8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 22, 2009

LSI INDUSTRIES INC.

(Exact name of registrant as specified in its charter)

Ohio	0-13375	31-0888951
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

10000 Alliance Road, Cincinnati, Ohio	45242
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (513) 793-3200

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

Purchase Agreements.

On July 22, 2009 (the “Closing Date”) the registrant simultaneously entered into and consummated the transactions contemplated by a Purchase and Sale Agreement (the “Purchase Agreement”) with LSI Acquisition Inc., an Ohio corporation and wholly owned subsidiary of the registrant (“Buyer”), ADL Technology Inc., an Ohio corporation (“ADL Technology”), ADL Engineering Inc., an Ohio corporation (“ADL Engineering”), Craig A. Miller, Kevin A. Kelly, and David T. Feeney (collectively, the “Shareholders”).

Pursuant to the Purchase Agreement, the Buyer acquired substantially all of the assets of each of ADL Engineering and ADL Technology on the Closing Date and acquired certain real estate used in their business pursuant to a Real Estate Purchase Agreement (described below) entered into with Kelmilfeen Ltd., an Ohio limited liability company affiliated with the Shareholders (“Kelmilfeen”, and collectively with ADL Technology and ADL Engineering, the “Acquired Companies”). The Acquired Companies are in the business of producing electronic assemblies and subassemblies per customer specifications. The purchase price for the acquisition of the non-real estate assets of Acquired Companies was 2,469,676 unregistered shares of LSI Common Stock (“Common Shares”), 1,372,062 of which were deposited pursuant to the Escrow Agreement described below, $447,896 in cash and the assumption of certain indebtedness. Under the Real Estate Purchase Agreement entered into on the Closing Date with Kelmilfeen the Buyer acquired approximately five acres of land on which office and light industrial space is located in Columbus, Ohio (the “Property”). The Property serves as the principal place of operations of the business conducted by the Acquired Companies. The purchase price for the Property was $700,438 in cash plus the assumption of certain related indebtedness.

The registrant renamed the Buyer, now the owner of the business of the Acquired Companies, “LSI ADL Technology Inc.” The Acquired Companies and the Shareholders are collectively referred to herein as the “Sellers”.

Escrow Agreement.

As part of the purchase price the registrant deposited with U.S. Bank, National Association, as escrow agent (“Escrow Agent”), 1,372,062 Common Shares to satisfy post-closing indemnification claims, if any. Pursuant to the Escrow Agreement dated the Closing Date among the Buyer, Escrow Agent, and Shareholders one half of the escrowed shares are to be released eighteen months after the Closing Date with the remaining escrowed shares to be released on the second anniversary of the Closing Date as described therein to the extent the Buyer has not delivered any notice of claim that it is asserting indemnification against the Sellers pursuant to the Purchase Agreement.

Registration Rights Agreement.

Pursuant to the Registration Rights Agreement dated the Closing Date between the registrant and the Shareholders, the registrant granted certain piggyback registration rights to each of the Shareholders. Under certain circumstances, the registrant will be obligated to include certain of the Common Shares issued pursuant to the Purchase Agreement in a registration statement that the registrant may file with the Securities and Exchange Commission (“SEC”). The registrant is required to pay all registration expenses but is not required to pay any underwriting fees, discounts or commissions attributable to the sale of such Common Shares.

The foregoing description of the Purchase Agreement, Real Estate Purchase Agreement, Escrow Agreement, and Registration Rights Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the respective exhibits filed herewith and incorporated herein by reference. The Purchase Agreement has been included to provide investors and stockholders with information regarding its terms. It is not intended to provide any other factual information about the registrant or the Acquired Companies. The Purchase Agreement contains representations and warranties that the parties to the Purchase Agreement made to and solely for the benefit of each other for, among other reasons, to allocate certain risks among the parties. The assertions embodied in such representations and warranties are qualified by information contained in confidential disclosure schedules that the parties exchanged in connection with signing the Purchase Agreement. Accordingly, investors and stockholders should not rely on such representations and warranties as characterizations of the actual state of facts or circumstances, since they are only made as of the date of the Purchase Agreement, are modified in important part by the underlying disclosure schedules and, in some instances, are intended merely as a method of risk allocation.

Item 2.01 Completion of Acquisition or Disposition of Assets.

The information set forth in Item 1.01 is incorporated herein by reference.

