EX-10.4



 







Exhibit 10.4




NS
GROUP, INC. NON-EQUITY PLAN

PERFORMANCE UNITS AGREEMENT




     This
Agreement (the “Agreement”) is made as of _______, 20___ (the “Date of Grant”),
by and between NS Group, Inc., a Kentucky corporation (the “Company”), and
_____________ (the “Grantee”).



     1. Grant of Performance Units. Subject to and upon the terms, conditions, and restrictions set
forth in this Agreement, the Company hereby grants to the Grantee
___ Performance Units (the
“Target Performance Units”) subject to the attainment of the criteria described in Section 2(a).
Each Performance Unit represents the contingent right to receive $1.00, subject to the terms and
conditions set forth in this Agreement.



     2. Earning of Performance Units.




          (a) The Grantee’s right to receive payment for any Performance Unit shall be determined on the
basis of the Company’s return on capital employed during each three-year period which commences
January 1, ___ and ends December 31,
___ (the “Performance Period”). Except as provided
in this Section 2, the applicable percentage of the Target Performance Units, if any, earned by the
Grantee shall range from 0% to 150%, based on the Company’s results during the Performance Period
and the performance criteria set forth in Exhibit A.




          (b) If, while in the continuous employ of the Company or a Subsidiary Company, the Grantee
dies, retires at age 62 with at least 5 years of continuous employment or becomes permanently
disabled (as determined by the Committee) prior to the date that the Performance Units are paid as
provided herein, the Grantee shall be entitled to receive a prorated portion of the value of the
Performance Units calculated under Section 2(a), determined by multiplying the value of the
Performance Units by a fraction, the numerator of which is the number of days during the
Performance Period that the Grantee was employed by the Company, or a Subsidiary and the
denominator of which is the total number of days during the Performance Period.




          (c) If a Change in Control occurs prior to the end of the Performance Period and while the
Grantee is in the continuous employ of the Company or a Subsidiary, the Grantee shall be entitled
to receive a prorated portion of the value of the Performance Units calculated under Section 2(a),
determined by multiplying the value of the Performance Units by a fraction, the numerator of which
is the number of days during the Performance Period that the Grantee was employed by the Company or
a Subsidiary and the denominator of which is the total number of days during the Performance
Period. The applicable percentage of the Target Performance Units earned by the Grantee shall be
determined by the Committee, in its discretion, by using a reasonable estimate of Company
performance.



     3. Payment of Performance Units.




          (a) Except as provided in Section 3(b), the value of the Target Performance Units earned as
provided in Section 2 and not forfeited as provided in Section 4 shall be paid to the Grantee (or
his beneficiary in the case of death) in cash as soon as administratively practicable after the
approval of audited financial results for the Performance Period, but in no event later than 75
days after the end of a Performance Period.



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NS
GROUP, INC. NON-EQUITY PLAN

PERFORMANCE UNITS AGREEMENT





          (b) Notwithstanding anything contained herein to the contrary, if a Change in Control occurs
prior to the date that the Performance Units are paid as provided herein and while the Grantee is
in the continuous employ of the Company or a Subsidiary, the value of the Performance Units earned
as provided in Section 2(a) or 2(c), as the case may be, shall be paid to the Grantee in cash
within 30 days after the date of the Change in Control.



     4. Forfeiture of Target Performance Units.




          (a) Except as provided in Section 3(b) and 4(b), the Performance Units shall be forfeited
automatically without further notice on the date the Grantee ceases to be continuously employed by
the Company or a Subsidiary.




          (b) Notwithstanding the provisions of Section 4(a), the Performance Units shall not be
forfeited upon the Grantee’s ceasing to be continuously employed by the Company or a Subsidiary if
the Grantee dies, retires at age 62 with at least 5 years of continuous employment or becomes
permanently disabled (as determined by the Committee).



     5. Transferability. The Performance Units may not be sold, exchanged, assigned, transferred,
pledged, encumbered or otherwise disposed of by the Grantee; provided, however,
that the Grantee’s rights with respect to such Performance Units may be transferred by will or
pursuant to the laws of descent and distribution. Any purported transfer or encumbrance in
violation of the provisions of this Section 5 shall be void, and the other party to any such
purported transaction shall not obtain any rights to or interest in such Performance Units.



     6. No Employment Contract. Nothing contained in this Agreement shall confer upon the Grantee
any right with respect to continuance of employment by the Company or a Subsidiary, nor limit or
affect in any manner the right of the Company or a Subsidiary to terminate the employment or adjust
the compensation of the Grantee.



     7. Taxes and Withholding. To the extent that the Company shall be required to withhold any
federal, state, local or other taxes in connection with the payment of the value of the Performance
Units, the Grantee hereby authorizes the necessary withholding by the Company to satisfy such tax
withholding obligations prior to payment.



     8. Compliance with Section 409A of the Code. To the extent applicable, it is intended that
this Agreement comply with the provisions of Section 409A of the Internal Revenue Code of 1986, as
amended (the “Code”). This Agreement shall be administered in a manner consistent with this intent,
and any provision that would cause the Agreement to fail to satisfy Section 409A of the Code shall have no force and effect until amended to comply with
Section 409A of the Code (which amendment may be retroactive to the extent permitted by Section
409A of the Code and may be made by the Company without the consent of the Grantee).



