Schedule 13D

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Urbk13PxWfCY2dP0y3YXu7vRJHt2RuyWiiJJAVoo1rbIQHZ7ZxPeWga323mLnHLq O44Swil4maXj2J2JgU+Xxw== 0001193125-06-142668.txt : 20060706 0001193125-06-142668.hdr.sgml : 20060706 20060706172819 ACCESSION NUMBER: 0001193125-06-142668 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20060706 DATE AS OF CHANGE: 20060706 GROUP MEMBERS: BASSAM JALBOUT GROUP MEMBERS: FRED JALBOUT SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: LSI INDUSTRIES INC CENTRAL INDEX KEY: 0000763532 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC LIGHTING & WIRING EQUIPMENT [3640] IRS NUMBER: 310888951 STATE OF INCORPORATION: OH FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-36715 FILM NUMBER: 06948966 BUSINESS ADDRESS: STREET 1: 10000 ALLIANCE RD STREET 2: P O BOX 42728 CITY: CINCINNATI STATE: OH ZIP: 45242 BUSINESS PHONE: 5135796411 MAIL ADDRESS: STREET 1: 10000 ALLIANCE RD STREET 2: P O BOX 42728 CITY: CINCINNATI STATE: OH ZIP: 45242 FORMER COMPANY: FORMER CONFORMED NAME: LSI LIGHTING SYSTEMS INC DATE OF NAME CHANGE: 19891121 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Saco Technologies Inc CENTRAL INDEX KEY: 0001368363 IRS NUMBER: 000000000 STATE OF INCORPORATION: A8 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 260 STRATHCONA CITY: MONT-ROYAL STATE: A8 ZIP: H3R 1EF BUSINESS PHONE: 514-745-0310 MAIL ADDRESS: STREET 1: 260 STRATHCONA CITY: MONT-ROYAL STATE: A8 ZIP: H3R 1EF SC 13D 1 dsc13d.htm SCHEDULE 13D Schedule 13D


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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934

(Amendment No. )*

LSI Industries Inc.

(Name of Issuer)

Common Stock, $0.01 par value per share

(Title of Class of Securities)

502 16C 10 8

(CUSIP Number)

Fred Jalbout

President

Saco Technologies Inc.

260 Strathcona

Mont-Royal, Quebec

Canada H3R 1E7

(514) 745-0310

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

June 26, 2006

(Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. ¨

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be sent.

The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

Potential persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.


CUSIP No. 502 16C 10 8				Page 2 of 13


1.	Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only).

	Saco Technologies Inc.
2.	Check the Appropriate Box if a Member of a Group (See Instructions)
	(a) ¨
	(b) ¨
3.	SEC Use Only

4.	Source of Funds (See Instructions)

	OO
5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)	¨


6.	Citizenship or Place of Organization

	Canada


Number of Shares Beneficially Owned by Each Reporting Person With		7. Sole Voting Power


		8. Shared Voting Power

		1,419,355
		9. Sole Dispositive Power


		10. Shared Dispositive Power

		1,419,355


11.	Aggregate Amount Beneficially Owned by Each Reporting Person

	1,419,355
12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)	¨

13.	Percent of Class Represented by Amount in Row (11)

	6.6%
14.	Type of Reporting Person (See Instructions)

	CO


CUSIP No. 502 16C 10 8				Page 3 of 13


1.	Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only).

	Fred Jalbout
2.	Check the Appropriate Box if a Member of a Group (See Instructions)
	(a) ¨
	(b) ¨
3.	SEC Use Only

4.	Source of Funds (See Instructions)

	OO
5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)	¨


6.	Citizenship or Place of Organization

	Canada


Number of Shares Beneficially Owned by Each Reporting Person With		7. Sole Voting Power


		8. Shared Voting Power

		1,419,355
		9. Sole Dispositive Power


		10. Shared Dispositive Power

		1,419,355


11.	Aggregate Amount Beneficially Owned by Each Reporting Person

	1,419,355
12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)	¨

13.	Percent of Class Represented by Amount in Row (11)

	6.6%
14.	Type of Reporting Person (See Instructions)

	IN


CUSIP No. 502 16C 10 8				Page 4 of 13


1.	Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only).

	Bassam Jalbout
2.	Check the Appropriate Box if a Member of a Group (See Instructions)
	(a) ¨
	(b) ¨
3.	SEC Use Only

4.	Source of Funds (See Instructions)

	OO
5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)	¨


6.	Citizenship or Place of Organization

	Canada


Number of Shares Beneficially Owned by Each Reporting Person With		7. Sole Voting Power


		8. Shared Voting Power

		1,419,355
		9. Sole Dispositive Power


		10. Shared Dispositive Power

		1,419,355


11.	Aggregate Amount Beneficially Owned by Each Reporting Person

	1,419,355
12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)	¨

13.	Percent of Class Represented by Amount in Row (11)

	6.6%
14.	Type of Reporting Person (See Instructions)

	IN

Page 5 of 13

Item 1. Security and Issuer.

