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NS GROUP, INC. JUNE 30, 2002 FORM 10-Q                              EXHIBIT 10.3


                      CHANGE OF CONTROL SEVERANCE AGREEMENT
                      -------------------------------------


         AGREEMENT by and between NS Group, Inc., a Kentucky Corporation (the
"Company"), and Albert E. Ferrara, Jr. (the "Employee"), dated as of the 8th day
of July, 2002.

         The Company wishes to assure that it will have the continued dedication
of the Employee notwithstanding the possibility, threat or occurrence of a
Change of Control (as defined below) of the Company. The Company believes it is
imperative to diminish the inevitable distraction of the Employee by virtue of
the personal uncertainties and risks created by a pending or threatened Change
of Control, to encourage the Employee's full attention and dedication to the
Company upon a Change of Control, and to provide the Employee with compensation
arrangements upon a Change of Control which provide the Employee with individual
financial security and which are competitive with those of other corporations
and, in order to accomplish these objectives, the Company desires to enter into
this Agreement.

         NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

         1.    CERTAIN DEFINITIONS
               -------------------

               (a)  "Affiliate" of any specified Person means (i) any other
                    Person which, directly or indirectly, is in control of, is
                    controlled by or is under common control with such specified
                    Person or (ii) any other person who is a director or officer
                    (A) of such specified Person, (B) of any subsidiary of such
                    specified Person or (C) of any Person described in clause
                    (i) above or (iii) any person in which such Person has,
                    directly or indirectly, a 5 percent or greater voting or
                    economic interest or the power to control. For the purposes
                    of this definition, "control" of a Person means the power,
                    direct or indirect, to direct or cause the direction of the
                    management or policies of such Person whether through the
                    ownership of voting securities, or by contract or otherwise;
                    and the terms "controlling" and "controlled" have meanings
                    correlative to the foregoing.

               (b)  "Agreement Period" shall mean the period as defined in
                    Section 2 of this Agreement.

               (c)  "Board of Directors"' shall mean the Board of Directors of
                    the Company as constituted from time to time.


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               (d)  "Change of Control" shall mean:

                     (i)    the direct or indirect sale, lease, exchange or
                            other transfer of all or substantially all of the
                            assets of the Company to any Person or entity or
                            group of Persons or entities acting in concert as a
                            partnership or other group ("Group of Persons")
                            other than a Person described in clause (i) of the
                            definition of Affiliate;

                     (ii)   the consummation of any consolidation or merger of
                            the Company with or into another corporation with
                            the effect that the stockholders of the Company
                            immediately prior to the date of the consolidation
                            or merger hold less than 51% of the combined Voting
                            Power of the outstanding voting securities of the
                            surviving entity of such merger or the corporation
                            resulting from such consolidation ordinarily having
                            the right to vote in the election of directors
                            (apart from rights accruing under special
                            circumstances) immediately after such merger or
                            consolidation;

                     (iii)  the stockholders of the Company shall approve any
                            plan or proposal for the liquidation or dissolution
                            of the Company;

                     (iv)   a Person or Group of Persons acting in concert as a
                            partnership, limited partnership, syndicate or other
                            group shall, as a result of a tender or exchange
                            offer, open market purchases, privately negotiated
                            purchases or otherwise, have become the direct or
                            indirect beneficial owner (within the meaning of
                            Rule 13d-3) under the Securities Exchange Act of
                            1934, as amended (the "Exchange Act") ("Beneficial
                            Owner") of securities of the Company representing
                            30% or more of the combined Voting Power of the then
                            outstanding securities of the Company ordinarily
                            (and apart from rights accruing under special
                            circumstances) having the right to vote in the
                            election of directors;

                     (v)    a Person or Group of Persons, together with any
                            Affiliates thereof, shall succeed in having a
                            sufficient number of its nominees elected to the
                            Board of Directors of the Company such that such
                            nominees, when added to any existing director
                            remaining on the Board of Directors of the Company
                            after such election who is an Affiliate of such
                            Person or Group of Persons, will constitute a
                            majority of the Board of Directors of the Company;
                            provided that the Person or Group of Persons
                            referred to in clauses (i), (iv) and (v) shall not
                            mean Clifford Borland or any Group of Persons with
                            respect to which Clifford Borland is the Beneficial
                            Owner of the majority of the voting equity
                            interests.


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               (e)  "Cause" shall be defined as (i) Conviction or judicial
                    admission by the Employee of any felony criminal act, a
                    crime involving moral turpitude, or a crime of fraud or
                    dishonesty; (ii) acts by Employee constituting gross
                    negligence or willful misconduct to the detriment of the
                    Company; (iii) Employee's misfeasance, nonfeasance or
                    malfeasance in the performance of his duties; or (iv)
                    Employee's failure or refusal to comply with the lawful
                    directions of Company's Board of Directors or with the
                    policies, standards and regulations of the Company after
                    notice and failure to cure within 30 days.