Item 3.02. Unregistered Sales of Equity Securities.

In connection with the acquisition described in Item 1.01 above, the registrant issued 2,469,676 Common Shares on the Closing Date. The registrant issued these Common Shares as consideration for the acquisition of certain assets Acquired Companies and deposited 1,372,062 of them with the Escrow Agent pursuant to the Escrow Agreement described above. The Common Shares were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended.

Item 8.01 Other Events.

On July 22, 2009 the registrant issued a press release announcing its consummation of the transactions contemplated by the Purchase Agreement. A copy of the press release is attached as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

2.1	Purchase and Sale Agreement dated as of July 22, 2009 among LSI Industries Inc., LSI Acquisition Inc., ADL Technology Inc., ADL Engineering Inc., and Craig A. Miller, Kevin A. Kelly and David T. Feeney (The schedules to this agreement have been omitted from this filing pursuant to Item 601(b)(2) of Regulation S-K. The registrant will furnish copies of any schedules to the Securities and Exchange Commission upon request.)
10.1	Escrow Agreement dated as of July 22, 2009 among LSI Acquisition Inc., Craig A. Miller, Kevin A. Kelly, David T. Feeney and U. S. Bank, National Association
10.2	Registration Rights Agreement dated as of July 22, 2009 by and between LSI Industries Inc. and Craig A. Miller, Kevin A. Kelly and David T. Feeney
10.3	Real Estate Purchase Agreement between Kelmilfeen Ltd. and LSI Acquisition Inc. dated July 22, 2009
99.1	Press Release dated July 22, 2009

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

LSI INDUSTRIES INC.

/s/ Ronald S. Stowell

Ronald S. Stowell

Vice President, Chief Financial Officer

and Treasurer

(Principal Accounting Officer)

July 24, 2009

EXHIBIT INDEX

Exhibit No.		Description
	2.1	Purchase and Sale Agreement dated as of July 22, 2009 among LSI Industries Inc., LSI Acquisition Inc., ADL Technology Inc., ADL Engineering Inc., and Craig A. Miller, Kevin A. Kelly and David T. Feeney (The schedules to this agreement have been omitted from this filing pursuant to Item 601(b)(2) of Regulation S-K. The registrant will furnish copies of any schedules to the Securities and Exchange Commission upon request.)
	10.1	Escrow Agreement dated as of July 22, 2009 among LSI Acquisition Inc., Craig A. Miller, Kevin A. Kelly, David T. Feeney and U. S. Bank, National Association
	10.2	Registration Rights Agreement dated as of July 22, 2009 by and between LSI Industries Inc. and Craig A. Miller, Kevin A. Kelly and David T. Feeney
	10.3	Real Estate Purchase Agreement between Kelmilfeen Ltd. and LSI Acquisition Inc. dated July 22, 2009
	99.1	Press Release dated July 22, 2009

EX-2.1

Exhibit 2.1

PURCHASE AND SALE AGREEMENT

DATED AS OF JULY 22, 2009

AMONG

LSI INDUSTRIES INC.,

LSI ACQUISITION INC.,

ADL TECHNOLOGY INC.,

ADL ENGINEERING INC.,

AND

CRAIG A. MILLER, KEVIN A. KELLY, AND DAVID T. FEENEY

TABLE OF CONTENTS

	Page
ARTICLE I DEFINITIONS		1
Section 1.1 Certain Defined Terms		1
Section 1.2 Provisions Pertaining to Definitions		10
ARTICLE II PURCHASE AND SALE		11
Section 2.1 Purchased Assets		11
Section 2.2 Excluded Assets		12
Section 2.3 Assumption of Liabilities		13
Section 2.4 Retained Liabilities		13
Section 2.5 Purchase Price and Method of Payment		14
Section 2.6 Closing		15
Section 2.7 Tax Treatment		15
Section 2.8 Consent of Third Parties		15
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLERS		16
Section 3.1 Corporate Existence		17
Section 3.2 Authorization; Enforceable Obligations		17
Section 3.3 Capital Stock and Ownership of Shares; Subsidiaries		18
Section 3.4 Validity of Contemplated Transactions, Needed Consents, etc.		18
Section 3.5 Financial Information		18
Section 3.6 Undisclosed Liability		19
Section 3.7 Tax and Other Returns and Reports		19
Section 3.8 Title to and Condition of Properties		20
Section 3.9 Litigation		21
Section 3.10 Insurance		22
Section 3.11 Contracts and Commitments		22
Section 3.12 Supplier Contracts		24
Section 3.13 Employees		24
Section 3.14 Employee Benefit Plans and Arrangements		24
Section 3.15 Environmental Matters		26
Section 3.16 Compliance or Liability Under Laws; Permits, etc.		28
Section 3.17 Intellectual Property		28
Section 3.18 Products, Inventories and Operations		30
Section 3.19 Product Liability		31
Section 3.20 Product Warranty		31
Section 3.21 Sufficiency of the Purchased Assets		31
Section 3.22 Notes and Accounts Receivable		31
Section 3.23 Conduct of Business		31
Section 3.24 Customers and Suppliers		32
Section 3.25 Investments		32
Section 3.26 Guaranties		32
Section 3.27 Powers of Attorney		32
Section 3.28 Affiliate Transactions		33

