APPENDIX C
 
                                 NS GROUP, INC.
                                  EQUITY PLAN
 
1. PURPOSE OF THE PLAN. The purpose of this Plan is to attract, retain and
motivate officers and other key employees of NS Group, Inc. (the "Company") and
its Subsidiaries and to provide to such persons incentives and rewards for
superior performance and contribution. The Company has adopted the Plan
effective as of January 1, 2004, subject to the approval of the Company's
stockholders. Upon the approval of the adoption of the Plan by the Company's
stockholders, the Plan will replace and supersede the Company's prior Amended
and Restated 1995 Stock Option and Stock Appreciation Rights Plan, provided that
awards granted thereunder prior to January 1, 2004 will continue in accordance
with their terms.
 
2. DEFINITIONS. Capitalized terms used herein shall have the meanings assigned
to such terms in this Section 2.
 
         "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.
 
         "Applicable Laws" means the requirements relating to the administration
of equity-based compensation plans under U.S. state corporate laws, U.S. federal
and state securities laws, the Code, any stock exchange or quotation system on
which the Common Shares are listed or quoted and the applicable laws of any
other country or jurisdiction where awards are granted under the Plan.
 
         "Appreciation Right" means a right granted pursuant to Section 5 of
this Plan, and shall include both Tandem Appreciation Rights and Free-Standing
Appreciation Rights.
 
         "Base Price" means the price to be used as the basis for determining
the Spread upon the exercise of a Free-Standing Appreciation Right and a Tandem
Appreciation Right.
 
         "Board" means the Board of Directors of the Company.
 
         "Change in 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
 
                                       47
 
<PAGE>
 
              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 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; or
 
                  (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 such that such nominees, when
              added to any existing director remaining on the Board after such
              election who is an Affiliate of such Person or Group of Persons,
              will constitute a majority of the Board; 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.
 
         "Code" means the Internal Revenue Code of 1986, as amended.
 
         "Committee" means the Committee described in Section 15 of the Plan.
 
         "Common Shares" means the Common Stock of the Company or any security
into which such Common Shares may be changed by reason of any transaction or
event of the type referred to in Section 11 of this Plan.
 
         "Covered Employee" means a Participant who is, or is determined by the
Committee to be likely to become, a "covered employee" within the meaning of
Section 162(m) of the Code (or any successor provision).
 
         "Date of Grant" means the date specified by the Committee on which a
grant of Option Rights, Appreciation Rights, Performance Units or Performance
Shares or a grant or sale of Restricted Shares or Deferred Shares shall become
effective.
 
         "Deferral Period" means the period of time during which Deferred Shares
are subject to deferral limitations under Section 8 of this Plan.
 
         "Deferred Shares" means an award made pursuant to Section 8 of this
Plan of the right to receive Common Shares at the end of a specified Deferral
Period.
 
         "Director" means a member of the Board of Directors of the Company.
 
                                       48
 
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         "Evidence of Award" means an agreement, certificate, resolution or
other type or form of writing or other evidence approved by the Committee which
sets forth the terms and conditions of the Option Rights, Appreciation Rights,
Performance Units, Performance Shares, Restricted Shares or Deferred Shares. An
Evidence of Award may be in an electronic medium, may be limited to a notation
on the books and records of the Company and, with the approval of the Committee,
need not be signed by a representative of the Company or a Participant.
 
         "Exchange Act" means the Securities Exchange Act of 1934 and the rules
and regulations thereunder, as such law, rules and regulations may be amended
from time to time.
 
         "Free-Standing Appreciation Right" means an Appreciation Right granted
pursuant to Section 5 of this Plan that is not granted in tandem with an Option
Right.
 
         "Incentive Stock Options" means Option Rights that are intended to
qualify as "incentive stock options" under Section 422 of the Code or any
successor provision.
 