               (f)  "Company" as used herein includes NS Group, Inc. and any of
                    its subsidiaries and divisions and, as provided by Section
                    12(b) hereof, any successor.

               (g)  "Date of Termination" shall be the date on which the Notice
                    of Termination is actually received by the addressee, or
                    alternatively, if the Notice of Termination specifies a date
                    other than the date of receipt of such notice then that
                    specified date shall be the Date of Termination.

               (h)  "Effective Date" shall mean the first date on which a Change
                    of Control occurs; provided, however, that if the Employee's
                    employment is terminated by the Company prior to the date on
                    which a Change of Control occurs, and the Employee can
                    reasonably demonstrate that such termination by the Company
                    was in contemplation of a Change of Control, then for all
                    purposes of this Agreement the "Effective Date" shall mean
                    the date immediately prior to the date of such termination.

               (i)  "Good Reason" means: (i) any material adverse change in
                    compensation to the Employee; (ii) substantial decrease in
                    the nature or scope of the Employee's duties,
                    responsibilities, powers, authority, title, position or
                    status; (iii) unreasonable travel requirements; (iv) any
                    relocation required on the part of Employee, without his
                    consent, outside of a 50-mile radius from his primary
                    residence on the Effective Date; or (v) material breach by
                    the Company of an employment, compensation or similar
                    agreement between the Employee and the Company.

               (j)  "Person" means any individual, corporation, partnership,
                    joint venture, association, joint-stock company, trust,
                    unincorporated organization, government or any agency or
                    political subdivision thereof or any other entity within the
                    meaning of Section 13(d)(3) or 14(d) (2) of the Exchange
                    Act.

               (k)  "Voting Power" shall mean the voting power of all securities
                    of a Person then outstanding generally entitled to vote for
                    the election of directors of the Person (or, where
                    appropriate, for the election of persons performing similar
                    functions).


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         2.    AGREEMENT PERIOD
               ----------------

         The Company hereby agrees to provide the Employee with the protections
and benefits enumerated in Section 3 of this Agreement for the period commencing
on the Effective Date and ending on the third anniversary of the Effective Date.

         3.    OBLIGATIONS OF THE COMPANY UPON TERMINATION
               -------------------------------------------

               (a)  Notice of Termination. Any termination after the Effective
                    Date by the Company or by the Employee shall be communicated
                    by Notice of Termination, within ten (10) business days
                    after the later of the date of employment termination or the
                    date of Change of Control, to the other party hereto given
                    in accordance with Section 13(c) of this Agreement. For
                    purposes of this Agreement, a "Notice of Termination" means
                    a written notice which (i) sets forth in reasonable detail
                    the facts and circumstances claimed to provide a basis for
                    termination of the Employee's employment, and (ii) if the
                    termination date is other than the date of receipt of such
                    notice, specifies the termination date.

               (b)  Termination by the Company for Cause; Termination by the
                    Employee for Other Than Good Reason. If during the Agreement
                    Period, the Employee's employment is terminated by the
                    Company for Cause, by the Employee other than for Good
                    Reason, or by reason of death or disability, this Agreement
                    shall terminate without further obligations to the Employee.

               (c)  Termination by the Company other than for Cause; Termination
                    by the Employee for Good Reason. If, during the Agreement
                    Period, the Company shall terminate the Employee's
                    employment other than for Cause, or the employment of the
                    Employee shall be terminated by the Employee for Good
                    Reason, the Employee shall be entitled to the following
                    payments and benefits:

                     (i)    The Company shall pay to the Employee in a lump sum
                            in cash within thirty (30) days after the Date of
                            Termination the aggregate of two (2) times the
                            amount of the Employee's base salary in effect on
                            the Date of Termination two (2) times the average
                            amount of the Employee's annual bonus payments made
                            in the five (5) years prior to the Date of
                            Termination, plus a payment equal to a pro rata
                            portion (based on the whole number of months worked
                            in the fiscal year by the Employee prior to the Date
                            of Termination and, if applicable performance
                            targets have not been met on the Date of
                            Termination, based on a reasonable estimate of the
                            amount of bonus to be earned for the full year) of
                            the Employee's annual bonus for the year of
                            termination.


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                     (ii)   For two (2) years after the Date of Termination, the
                            Company shall continue providing medical, dental,
                            life and disability insurance benefits to the
                            Employee in an amount equivalent to that which would
                            have been provided to the Employee had the
                            Employee's employment not been terminated. The
                            Employee shall not be obligated to pay higher fees
                            for such benefits than he or she was paying, at the
                            Date of Termination. In the event it is not possible
                            to provide this continued coverage, the Company
                            shall provide the Employee with a cash payment in
                            the amount necessary for the Employee to purchase
                            equivalent insurance for two (2) years after the
                            Date of Termination.

