EXHIBIT 10.8

 

LSI INDUSTRIES INC.

NONQUALIFIED DEFERRED COMPENSATION PLAN

 

PREAMBLE

 

LSI Industries Inc. and each Employer hereby amend and restate the Plan
effective as of April 27, 2004 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. The Plan was also amended and restated as of July 1, 2002. 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 “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.

 

1.3 “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 Section
401(k) or 125 plan.

 

1.4 “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 Section 6.2, Article VII and Article VIII.

 

1.5 “Effective Date” shall mean April 27, 2004 for purposes of this amendment
and restatement.

 

1.6 “Employer” shall mean LSI Industries Inc., 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.

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1.7 “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.

 

1.8 “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 his death or termination of
service and who retains, or whose Beneficiary retains, a benefit under the Plan
which has not been distributed.

 

1.9 “Plan” shall mean the LSI Industries Inc. Nonqualified Deferred Compensation
Plan as described in this instrument, amended and restated effective July 1,
2002, and, as may be amended thereafter.

 

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

 

ARTICLE II. PARTICIPANT’S ELECTION TO DEFER

 

2.1 Each Executive may elect to have up to 100% of his 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, and delivered to the Committee by such date
as the Committee shall specify, but in all events before the first day of the
Plan Year to which such election is to apply.

 

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, in the Plan year beginning July 1, 2002, Participants may
increase their deferral election during a two week period designated by the
Committee.

 

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.

 

ARTICLE III. EMPLOYER MAKE-UP ALLOCATIONS

 

3.1

If, by reason 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 he 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

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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 Section 401(a)(17) of the Internal Revenue Code of 1986 (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).

 

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 he 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 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.

 

  (a) “Performance Goal” shall mean a Return on Beginning 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:

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  (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:

 

     Return on Average Shareholders’ Equity

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At least Performance Goal

but less than Performance

Goal plus 0.5%

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At least Performance

Goal plus 0.5% but less

than Performance Goal

plus 1.0%

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Performance Goal

plus 1.0% or more

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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 he makes his
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

 

No Participant or his designated Beneficiary shall acquire any property interest
in his 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.

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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.

 

ARTICLE VII. PLAN BENEFITS

 

7.1 (a) A Participant’s rights to that portion of his Deferred Compensation
Account attributable to his Compensation deferrals under Article II (as adjusted
for earnings and losses) shall be nonforfeitable at all times.

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(b) A Participant shall have a vested interest in that portion of his Deferred
Compensation Account attributable to Employer allocations under Article III and
Article IV (as adjusted for earnings and losses) determined in accordance with
the following schedule:

 

YEARS OF VESTED SERVICE

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   PERCENTAGE

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Less than two

   0

Two but less than three

   20

Three but less than four

   40

Four but less than five

   60

Five but less than six

   80

Six or more

   100

 

For purposes of this Paragraph, “Years of Vested Service” shall be determined in
accordance with the provisions of the LSI Industries Inc. Retirement Plan.

 

(c) Notwithstanding Paragraph 7.1(b) above, Employer allocations under Article
III and Article IV (as adjusted for earnings and losses) shall become fully
vested upon the Participant’s retirement after age 62 and completion of at least
three (3) years of service, disability or death.

 

(d) Notwithstanding any provision to the contrary, Employer allocations under
Article III and Article IV (as adjusted for earnings and losses) shall be
forfeited if the Participant commits any dishonest act or violates any
noncompete or nonsolicitation agreement (as the Committee in its sole discretion
shall determine).

 

7.2 (a) At the time an Executive makes his first deferral election under Article
II, he shall also elect to have the amounts represented by his Deferred
Compensation Account paid in one of the following two forms commencing as soon
as administratively feasible upon termination of his service with all Employers:

 

  (1) 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. Payment
shall be made in accordance with any such changed election only if the
Participant terminates service with all Employers at least one year 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.

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(c) If a Participant has no election concerning the form of benefit payment
under this Paragraph 7.2 in effect at the time he terminates service with all
Employers, 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.

 

7.3 Distribution of Benefits. Participants shall receive benefit payments in the
form of 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 his Deferred Compensation Account
in the event of a hardship 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 or a dependant of the Participant, 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. An unforeseeable emergency shall also include the death 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 received (1) through reimbursement
or compensation by insurance or otherwise or (2) by cessation of deferrals under
the Plan.

 

7.5 Other Distributions. Subject to the approval of the Committee, a Participant
may withdraw all or a portion of his Deferred Compensation Account in cash in
the event a written request is made nine (9) months in advance of such
withdrawal.

 

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 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 cash. The Beneficiary shall be
eligible to request a Hardship Withdrawal pursuant to Paragraph 7.4, or
otherwise shall be able to request a change to a final single lump sum
withdrawal provided that a written request is made twelve (12) months in advance
of such withdrawal.

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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 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 27th day of April, 2004.

 

LSI INDUSTRIES, INC. By:  

/s/    Ronald S. Stowell

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