**Exhibit10.4**

 

**NSPHOLDINGS L.L.C.UNIT APPRECIATION RIGHTS PLAN**

 

# Article 1

 

# Purpose of Plan

 

1.1           Purpose.  The purpose of the Unit Appreciation RightsPlan is to further the long-term growth in earnings and value of NSP HoldingsL.L.C. and its affiliates by offering long-term incentives in addition tocurrent compensation to key individuals of NSP Holdings L.L.C.

 

# Article 2

 

# Definitions

 

Whenever the following terms are used in the NSPHoldings L.L.C. Unit Appreciation Rights Plan, they shall have the meaningsspecified below unless the context clearly indicates to the contrary:

 

2.1           Accountshall mean a bookkeeping account established by the Committee for eachParticipant to which the Appreciation Rights attributable to the DesignatedUnits shall be credited.

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2.2           AppreciationRight shall mean a right to an amount equal to the difference between theGrant Value and the Exit Value (or Market Value upon a Realization Event to theextent specified in this Unit Appreciation Rights Plan) of a Designated Unit.

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2.3           AppropriateForm shall mean the form provided or prescribed by the Committee for thepurpose specified by the Plan.

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2.4           Beneficiaryshall mean such person or persons or legal entity as may be designated by aParticipant to receive benefits hereunder after such Participant’s death, or,in the absence of such designation, the personal or legal representative of theParticipant.

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2.5           Boardshall mean the Board of Managers of the Company.

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2.6           Committeeshall mean the Management Team as determined by the Board of Managers of theCompany.

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2.7           Companyshall mean NSP Holdings L.L.C.

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2.8           CompanyValue shall mean the value of the Company as a whole, which will bedetermined at the end of each fiscal year according to a formula equal to sixtimes the prior year’s EBITDA minus debt (average term debt during the yearplus average revolver outstanding during the year) plus average cash (overnecessary working capital).

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2.9           DesignatedUnit shall mean a Unit under which an Appreciation Right has been granted.

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2.10         Disabilityor Disabled shall mean the state of being unable to engage in anysubstantial gainful activity by reason of any medically determinable physicalor mental impairment which can be expected to result in death or which haslasted or can be expected to last for a continuous period of not less than 60months, such Disability to be deemed to exist when so determined by theCommittee, in its sole discretion.

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2.11         EffectiveDate shall mean the date the Plan is effective which is January 1, 1997.

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2.12         ERISAshall mean the Employee Retirement Income Security Act of 1974, as amended.

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2.13         GrantValue shall be determined at the end of the previous fiscal year as theCompany Value divided by the total number of Units (including but not limitedto Units issued and Units for which options, warrants, appreciation rights orother equity equivalents have been granted).

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2.14         KeyIndividual shall mean any individual rendering services to the Company whois designated by the Committee as a Key Individual.

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2.15         Participantshall mean any Key Individual who is selected by the Committee forparticipation in the Plan.

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2.16         Planshall mean the NSP Holdings L.L.C. Unit Appreciation Rights Plan.

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2.17         PlanYear shall mean the 12 consecutive month period ended December 31st,including periods prior to the date on which the Plan was adopted.

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2.18         RealizationEvent.  A Realization Event shallmean a sale of the Company or an initial public offering (IPO).

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2.19         RetirementDate shall mean the first day of the month coincident with or immediatelyfollowing the date on which a Participant attains age 65.

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2.20         SeparationDate shall be the date on which a Participant’s service with the Company isterminated (whether on account of retirement, death, Disability, discharge, orvoluntary separation).

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2.21         Unitshall mean a Common Unit of NSP Holdings L.L.C.

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2.22         ValuationDate shall mean the last day of each Plan Year and such other dates as theCommittee may determine.

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Article 3

 

Eligibility andParticipation

 

3.1           Eligibility.  Any Key Individual is e1igible toparticipate in the Plan.

 

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3.2           Participation.  The Committee, in its sole discretion, shallselect those Key Individuals who are to participate in the Plan.  A Key Individual shall become a Participanton the date he is notified by the Committee of his selection to participateunder the Plan.  After a Key Individualbecomes a Participant in the Plan, his active participation shall continueuntil his Separation Date.

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# Article 4

 

# Establishment of Accounts and Determination,

 

Allocation and Crediting of Units

 

4.1           Accounts.  The Committee shall establish and maintain,or cause to be maintained, a separate Account for each Participant.  The Committee shall also maintain or causeto be maintained, a record of the Appreciation Rights credited and debited toeach Participant’s Account.