                     (iii)  Within ten (10) business days after the later of the
                            date of employment termination or the date of Change
                            of Control, the Company shall provide, at no cost to
                            the Employee, individual outside assistance for the
                            Employee in finding other employment. Such
                            obligation may be fulfilled by the Company through
                            the retention of an outplacement service for use by
                            the Employee.

         4.    NON-REDUCTION OF TERMINATION BENEFITS
               -------------------------------------

         In the event the Company's independent auditors (the "Accounting Firm")
shall determine that any payment or distribution by the Company to or for the
benefit of the Employee made pursuant to Section 3 of this Agreement would be
nondeductible by the Company for Federal income tax purposes because of Section
280G of the Internal Revenue Code of 1986 ("Code"), as amended, then the Company
shall nonetheless pay to Employee all payments and distributions under Section
3. If the Accounting Firm makes such a determination, the Company shall promptly
provide the Employee with notice to that effect with a copy of the detailed
calculation thereof. The Employee shall pay all taxes on all such payments and
distributions under Section 3 that are imposed on Employee, including the excise
tax under Section 280G of the Code.

         5.    FUNDING OF GRANTOR TRUST
               ------------------------

         The Board of Directors of the Company shall have the option to
establish a so-called "Rabbi Trust" upon the occurrence, or in anticipation, of
a Change of Control to secure for the Employee the benefits provided pursuant to
Section 3 of this Agreement. If the Board of Directors elects to do so, the
Company shall, immediately upon the occurrence of a Change of Control, make an
irrevocable contribution to the Rabbi Trust in an amount that is sufficient to
pay the Employee the benefits to which such Employee would be entitled pursuant
to the terms of this Agreement as of the date on which the Change of Control
occurred.


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         6.    NON-EXCLUSIVITY OF RIGHTS
               -------------------------

         Nothing in this Agreement shall prevent or limit the Employee's
continuing or future participation in any benefit, bonus, incentive or other
plan or program provided by the Company or any of its affiliated companies and
for which the Employee may qualify, nor shall anything herein limit or otherwise
affect such rights that the Employee may have under any stock option or other
agreements with the Company. Amounts which are vested benefits or which the
Employee is otherwise entitled to receive under any plan or program of the
Company at or subsequent to the Date of Termination shall be payable in
accordance with such plan or program.

         7.    NO SETOFF; COOPERATION
               ----------------------

         The Company's obligation to make the payments provided for in this
Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against the Employee or others.

         8.    CONFIDENTIAL INFORMATION
               ------------------------

         Employee specifically agrees that he will not at any time, whether
during his employment or for a period of two (2) years after such employment
ends for any reason, disclose or communicate to any third party or use for any
purpose (other than during his employment by the Company for proper business
purposes) any secret, proprietary or confidential information, or trade secret,
relating to the business of Company, or any subsidiary or affiliate of Company,
including business methods and techniques, research data, marketing and sales
information, customer lists, know-how, and any other information, process or
technique or information, customer lists, know-how, and any other information,
process or technique or information concerning the business of Company, or any
subsidiary or affiliate of Company, their manner and method of operation, their
plans or other data not disclosed to the general public or known within the
industry, regardless of whether such information or trade secret was acquired
prior to or after execution of this Agreement.

         9.    NON-SOLICITATION
               ----------------

         Employee shall not, either directly or indirectly, by or for himself,
or as agent of another, or through others as his agent, in any way seek to
induce, bring about, promote, facilitate or encourage the discontinuance of or
in any way solicit for himself or others, those persons or entities who are
employees of the Company, or any subsidiary or affiliate of the Company.


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         10.   EXCLUSIVE REMEDY
               ----------------

         The Employee's rights to severance benefits pursuant to Section 3
hereof shall apply only in the events specified in this Agreement and shall be
the Employee's sole and exclusive remedy for any termination of the Employee's
employment by the Company other than for Cause or by the Employee for Good
Reason. The payments, severance benefits and severance protections provided to
the Employee pursuant to this Agreement are provided in lieu of any severance
payments, severance benefits and severance protections provided in any
employment agreement or any other plan or policy of the Company, except (i) as
may be expressly provided in writing under the terms of any plan or policy of
the Company; or (ii) as provided in any Non-Qualified Stock Option Agreement
between the Company and the Employee and any Salary Continuation Agreement
between the Company and the Employee; or (iii) as may be provided in a written
agreement between the Company and the Employee entered into on or after the date
of this Agreement. In no event shall the Employee be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Employee under any of the provisions of this Agreement.

         11.   STATEMENT OF INTENTION
               ----------------------

         It is the intention of the parties hereto that, prior to the Effective
Date, this Agreement shall not create any rights or obligations in the Employee
or the company, or require any payments by the Company to the Employee.