     9. Compliance with Law. The Company shall make reasonable efforts to comply with all
applicable laws; provided, however, that notwithstanding any other provision of this Agreement, the
Performance Units shall not be paid if the payment thereof would result in a violation of any such
law.



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NS
GROUP, INC. NON-EQUITY PLAN

PERFORMANCE UNITS AGREEMENT




     10. Continuous Employment. For purposes of this Agreement, the continuous employment of the
Grantee with the Company or a Subsidiary shall not be deemed to have been interrupted, and the
Grantee shall not be deemed to have ceased to be an employee of the Company or a Subsidiary, by
reason of the transfer of his employment among the Company or a Subsidiary or a leave of absence
approved by the Committee.



     11. Amendments. The Committee may modify this Agreement upon written notice to the Grantee.
Notwithstanding the foregoing and except as provided in Section 8 hereof, no amendment of this
Agreement shall adversely affect the rights of the Grantee under this Agreement without the
Grantee’s consent.



     12. 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.



     13. Administration; Entire Agreement. This Agreement contains the entire agreement and
understanding of the parties with respect to the subject matter contained in this Agreement, and
supersedes all prior written or oral communications, representations and negotiations in respect
thereto. The Committee, 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 settlement of the Performance Units. The interpretation and construction by the Committee
of any provision of this Agreement and any determination by the Committee pursuant to any provision
of this Agreement shall be final and conclusive. No member of the Committee shall be liable for any
such action or determination made in good faith.



     14. Successors and Assigns. Without limiting Section 5 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 Grantee, and the successors and assigns of the
Company.



     15. 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.



     16. Notices. Any notice to the Company provided for herein shall be in writing to the Company
and any notice to the Grantee shall be addressed to the Grantee at his or her address on file with
the Company. Except as otherwise provided herein, any written notice shall be deemed to be duly
given if and when delivered personally or deposited in the United States mail, first class
certified or registered mail, postage and fees prepaid, return receipt requested, and addressed as
aforesaid. Any party may change the address to which notices are to be given hereunder by written
notice to the other party as herein specified (provided that for this purpose any mailed notice
shall be deemed given on the third business day following deposit of the same in the United States
mail).



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NS
GROUP, INC. NON-EQUITY PLAN

PERFORMANCE UNITS AGREEMENT




     17. Unsecured Creditor. The Grantee acknowledges that no assets of the Company shall be
segregated for the purpose of payment under this Agreement or shall be held (or deemed to be held)
in trust for the benefit of the Grantee. It is the intention of the Grantee and the Company that
all payment obligations under this Agreement shall constitute at all times general unsecured
obligations of the Company.



     18. Definitions. Capitalized terms not otherwise defined herein shall have the following
meanings: (i) “Change in Control” shall have the meaning provided such term in the NS Group, Inc.
Equity Plan; (ii) “Committee” means the Compensation Committee of the Board of Directors of the
Company; and (iii) “Subsidiary” means a corporation, company or other entity which is designated by
the Committee and in which the Company has a direct or indirect ownership or other equity interest.



     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on its behalf by its
duly authorized officer and the Grantee has also executed this Agreement in duplicate, as of the
day and year first above written.



	 	 	 	 	 
	 	NS GROUP, INC.

 	 
	 	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 




     The undersigned hereby acknowledges receipt of an executed original of this Agreement and
accepts the award of Target Performance Units granted thereunder on the terms and conditions set
forth herein.



	 	 	 	 	 	 	 
	 
	 	 	 	 	 
	 	 	Grantee	 	 
	 
	 

	 	Date:	 	 	 	 






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NS
GROUP, INC. NON-EQUITY PLAN

PERFORMANCE UNITS AGREEMENT




Exhibit A



The performance goals used to determine the performance units earned under this Agreement is the
Company’s return on capital employed (“ROCE”). For purposes of this Agreement, ROCE shall equal
earnings before interest and taxes, divided by average capital employed for the applicable period.
Performance goals shall be calculated based on generally accepted accounting principles in effect
at the time the goals are established without regard to any change in accounting standards that may
be required by the Financial Accounting Standards Board after the goals are established.



In order to earn the performance award, ROCE for the Performance Period must:





	 	•	 	average 10% over the Performance Period; and
	 
	 	•	 	be at least 4% in the final year of the Performance Period; otherwise, the cash is
forfeited.




If earned, the performance award is paid in the following percentages:





	 	•	 	“Threshold” performance pays 50% of the target performance award amount
	 
	 	•	 	“Target” performance pays 100% of the target performance award amount, and
	 
	 	•	 	“Maximum” performance pays 150% of the target performance award amount




Points between “threshold” and “target” performance and between “target” and “maximum” will be
interpolated on a straight line basis. Upon achievement of performance goals, the cash award is
paid at the end of the Performance Period, subject to other provisions of the LTIP.





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