The class of equity securities to which this statement on Schedule 13D (this “Statement”) relates are the shares of common stock, par value $0.01 per share (the “Common Shares”), of LSI Industries Inc., an Ohio corporation (the “Company”). The principal executive offices of the Company are located at 10000 Alliance Road Cincinnati, Ohio 45242.

Item 2. Identity and Background.

This Statement is being filed by Saco Technologies Inc., a corporation incorporated under the laws of Canada (“Saco”), Fred Jalbout, an individual, and Bassam Jalbout, an individual (Saco, Fred Jalbout and Bassam Jalbout together constitute the “Reporting Persons”). The joint filing agreement of the Reporting Persons is attached hereto as Exhibit 99.7 and is incorporated herein by reference.

Saco’s principal executive offices are located at 260 Strathcona, Mont-Royal, Quebec, Canada H3R 1E7. Saco sold substantially all of its assets to the Company in the transactions described in more detail below. Saco’s primary assets are Common Shares of Company stock as further described herein.

Saco’s sole directors and executive officers are Fred Jalbout and Bassam Jalbout. Fred Jalbout is a Canadian citizen. His present principal occupation is President of LSI Technology Solutions Plus, a wholly-owned subsidiary of the Company (“LSI Technology”), and his principal business address is 7809 Trans Canada Highway, Montreal, Quebec, H4S 1L3, Canada. Bassam Jalbout is a Canadian citizen. His present principal occupation is Executive Vice President and Chief Operating Officer of LSI Technology and his principal business address is 7809 Trans Canada Highway, Montreal, Quebec, H4S 1L3, Canada.

Saco is equally controlled by Fred Jalbout and Bassam Jalbout, by reason of each of Fred Jalbout and Bassam Jalbout (i) owning fifty percent (50%) of the issued and outstanding capital stock of Saco and (ii) having the right to designate fifty percent (50%) of the members of the board of directors of Saco. Other than Fred Jalbout and Bassam Jalbout, there are no persons controlling, directly or indirectly, Saco.

During the last five years, none of the Reporting Persons has been (i) convicted in a criminal proceeding (excluding traffic violations and similar misdemeanors) or (ii) a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

Page 6 of 13

Item 3. Source and Amount of Funds or Other Consideration.

Pursuant to that certain Stock Purchase Agreement (the “Purchase Agreement”), dated as of June 26, 2006, by and among the Company, Jalbout Holdings Inc., 3970957 Canada, Inc., Saco, 4349466 Canada Inc. (“Canada Inc.”), Fred Jalbout and Bassam Jalbout, Saco sold and transferred to the Company all of the outstanding shares of capital stock of Canada Inc. in consideration for (i) $23,171,959.07 in cash and (ii) 1,419,355 Common Shares, having a value of approximately $19,569,357 based on the average NASDAQ National Market closing price of the Common Shares for the 20 consecutive trading days ending on June 26, 2006.

The foregoing description of the Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Purchase Agreement, which is filed as Exhibit 99.1 hereto, and is incorporated herein by reference.

Item 4. Purpose of Transaction.

The Reporting Persons’ purpose in the sale of Canada Inc., as described in Item 3 of this Statement above, was to realize the maximum value from the sale of the shares of capital stock of Canada Inc. The 1,419,355 Common Shares were offered to Saco by the Company as a portion of the total purchase price for the shares of capital stock of Canada Inc. The Reporting Persons acquired the 1,419,355 Common Shares for investment purposes only with the goal of realizing the maximum value of such Common Shares. Fred Jalbout may be deemed to be an executive officer of the Company by virtue of his role as President of LSI Technology. Except as set forth in this Statement, none of the Reporting Persons has any plans or proposals which relate to or would result in:

(a)

the acquisition by any person of additional securities of the Company, or the disposition of securities of the Company;

(b)

an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Company or any of its subsidiaries;

(c)

a sale or transfer of a material amount of assets of the Company or any of its subsidiaries;

(d)

any change in the present board of directors or management of the Company, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the board of directors of the Company;

(e)

any material change in the present capitalization or dividend policy of the Company;

(f)

any other material change in the Company’s business or corporate structure, including but not limited to, if the Company is a registered closed-end investment company, any plans or proposals to make any changes in its investment policy for which a vote is required by Section 13 of the Investment Company Act of 1940, as amended;

Page 7 of 13

(g)

changes in the Company ‘s charter, bylaws or instruments corresponding thereto or other actions which may impede the acquisition of control of the Company by any person;

(h)

causing a class of securities of the Company to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association;

(i)

a class of equity securities of the Company becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934, as amended (the “Securities Act”); or

(j)

any action similar to any of those enumerated above.