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Table of Contents
(continued)

	Page
Section 3.29 Brokers		33
Section 3.30 Investment Purpose		33
Section 3.31 Disclosure		33
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF LSI AND BUYER		33
Section 4.1 Corporate Existence		33
Section 4.2 Corporate Power and Authorization		34
Section 4.3 Validity of Contemplated Transactions, etc.		34
Section 4.4 SEC Reports		35
Section 4.5 Brokers		35
Section 4.6 Continuity of the Business Enterprise		35
ARTICLE V COVENANTS		35
Section 5.1 Conduct of Business Prior to the Closing		35
Section 5.2 Due Diligence		36
Section 5.3 Regulatory and Other Authorizations; Notices and Consents		37
Section 5.4 No Solicitation or Negotiation; Break-Up Fee		37
Section 5.5 Employee Benefit Plans; Employees		38
Section 5.6 Tax Matters		39
Section 5.7 Insurance		39
Section 5.8 Change of Name After the Closing		39
Section 5.9 Dissolution of the Companies		39
Section 5.10 Further Action		39
Section 5.11 Press Releases		40
Section 5.12 Additional Covenants of LSI		40
ARTICLE VI STOCK CONSIDERATION		40
Section 6.1 LSI Common Shares to be Issued		40
Section 6.2 Restrictive Legend		40
Section 6.3 Information		41
ARTICLE VII CONDITIONS PRECEDENT TO THE CLOSING		41
Section 7.1 Conditions Precedent to LSI’s and Buyer’s Obligations		41
Section 7.2 Conditions Precedent to the Obligations of the Shareholders and the Companies		43
Section 7.3 Consummation of Agreement		44
Section 7.4 Further Assurances		44
ARTICLE VIII SHAREHOLDER RESTRICTIVE COVENANTS		45
Section 8.1 Unfair Competition		45
Section 8.2 Confidential Information		46
Section 8.3 Remedy for Breach		47
Section 8.4 Non-Exclusivity		47

ii

Table of Contents
(continued)

	Page
ARTICLE IX SURVIVAL OF REPRESENTATIONS AND WARRANTIES		48
Section 9.1 Survival of Representations and Warranties		48
ARTICLE X INDEMNIFICATION		48
Section 10.1 General Indemnification Obligation of the Shareholders and the Companies		48
Section 10.2 General Indemnification Obligation of LSI and Buyer		49
Section 10.3 Third Party Claims — Indemnification		50
Section 10.4 Provisions Regarding Indemnity		51
Section 10.5 Payment		52
ARTICLE XI TAX MATTERS		52
Section 11.1 General Tax Matters		52
Section 11.2 Transfer Taxes		52
ARTICLE XII MISCELLANEOUS		53
Section 12.1 Termination		53
Section 12.2 Expenses		53
Section 12.3 Waiver		54
Section 12.4 Notices		54
Section 12.5 Headings		54
Section 12.6 Schedules and Exhibits		55
Section 12.7 Severability		55
Section 12.8 Counterparts		55
Section 12.9 Entire Agreement		55
Section 12.10 Amendments; Waivers		55
Section 12.11 Assignment and Binding Effect		55
Section 12.12 Exclusive Benefits		56
Section 12.13 Delays or Omissions		56
Section 12.14 Construction		56
Section 12.15 Governing Law		56
Section 12.16 Submission to Jurisdiction; Waiver		56
Section 12.17 Waiver of Jury Trial		57

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PURCHASE AND SALE AGREEMENT

This Purchase and Sale Agreement (this “Agreement”) is entered into as of July 22, 2009 among LSI Industries Inc., an Ohio corporation (“LSI”), LSI Acquisition Inc., an Ohio corporation (“Buyer”), ADL Technology Inc., an Ohio corporation, (“ADL Technology”), ADL Engineering Inc., an Ohio corporation (“ADL Engineering”), Craig A. Miller, Kevin A. Kelly, and David T. Feeney (collectively, the “Shareholders”). ADL Technology, ADL Engineering and the Shareholders are collectively referred to herein as the “Sellers”.