         "Management Objectives" means the measurable performance objective or
objectives established pursuant to this Plan for Participants who have received
grants of Performance Units or Performance Shares or, when so determined by the
Committee, Option Rights, Appreciation Rights and Restricted Shares pursuant to
this Plan. Management Objectives may be described in terms of Company-wide
objectives or objectives that are related to the performance of the individual
Participant or of the Subsidiary, division, department, region or function
within the Company or Subsidiary in which the Participant is employed. The
Management Objectives may be made relative to the performance of other
corporations. The Management Objectives applicable to any award to a Covered
Employee shall be based on specified levels of or growth in one or more of the
following criteria: revenues, earnings from operations, earnings before or after
interest and taxes, net income, cash flow, earnings per share, debt to capital
ratio, economic value added, return on total capital, return on invested
capital, return on equity, return on assets, total return to shareholders,
earnings before or after interest, depreciation, amortization or extraordinary
or special items, return on investment, free cash flow, cash flow return on
investment (discounted or otherwise), net cash provided by operations, cash flow
in excess of cost of capital, operating margin, profit margin, stock price
and/or strategic business criteria consisting of one or more objectives based on
meeting specified product development, strategic partnering, research and
development, market penetration, geographic business expansion goals, cost
targets, customer satisfaction, employee satisfaction, management of employment
practices and employee benefits, supervision of litigation and information
technology, and goals relating to acquisitions or divestitures of subsidiaries,
affiliates and joint ventures. Management Objectives may be stated as a
combination of the listed factors. If the Committee determines that a change in
the business, operations, corporate structure or capital structure of the
Company, or the manner in which it conducts its business, or other events or
circumstances (including those events and circumstances described in Section 11
of this Plan) render the Management Objectives unsuitable, the Committee may in
its discretion modify such Management Objectives or the related minimum
acceptable level of achievement, in whole or in part, as the Committee deems
appropriate and equitable, except in the case of a Covered Employee to the
extent that such action would result in the loss of the otherwise available
exemption of the award under Section 162(m) of the Code.
 
         "Market Value per Share" means, as of any particular date, (i) the
closing sale price per Common Share as reported on the principal exchange on
which Common Shares are then trading, if any, or, if applicable, the NASDAQ
National Market System, or if there are no sales on such day, on the next
preceding trading day during which a sale occurred, or (ii) if clause (i) does
not apply, the fair market value of the Common Shares as determined by the
Committee.
 
                                       49
 
<PAGE>
 
         "Optionee" means the optionee named in an agreement evidencing an
outstanding Option Right.
 
         "Option Price" means the purchase price payable on exercise of an
Option Right.
 
         "Option Right" means the right to purchase Common Shares from the
Company upon the exercise of an option granted pursuant to Section 4 of this
Plan.
 
         "Participant" means a person who is selected by the Committee to
receive benefits under this Plan and who is at the time an employee of the
Company or any of its Subsidiaries (including an executive officer) or a person
who has been offered employment by the Company or a Subsidiary, provided that
such prospective employee may not receive any payment or exercise the right
relating to any award until such person has commenced employment with the
Company or a Subsidiary.
 
         "Performance Period" means, in respect of a Performance Unit or
Performance Share, a period of time established pursuant to Section 6 of this
Plan within which the Management Objectives relating to such Performance Share
or Performance Unit are to be achieved.
 
         "Performance Share" means a bookkeeping entry that records the
equivalent of one Common Share awarded pursuant to Section 6 of this Plan.
 
         "Performance Unit" means a bookkeeping entry that records a unit
equivalent to $1.00 awarded pursuant to Section 6 of this Plan.
 
         "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.
 
         "Plan" means this NS Group, Inc. Equity Plan, as amended from time to
time.
 
         "Restricted Shares" means Common Shares granted or sold pursuant to
Section 7 of this Plan as to which neither the substantial risk of forfeiture
nor the prohibition on transfers referred to in such Section 7 has expired.
 
         "Spread" means the excess of the Market Value per Share on the date
when an Appreciation Right is exercised, over the Option Price or Base Price
provided for in the related Option Right or Free-Standing Appreciation Right,
respectively.
 
         "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, provided, however, that for purposes of
determining whether any person may be a Participant for purposes of any grant of
Incentive Stock Options, "Subsidiary" means any corporation in which at the time
the Company owns or controls, directly or indirectly, more than 50 percent of
the total combined voting power represented by all classes of stock issued by
such corporation.
 
         "Tandem Appreciation Right" means an Appreciation Right granted
pursuant to Section 5 of this Plan that is granted in tandem with an Option
Right.
 
         "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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<PAGE>
 
3. SHARES AVAILABLE UNDER THE PLAN.
 
     a.   Subject to adjustment as provided in Section 3(b) and Section 10 of
          this Plan, the number of Common Shares that may be issued or
          transferred (i) upon the exercise of Option Rights or Appreciation
          Rights, (ii) as Restricted Shares and released from substantial risks
          of forfeiture thereof, (iii) as Deferred Shares, (iv) in payment of
          Performance Units or Performance Shares that have been earned, (v) in
          payment of awards granted under Section 9 of the Plan or (vi) in
          payment of dividend equivalents paid with respect to deferred
          issuances and settlements of awards made under the Plan shall not
          exceed in the aggregate 1,000,000 Common Shares, plus any shares
          described in Section 3(b). Such shares may be shares of original
          issuance, treasury shares or a combination of the foregoing.
 