Each Reporting Person reserves the right to change its plans and intentions at any time, as it deems appropriate. In particular, each Reporting Person may at any time and from time to time: acquire Common Shares or securities convertible or exchangeable for Common Shares; dispose of Common Shares which it has acquired; and/or enter into privately negotiated derivative transactions with institutional counterparts to hedge the market risk of some or all of the positions in the Common Shares which it has acquired. Any such transactions may be effected at any time and from time to time subject to any applicable limitations of the Securities Act of 1933, as amended. As of the date hereof, the Reporting Persons intend to dispose, depending on the market price of Common Shares, the Common Shares issued to Saco pursuant to the Purchase Agreement as soon as practical pursuant to the terms and conditions of the Registration Rights Agreement (as defined in Item 6 of this Statement below).

Item 5. Interests in the Securities of the Purchaser.

(a)

Saco beneficially owns 1,419,355 Common Shares representing 6.6% of the issued and outstanding Common Shares. By virtue of their ownership of the capital stock of Saco, each of Fred Jalbout and Bassam Jalbout may be deemed to share beneficial ownership of the Common Shares owned by Saco. The calculations in this Statement are based upon 20,019,741 Common Shares issued and outstanding as of May 1, 2006 (based upon the disclosure made by the Company in its Form 10-Q for the quarter ended March 31, 2006) together with the 1,419,355 Common Shares issued to Saco pursuant to the Purchase Agreement. On June 26, 2006, the Company granted Fred Jalbout 20,000 options to purchase Common Shares in connection with his becoming President of LSI Technology and the President and Chief Executive Officer of Canada Inc. The exercise price of the options is $14.36 per share, reflecting the market value of Common Shares as of the date of the grant. Also on June 26, 2006, the Company granted Bassam Jalbout 12,000 options to purchase Common Shares in connection with his becoming the Executive Vice President and Chief Operating Officer of LSI Technology. The options of Fred Jalbout and Bassam Jalbout expire on June 2, 2016

Page 8 of 13

and each are exercisable at a rate of 25% per year of the aggregate grant beginning on June 26, 2007. The foregoing calculation is made pursuant to Rule 13d-3 promulgated under the Securities Act.

(b)

Saco, Fred Jalbout and Bassam Jalbout have the shared power to vote, direct the vote, dispose of or direct the disposition of the Common Shares owned by Saco, as set forth in paragraph (a) of Item 5 of this Statement. Pursuant to the Escrow Agreement (the “Escrow Agreement”), dated as of June 26, 2006, by and among the Company, Saco and The Bank of New York, N.A. (the “Escrow Agent”), the 1,419,355 Common Shares deemed to be beneficially owned by Saco are held in escrow by the Escrow Agent and (i) 419,355 Common Shares may be released by the Escrow Agent to Saco on September 30, 2006, (ii) 500,000 may be released by the Escrow Agent to Saco on September 30, 2007 and (iii) 500,000 may be released by the Escrow Agent to Saco on September 30, 2008, provided that the Escrow Agent may release the Common Shares held in escrow to the Company to satisfy successful indemnity claims made by the Company pursuant to the Purchase Agreement.

(c)	Except for the receipt of Common Shares issued to Saco pursuant to the Purchase Agreement as described in Item 4 of this Statement, none of the Reporting Persons has effected any transactions in the Common Shares during the past 60 days.

(d)	Pursuant to the Escrow Agreement, the Company has the right to receive the proceeds from the sale of the Common Shares held under the Escrow Agreement in the event that the Company successfully asserts an indemnity claim against Saco under the Purchase Agreement.

(e)	Not applicable.

Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer.

The Purchase Agreement, which provided for the issuance of the 1,419,355 Common Shares to Saco, is described in Item 3 of this Statement above.

The Escrow Agreement, which provides for the voting and disposition of the Common Shares issued to Saco pursuant to the Purchase Agreement deemed beneficially owned by Saco, is described in Item 5(b) of this Statement above.

Pursuant to the Purchase Agreement, the Company entered into a Registration Rights Agreement (the “Registration Rights Agreement”), dated as of June 26, 2006, with Saco for the purpose of registering the Common Shares issued to Saco pursuant to the Purchase Agreement. Pursuant to the terms of the Registration Rights Agreement, the Company has agreed to file a registration statement on Form S-3 with the United States Securities and Exchange Commission (the “Commission”) to effect the registration under the Securities Act of 1933, as amended (the “Securities Act”), of all of the Common Shares issued to Saco

Page 9 of 13

pursuant to the Purchase Agreement for resale by Saco no later than thirty (30) days after the date on which the Company files with the Commission its annual report on Form 10-K with respect to the fiscal year ended June 30, 2006, provided that such registration statement will be filed with the Commission no later than October 15, 2006. In addition, the Company has agreed to keep such registration statement effective until the earliest to occur of (i) the Common Shares issued to Saco pursuant to the Purchase Agreement have been disposed of pursuant to such effective registration statement, (ii) such Common Shares have been sold by Saco pursuant to Rule 144 or Rule 145 under the Securities Act or (iii) such Common Shares can be sold pursuant to Rule 144 or Rule 145 under the Securities Act without regard to the volume limitations set forth in Rule 144 or Rule 145 under the Securities Act, as applicable. The Company has agreed to pay all expenses associated with the registration of the Common Shares held by Saco. Sales of substantial additional amounts of Common Shares in the public market, or the perception that such sales may occur, could adversely affect the prevailing market for Common Shares.

