EXHIBIT 10

LSI INDUSTRIES INC.
NONQUALIFIED DEFERRED COMPENSATION PLAN
(Amended and Restated as of December 31, 2008)
 

 
PREAMBLE

LSI Industries Inc. and each Employer hereby amend and restate the Plan
effective as of December 31, 2008 as set forth herein.  The Plan was originally
effective as of September 15, 1996.  The Plan was amended and restated as of
July 1, 1998, July 1, 2002, April 27, 2004, September 9, 2005, and November 1,
2006.  This amendment and restatement is intended to bring the Plan document
into compliance with Section 409A of the Internal Revenue Code of 1986 and the
final regulations issued thereunder.  This Plan is an unfunded deferred
compensation arrangement for a select group of management or highly compensated
employees who are rendering service to an Employer.

ARTICLE I.  DEFINITIONS

1.1
“Beneficiary” shall mean the person or persons entitled to receive the
distributions, if any, payable under the Plan upon or after a Participant’s
death, to such person or persons as such Participant’s Beneficiary.  Each
Participant may designate a Beneficiary by filing the proper form with the
Committee.  A Participant may designate one or more contingent Beneficiaries to
receive any distributions after the death of a prior Beneficiary.  A designation
shall be effective upon said filing, provided that it is so filed during such
Participant’s lifetime, and may be changed from time to time by the Participant.

1.2
“Code” shall mean the Internal Revenue Code of 1986 as amended.

1.3
“Committee” shall mean the Compensation Committee of the Board of Directors of
LSI Industries Inc. which is responsible for the administration of this Plan in
accordance with the provisions of the Plan as set forth in this document.

1.4
“Compensation” shall mean the total amount of earnings (including bonuses) paid
by an Employer to an Executive or which would otherwise be paid but for a
deferral election hereunder or a salary reduction election under any Code
Section 401(k) plan or Code Section 125 plan.

1.5
“Deferred Compensation Account” shall mean the account to be established by an
Employer as a book reserve to reflect the amounts deferred by a Participant, the
amounts credited by the Employer, and the earnings adjustment under Article
VI.  A Participant’s Deferred Compensation Account shall be reduced by
distributions under Paragraph 6.2, Article VII and Article VIII.

1.6
“Effective Date” shall mean December 31, 2008 for purposes of this amendment and
restatement.  The provisions of the Plan that have been amended for compliance
with Code Section 409A shall be effective for deferrals made on or after January
1, 2005, unless otherwise provided.

 
 

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1.7
“Employer” shall mean LSI Industries Inc. and any affiliate of LSI Industries
Inc. (whether or not incorporated) which has adopted the Plan with the consent
of LSI Industries Inc., or any successor or assignee of any of them.

1.8
“Executive” shall mean any employee designated by the Committee (in conjunction
with senior management of LSI Industries Inc.) as a member of the select group
of management or highly compensated employees eligible for participation in this
Plan.

1.9
“Participant” shall mean any Executive who has a right to a benefit under the
Plan and a person who was such at the time of the Executive’s death or
Separation from Service and who retains, or whose Beneficiary retains, a benefit
under the Plan which has not been distributed.

1.10
“Plan” shall mean the LSI Industries Inc. Nonqualified Deferred Compensation
Plan as described in this instrument, amended and restated effective December
31, 2008, and, as may be amended thereafter.

1.11
“Plan Year” shall mean the 12-consecutive month period beginning on July 1.

1.12
“Separation from Service” shall mean a “separation from service” within the
meaning of Code Section 409A and the rules and regulations promulgated
thereunder.

ARTICLE II.  PARTICIPANT’S ELECTION TO DEFER

2.1
Each Executive may elect to have up to 100% of the Executive’s Compensation (in
whole percentages) for a Plan Year deferred and credited with earnings in
accordance with the terms and conditions of the Plan.  The Committee may allow
separate elections with respect to regular earnings and bonuses.