     b.   The Committee may adopt reasonable counting procedures to ensure
          appropriate counting, avoid double counting (as, for example, in the
          case of tandem or substitute awards) and make adjustments in the
          number of Common Shares available in Section 3(a) above or otherwise
          specified in the Plan or in any award granted hereunder if the number
          of Common Shares actually delivered differs from the number of Common
          Shares previously counted in connection with an award. Common Shares
          subject to an award that is canceled, expired, forfeited, settled in
          cash or is otherwise terminated without a delivery of Common Shares to
          the Participant will again be available for awards, and Common Shares
          withheld in payment of the exercise price or taxes relating to an
          award and Common Shares equal to the number surrendered in payment of
          any exercise price or taxes relating to an award shall be deemed to
          constitute Common Shares not delivered to the Participant and shall be
          deemed to again be available for awards under the Plan. This Section
          3(b) shall apply to the number of Common Shares reserved and available
          for Incentive Stock Options only to the extent consistent with
          applicable Treasury regulations relating to Incentive Stock Options
          under the Code.
 
     c.   Notwithstanding anything in this Section 3, or elsewhere in this Plan,
          to the contrary and subject to adjustment as provided in Section 11 of
          this Plan, (i) the aggregate number of Common Shares actually issued
          or transferred by the Company upon the exercise of Incentive Stock
          Options shall not exceed 800,000 Common Shares; (ii) no Participant
          shall be granted Option Rights and Appreciation Rights, in the
          aggregate, for more than 300,000 Common Shares during any calendar
          year; and (iii) the number of Performance Shares that may be granted
          and paid out under this Plan, and the number of Restricted Shares,
          Deferred Shares and Common Shares awarded under Section 9 of the Plan
          (after taking forfeitures into account) shall not exceed, in the
          aggregate, 200,000.
 
     d.   Notwithstanding any other provision of this Plan to the contrary, in
          no event shall any Participant in any calendar year receive an award
          of Performance Shares, Performance Units or Restricted Shares
          specifying Management Objectives having an aggregate maximum value as
          of their respective Dates of Grant in excess of $400,000.
 
4. OPTION RIGHTS. The Committee may, from time to time and upon such terms and
conditions as it may determine, authorize the granting to Participants of Option
Rights to purchase shares of Common Stock. Each such grant may utilize any or
all of the authorizations, and shall be subject to all of the limitations,
contained in the following provisions:
 
                                       51
 
<PAGE>
 
     a.   Each grant shall specify the number of shares of Common Stock to which
          it pertains, subject to adjustments as provided in Section 11 of this
          Plan.
 
     b.   Each grant shall specify an Option Price per share, which shall be
          equal to or greater than the Market Value per Share on the Date of
          Grant.
 
     c.   Each grant shall specify whether the Option Price shall be payable (i)
          in cash or by check acceptable to the Company, (ii) by the actual or
          constructive transfer to the Company of Common Shares owned by the
          Optionee not less than 6 months having a value at the time of exercise
          equal to the total Option Price, or (iii) by a combination of such
          methods of payment.
 
     d.   To the extent permitted by law, any grant may provide for deferred
          payment of the Option Price from the proceeds of sale through a bank
          or broker on a date satisfactory to the Company of some or all of the
          shares to which such exercise relates.
 
     e.   To the extent permitted by law, any grant may provide for payment of
          the Option Price, at the election of the Optionee, in installments,
          with or without interest, upon terms determined by the Committee.
 
     f.   Successive grants may be made to the same Participant whether or not
          any Option Rights previously granted to such Participant remain
          unexercised.
 
     g.   Each grant shall specify the period or periods of continuous service
          by the Optionee with the Company or any Subsidiary that is necessary
          before the Option Rights or installments thereof will become
          exercisable.
 
     h.   Any grant of Option Rights may specify Management Objectives that must
          be achieved as a condition to the exercise of such rights.
 
     i.   Option Rights granted under this Plan may be (i) options, including,
          without limitation, Incentive Stock Options, that are intended to
          qualify under particular provisions of the Code, (ii) options that are
          not intended so to qualify, or (iii) combinations of the foregoing.
 
     j.   The exercise of an Option Right shall result in the cancellation on a
          share-for-share basis of any Tandem Appreciation Right authorized
          under Section 5 of this Plan.
 
     k.   No Option Right shall be exercisable more than 10 years from the Date
          of Grant.
 
     l.   Each grant of Option Rights shall be evidenced by an Evidence of Award
          which shall contain such terms and provisions, consistent with this
          Plan and applicable sections of the Code, as the Committee may
          approve.
 