On June 26, 2006, the Company granted Fred Jalbout 20,000 options to purchase Common Shares pursuant to (i) the Employment Agreement (the “FJ Employment Agreement”), dated as of June 26, 2006, by and between Canada Inc. and Fred Jalbout and (ii) the Company’s 2003 Equity Compensation Plan, as amended from time to time (the “Equity Compensation Plan”). The exercise price of the options is $14.36 per share, reflecting the market value of Common Shares as of the date of the grant. Such options expire on June 2, 2016 and are exercisable at a rate of 25% per year of the aggregate grant beginning on June 26, 2007. Pursuant to the FJ Employment Agreement, Fred Jalbout will be eligible to participate in the Equity Compensation Plan, subject to the terms and conditions thereof, during his term of employment as set forth in the FJ Employment Agreement.

On June 26, 2006, the Company granted Bassam Jalbout 12,000 options to purchase Common Shares pursuant to (i) the Employment Agreement (the “BJ Employment Agreement”), dated as of June 26, 2006, by and between Canada Inc. and Bassam Jalbout and (ii) the Company’s Equity Compensation Plan. The exercise price of the options is $14.36 per share, reflecting the market value of Common Shares as of the date of the grant. Such options expire on June 2, 2016 and are exercisable at a rate of 25% per year of the aggregate grant beginning on June 26, 2007. Pursuant to the BJ Employment Agreement, Bassam Jalbout will be eligible to participate in the Equity Compensation Plan, subject to the terms and conditions thereof, during his term of employment as set forth in the Employment Agreement.

The foregoing descriptions of the Escrow Agreement, the Registration Rights Agreement, the FJ Employment Agreement, the BJ Employment Agreement and the Equity Compensation Plan do not purport to be complete and are qualified in their entirety by reference to the full text of the Escrow Agreement, the Registration Rights Agreement, the Equity Compensation Plan, the FJ Employment Agreement and the BJ Employment Agreement, which are filed as Exhibit 99.2, 99.3, 99.4, 99.5 and 99.6 hereto, respectively, and are incorporated herein by reference.

Page 10 of 13

Except as set forth in this Statement, there are no contacts, arrangements, understandings or relationships (legal or otherwise) between any Reporting Person and any other person with respect to any of the securities of the Company, including but not limited to, transfer or voting or any of the securities, finder’s fees, joint ventures, loan or option arrangements, put or calls, guarantees of profits, division of profits or loss, or the giving or withholding of proxies.

Item 7. Material to be Filed as Exhibits.


Exhibit No.		Description
99.1.		Stock Purchase Agreement, dated as of June 26, 2006, by and among LSI Industries Inc., Jalbout Holdings Inc., 3970957 Canada, Inc., Saco Technologies Inc., 4349466 Canada Inc., Fred Jalbout and Bassam Jalbout (incorporated by reference as Exhibit 2.1 to LSI Industries Inc.’s Current Report on Form 8-K filed with the Commission on June 29, 2006).

99.2.		Escrow Agreement, dated as of June 26, 2006, by and among Saco Technologies Inc., LSI Industries Inc. and The Bank of New York Trust Company (incorporated by reference as Exhibit 10.1 to LSI Industries Inc.’s Current Report on Form 8-K filed with the Commission on June 29, 2006).

99.3.		Registration Rights Agreement, dated as of June 26, 2006, by and between LSI Industries Inc. and Saco Technologies Inc. (incorporated by reference as Exhibit 10.2 to LSI Industries Inc.’s Current Report on Form 8-K filed with the Commission on June 29, 2006).

99.4.		LSI Industries Inc. 2003 Equity Compensation Plan, as amended (incorporated by reference as Exhibit 99 to LSI Industries Inc.’s Current Report on Form 8-K/A filed with the Commission on November 7, 2003).

99.5.		Employment Agreement, dated as of June 26, 2006, by and between 4349466 Canada Inc. and Fred Jalbout (incorporated by reference as Exhibit 10.3 to LSI Industries Inc.’s Current Report on Form 8-K filed with the Commission on June 29, 2006).

99.6.		Employment Agreement, dated as of June 26, 2006, by and between 4349466 Canada Inc. and Bassam Jalbout.

99.7.		Joint Filing Agreement, dated as of July 6, 2006, by and among the Reporting Persons.

SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Dated: July 6, 2006


SACO TECHNOLOGIES INC.

By:		/s/ Fred Jalbout
Name:		Fred Jalbout
Title:		President

SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Dated: July 6, 2006

FRED JALBOUT

/s/ Fred Jalbout

SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Dated: July 6, 2006

BASSAM JALBOUT

/s/ Bassam Jalbout

EX-99.6 2 dex996.htm EMPLOYMENT AGREEMENT, DATED AS OF JUNE 26, 2006 Employment Agreement, dated as of June 26, 2006

Exhibit 99.6

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into as of the 26th day of June, 2006, by and between 4349466 CANADA, INC., a corporation duly incorporated under the Canadian Business Corporations Act (the “Company”), and BASSAM JALBOUT (the “Employee”).