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4.2           Determinationof Designated Units.  As of theEffective Date, the number of Appreciation Rights granted and to be granted arereflected on Appendix A.

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4.3           Allocationof Appreciation Rights.  Followingthe end of each fiscal year, the Committee shall present recommendations fornew grants of Appreciation Rights and the Board will allocate the AppreciationRights authorized by it for such fiscal year among Participants.  All Appreciation Rights shall be allocatedas of the first day of the Plan Year.

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# Article 5

 

# Vesting

 

5.1           RegularVesting.  Subject to the followingsubsections, a Participant’s interest in the Appreciation Rights credited tohis Account shall vest in accordance with the following schedule:

 
| **Number of Years Since   Appreciation Right   Was Allocated** |   | **Vested  (Nonforfeitable)  Percentage** |   | **Forfeitable  Percentage** |   |
|----------------------------------------------------------------|--------|------------------------------------------|--------|-----------------------------|--------|
| 1                                                              |   | 10                                       |   | 90                          |   |
| 2                                                              |   | 30                                       |   | 70                          |   |
| 3                                                              |   | 60                                       |   | 40                          |   |
| 4                                                              |   | 100                                      |   | 0                           |   |

 

 

5.2           AcceleratedVesting.  A Participant’s interestin the Appreciation Rights credited to his Account shall be fully vested andnonforfeitable on the earlier of the following dates:

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(a)           the date of aParticipant’s death, provided he dies while in the service of the Company; or

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(b)           the date of aParticipant’s Disability, provided he becomes Disabled while in the service ofthe Company; or

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(c)           the date of aRealization Event; or

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(d)           termination of thePlan.

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5.3           Terminationfor Cause.  Notwithstanding theforegoing, all Appreciation Rights (vested or non-vested) shall be forfeited inthe event of a termination for Cause. For purposes of this Plan, “Cause” shall be deemed to mean one or moreof the following:  (a) Participant’sembezzlement or misappropriation of funds, (b) Participant’s conviction of afelony involving moral turpitude, (c) Participant’s commission of material actsof dishonesty, fraud, or deceit, (d) Participant’s breach of any materialprovisions of any employment or service agreement with the Company to which heis a party, (e) Participant’s habitual or willful neglect of his duties, (f)Participant’s breach of fiduciary duty to the Company involving personalprofit, or (g) Participant’s material violation of any other duty to theCompany or its members imposed by law or by the managers.

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# Article 6

 

# Distribution of Benefits

 

6.1           Valuationof Appreciation Rights.

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### (a)           ValueUpon Termination.  Upon aParticipant’s termination of service other than for cause, the Exit Value ofthe Appreciation Rights of a Participant will be fixed in value as of theParticipant’s Separation Date.  The ExitValue will be determined based on a weighted average of the Grant Values for thepreceding 3 years prior to the termination date as follows (the Grant Value forthe years preceding the effective date of the Plan through December 31, 1998shall be $1.20 per unit and thereafter in accordance with the Plan, but in anyevent no less than $5.89 per unit):

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| **Number of Years Preceding   Termination Date** |   | **Weight To  Be Given  To Such Year’s Grant  Value** |   |
|--------------------------------------------------|--------|-----------------------------------------------------------|--------|
| 1                                                |   | 60                                                        | %      |
| 2                                                |   | 30                                                        | %      |
| 3                                                |   | 10                                                        | %      |

 

### (b)           ValueUpon Realization Event.

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#### (1)           Inthe event of an IPO, the value of the Appreciation Rights shall be redeemed inthe form of publicly-traded units or stock.

 

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#### (2)           Inthe event of a sale for cash, notes and/or publicly-traded securities, theAppreciation Rights shall be redeemed for the same combination of cash, notesand/or publicly traded securities.

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#### (3)           Inthe event of a merger in which the Company remains in control, the AppreciationRights shall remain in place subject to appropriate dilution.

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#### (4)           Inlieu of the foregoing, the Company at its option, upon a Realization Event thatis not a sale for cash, notes and/or publicly-traded securities, may insteadliquidate the Appreciation Rights for cash (i) at the lower of Exit Value orthen Market Value (as measured by the Realization Event) as to rights held byindividuals who had previously terminated, and (ii) at the Market Value derivedby the Realization Event as if all Appreciation Rights were outstanding as toindividuals who had not previously terminated.