                                       52
 
<PAGE>
 
5. APPRECIATION RIGHTS.
 
     a.   The Committee may authorize the granting (i) to any Optionee, of
          Tandem Appreciation Rights in respect of Option Rights granted
          hereunder, and (ii) to any Participant, of Free-Standing Appreciation
          Rights. A Tandem Appreciation Right shall be a right of the Optionee,
          exercisable by surrender of the related Option Right, to receive from
          the Company an amount determined by the Committee, which shall be
          expressed as a percentage of the Spread (not exceeding 100 percent) at
          the time of exercise. Tandem Appreciation Rights may be granted at any
          time prior to the exercise or termination of the related Option
          Rights; provided, however, that a Tandem Appreciation Right awarded in
          relation to an Incentive Stock Option must be granted concurrently
          with such Incentive Stock Option. A Free-Standing Appreciation Right
          shall be a right of the Participant to receive from the Company an
          amount determined by the Committee, which shall be expressed as a
          percentage of the Spread (not exceeding 100 percent) at the time of
          exercise.
 
     b.   Each grant of Appreciation Rights may utilize any or all of the
          authorizations, and shall be subject to all of the requirements,
          contained in the following provisions:
 
                  (i)      Any grant may specify that the amount payable on
                           exercise of an Appreciation Right may be paid by the
                           Company in cash, in Common Shares or in any
                           combination thereof and may either grant to the
                           Participant or retain in the Committee the right to
                           elect among those alternatives.
 
                  (ii)     Any grant may specify that the amount payable on
                           exercise of an Appreciation Right may not exceed a
                           maximum specified by the Committee at the Date of
                           Grant.
 
                  (iii)    Any grant may specify waiting periods before exercise
                           and permissible exercise dates or periods.
 
                  (iv)     Each grant of an Appreciation Right shall be
                           evidenced by an Evidence of Award, which shall
                           describe such Appreciation Right, identify any
                           related Option Right, state that such Appreciation
                           Right is subject to all the terms and conditions of
                           this Plan, and contain such other terms and
                           provisions, consistent with this Plan and applicable
                           sections of the Code, as the Committee may approve.
 
     c.   Any grant of Tandem Appreciation Rights shall provide that such Rights
          may be exercised only at a time when the related Option Right is also
          exercisable and at a time when the Spread is positive, and by
          surrender of the related Option Right for cancellation.
 
     d.   Regarding Free-Standing Appreciation Rights only:
 
                  (i)      Each grant shall specify in respect of each
                           Free-Standing Appreciation Right a Base Price, which
                           shall be equal to or greater than the Market Value
                           per Share on the Date of Grant;
 
                  (ii)     Successive grants may be made to the same Participant
                           regardless of whether any Free-Standing Appreciation
                           Rights previously granted to the Participant remain
                           unexercised; and
 
                  (iii)    No Free-Standing Appreciation Right granted under
                           this Plan may be exercised more than 10 years from
                           the Date of Grant.
 
                                       53
 
 
<PAGE>
 
6. PERFORMANCE UNITS AND PERFORMANCE SHARES. The Committee may also authorize
the granting to Participants of Performance Units and Performance Shares that
will become payable (or payable early) to a Participant upon achievement of
specified Management Objectives. Each such grant may utilize any or all of the
authorizations, and shall be subject to all of the limitations, contained in the
following provisions:
 
     a.   Each grant shall specify the number of Performance Units or
          Performance Shares to which it pertains, which number may be subject
          to adjustment to reflect changes in compensation or other factors;
          provided, however, that no such adjustment shall be made in the case
          of a Covered Employee where such action would result in the loss of
          the otherwise available exemption of the award under Section 162(m) of
          the Code.
 
     b.   The Performance Period with respect to each Performance Unit or
          Performance Share shall be such period of time (not less than 3 years,
          except in the event of a Change in Control, if the Committee shall so
          determine) commencing with the Date of Grant as shall be determined by
          the Committee at the time of grant.
 