WHEREAS LSI Industries Inc. (“LSI”) has agreed to purchase from Saco Technologies Inc. (the “Seller”) all of the issued and outstanding Common Stock of the Company and to carry on the Business (as hereinafter defined) as LSI Saco Technologies Inc. pursuant to a Stock Purchase Agreement dated of even date herewith (the “Purchase Agreement”);

WHEREAS it is a condition precedent to LSI and the Company entering into the Purchase Agreement that the Employee enter into this Agreement with the Company in the form hereof;

WHEREAS the Employee shall become employed by the Company from and after the Closing Date;

WHEREAS the parties agree that the Company requires the protection of its legitimate business interests;

WHEREAS the parties consequently desire to enter into this Agreement setting forth the terms and conditions of the employment of the Employee with the Company and the benefits attaching thereto.

1.	ENTIRE AGREEMENT

This Agreement (including any attachments and exhibits hereto, and any ancillary agreements, as the case may be), contains the entire agreement as to the terms of the Employee’s employment with the Company and replaces and supersedes all previous negotiations, understandings, arrangements and agreements, whether written or verbal, express or implied between the parties. No other representations, covenants, undertakings or other prior or contemporaneous agreements, oral or written, relating to the Employee’s employment will be deemed to exist or to bind either the Employee or the Company. Both the Company and the Employee understand and agree that they have not relied on any statement or representation by the other party or any of its representatives in entering into this Agreement, except where such statements and representations are set forth herein. This Agreement shall not in any way limit or restrict the scope of the undertakings of the Employee contained, as the case may be, in the Purchase Agreement as seller or owner thereunder.

2.	DEFINITIONS

For the purposes of this Agreement, the following terms have the meanings set out below:

“Affiliate” means with respect to any Person, any other Person directly or indirectly controlled, by or under common control with that other Person, including any subsidiaries or other entities controlled by that other Person.

“Business” means the development, design, manufacture and sale of large-format video screens and high-performance light engine devices derived from light emitting diode technology.

“Person” means an individual, corporation, company, co-operative, partnership, trust, unincorporated association, entity with juridical personality, governmental authority or governmental body.

“Territory” means the United States, Canada and any other country in which products of the Company’s Business have been sold, leased or distributed in the 12 months preceding the date of this Agreement.

3.	TERM OF AGREEMENT

The term of this Agreement shall be for an initial three (3) year term commencing effective as of the date first set forth above and terminating on third anniversary of such date (the “Term”). Thereafter, this Agreement may be renewed at the election of the Company, in its sole discretion, for successive one year periods by giving sixty (60) days written notice of such renewal prior to the end of the then current Term; provided the Employee may elect not to renew this Agreement by giving the Company written notice of such election within fifteen (15) days of receipt of such notice.

4.	DUTIES AND RESPONSIBILITIES

4.1

During the Term, the Employee shall:

(a)

Serve as Executive Vice President and Chief Operating Officer of the Company and perform all duties customarily attendant to such position and such other duties as may be assigned from time-to-time by the Chief Executive Officer or the Chairman of the Board of LSI;

(b)

Do all that is reasonably within the Employee’s power to promote, develop and extend the operations and favourable reputation of the Company;

(c)

Devote the Employee’s full time effort, skill, attention and energies to the performance of the Employee’s duties of employment under this Agreement and in all respects carry out the objectives of the Company as well as diligently and faithfully serve the Company and promote its interests in all matters to the best of the Employee’s ability and judgment; and

- 2 -

(d)

Furnish, in a timely manner, all information, reports, disclosures, assistance and explanations in connection with the performance of the Employee’s duties under this Agreement as may be required from time to time.

5.	COMPENSATION

5.1

The Company agrees to pay the Employee an annual base salary, less deductions properly withheld by law, for all services provided under this Agreement of CAN$215,000.00, payable in accordance with the normal payroll practices of the Company. The Board of Directors of LSI shall conduct an annual review of the services rendered by the Employee hereunder for the preceding year and may, at its sole discretion, determine to increase the Employee’s base salary in such amount as the Board may determine.

5.2

On the date of execution of this Agreement, Employee shall receive a one time grant of options to purchase 12,000 shares of LSI’s Common Stock at a purchase price equal to the fair market value of the stock on the date of grant. Such options will be granted pursuant to the 2003 LSI Industries Inc. Equity Compensation Plan, as amended November 6, 2003, as such shall be amended from time to time (the “Plan”). During the Term, the Employee shall be eligible to participate in the Plan, subject to the terms and conditions of the Plan.

5.3

Commencing on July 1, 2007, the Employee shall be eligible to receive a bonus equal to between 15% and 25% of the Employee’s annual base salary as stated in Section 5.1 which shall be paid at the sole discretion of the Board of Directors of LSI. Such bonus shall be an amount determined by the Board of Directors of LSI in their sole discretion.