2.2
An Executive desiring to exercise an election under Paragraph 2.1 shall notify
the Committee of his deferral election.  Such notice must be in writing on a
form provided by the Committee, or in a manner otherwise satisfactory to the
Committee, and provided to the Committee by such date as the Committee shall
specify, but in all events no later than the end of the calendar year preceding
the first day of the Plan Year to which such election is to apply.  In the event
an Executive first becomes eligible to participate in the Plan on or after
January 1, 2005, the Executive’s election for deferrals must be provided no
later than 30 days following the date the Executive first becomes eligible, and
such election will only be effective with regard to Compensation earned
following the election.

2.3
A deferral election shall be effective with respect to the entire Plan Year to
which it relates and may not be modified or terminated for that Plan Year;
provided, however, (1) in the Plan Year beginning July 1, 2002, Participants may
increase their deferral election during a two week period designated by the
Committee, and (2) for periods on or after January 1, 2005, in the event of an
unforeseeable emergency (as defined in Paragraph 7.4), a Participant’s deferral
election shall be terminated for the remainder of the respective Plan Year.

 
 

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2.4
The Compensation otherwise payable to the Executive during the Plan Year shall
be reduced pursuant to the Executive’s election under this Article II.  Such
amounts shall be credited to the Executive’s Deferred Compensation Account.

2.5
For deferrals on or after January 1, 2005, an Executive’s election relating to
Compensation from a performance-based bonus payment based on services over a
period of at least 12 months must be made no later than 6 months before the end
of the service period, provided the Executive performs services continuously
from the later of the beginning of the performance period or the date the
performance criteria are established through the date an election is made under
this Paragraph 2.5, and provided further that in no event may an election to
defer Compensation from a performance-based bonus payment be made after such
Compensation has become readily ascertainable.

ARTICLE III.  EMPLOYER MAKE-UP ALLOCATIONS

3.1
If because of an election under Article II, a Participant receives a smaller
allocation of Employer contributions and/or forfeitures under the LSI Industries
Inc. Retirement Plan for a Plan Year of that plan than the Participant would
have received had no such election been made, then there shall be credited to
the Participant’s Deferred Compensation Account an amount equal to the amount
which bears the same relationship to the amounts deferred under Article II and
credited to the Participant’s Deferred Compensation Account during the Plan Year
as the Participant’s allocations (of Employer contributions and/or forfeitures)
under the LSI Industries Inc. Retirement Plan bear to the Participant’s
compensation taken into account under that plan.  Such amount shall be credited
to the Participant’s Deferred Compensation Account at such time as the Committee
shall determine.

3.2
(a)
If, by reason of the application of the compensation limitation imposed by Code
Section 401(a)(17) (or any corresponding successor provision), including any
provision in the LSI Industries Inc. Retirement Plan providing such limitation,
a Participant receives a smaller allocation of Employer contributions and/or
forfeitures under the LSI Industries Inc. Retirement Plan for any plan year of
that plan than he would have received had no such limitation been in effect,
then there shall be credited to his Deferred Compensation Account the amount
determined under (b) below.  Such amount shall be credited to the Participant’s
Deferred Compensation Account at such time as the Committee shall determine.

 
(b)
The amount hereunder shall be equal to the amount which is the same percentage
of the Participant’s compensation (as defined in the LSI Industries Inc.
Retirement Plan) in excess of the compensation limitation referred to in (a)
above as the percentage allocated under the LSI Industries Inc. Retirement Plan
on compensation in excess of the Social Security taxable wage base (but not in
excess of the limitation referred to in (a) above).

 
 

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ARTICLE IV.  LSI INCENTIVE ALLOCATIONS

4.1
Subject to Paragraph 4.2, each Participant shall be eligible for an Employer
incentive allocation for a Plan Year, to be determined in accordance with
Paragraph 4.3, if the Participant satisfies both of the following requirements:

 
(a)
The Participant must have elected to make Compensation deferrals under the Plan
for the Plan Year of the LSI incentive allocation, the immediately preceding
Plan Year and/or the second preceding Plan Year; and

 
(b)
The Participant must be employed by an Employer at the time the Committee
determines that the Performance Goal (defined below) was satisfied for the Plan
Year.