     c.   Any grant of Performance Units or Performance Shares shall specify
          Management Objectives which, if achieved, will result in payment or
          early payment of the award, and each grant may specify in respect of
          such specified Management Objectives a minimum acceptable level of
          achievement and shall set forth a formula for determining the number
          of Performance Units or Performance Shares that will be earned if
          performance is at or above the minimum level, but falls short of full
          achievement of the specified Management Objectives. The grant of
          Performance Units or Performance Shares shall specify that, before the
          Performance Shares or Performance Units shall be earned and paid, the
          Committee must determine that the Management Objectives have been
          satisfied
 
     d.   Each grant shall specify the time and manner of payment of Performance
          Units or Performance Shares that have been earned. Any grant may
          specify that the amount payable with respect thereto may be paid by
          the Company to the Participant in cash, in Common Shares or in any
          combination thereof, and may either grant to the Participant or retain
          in the Committee the right to elect among those alternatives.
 
     e.   Any grant of Performance Units may specify that the amount payable or
          the number of Common Shares issued with respect thereto may not exceed
          maximums specified by the Committee at the Date of Grant. Any grant of
          Performance Shares may specify that the amount payable with respect
          thereto may not exceed a maximum specified by the Committee at the
          Date of Grant.
 
     f.   Each grant of Performance Units or Performance Shares shall be
          evidenced by an Evidence of Award, which shall contain such terms and
          provisions, consistent with this Plan and applicable sections of the
          Code, as the Committee may approve.
 
                                       54
 
<PAGE>
 
7. RESTRICTED SHARES. The Committee may also authorize the grant or sale of
Restricted Shares to Participants. Each such grant or sale may utilize any or
all of the authorizations, and shall be subject to all of the limitations,
contained in the following provisions:
 
     a.   Each such grant or sale shall constitute an immediate transfer of the
          ownership of Common Shares to the Participant in consideration of the
          performance of services, entitling such Participant to voting,
          dividend and other ownership rights, but subject to the substantial
          risk of forfeiture and restrictions on transfer hereinafter referred
          to.
 
     b.   Each such grant or sale may be made without additional consideration
          or in consideration of a payment by such Participant that is less than
          Market Value per Share at the Date of Grant.
 
     c.   Each such grant or sale shall provide that the Restricted Shares
          covered by such grant or sale shall be subject to a "substantial risk
          of forfeiture" within the meaning of Section 83 of the Code for a
          period of not less than 3 years to be determined by the Committee at
          the Date of Grant and may provide for the earlier lapse of such
          substantial risk of forfeiture in the event of a Change in Control.
 
     d.   Each such grant or sale shall provide that during the period for which
          such substantial risk of forfeiture is to continue, the
          transferability of the Restricted Shares shall be prohibited or
          restricted in the manner and to the extent prescribed by the Committee
          at the Date of Grant (which restrictions may include, without
          limitation, rights of repurchase or first refusal in the Company or
          provisions subjecting the Restricted Shares to a continuing
          substantial risk of forfeiture in the hands of any transferee).
 
     e.   Any grant of Restricted Shares may specify Management Objectives that,
          if achieved, will result in termination or early termination of the
          restrictions applicable to such shares. Each grant may specify in
          respect of such Management Objectives a minimum acceptable level of
          achievement and may set forth a formula for determining the number of
          Restricted Shares on which restrictions will terminate if performance
          is at or above the minimum level, but falls short of full achievement
          of the specified Management Objectives.
 
     f.   Any such grant or sale of Restricted Shares may require that any or
          all dividends or other distributions paid thereon during the period of
          such restrictions be automatically deferred and reinvested in
          additional Restricted Shares, which may be subject to the same
          restrictions as the underlying award.
 
     g.   Each grant or sale of Restricted Shares shall be evidenced by an
          Evidence of Award, which shall contain such terms and provisions,
          consistent with this Plan and applicable sections of the Code, as the
          Committee may approve. Unless otherwise directed by the Committee, all
          certificates representing Restricted Shares shall be held in custody
          by the Company until all restrictions thereon shall have lapsed,
          together with a stock power or powers executed by the Participant in
          whose name such certificates are registered, endorsed in blank and
          covering such Shares.
 
                                       55
 
<PAGE>
 
8. DEFERRED SHARES. The Committee may also authorize the grant or sale of
Deferred Shares to Participants. Each such grant or sale may utilize any or all
of the authorizations, and shall be subject to all of the requirements contained
in the following provisions:
 
     a.   Each such grant or sale shall constitute the agreement by the Company
          to deliver Common Shares to the Participant in the future in
          consideration of the performance of services, but subject to the
          fulfillment of such conditions during the Deferral Period as the
          Committee may specify.
 
     b.   Each such grant or sale may be made without additional consideration
          or in consideration of a payment by such Participant that is less than
          the Market Value per Share at the Date of Grant.
 
     c.   Each such grant or sale shall be subject to a Deferral Period of not
          less than 3 years, as determined by the Committee at the Date of
          Grant, and may provide for the earlier lapse or other modification of
          such Deferral Period in the event of a Change in Control.
 
     d.   During the Deferral Period, the Participant shall have no right to
          transfer any rights under his or her award and shall have no rights of
          ownership in the Deferred Shares and shall have no right to vote them.
 
     e.   Each grant or sale of Deferred Shares shall be evidenced by an
          Evidence of Award, which shall contain such terms and provisions,
          consistent with this Plan and applicable sections of the Code, as the
          Committee may approve.
 