5.4

The Employee shall be eligible to participate in a Deferred Compensation Plan, subject to its terms, and shall receive an annual contribution in an amount equivalent to that amount contributed to other similarly situated employees of LSI pursuant to LSI’s Retirement Plan.

6.	EXPENSES

The Company shall reimburse the Employee for reasonable expenses incurred in the course of performing his duties pursuant to this Agreement, the whole subject to Company policy for reimbursement of such expenses, which policy may be amended from time to time by the Company.

7.	BENEFITS AND VACATION

7.1

The Employee shall be entitled to participate in such group [RRSP], medical, dental, visual and/or disability plans, if any, as may be provided (and amended or replaced) by the Company for its employees, subject to the Employee meeting and sustaining qualification and eligibility requirements for such plans.

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7.2

During the Term, the Employee will be entitled to an annual vacation of four (4) weeks, to be taken at times mutually agreed upon between the Employee and the Company. The Employee shall not be entitled to carry forward any days of vacation beyond the year in which the Employee became entitled to such vacation.

8.	NON-DISCLOSURE OF CONFIDENTIAL INFORMATION

8.1

The Employee agrees that, during the Term and thereafter, the Employee will not, directly or indirectly, disclose to any Person or entity, or use for the benefit of the Employee or any Person or entity, any confidential, non-public, secret or proprietary information relating to the Business, prospects, or plans of the Company or its Affiliates (“Confidential Information”). The Employee shall not be in violation of this section for a disclosure pursuant to a court action or governmental rule, regulation, or other proceeding (“Ordered Disclosure”) provided that the Employee has notified the Company of the Ordered Disclosure within two business days of being notified of the request for Ordered Disclosure. The Employee agrees to cooperate in good faith with the Company in responding to the Ordered Disclosure in order to prevent, limit or impose restrictions on the Ordered Disclosure. In no event, however, shall this section require the Employee to take action or otherwise be in violation of any law relating to the Ordered Disclosure.

8.2

On cessation of the Employee’s employment with the Company for whatever reason, the Employee shall immediately provide to the Company all working papers, reports, manuals, documents, and the like (including all originals and copies) in the Employee’s possession which contain Confidential Information (which are acknowledged by the Employee as being the property of the Company) and any other property belonging to the Company or its Affiliates in the Employee’s possession.

8.3

The Employee agrees that, during the Term and thereafter, the Employee will not disclose, or cause to be disclosed, any negative, adverse or derogatory comments or information of a substantial nature about:

(a)

the Company or its Affiliates, or any management member of the Company or its Affiliates;

(b)

any products or services provided by the Company or its Affiliates; or

(c)

the prospects for the future of the Company or its Affiliates.

8.4

Subsequent to the cessation of the Employee’s employment with the Company, for whatever reason, the Company may seek the assistance, cooperation or testimony of the Employee in connection with any investigation, litigation or

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proceeding arising out of matters within the knowledge of the Employee and related to the Employee’s position with the Company. The Employee shall provide assistance, cooperation or testimony as reasonably required by the Company. If such assistance, cooperation or testimony requires more than a nominal commitment of the Employee’s time, the Company will compensate the Employee for such time at a per diem rate derived from the Employee’s salary at the time of the Employee’s employment with the Company ended as well as all other reasonable costs and expenses incurred by the Employee, acting reasonably, associated with the Employee’s assistance pursuant to this section.

9.	COVENANT NOT TO SOLICIT OR COMPETE WITH THE BUSINESS

9.1

The Employee agrees that during the Term and for a period of twenty-four (24) months following the cessation of the Employee’s employment for whatever reason, the Employee shall not, directly or indirectly, on his own behalf or on behalf of, or in connection with, any other Person, as principal, agent, creditor, advisor, consultant, owner, partner, independent contractor, employee, shareholder, director, officer or in any capacity whatsoever:

(a)

employ, offer employment to, solicit the employment or service of, or procure or assist any Person to employ, offer employment to, solicit the employment or service of, or otherwise entice away from the employment or service of the Company or its Affiliates, any Person who is employed by the Company or its Affiliates;

(b)

canvas or solicit or accept or interfere with the business of any Customer, or procure or assist in the canvassing or soliciting of the business of any Customer, or canvas or solicit or accept the business of any Prospective Customer, or procure or assist in the canvassing or soliciting of any Prospective Customer.

9.2

The Employee and the Company agree that the following terms shall have the following meanings:

(a)

“Customer” shall mean any and all Persons having, to the knowledge of the Employee, purchased services from the Company or its Affiliates at any time during the twelve (12) months preceding the termination of the Employee’s employment;

(b)

“Prospective Customer” shall mean any Person canvassed or solicited by the Company or its Affiliates, to the knowledge of the Employee, at any time during the twelve (12) months preceding the termination of the Employee’s employment, irrespective of whether or not such Person thereafter purchased services from the Company or its Affiliates.