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## 6.2           Paymentfor Appreciation Rights.

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### (a)           Notwithstandingthe Company’s option described in Section 6.2(b) or a Participant’s optiondescribed in Section 6.2(c), payment for the Participant’s vested AppreciationRights will be deferred until the occurrence of a Realization Event or theParticipant’s death, Disability or Retirement Date.  Upon such event, the Company will make payment to the Participant(or the Participant’s Beneficiary if the Participant has died) in the amount ofthe lower of (1) the Exit Value (as determined at the time of the Participant’stermination) or (2) the Market Value derived by the Realization Event as if allsuch Appreciation Rights were outstanding.

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### (b)           Atany time following a Participant’s termination of service, the Company shallhave the option to make payment on all vested Appreciation Rights exercisable,based upon the Exit Value applicable to the particular Designated Units.

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### (c)           Exceptas provided in Section 5.3, at any time following a Participant’s terminationof service but before the occurrence of a Realization Event or theParticipant’s death, Disability or Retirement Date, the Participant shall havethe option to receive payment from the Company on all vested AppreciationRights exercisable, based upon the Exit Value applicable to the particularDesignated Units.  Upon such request bya Participant, payment shall be made by the Company within ninety (90) days ofsuch request, unless the amount to be paid exceeds $500,000 in which casepayment shall be made within one year of such request.

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## 6.3           RealizationEvent.  In connection with anyRealization Event, and as a condition to the receipt of any payment ofAppreciation Rights, each Participant shall take all necessary or desirableactions requested by the Board in connection with such Realization Event,including without limitation, execution of any and all agreements, documentsand instruments presented to such Board in the form presented to suchParticipant.

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# Article 7

 

# Funding

 

## 7.1           PlanUnfunded.  Nothing in this Planshall be interpreted or construed to require the Company in any manner to fundany obligation to the Participants hereunder. Nothing contained in the Plan nor any action taken hereunder shallcreate or be construed to create a trust of any kind, or a fiduciaryrelationship between the Company and the Participants, Beneficiaries, or anyother persons.  Any funds which may beaccumulated in order to meet any obligation under this Plan shall for allpurposes continue to be a part of the general funds of the Company, asapplicable, and no person other than the Company, as applicable, shall byvirtue of the provisions of this Plan have any interest in such amounts.  To the extent that any person acquires aright to receive payment from the Company, such rights shall be no greater thanthe rights of any unsecured general creditor of the Company.

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# Article 8

 

# Administration

 

## 8.1           PlanAdministrator.  The Committee shallbe the Plan Administrator.

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## 8.2           Powersand Duties of Committee.  TheCommittee shall administer the Plan in accordance with its terms and shall haveall the powers necessary to carry out such terms.  The Committee shall act by a majority of its members at the timein office, and such action may be taken by a vote at a meeting or in writingwithout a meeting.  A member of theCommittee who is a Participant in the Plan shall not vote on any questionrelating specifically to such Participant. Any such action shall be voted or decided by a majority of the remainingmembers of the Committee.  The Committeemay appoint from its members such subcommittees with such powers as theCommittee shall determine.  Either theChairman, or a member of the Committee designated by the Chairman, shallexecute any certificate, instrument or other written direction on behalf of theCommittee.  All interpretations of thePlan, and questions concerning its administration and application, shall bedetermined by the Committee, and such determination shall be binding on allpersons except as otherwise expressly provided herein.

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## The Committee may appoint such accountants, counsel,specialists, and other persons as it deems necessary or desirable in connectionwith the administration of the Plan. Such accountants and counsel may, but need not, be accountants andcounsel for the Company.

 

## The Committee may, pursuant to a written designation,delegate to any person or entity any of its responsibilities under the Plan.

 

## 8.3           Determinationof Eligibility of Participants.  TheCommittee shall determine the eligibility of Participants in accordance withthe provisions of the Plan.

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## 8.4           Recordsand Reports.  The Committee andothers to whom the Committee has delegated fiduciary duties shall keep a recordof all their proceedings and actions and shall maintain all such books ofaccount, records and other data as shall be necessary for the properadministration of the Plan and to meet the reporting and disclosurerequirements of ERISA 

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which are applicable to this Plan. The Committee shall maintain records which shall contain all relevantdata pertaining to individual Participants and their rights under thePlan.  The Committee shall have the dutyto carry into effect all rights or benefits provided hereunder to the extentCompany assets, as applicable are properly available therefor.