4.2
(a)
The Employer shall make an incentive allocation determined under Paragraph 4.3
below only if the Performance Goal (defined below) is met for the Plan Year as
determined in the sole discretion of the Committee.

 
(b)
“Performance Goal” shall mean a Return on Average Shareholders’ Equity as
determined in the sole discretion of the Committee each year based on the annual
operating plan for the relevant fiscal year.

4.3
If the Performance Goal (defined above) is met for a Plan Year, those
Participants eligible for an Employer incentive allocation under Paragraph 4.1
above shall receive such an allocation determined by the Committee as follows:

 
(a)
The Committee shall determine the number of LSI Common Shares deemed to have
been acquired during the Plan Year and each of the two immediately preceding
Plan Years with the Compensation deferrals for such years.  In making that
determination, the Committee shall consider only Compensation deferrals for a
Plan Year up to 40% of the Participant’s Compensation.

 
(b)
The Committee shall determine the percentages applicable to each eligible
Participant for the current Plan Year and for each of the two preceding Plan
Years from the following:

 
 

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Return on Average Shareholders’ Equity
 
At least Performance Goal
but less than Performance
Goal plus 0.5%
At least Performance Goal plus 0.5% but less than Performance Goal plus 1.0%
Performance Goal
plus 1.0% or more
Corporate Officers and
  Top Executives
20%
25%
30%
All Other Employees
10%
12.5%
15%

The Participant’s status (as a “corporate officer” or “top executive”) as
determined by the Committee at the end of the Plan Year in which the Participant
makes Compensation deferrals will determine the level of Employer allocations
under this Paragraph attributable to such Compensation deferrals for that Plan
Year.

 
(c)
The applicable percentages determined for a Participant for the Plan Year and
the two immediately preceding Plan Years shall be applied against the number of
LSI Common Shares determined for the respective Plan Years (under (a)
above).  The resulting number shall be rounded to the nearest whole share.

 
(d)
The Committee shall determine the value of the number of LSI Common Shares
(determined under (c) above) as of such date as it deems appropriate.  That
amount shall be credited to the Participant’s Deferred Compensation Account at
such time as the Committee shall determine.

ARTICLE V.  PARTICIPANT’S INTEREST

Neither a Participant nor a Participant’s designated Beneficiary shall acquire
any property interest in the Participant’s Deferred Compensation Account or any
other assets of the Employer, their rights being limited to receiving from the
Employer a deferred payment as set forth in this Plan, and these rights are
conditioned upon continued compliance with the terms and conditions of this
Plan.  To the extent that any Participant or Beneficiary acquires a right to
receive benefits under this Plan, such right shall be no greater than the right
of any unsecured general creditor of the Employer.

ARTICLE VI.  CREDITING OF EARNINGS

6.1
General.  There shall be credited to the Deferred Compensation Account of each
Participant an additional amount of earnings (or losses) determined under this
Article VI.

 
6.2
Investment of Compensation Deferrals in LSI Common Shares.  All Compensation
deferrals for a Plan Year shall be credited with earnings (or losses) as though
invested primarily in LSI Common Shares.  Participants who, prior to the
amendment and restatement, had amounts attributable to their Deferred
Compensation Account credited with earnings or losses based on any investment
election other than the LSI Common Shares investment election shall receive a
cash distribution before July 1, 1998 equal to such value of all accounts
subject to such other investment elections under the Plan as it then existed.

6.3
Employer Allocations.  Employer allocations under Article III and Article IV
shall be credited with earnings (or losses) as if it were invested primarily in
LSI Common Shares.  The Participant shall have no right to elect that
alternative investments be used.

6.4
Determination of Rate of Return.  The Committee shall determine the rate of
return throughout each Plan Year quarter or other period for the investment in
LSI Common Shares and any other investment required to maintain the liquidity of
the Plan.