9. OTHER AWARDS.
 
     a.   The Committee is authorized, subject to limitations under applicable
          law, to grant to any Participant such other awards that may be
          denominated or payable in, valued in whole or in part by reference to,
          or otherwise based on, or related to, Common Shares or factors that
          may influence the value of Common Shares, including, without
          limitation, convertible or exchangeable debt securities, other rights
          convertible or exchangeable into Common Shares, purchase rights for
          Common Shares, awards with value and payment contingent upon
          performance of the Company or business units thereof or any other
          factors designated by the Committee, and awards valued by reference to
          the book value of Common Shares or the value of securities of, or the
          performance of specified Subsidiaries or affiliates or other business
          units of, the Company. The Committee shall determine the terms and
          conditions of such awards. Common Shares delivered pursuant to an
          award in the nature of a purchase right granted under this Section 9
          shall be purchased for such consideration, paid for at such times, by
          such methods, and in such forms, including, without limitation, cash,
          Common Shares, other awards, notes or other property, as the Committee
          shall determine.
 
     b.   Cash awards, as an element of or supplement to any other award granted
          under this Plan, may also be granted pursuant to this Section 9 of the
          Plan.
 
     c.   The Committee is authorized to grant Common Shares as a bonus, or to
          grant Common Shares or other awards in lieu of obligations of the
          Company or a Subsidiary to pay cash or deliver other property under
          the Plan or under other plans or compensatory
 
                                       56
 
<PAGE>
          arrangements, subject to such terms as shall be determined by the
          Committee.
 
10. TRANSFERABILITY.
 
     a.   Except as otherwise determined by the Committee, no Option Right,
          Appreciation Right or other derivative security granted under the Plan
          shall be transferable by a Participant other than by will or the laws
          of descent and distribution. Except as otherwise determined by the
          Committee, Option Rights and Appreciation Rights shall be exercisable
          during the Optionee's lifetime only by him or her or by his or her
          guardian or legal representative.
 
     b.   The Committee may specify at the Date of Grant that part or all of the
          Common Shares that are (i) to be issued or transferred by the Company
          upon the exercise of Option Rights or Appreciation Rights, upon the
          termination of the Deferral Period applicable to Deferred Shares or
          upon payment under any grant of Performance Units or Performance
          Shares or (ii) no longer subject to the substantial risk of forfeiture
          and restrictions on transfer referred to in Section 7 of this Plan,
          shall be subject to further restrictions on transfer.
 
11. ADJUSTMENTS. The Committee may make or provide for such adjustments in the
numbers of Common Shares covered by outstanding Option Rights, Appreciation
Rights, Performance Shares, Deferred Shares and share-based awards described in
Section 9 of the Plan granted hereunder, in the Option Price and Base Price
provided in outstanding Appreciation Rights, and in the kind of shares covered
thereby, as the Committee, in its sole discretion, exercised in good faith, may
determine is equitably required to prevent dilution or enlargement of the rights
of Participants or Optionees 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, or (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), 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. Moreover, in the event of any such
transaction or event, the Committee, in its discretion, may provide in
substitution for any or all outstanding awards under this Plan such alternative
consideration as it, in good faith, may determine to be equitable in the
circumstances and may require in connection therewith the surrender of all
awards so replaced. The Committee may also make or provide for such adjustments
in the numbers of shares specified in Section 3 of this Plan as the Committee in
its sole discretion, exercised in good faith, may determine is appropriate to
reflect any transaction or event described in this Section 11; provided,
however, that any such adjustment to the number specified in Section 3(c)(i)
shall be made only if and to the extent that such adjustment would not cause any
Option intended to qualify as an Incentive Stock Option to fail so to qualify.
 
12. FRACTIONAL SHARES. The Company shall not be required to issue any fractional
Common Shares pursuant to this Plan. The Committee may provide for the
elimination of fractions or for the settlement of fractions in cash.
 
