Company shall be required
to withhold any federal, state, local or other taxes in connection with Common
Shares obtained upon the exercise of the Option Right, it shall be a condition
to the issuance of such Common Shares that the Optionee shall pay such taxes or
make provisions that are satisfactory to the Company for the payment thereof.
     10. Compliance with Law. The Company shall make reasonable efforts to
comply with all applicable federal and state securities laws and listing
requirements of the New York Stock Exchange or any national securities exchange
with respect to the Option Right; provided, however, notwithstanding any other
provision of this Agreement, the Company will not be obligated to issue any
Common Shares pursuant to this Agreement if the issuance thereof would result in
a violation of any such law or listing requirement.
     11. Adjustments. The Board may make or provide for such adjustments in the
Option Price and in the number and kind of shares of stock covered by this
Agreement, as the Board, in its sole discretion, exercised in good faith, may
determine is equitably required to prevent dilution or enlargement of the
Optionee’s rights that otherwise would result from (a) any stock dividend, stock
split, combination of shares, recapitalization, or other change in the capital
structure of the Company, (b) any merger, consolidation, spin-off, split-off,
spin-out, split-up, reorganization, partial or complete liquidation, or other
distribution of assets (including, without limitation, a special or large
non-recurring dividend) or issuance of rights or warrants to purchase
securities, or (c) any other corporate transaction or event having an effect
similar to any of the foregoing. In the event of any such transaction or event,
the Board, in its discretion, may provide in substitution for the Option Right
such alternative consideration as it may determine to be equitable in the
circumstances and may require in connection therewith the surrender of the
Option Right.
     12. Amendments. Subject to the terms of the Plan, the Board may modify this
Agreement upon written notice to the Optionee. Any amendment to the Plan shall
be deemed to be an amendment to this Agreement to the extent that the amendment
is applicable hereto. Notwithstanding the foregoing, no amendment of the Plan or
this Agreement shall adversely affect the rights of the Optionee under this
Agreement without the Optionee’s consent.
     13. Severability. In the event that one or more of the provisions of this
Agreement shall be invalidated for any reason by a court of competent
jurisdiction, any provision so invalidated shall be deemed to be separable from
the other provisions hereof, and the remaining provisions hereof shall continue
to be valid and fully enforceable.

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NS GROUP, INC. NON-EMPLOYEE DIRECTOR EQUITY PLAN
(Amended and Restated Effective February 17, 2005)
NONQUALIFIED STOCK OPTION AGREEMENT
     14. Relation to Plan. The Option Right granted under this Agreement and all
the terms and conditions hereof are subject to the terms and conditions of the
Plan. This Agreement and the Plan contain the entire agreement and understanding
of the parties with respect to the subject matter contained in this Agreement,
and supersede all prior written or oral communications, representations and
negotiations in respect thereto. In the event of any inconsistency between the
provisions of this Agreement and the Plan, the Plan shall govern. Capitalized
terms used herein without definition shall have the meanings assigned to them in
the Plan. The Board acting pursuant to the Plan, as constituted from time to
time, shall, except as expressly provided otherwise herein, have the right to
determine any questions which arise in connection with the grant or exercise of
the Option Right.
     15. Successors and Assigns. Without limiting Section 7 hereof, the
provisions of this Agreement shall inure to the benefit of, and be binding upon,
the successors, administrators, heirs, legal representatives and assigns of the
Optionee, and the successors and assigns of the Company.
     16. Governing Law. The interpretation, performance, and enforcement of this
Agreement shall be governed by the laws of the Commonwealth of Kentucky, without
giving effect to the principles of conflict of laws thereof.
     17. Electronic Delivery. The Optionee hereby consents and agrees to
electronic delivery of any documents that the Company may elect to deliver
(including, but not limited to, prospectuses, prospectus supplements, grant or
award notifications and agreements, account statements, annual and quarterly
reports, and all other forms of communications) in connection with this and any
other award made or offered under the Plan. The Optionee understands that,
unless earlier revoked by the Optionee by giving written notice to the Secretary
of the Company, this consent shall be effective for the duration of the
Agreement. The Optionee also understands that he or she shall have the right at
any time to request that the Company deliver written copies of any and all
materials referred to above at no charge. The Optionee hereby consents to any
and all procedures the Company has established or may establish for an
electronic signature system for delivery and acceptance of any such documents
that the Company may elect to deliver, and agrees that his or her electronic
signature is the same as, and shall have the same force and effect as, his or
her manual signature. The Optionee consents and agrees that any such procedures
and delivery may be effected by a third party engaged by the Company to provide
administrative services related to the Plan.

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NS GROUP, INC. NON-EMPLOYEE DIRECTOR EQUITY PLAN
(Amended and Restated Effective February 17, 2005)
NONQUALIFIED STOCK OPTION AGREEMENT
     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on
its behalf by its duly authorized officer and the Optionee has also executed
this Agreement, as of the Date of Grant.

            NS GROUP, INC.
      By:        Name:         Title:      

     The undersigned hereby acknowledges receipt of a copy of the Plan Summary
and Prospectus, and the Company’s most recent Annual Report and Proxy Statement
(the “Prospectus Information”). The Optionee represents that he or she is
familiar with the terms and provisions of the Prospectus Information and hereby
accepts the Option Right on the terms and conditions set forth herein and in the
Plan.

                  Optionee        Date:      

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