6.5
Investment Adjustment.  For each Plan Year quarter or other period, the
Participant’s Deferred Compensation Account shall be increased or decreased as
if it had earned the rate of return corresponding to the amount determined by
the Committee under Paragraph 6.5.  Such increase or decrease shall be based on
the balance in the Deferred Compensation Account throughout the Plan Year
quarter or other period and shall be credited at such time as the Committee in
its sole discretion shall determine.

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ARTICLE VII.  PLAN BENEFITS

7.1
Vesting.  Effective as of September 9, 2005, a Participant’s rights to the
Participant’s Deferred Compensation Account (as adjusted for earnings and
losses) shall be fully vested and nonforfeitable at all times.

7.2
Distribution of Benefit.

 
(a)
At the time an Executive makes the first deferral election under Article II, the
Executive shall also elect to have the amounts represented by the Executive’s
Deferred Compensation Account paid in one of the following two forms commencing
as soon as administratively feasible upon the Executive’s Separation from
Service but in all events within 90 days following the date of such Separation
from Service:

 
(1)
a single lump sum payment, or

 
(2)
approximately equal annual installments to last not more than 10 years.

 
If installment payments are in effect, the Participant’s Deferred Compensation
Account shall continue to be credited with earnings (or losses) under Article VI
until payment of the final installment.

 
(b)
A Participant may change the election referred to in (a) above only in
accordance with this Paragraph 0.  Effective for deferrals made before January
1, 2005, payment shall be made in accordance with any such changed election only
if the Participant terminates service with all Employers at least 12 months
following the date of the election.  Otherwise, the payment shall be made in
accordance with the election (if any) in effect immediately prior to the changed
election.  Effective for deferrals made on or after January 1, 2005, subsequent
elections to change the time and form of payment must meet the following
requirements:

 
(1)
Elections shall not be effective until at least 12 months following the date the
election is made.

 
(2)
For all elections for payments other than because of death or an unforeseeable
emergency (as such term is defined in Paragraph 7.4), the first payment may not
be made for a period of not less than 5 years from the date such payment would
otherwise have been made (or in the case of installment payments, 5 years from
the date the first amount was scheduled to be paid).

Notwithstanding the preceding sentence, effective for deferrals made on or after
January 1, 2005, a Participant shall be permitted to make a subsequent election
to change the form of payment during 2008, provided such election is made on or
before December 31, 2008, and provided further that such election may apply only
to amounts that would not otherwise be payable in 2008 and may not cause an
amount to be paid in 2008 that would not otherwise be payable in 2008.

 
(c)
If a Participant has no election concerning the form of benefit payment under
this Paragraph 7.2 in effect at the time of the Participant’s Separation from
Service, payment shall be made in a single lump sum payment.

 
(d)
Elections shall be made in writing, on a form provided by the Committee, and
shall be made in accordance with the rules established by the Committee.

 
(e)
Notwithstanding the Participant’s payment election under this Paragraph 7.2 for
a Participant who is a “specified employee” as defined in Code Section 409A and
the rules and regulations promulgated thereunder, a distribution may not be made
before the date which is 6 months after the date of the Participant’s Separation
from Service (or if earlier, the date of death of the Participant).

 
 

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7.3
Distribution of LSI Common Shares.  Participants shall receive benefit payments
in the form of whole shares of LSI Common Shares.  Any fractional shares shall
be paid in cash.  Any expenses attributable to such payment may be deducted from
the Participant’s Deferred Compensation Account.