         12.   SUCCESSORS
               ----------

               (a)  The Employee. This Agreement is personal to the Employee and
                    without the prior written consent of the Company shall not
                    be assignable by the Employee otherwise than by will or the
                    laws of descent and distribution. This Agreement shall inure
                    to the benefit of and be enforceable by the Employee's legal
                    representatives.

               (b)  The Company. This Agreement shall inure to the benefit of
                    and be binding upon the Company and its successors. The
                    Company will require any successor (whether direct or
                    indirect, by purchase, merger, consolidation or otherwise)
                    to all or substantially all of the business and/or assets of
                    the Company to expressly 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.

         As used in this Agreement, "Company" shall include any successor to its
business and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.


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         13.   MISCELLANEOUS
               -------------

               (a)  Interpretation. This Agreement shall be governed by and
                    construed in accordance with the laws of the Commonwealth of
                    Kentucky, without reference to principles of conflict of
                    laws. The captions of this Agreement are not part of the
                    provisions hereof and shall have no force or effect.

               (b)  Legal Fees. In the event of any litigation involving this
                    Agreement, and if the Employee is successful in such
                    litigation, the Company will reimburse the Employee for all
                    legal fees and expenses paid by the Employee in prosecuting
                    or defending such litigation.

               (c)  Notices. All notices and other communications hereunder
                    shall be in writing and shall be given by hand delivery to
                    the other party or by registered or certified mail, return
                    receipt requested, postage prepaid, addressed to the
                    Employee at the Employee's address on the payroll records of
                    the Company and to the Company as follows:

                                    NS Group, Inc.
                                    P.O. Box 1670
                                    Newport, Kentucky 41072
                                    Attention: President

And to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.

               (d)  Severability. The invalidity or unenforceability of any
                    provision of this Agreement shall not affect the validity or
                    enforceability of any other provision of this Agreement.

               (e)  Withholding Taxes. The Company may withhold from any amounts
                    payable under this Agreement such Federal, state or local
                    taxes as shall be required to be withheld pursuant to any
                    applicable law or regulation.

               (f)  No Waiver. The failure of the Employee or the Company to
                    insist upon strict compliance with any provision hereof
                    shall not be deemed to be a waiver of such provision or any
                    other provision thereof.

               (g)  Entire Agreement. This Agreement contains the entire
                    understanding of the Company and the Employee with respect
                    to the subject matter hereof. This Agreement may not be
                    amended or modified otherwise than by a written agreement
                    executed by the parties hereto or their respective
                    successors and legal representatives.


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               (h)  Dispute /Resolution Procedures. If any question shall arise
                    in regard to the interpretation of any provision of this
                    Agreement or as to the rights and obligations of either of
                    the parties hereunder, the Employee and a designated
                    representative of the Company shall meet to negotiate and
                    attempt to resolve such question in good faith. The Employee
                    and such representative may, if they so desire, consult
                    outside experts for assistance in arriving at a resolution.
                    In the event that a resolution is not achieved within
                    fifteen (15) days after their first meeting, then either
                    party may submit the question for final resolution by
                    binding arbitration in accordance with the rules and
                    procedures of the American Arbitration Association
                    applicable to commercial transactions, and any judgment
                    thereon may be entered in any court having jurisdiction
                    thereof. The arbitration shall be held in Covington,
                    Kentucky. In the event of any arbitration, the Employee
                    shall select one arbitrator, the Company shall select one
                    arbitrator and the two arbitrators so selected shall select
                    a third arbitrator, any two of which arbitrators together
                    shall make the necessary determinations. All out-of-pocket
                    costs and expenses of the parties in connection with such
                    arbitration, including, without limitation, the fees of the
                    arbitrators and any administration fees and reasonable
                    attorney's fees and expenses, shall be borne by the parties
                    in such proportions as the arbitrators shall decide that
                    such expenses should, in equity, be apportioned.

               (i)  This Agreement shall supersede any previous agreement
                    between Employee and the Company with regard to the change
                    of control benefits, which is deemed to be terminated.

         IN WITNESS WHEREOF, the Employee and the Company have executed this
Agreement as of the day and year first above written.

I HAVE READ THIS CHANGE OF CONTROL SEVERANCE AGREEMENT AND, UNDERSTANDING ALL
ITS TERMS, INCLUDING THAT THIS AGREEMENT CONTAINS A BINDING ARBITRATION
PROVISION WHICH MAY BE ENFORCED BY THE PARTIES, I SIGN IT AS MY FREE ACT AND
DEED.

                                   Employee:

                                   /s/ Albert E. Ferrara, Jr.
                                   ----------------------------
                                   Albert E. Ferrara, Jr.

                                   Company:

                                   NS GROUP, INC.

                                   By: /s/ Rene J. Robichaud
                                       ---------------------
                                       Rene J. Robichaud
                                       President and Chief Executive Officer



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