9.3

The Employee acknowledges that the Employee is a key employee occupying a special relationship with the Company and consequently the Employee, during the Term, will receive from the Company, special knowledge and Confidential

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Information of the Company, including, but not limited to, corporate books and records, financial information, personnel information, lists of customers and suppliers, processes or dealings, patents, inventions, discoveries, information, data, programs, know-how, knowledge and other trade secrets. The Employee also acknowledges that this special knowledge and Confidential Information are valuable to the Company and, therefore, their protection and maintenance constitute a legitimate interest to be protected by the Company by the enforcement of a covenant not to compete. Consequently, the Employee agrees that during the Term and for a period of twenty-four (24) months after the Employee’s resignation or the termination of the Employee’s employment with the Company, as the case may be, on his own behalf, or on behalf of, or in connection with, any Person, whether directly or indirectly, as principal, agent, creditor, advisor, consultant, owner, partner, independent contractor, employee, shareholder, director, officer, or in any capacity whatsoever, carry on or be engaged in or have any financial or other interest in, or be otherwise commercially involved in any endeavour, activity or business in all or part of the Territory, which is substantially the same or is in competition, in whole or in part, with the Business.

9.4

The Employee shall not be in breach of this Section 9 by virtue of his holding, as a passive investor, not more than 5% of the issued and outstanding shares of a corporation which is listed on a recognized stock exchange or by reason of providing part-time services to a charity, not-for-profit organization or educational institution for which the Employee does not receive any compensation or remuneration.

9.5

The Employee acknowledges that a remedy at law for any breach or attempted breach of this Section 9 will be inadequate and that any breach of this Section 9 will result in irreparable harm to the Company. Accordingly, the Company shall, in addition to any other remedy that may be available, be entitled to specific performance and injunctive and other equitable relief in case of any such breach or attempted breach.

9.6

The Employee acknowledges that this Section 9 contains reasonable limitations as to time, geographical area and scope of activity to be restrained that do not impose a greater restraint than is reasonable or necessary to protect the goodwill or other legitimate business interests of the Company.

10.

TERMINATION OF AGREEMENT BY THE COMPANY

10.1

“Cause” shall mean the following events or conditions:

(a)

the Employee’s commission of a criminal act or other indictable offence (other than minor misdemeanors) pursuant to the provisions of the Criminal Code (Canada) or any other criminal or penal statute of any jurisdiction, which the Company reasonably determines may have an adverse effect upon the reputation or goodwill of the Company or its Affiliates or on the performance of the Employee’s duties;

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(b)

a breach by the Employee of, or the Employee’s failure or refusal to perform, in any material respect, any of the Employee’s obligations under this Agreement or any other agreement between the Employee and the Company, where the Employee fails to cure such deficiency within ten (10) days after receipt of notice thereof (provided, however, that no notice shall be given in the event of a breach by the Employee, of any of the restrictive covenants which are set forth in Section 9);

(c)

the Employee’s commission of any immoral act that would bring disrepute to LSI, the Company or the Business;

(d)

a material breach by the Employee of his duties towards the Company or its Affiliates, where the Employee fails to cure such deficiency in all material respects within ten (10) days after receipt of notice thereof;

(e)

theft, fraud, embezzlement from the Company or its Affiliates or any other material act of dishonesty relating to the Employee’s employment;

(f)

gross negligence or willful misconduct or fraud by the Employee in the performance of his duties; and

(g)

any other matter which, pursuant to applicable law, constitutes serious reason for termination without either notice or payment in lieu of notice.

10.2

Termination of Agreement for Cause.

The Company may terminate this Agreement for Cause, upon simple notice from the Company to the Employee, without providing the Employee other notice, severance pay, pay in lieu of notice, or any indemnity whatsoever, except as may otherwise be required by applicable law.

10.3

Termination of Agreement Without Cause.

The Company may terminate this Agreement without Cause at any time upon written notice, provided the Company shall be obligated to the Employee, at its election, either (a) continue to pay the Employee the Employee’s base salary payable in accordance with the normal payroll practices of the Company for the remainder of the then current Term, or (b) provide the Employee with a lump sum payment representing the Employee’s then monthly base salary, less deductions required to be withheld by law, for the remainder of the then current Term. In exchange for this payment, the Employee undertakes to execute a full and complete release of all claims against the Company, its Affiliates and their employees, officers, directors, agents and shareholders, in a form to be determined by the Company, the whole at the Company’s sole discretion.

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10.4

Termination of Agreement Due to Death of the Employee.

This Agreement shall automatically terminate on the death of the Employee and the Company shall have no further obligations to the Employee or to the Employee’ estate pursuant to this Agreement. Any entitlements under this Agreement or otherwise accrued by the Employee at the time of the Employee’s death not yet paid to the Employee will be paid to the appropriate legal designate of the Employee.

11.