13. WITHHOLDING TAXES. The Company shall have the right to deduct from any
payment under this Plan an amount equal to the federal, state, local, foreign
and other taxes which in the opinion of the Company are required to be withheld
by it with respect to such payment and to the extent that the amounts available
to the Company for such withholding are insufficient, it shall be a condition to
the receipt of such payment or the realization of such benefit that the
Participant or such other person make arrangements satisfactory to the Company
for payment of the balance of such taxes required to be withheld. At the
discretion of the Committee, such arrangements may include relinquishment of a
portion
 
                                       57
 
<PAGE>
 
of such benefit. In no event, however, shall the Company accept Common Shares
for payment of taxes in excess of required tax withholding rates, except that,
in the discretion of the Committee, a Participant or such other person may
surrender Common Shares owned for more than 6 months to satisfy any tax
obligations resulting from any such transaction.
 
14. FOREIGN EMPLOYEES. In order to facilitate the making of any grant or
combination of grants under this Plan, the Committee may provide for such
special terms for awards to Participants who are foreign nationals or who are
employed by the Company or any Subsidiary outside of the United States of
America as the Committee may consider necessary or appropriate to accommodate
differences in local law, tax policy or custom. Moreover, the Committee may
approve such supplements to or amendments, restatements or alternative versions
of this Plan as it may consider necessary or appropriate for such purposes,
without thereby affecting the terms of this Plan as in effect for any other
purpose, and the Corporate Secretary or other appropriate officer of the Company
may certify any such document as having been approved and adopted in the same
manner as this Plan. No such special terms, supplements, amendments or
restatements, however, shall include any provisions that are inconsistent with
the terms of this Plan as then in effect unless this Plan could have been
amended to eliminate such inconsistency without further approval by the
shareholders of the Company.
 
15. ADMINISTRATION OF THE PLAN.
 
     a.   This Plan shall be administered by one or more Committees (or
          subcommittees thereof) consisting of not less than two Directors
          appointed by the Board each of whom shall be a "non-employee director"
          as defined in Rule 16b-3 of the Exchange Act and an "outside director"
          as defined in the regulations under Section 162(m) of the Code. A
          majority of the Committee shall constitute a quorum, and the action of
          the members of the Committee present at any meeting at which a quorum
          is present, or acts unanimously approved in writing, shall be the acts
          of the Committee. The Board may perform any function of the Committee
          hereunder, in which case the term "Committee" shall refer to the
          Board.
 
     b.   The interpretation and construction by the Committee of any provision
          of this Plan or of any agreement, notification or document evidencing
          the grant of Option Rights, Appreciation Rights, Restricted Shares,
          Deferred Shares, Performance Units, Performance Shares or any awards
          granted under Section 9 of the Plan and any determination by the
          Committee pursuant to any provision of this Plan or of any such
          agreement, notification or document shall be final and conclusive. No
          member of the Committee shall be liable for any such action or
          determination made in good faith.
 
16. AMENDMENTS AND OTHER MATTERS.
 
     a.   The Board may at any time and from time to time amend the Plan in
          whole or in part; provided, however, that any amendment which must be
          approved by the shareholders of the Company in order to comply with
          applicable law or the rules of the New York Stock Exchange or, if the
          Common Shares are not traded on the New York Stock Exchange, the
          principal national securities exchange upon which the Common Shares
          are traded or quoted, shall not be effective unless and until such
          approval has been obtained. Presentation of this Plan or any amendment
          thereof for shareholder approval shall not be construed to limit the
          Company's authority to offer similar or dissimilar benefits under
          other plans or otherwise with or without shareholder approval. Without
          limiting the generality of the foregoing, the Board of Directors may
          amend this Plan to eliminate provisions which are no longer necessary
          as a result in changes in tax or
 
                                       58
 
<PAGE>
 
          securities laws or regulations, or in the interpretation thereof.
 
     b.   The Committee shall not, without the further approval of the
          shareholders of the Company, authorize the amendment of any
          outstanding Option Right to reduce the Option Price. Furthermore, no
          Option Right shall be cancelled and replaced with awards having a
          lower Option Price without further approval of the shareholders of the
          Company. This Section 16(b) is intended to prohibit the repricing of
          "underwater" Option Rights and shall not be construed to prohibit the
          adjustments provided for in Section 11 of this Plan.
 
     c.   The Committee also may permit Participants to elect to defer the
          issuance of Common Shares or the settlement of awards in cash under
          the Plan pursuant to such rules, procedures or programs as it may
          establish for purposes of this Plan. The Committee also may provide
          that deferred issuances and settlements include the payment or
          crediting of dividend equivalents or interest on the deferral amounts.
 
     d.   The Committee may condition the grant of any award or combination of
          awards authorized under this Plan on the deferral by the Participant
          of his or her right to receive a cash bonus or other compensation
          otherwise payable by the Company or a Subsidiary to the Participant.
 