7.4
Hardship Distribution.  Subject to the approval of the Committee, a Participant
may withdraw all or a portion of the Participant’s Deferred Compensation Account
in the event of a hardship.  The distribution shall be made in the form of whole
shares of LSI Common Shares.  Any fractional shares shall be paid in cash.  A
hardship distribution shall only be made in the event of an unforeseeable
emergency that would result in severe financial hardship to the Participant if
hardship distributions were not permitted.  Withdrawals of amounts because of an
unforeseeable emergency shall only be permitted to the extent reasonably needed
to satisfy the emergency need.  An unforeseeable emergency is defined as severe
financial hardship to the Participant resulting from a sudden and unexpected
illness or accident of the Participant, the Participant’s spouse, the
Participant’s Beneficiary, or the Participant’s dependent (as defined in Code
Section 152, without regard to Code Section 152(b)(1), (b)(2) and (d)(1)(B)),
loss of the Participant’s property due to casualty, or other similar
extraordinary and unforeseeable circumstances arising as a result of events
beyond the control of the Participant.  The circumstances that will constitute
an unforeseeable emergency will depend upon the facts of each case, but, in any
case, payment may not be made to the extent such hardship is or may be relieved
(1) through reimbursement or compensation by insurance or otherwise (2)
liquidation of the Participant’s assets (to the extent the liquidation of such
assets would not cause severe financial hardship, or (3) by cessation of
deferrals under the Plan.  In the event of an unforeseeable emergency
(regardless of whether a hardship distribution is made), a Participant’s
deferral election under Paragraph 2.1 shall terminate and no further deferrals
shall be made for such Participant for the remainder of the Plan Year.

ARTICLE VIII.  DEATH

Upon the death of a Participant prior to commencement of payment under Article
VII, the amounts represented by the Participant’s Deferred Compensation Account,
increased by any amounts due to be credited but not yet credited under Article
II, Article III or Article IV shall be payable to the Participant’s Beneficiary
as soon as administratively feasible following the date of the Participant’s
death but in all events within 90 days following such date in the form of
distribution elected by the Participant pursuant to Paragraph 7.2(a).  If the
Participant has already commenced receiving the amounts represented by the
Participant’s Deferred Compensation Account in the installment payment form, the
installment payments shall continue to be paid to the Participant’s
Beneficiary.  The Beneficiary shall receive any benefit payments in the form of
whole shares of LSI Common Shares.

 
 

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ARTICLE IX.  NON-ASSIGNABLE/NON-ATTACHMENT

Except as required by law, no right of the Participant or designated Beneficiary
to receive payments under this Plan shall be subject to anticipation,
commutation, alienation, sale, assignment, encumbrance, charge, pledge, or
hypothecation or to execution, attachment, levy or similar process or assignment
by operation of law and any attempt, voluntary or involuntary, to effect any
such action shall be null and void and of no effect.  An Employer may not assign
its obligations hereunder.

ARTICLE X.  CONSTRUCTION

This Plan shall be construed under the laws of the Code and to the extent not
preempted by federal law, according to the laws of the State of Ohio.  Article
headings are for convenience only and shall not be considered as part of the
terms and provisions of the Plan.  The Committee shall have full power and
authority to interpret, construe and administer this Plan.

ARTICLE XI.  AMENDMENT OR TERMINATION OF PLAN

The Plan may be terminated at any time or amended in whole or in part from time
to time by LSI Industries Inc. provided that no such termination or amendment
may directly or indirectly reduce a Participant’s Deferred Compensation Account
(other than through a distribution thereof to the Participant (or his
Beneficiary in the event of his death)); and any such amendment shall be binding
on each Employer, Participant and designated Beneficiary.

ARTICLE XII.  MISCELLANEOUS

12.1
Neither this Plan, nor any action of LSI Industries Inc., an Employer or the
Committee, nor any election to defer Compensation hereunder shall be held or
construed to confer on any person any legal right to be continued as an employee
of LSI Industries Inc. or any Employer.

12.2
LSI Industries Inc. and the Participant’s Employer shall have the right to
deduct from all payments and amounts credited hereunder any taxes required by
law to be withheld with respect to any benefits under this Plan.

IN WITNESS WHEREOF, LSI Industries Inc. and each Employer, with the consent of
LSI Industries Inc., have caused this amended and restated Plan to be executed
as of this _____ day of _____________ , 2008.
 

  LSI INDUSTRIES INC.          
 
By: