TRUST AGREEMENT
Establishing
the
RABBI TRUST AGREEMENT
by and between
LSI INDUSTRIES INC.
and
PRUDENTIAL BANK &
TRUST, FSB
TABLE OF CONTENTS
Section 1
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Establishment of Trust
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PAGE
1
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Section 2
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Payments to Plan Participants
and Their Beneficiaries
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2
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Section 3
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Trustee Responsibility Regarding
Payments to Trust Beneficiary
When Company is Insolvent
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3
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Section 4
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Payments to Company
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4
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Section 5
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Investment Authority
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4
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Section 6
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Disposition of Income
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4
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Section 7
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Accounting by Trustee
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4
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Section 8
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Responsibility of Trustee
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5
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Section 9
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Compensation and Expenses of Trustee
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6
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Section 10
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Resignation and Removal of Trustee
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6
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Section 11
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Appointment of Successor
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7
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Section 12
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Amendment or Termination
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7
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Section 13
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Miscellaneous
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7
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Section 14
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Effective Date
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8
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(a)
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This Agreement made this 28
th
day of December, 2005, by and between
LSI Industries Inc. (the “Company”) and Prudential Bank & Trust,
FSB, a federal savings bank with its principal office and place of business in
Hartford, Connecticut (the “Trustee”);
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(b)
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WHEREAS, Company has adopted the LSI Industries Inc. Nonqualified Deferred
Compensation Plan (the “Plan”);
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(c)
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WHEREAS, Company has incurred or expects to incur liability under the terms of
such Plan with respect to the individuals participating in such Plan;
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(d)
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WHEREAS, Company wishes to establish the Rabbi Trust Agreement (hereinafter
called “Trust” or “Trust Fund”) and to contribute to the
Trust assets that shall be held herein, subject to the claims of Company’s
creditors in the event of Company’s insolvency, as herein defined, until
paid to Plan participants and their beneficiaries in such manner and at such
times as specified in the Plan;
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(e)
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WHEREAS, it is the intention of the parties that this Trust shall constitute an
unfunded arrangement and shall not affect the status of the Plan as an unfunded
plan maintained for the purpose of providing deferred compensation and/or
benefits for a select group of management or highly compensated employees for
purposes of Title I of the Employee Retirement Income Security Act of 1974;
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(f)
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WHEREAS, it is the intention of Company to make contributions to the Trust to
provide itself with a source of funds to assist in the meeting of its
liabilities under the Plan.
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NOW, THEREFORE, the parties do hereby
establish the Trust and agree that the Trust shall be comprised, held and disposed of as
follows:
Section 1. Establishment of Trust.
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(a)
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Company hereby deposits with Trustee in trust certain good and valuable
consideration, which shall become the principal of the Trust to be held,
administered and disposed of by Trustee as provided in this Trust Agreement.
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(b)
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The Trust hereby established shall be irrevocable.
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(c)
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The Trust is intended to be a grantor trust, of which Company is the grantor,
within the meaning of subpart E, part I, subchapter J, chapter 1, subtitle A of
the Internal Revenue Code of 1986, as amended, and shall be construed
accordingly.
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(d)
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The principal of the Trust, and any earnings thereon shall be held separate and
apart from other funds of Company and shall be used exclusively for the uses and
purposes of Plan participants and general creditors as herein set forth. Plan
participants and their beneficiaries shall have no preferred claim on, or any
beneficial ownership interest in, any assets of the Trust. Any rights created
under the Plan and this Trust Agreement shall be mere unsecured contractual
rights of Plan participants and their beneficiaries against Company. Any assets
held by the Trust will be subject to the claims of Company’s general
creditors under federal and state law in the event of insolvency, as defined in
Section 3(a) herein.
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(e)
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Company, in its sole discretion, may at any time, or from time to time, make
additional deposits of cash or other property in trust with Trustee to augment
the principal to be held, administered and disposed of by Trustee as provided in
this Trust Agreement. Neither Trustee nor any Plan participant or beneficiary
shall have any right to compel such additional deposits.
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(f)
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Upon a Change of Control, Company shall, as soon as possible, but in no event
longer than 30 days following the Change of Control, as defined herein, make an
irrevocable contribution to the Trust in an amount that is sufficient to pay
each Plan participant or beneficiary the benefits to which Plan participants or
their beneficiaries would be entitled pursuant to the terms of the Plan as of
the date on which the Change of Control occurred.
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Section 2. Payments to Plan
Participants and Their Beneficiaries.
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(a)
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Company shall deliver to Trustee a schedule (the “Payment Schedule”)
that indicates the amounts payable in respect of each Plan participant (and his
or her beneficiaries), that provides a formula or other instructions acceptable
to Trustee for determining the amounts so payable, the form in which such amount
is to be paid (as provided for or available under the Plan), and the time of
commencement for payment of such amounts. Except as otherwise provided herein,
Trustee shall make payments to the Plan participants and their beneficiaries in
accordance with such Payment Schedule. The Trustee shall make provisions for
reporting and withholding of any federal, state or local taxes that may be
required to be withheld with respect to the payment of benefits pursuant to the
terms of the Plan and shall pay amounts withheld to the appropriate taxing
authorities or determine that such amounts have been reported, withheld and paid
by Company.
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(b)
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The entitlement of a Plan participant or his or her beneficiaries to benefits
under the Plan shall be determined by Company or such party as it shall
designate under the Plan, and any claim for such benefits shall be considered
and reviewed under the procedures set out in the Plan.
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(c)
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Company may make payment of benefits directly to Plan participants or their
beneficiaries as they become due under the terms of the Plan. Company shall
notify Trustee of its decision to make payment of benefits directly prior to the
time amounts are payable to participants or their beneficiaries. Trustee shall
require Company to provide reasonable written documentation that such payments
have been made directly to such participant or beneficiary. In addition, if the
principal of the Trust, and any earnings thereon, are not sufficient to make
payments of benefits in accordance with the terms of the Plan, Company shall
make the balance of each such payment as it falls due. Trustee shall notify
Company where principal and earnings are not sufficient.
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Section 3. Trustee Responsibility
Regarding Payments to Trust Beneficiary When Company is Insolvent.
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(a)
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Trustee shall cease payment of benefits to Plan participants and their
beneficiaries if the Company is insolvent. Company shall be considered
“insolvent” for purposes of this Trust Agreement if (i) Company is
unable to pay its debts as they become due, (ii) Company is subject to a pending
proceeding as a debtor under the United States Bankruptcy Code, or (iii) Company
is determined to be insolvent by a federal or state regulatory agency with
jurisdiction to make that determination.
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(b)
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At all times during the continuance of this Trust, as provided in Section 1(d)
hereof, the principal and income of the Trust shall be subject to claims of
general creditors of Company under federal and state law as set forth below.
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(1)
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The Board of Directors and the Chief Financial Officer of Company shall have the
duty to inform Trustee in writing of Company’s insolvency. If a person
claiming to be a creditor of Company alleges in writing to Trustee that Company
has become insolvent, Trustee shall determine whether Company is insolvent and,
pending such determination, Trustee shall discontinue payment of benefits to
Plan participants or their beneficiaries.
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(2)
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Unless Trustee has actual knowledge of Company’s insolvency, or has
received notice from Company or a person claiming to be a creditor alleging that
Company is insolvent, Trustee shall have no duty to inquire whether Company is
insolvent. Trustee may in all events rely on such evidence concerning
Company’s solvency as may be furnished to Trustee and that provides Trustee
with a reasonable basis for making a determination concerning Company’s
solvency.
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(3)
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If at any time Trustee has determined that Company is insolvent, Trustee shall
discontinue payments to Plan participants or their beneficiaries and shall hold
the assets of the Trust for the benefit of Company’s general creditors.
Nothing in this Trust Agreement shall in any way diminish any rights of Plan
participants or their beneficiaries to pursue their rights as general creditors
of Company with respect to benefits due under the Plan or otherwise.
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(4)
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Trustee shall resume the payment of benefits to Plan participants or their
beneficiaries in accordance with Section 2 of this Trust Agreement only after
Trustee has determined that Company is not insolvent (or is no longer
insolvent).
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(c)
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Provided that there are sufficient assets, if Trustee discontinues the payment
of benefits from the Trust pursuant to Section 3(b) hereof and subsequently
resumes such payments, the first payment following such discontinuance shall
include the aggregate amount of all payments due to Plan participants or their
beneficiaries under the terms of the Plan for the period of such discontinuance,
less the aggregate amount of any payments made to Plan participants and their
beneficiaries by Company in lieu of the payments provided for hereunder during
any such period of discontinuance.
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Section 4. Payments to Company.
Except as provided in Section 3
hereof, Company shall have no right or power to direct Trustee to return to Company or to
divert to others any of the Trust assets before all payment[s] of benefits have been made
to Plan participants and their beneficiaries pursuant to the terms of the Plan.
Section 5. Investment Authority.
Trustee shall have the power to
invest the assets of the Trust Fund in such investment vehicles as directed by the
Company, including securities (including stock or rights to acquire stock) or obligations
issued by Company. All rights associated with assets of the Trust shall be exercised by
Trustee or the person designated by Trustee pursuant to the Company’s direction, and
shall in no event be exercisable by or rest with Plan participants.
Section 6. Disposition of Income.
During the term of this Trust, all
income received by the Trust, net of expenses and taxes, shall be accumulated and
reinvested.
Section 7. Accounting by Trustee.
The Trustee has accepted this Trust
on the condition that the Company has entered or is entering into a service agreement with
an affiliate of the Trustee whereby an affiliate of the Trustee will provide recordkeeping
services for all assets held pursuant to this Trust Agreement. The Trustee shall be
required to forward to the Company, or require an affiliate of the Trustee to forward to
the Company, the recordkeeping reports and related financial information provided by an
affiliate of the Trustee, but the Trustee shall not otherwise be required to provide Trust
accounts.
Section 8. Responsibility of Trustee.
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(a)
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Trustee shall act with the care, skill, prudence and diligence under the
circumstances then prevailing that a prudent person acting in like capacity and
familiar with such matters would use in the conduct of an enterprise of a like
character and with like aims, provided, however, that Trustee shall incur no
liability to any person for any action taken pursuant to a direction, request or
approval given by Company or any delegate appointed by the Company which is
contemplated by, and in conformity with, the terms of the Plan or this Trust and
is given in writing by Company or its delegate. In the event of a dispute
between Company and a party, Trustee may apply to a court of competent
jurisdiction to resolve the dispute.
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(b)
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If Trustee undertakes or defends any litigation arising in connection with this
Trust, Company agrees to indemnify Trustee against Trustee’s reasonable
costs, expenses and liabilities (including, without limitation, attorneys’
fees and expenses) relating thereto and to be primarily liable for such
payments. If Company does not pay such costs, expenses and liabilities in a
reasonably timely manner, Trustee may obtain payment from the Trust.
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(c)
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Trustee may hire agents, accountants, actuaries, investment advisors, financial
consultants or other professionals to assist it in performing any of its duties
or obligations hereunder, including recordkeeping, reporting, custody of assets
or proxy voting. Such agents may include affiliates of the Trustee.
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(d)
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Trustee shall have, without exclusion, all powers conferred in Trustees in
accordance with applicable law, unless expressly provided otherwise herein,
provided, however, that if an insurance policy is held as an asset of the Trust,
Trustee shall have no power to name a beneficiary other than the Trust, to
assign the policy (as distinct from conversion of the policy to a different
form) other than to a successor trustee, or to loan to any person the proceeds
of any borrowing against such policy.
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(e)
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The Company shall indemnify and hold harmless the Trustee from and against any
and all claims, losses, damages, reasonable expenses (including reasonable
counsel fees) and liability to which the Trustee may be subject by reason of any
act done or omitted to be done, except where the same is due to the negligence
or willful misconduct of the Trustee.
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(f)
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In addition to and in no way in limitation of the indemnification of paragraph
(e) of this section, the Company hereby agrees to indemnify and hold harmless
the Trustee from and against any claims, losses, damages, reasonable expenses
(including reasonable counsel fees) and liability to which the Trustee may be
subject by reason of any act or omission of any prior, subsequent or other
existing trustee of the Plan.
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(g)
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The Trustee shall be responsible only for such assets as are actually received
by it as Trustee hereunder. The Trustee shall have no duty or authority to
ascertain whether any contributions should be made to it pursuant to the Plan or
to bring any action to enforce any obligation to make any such contribution, nor
shall it have any responsibility concerning the amount of any contribution or
the application of the Plan’s contribution formula. The Trustee shall have
no responsibility for any assets not held under this Trust, even if those assets
are held as assets of the Plan under a separate trust agreement. Responsibility
for any such assets shall be solely that of the trustees named in such separate
trust agreement, or, in the event no such separate trust exists, the Company.
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Section 9. Compensation and
Expenses of Trustee.
Company shall pay all administrative
and Trustees’ fees and reasonable expenses in accordance with a fee schedule provided
to the Company. In addition, Trustee shall be paid its reasonable expenses, including
reasonable expenses of counsel and other agents employed by the Trustee, incurred in
connection with administration of the Trust Fund. If the Trustee proposes an amended fee
schedule and the Company fails to object thereto within ninety (90) days of its receipt,
the amended fee schedule shall be deemed accepted by the Company. If not paid, the fees
and expenses shall be paid from the Trust.
Section 10. Resignation and Removal
of Trustee.
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(a)
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Trustee may resign at any time by written notice to Company, which shall be
effective 60 (sixty) days after receipt of such notice unless Company and
Trustee agree otherwise.
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(b)
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Trustee may be removed by Company on 60 (sixty) days notice or upon shorter
notice accepted by Trustee.
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(c)
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The Trustee’s service pursuant to this Agreement is conditioned upon the
existence of one or more contracts between the Company and an affiliate of the
Trustee providing for full Plan recordkeeping services. In the event the
contract providing for such recordkeeping services is discontinued or
terminated, this Trust Agreement shall be terminated as well with no further
notice from either party to the other as of the date of discontinuance or
termination of the contract providing for Plan recordkeeping services.
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(d)
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Upon resignation or removal of Trustee and appointment of a successor Trustee,
all assets shall subsequently be transferred to the successor Trustee. The
transfer shall be completed within 30 days after receipt of notice of
resignation, removal or transfer, unless Company extends the time limit.
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(e)
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If Trustee resigns or is removed, a successor shall be appointed, in accordance
with Section 11 hereof, by the effective date of resignation or removal under
paragraph(s) (a), (b) or (c) of this section. If no such appointment has been
made, Trustee may apply to a court of competent jurisdiction for appointment of
a successor or for instructions. All expenses of Trustee in connection with the
proceeding shall be allowed as administrative expenses of the Trust.
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Section 11. Appointment of Successor.
If Trustee resigns or is removed in
accordance with Section 10(a), (b) or (c) hereof, Company may appoint any third party,
such as a bank trust department or other party that may be granted corporate trustee
powers under state law, as a successor to replace Trustee upon resignation or removal. The
appointment shall be effective when accepted in writing by the new Trustee, who shall have
all of the rights and powers of the former Trustee, including ownership rights in the
Trust assets. The former Trustee shall execute any instrument necessary or reasonably
requested by Company or the successor Trustee to evidence the transfer.
Section 12. Amendment or Termination.
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(a)
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This Trust Agreement may be amended by a written instrument executed by Trustee
and Company. Notwithstanding the foregoing, no such amendment shall conflict
with the terms of the Plan or shall make the Trust revocable after it has become
irrevocable in accordance with Section 1(b) hereof.
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(b)
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The Trust shall not terminate until the date on which Plan participants and
their beneficiaries are no longer entitled to benefits pursuant to the terms of
the Plan. Upon termination of the Trust any assets remaining in the Trust shall
be returned to Company.
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Section 13. Miscellaneous.
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(a)
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Any provision of this Trust Agreement prohibited by law shall be ineffective to
the extent of any such prohibition, without invalidating the remaining
provisions hereof.
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(b)
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Benefits payable to Plan participants and their beneficiaries under this Trust
Agreement may not be anticipated, assigned (either at law or in equity),
alienated, pledged, encumbered or subjected to attachment, garnishment, levy,
execution or other legal or equitable process.
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(c)
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This Trust Agreement and the Trust hereby created shall be governed, construed,
administered and regulated in all respects in accordance with the laws of Ohio.
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(d)
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This Trust Agreement shall be binding upon the respective successors and assigns
of the Employer and the Trustee.
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(e)
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In the event of any conflict between provisions of the Plan and those of this
Trust Agreement, the Plan shall prevail except to the extent that the conflict
would modify the powers and duties of the Trustee.
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(f)
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For purposes of this Trust, Change of Control shall mean the purchase or other
acquisition by any person, entity or group of persons, within the meaning of the
section 13(d) or 14(d) of the Securities Exchange Act of 1934 (“Act”),
or any comparable successor provisions, of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Act) of 30 percent or more of either
the outstanding shares of common stock or the combined voting power of
Company’s then outstanding voting securities entitled to vote generally, or
the approval by the stockholders of Company of a reorganization, merger or
consolidation, in each case, with respect to which persons who were stockholders
of Company immediately prior to such reorganization, merger or consolidation do
not, immediately thereafter, own more than 50 percent of the combined voting
power entitled to vote generally in the election of directors of the
reorganized, merged or consolidated Company’s then outstanding securities,
or a liquidation or dissolution of Company or of the sale of all or
substantially all of Company’s assets.
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Section 14. Effective Date.
The effective date of this Trust
Agreement shall be January 1, 2006
Witness:
/s/Jeffrey Bastian
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LSI INDUSTRIES INC
BY: /s/Ronald S. Stowell
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Title: VP, CFO & Treasurer
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Date: December 28, 2005
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Witness:
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PRUDENTIAL BANK & TRUST, FSB
BY: /s/Michael G. Williamson
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Title: Chief Trust Officer
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Date: January 3, 2006
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