     e.   In case of termination of employment by reason of death, disability or
          normal or early retirement, or in the case of hardship or other
          special circumstances, of a Participant who holds an Option Right or
          Appreciation Right not immediately exercisable in full, or any
          Restricted Shares as to which the substantial risk of forfeiture or
          the prohibition or restriction on transfer has not lapsed, or any
          Deferred Shares as to which the Deferral Period has not been
          completed, or any Performance Units or Performance Shares which have
          not been fully earned, or who holds Common Shares subject to any
          transfer restriction imposed pursuant to Section 7 of this Plan, the
          Committee may, in its sole discretion, accelerate the time at which
          such Option Right or Appreciation Right may be exercised or the time
          at which such substantial risk of forfeiture or prohibition or
          restriction on transfer will lapse or the time when such Deferral
          Period will end or the time at which such Performance Units or
          Performance Shares will be deemed to have been fully earned or the
          time when such transfer restriction will terminate. In addition, the
          Committee may waive any other limitation or requirement under any
          award described in the preceding sentence, except in the case of a
          Covered Employee where such action would result in the loss of the
          otherwise available exemption of the award under Section 162(m) of the
          Code. In such case, the Committee shall not make any modification of
          the Management Objectives or minimum acceptable level of achievement.
          With respect to any Participant the Committee may, in its sole
          discretion, accelerate the time at which any Option Right or
          Appreciation Right may be exercised or the time when a Performance
          Unit or Performance Share shall be deemed to have been fully earned or
          the time when a substantial risk of forfeiture or prohibition on
          transfer of Restricted Shares shall lapse or the time when a Deferral
          Period shall end in connection with a Change in Control of the
          Company. In addition, the Committee may, in its sole discretion,
          modify any Option Right or Appreciation Right to extend the period
          following termination of a Participant's employment to the Company or
          any Subsidiary during which such award will remain outstanding and be
          exercisable, provided that no such extension shall result in any award
          being exercisable more than ten years after the Date of Grant.
 
                                       59
 
<PAGE>
 
     f.   This Plan shall not confer upon any Participant any right with respect
          to continuance of employment with the Company or any Subsidiary, nor
          shall it interfere in any way with any right the Company or any
          Subsidiary would otherwise have to terminate such Participant's
          employment at any time.
 
     g.   To the extent that any provision of this Plan would prevent any Option
          Right that was intended to qualify as an Incentive Stock Option from
          qualifying as such, that provision shall be null and void with respect
          to such Option Right. Such provision, however, shall remain in effect
          for other Option Rights and there shall be no further effect on any
          provision of this Plan.
 
     h.   Subject to Section 18, this Plan shall continue in effect until the
          date on which all Common Shares available for issuance or transfer
          under this Plan have been issued or transferred and the Company has no
          further obligation hereunder.
 
     i.   Neither a Participant nor any other person shall, by reason of
          participation in the Plan, acquire any right or title to any assets,
          funds or property of the Company or any Subsidiary, including without
          limitation, any specific funds, assets or other property which the
          Company or any Subsidiary may set aside in anticipation of any
          liability under the Plan. A Participant shall have only a contractual
          right to an award or the amounts, if any, payable under the Plan,
          unsecured by any assets of the Company or any Subsidiary, and nothing
          contained in the Plan shall constitute a guarantee that the assets of
          the Company or any Subsidiary shall be sufficient to pay any benefits
          to any person.
 
     j.   This Plan and each Evidence of Award shall be governed by the laws of
          the Commonwealth of Kentucky, excluding any conflicts or choice of law
          rule or principle that might otherwise refer construction or
          interpretation of the Plan to the substantive law of another
          jurisdiction.
 
     k.   If any provision of the Plan is or becomes invalid, illegal or
          unenforceable in any jurisdiction, or would disqualify the Plan or any
          award under any law deemed applicable by the Committee, such provision
          shall be construed or deemed amended or limited in scope to conform to
          applicable laws or, in the discretion of the Committee, it shall be
          stricken and the remainder of the Plan shall remain in full force and
          effect.
 
17. APPLICABLE LAWS. The obligations of the Company with respect to awards under
the Plan shall be subject to all Applicable Laws and such approvals by any
governmental agencies as the Committee determines may be required.
 
18. TERMINATION. No grant shall be made under this Plan more than 10 years after
the date on which this Plan is first adopted by the Board, but all grants made
on or prior to such date shall continue in effect thereafter subject to the
terms thereof and of this Plan.