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## 8.5           Paymentsof Expenses.  The Company shall payall expenses of administering the Plan. Such expenses shall include any expenses incident to the functioning ofthose to whom the Committee has delegated fiduciary duties, and thoseprofessionals and other persons appointed by the Committee including, but notlimited to, the payment of professional fees of consultants, and the costs ofadministering the Plan.

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## The members of the Committee shall serve withoutcompensation for their services, but all their expenses shall be paid by theCompany.

 

## 8.6           Indemnificationfor Liability.  The Company shallindemnify the members of the Committee and other individuals providing servicesto the Company to whom the Committee has delegated fiduciary duties against anyad all claims, losses, damages, expenses and liabilities arising from theirresponsibilities in connection with the Plan, unless the same is determined tobe due to gross negligence or willful misconduct.

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## 8.7           Agentfor Service of Legal Process.  Thename and address of the person designated for the service of legal process withrespect to the Plan are as follows:

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| Name:    | Robert A. Peterson                               |
|----------|--------------------------------------------------|
| Address: | 2211 York Road, Suite  215   Oak Brook, IL 60523 |

 

## 8.8           ClaimsProcedure.  Claims for benefitsunder the Plan shall be filed with the Committee, on the Appropriate Formsupplied by the Committee.  Writtennotice of the disposition of a claim shall be furnished the claimant withinninety (90) days after the application therefor is filed.  In the event the claim is denied, thespecific reasons for such denial shall be set forth, pertinent provisions ofthe Plan shall be cited and, where appropriate, an explanation as to how theclaimant can perfect the claim or submit such claim for review will beprovided.

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## 8.9           ClaimReview Procedure.  Any Participant,former Participant, or Beneficiary of either, who has been denied a benefitclaim, shall be entitled, upon written require to the Committee, to receive awritten notice of such action, together with a full and clear statement of thereasons for such action.  If theclaimant wishes further consideration of his position, the claimant may obtainthe Appropriate Form from the Committee on which to request a review of hisdenied claim.  Such Form, together witha written statement of the claimant’s position, shall be filed with theCommittee no later than sixty (60) days after receipt of the writtennotification provided for above or in Section 8.8.  The Committee shall make its decision within sixty (60) daysafter receipt of the claimant’s request for review.

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# Article 9

 

# Amendment and Termination

 

## 9.1           Amendmentand Termination.  The Board shallhave the right, at any time by an affirmative vote of a majority thereof, to amendor terminate, in whole or in part, the Plan, provided that such amendment ortermination shall not adversely affect the vested interest of any Participantunder the Plan prior to such amendment or termination.

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# Article 10

 

# Miscellaneous Provision

 

## 10.1         Rightsof Company to Discharge Persons. The adoption and maintenance of this Plan shall not be deemed toconstitute a contract between the Company and any person, or to be aconsideration for, or an inducement or condition of, the employment or engagementof any person.  Nothing hereincontained, nor any action taken hereunder, shall be deemed to give any personthe right to be retained by the Company or to interfere with the right of theCompany to discharge any person at any time, nor shall it be deemed to give theCompany the right to require a person to remain in its service, nor shall itinterfere with person’s right to terminate his employment or servicerelationship, respectively, at any time.

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## 10.2         Alienationor Assignment of Benefits.  AParticipant’s rights and interest under the Plan shall not be assigned ortransferred except by will or by the laws of descent and distribution.

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## 10.3         Rightto Withhold.  The Company shall havethe right to deduct from all benefit payments hereunder any taxes required bylaw to be withheld with respect to such payments.

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## 10.4         Genderand Number.  In interpreting thePlan, the masculine gender may include the feminine, the neuter gender mayinclude the masculine or feminine, and the singular may include the plural unlessthe context clearly indicates otherwise.

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## 10.5         Construction.  All legal questions pertaining to the Planshall be determined in accordance with the laws of Illinois except as otherwisepreempted by the law of the United States of America.

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## 10.6         Headings.  The headings are for reference only.  In the event of a conflict between a headingand the context of an Article or Section, the context of the Article or Sectionshall control.

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IN WITNESS WHEREOF, NSPHoldings L.L.C. has caused this instrument to be duly executed by its properofficers thereunto duly authorized, under seal, as of this 17 day of February, 2000.

 
| ATTEST:                 |      |                   |
|-------------------------|-----------|------------------------|
| /s/ DAVID F. MYERS, JR. |      | /s/ ROBERT A. PETERSON |
| Secretary               | President |

 

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