NOTICES

The parties agree that any notice to be given pursuant to this Agreement, shall be deemed to have been adequately given if such notice is (a) mailed by prepaid, registered post to the party for whom the notice is intended, (b) delivered personally, (c) sent by an internationally recognized overnight courier service with next day delivery guaranteed and delivery charges prepaid, to the following address:

To the Company:

LSI Industries

10000 Alliance Road

Cincinnati, Ohio 45242

Attention: Ronald S. Stowell

With a required copy to:

Keating Muething Klekamp PLL

One East Fourth Street, Suite 1400

Cincinnati, Ohio 45202

Attention: Paul V. Muething

To the Employee:

Bassam Jalbout

260 Strathcona

Mont-Royal, QC

H3R 1E7

With a required copy to:

Davies Ward Phillips & Vineberg LLP

1501 McGill College Avenue, 26^th Floor

Montreal, Canada H3A 3N9

Attention: Denis Ferland

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12.

GENERAL

12.1

If any part or parts of this Agreement shall be held illegal or null and void by any Court or administrative body of competent jurisdiction, such determination shall not affect the remaining parts of this Agreement and they shall remain in full force and effect as if such part of parts determined illegal or void had not been included in the Agreement.

12.2

All dollar amounts referred to in this Agreement, unless otherwise specified, are in Canadian funds.

12.3

All payments in this Agreement will be subject to applicable income tax and other deductions normally made by the Company and required by law.

12.4

This Agreement shall be governed and construed under and in accordance with the laws of the Province of Quebec.

12.5

This Agreement may not be modified or amended except by instrument in writing signed by the parties to this Agreement.

12.6

Any party to this Agreement may change its address for notice set out in Section 11 in this Agreement by notice of the change of address to the other party.

12.7

This Agreement is personal to the Employee and shall not be assigned by him. The Employee shall not hypothecate, delegate, encumber, alienate, transfer, or otherwise dispose of the Employee’s rights and duties under this Agreement. The Company may assign this Agreement without the Employee’s consent to any other entity and on such assignment, the provisions of this Agreement applicable to the Company shall be construed as being applicable to the entity to which this Agreement has been assigned. This Agreement shall enure to the benefit of and be binding on the successors and permitted assigns of the Company.

12.8

Waiver of any breach of this Agreement is not a waiver of any subsequent breach of this Agreement, nor is any forbearance to seek a remedy for any breach a waiver of any rights and remedies with respect to any subsequent breach.

12.9

If any clause, section, phrase, provision, or portion of this Agreement or its application to any person or circumstance shall be held invalid or unenforceable under any applicable law, such event shall not affect or render invalid or unenforceable the remainder of this Agreement and shall not affect the application of any clause, provision, or portion to other persons or circumstances.

12.10

The Employee agrees that Sections 8 and 9 of this Agreement shall survive any change, modification, or alteration to any of the terms of the Employee’s employment as well as the termination of the Employee’s employment for any reason whatsoever.

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12.11

The Employee acknowledges that he has had full opportunity to review and consider the content of this Agreement and to obtain adequate and independent legal advice with respect to this Agreement, prior to its execution by the Employee. Further, the Employee acknowledges and represents that the Employee does execute this Agreement voluntarily with full knowledge of its terms and conditions.

12.12

The parties hereto acknowledge that they have requested and are satisfied that this Agreement and all related documents be drawn up in the English language. Les parties aux présentes reconnaissent avoir requis que la présente entente et les documents qui y sont relatifs soient rédigés en anglais.

SIGNATURE PAGE TO FOLLOW.

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4349466 CANADA, INC.		BASSAM JALBOUT

Per:	/s/ Ronald S. Stowell	/s/ Bassam Jalbout
	Authorized Signatory

		Witness

EX-99.7 3 dex997.htm JOINT FILING AGREEMENT, DATED AS OF JULY 6, 2006 Joint Filing Agreement, dated as of July 6, 2006

Exhibit 99.7

JOINT FILING AGREEMENT

This confirms the agreement by and between the undersigned that the Statement on Schedule 13D (the “Statement”) filed on or about this date with respect to the beneficial ownership by the undersigned of the shares of common stock, par value $0.01, of LSI Industries Inc., an Ohio corporation, is being filed on behalf of each of the undersigned.

Each of the undersigned hereby acknowledges that pursuant to Rule 13d-1(k) promulgated under the Securities Exchange Act of 1934, as amended, each person on whose behalf the Statement is filed is responsible for the timely filing of such Statement and any amendments thereto, and for the completeness and accuracy of the information concerning such person contained therein; and that such person is not responsible for the completeness or accuracy of the information concerning the other persons making the filing, unless such person knows or has reason to believe that such information is inaccurate.

This Agreement may be executed in one or more counterparts by each of the undersigned, each of which, taken together, shall constitute one and the same instrument.

Date: July 6, 2006


SACO TECHNOLOGIES INC.

By:		/s/ Fred Jalbout
Name:		Fred Jalbout
Title:		President

FRED JALBOUT

/s/ Fred Jalbout

BASSAM JALBOUT

/s/ Bassam Jalbout

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