RECITALS:

A. ADL Technology and ADL Engineering are in the business of producing electronic assemblies and subassemblies per customer specifications (the “Business”);

B. Buyer is a wholly-owned subsidiary of LSI, and Buyer desires to purchase from ADL Technology and ADL Engineering and ADL Technology and ADL Engineering desire to sell to Buyer, substantially all of the assets of the Business and assume certain designated liabilities as more fully described herein;

C. Kelmilfeen Ltd., an Ohio limited liability company, (“Kelmilfeen”) is an Affiliate of ADL Technology and ADL Engineering which owns and leases to ADL Technology the Owned Real Property upon which the business of ADL Technology and ADL Engineering are operated;

D. Simultaneously with the execution of this Agreement, Buyer has entered into a Real Estate Purchase Agreement with Kelmilfeen dated as of even date herewith (the “Real Estate Purchase Agreement”) providing for the purchase and sale of the Owned Real Property; and

E. A condition precedent to LSI’s and Buyer’s willingness to enter into this Agreement, is that the Real Estate Purchase Agreement is executed and consummated.

NOW, THEREFORE, in consideration of the recitals and of the respective covenants, representations, warranties and agreements herein contained, and intending to be legally bound hereby, the parties agree as follows:

ARTICLE I
DEFINITIONS.

Section 1.1 Certain Defined Terms. As used in this Agreement, the following terms shall have the following meanings, unless the context clearly requires otherwise:

“Action” means any charge, decision, judgment, injunction, writ, subpoena, demand, notice, hearing, claim, action, judicial or administrative order or decree, suit, arbitration, inquiry, notice of violation or liability, information request, proceeding or investigation by or before any Governmental Authority or any Person.

“ADL Technology Closing Shares” has the meaning specified in Section 2.5(a).

“ADL Technology Escrow Shares” has the meaning specified in Section 2.5(a).

“ADL Engineering Closing Cash Payment” has the meaning specified in Section 2.5(b).

“ADL Engineering Closing Shares” has the meaning specified in Section 2.5(b).

“ADL Engineering Escrow Shares” has the meaning specified in Section 2.5(b).

“Affiliate” has the meaning set forth in Rule 12b-2 of the regulations promulgated under the Exchange Act.

“Agreement” means this Purchase and Sale Agreement among the Sellers and the Buyer (including all of the Exhibits and Schedules hereto), and all amendments hereto made in accordance with the provisions hereof.

“Assumed Contracts” has the meaning specified in Section 2.1(d).

“Assumed Indebtedness” means all Indebtedness for borrowed money set forth on Schedule 1.1(a).

“Assumed Liabilities” has the meaning specified in Section 2.3.

“Business” means the business of ADL Technology and ADL Engineering as defined in Recital A.

“Business Day” means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by Law to be closed in the State of Ohio.

“Buyer” has the meaning specified in the Preamble to this Agreement.

“CAA” has the meaning specified in the definition of “Environmental Laws.”

“Capital Stock” means any and all shares, stocks, interests, participations, rights or other equivalents (however designated), whether designated common or preferred in a corporation, limited liability company, unlimited liability company, partnership or other entity.

“CERCLA” means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. § 9601 et seq. through the date hereof, and any rules promulgated thereunder.

“Claims” has the meaning specified within the definition of “Environmental Claims.”

“Closing” has the meaning specified in Section 2.6.

“Closing Date” has the meaning specified in Section 2.6.

“Closing Shares” has the meaning specified in Section 2.5(b).

“Code” means the Internal Revenue Code of 1986, as amended through the date hereof.

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“Commission” means the United States Securities and Exchange Commission or any successor agency.

“Companies” means, collectively, ADL Technology, ADL Engineering and Kelmilfeen.

“Disclosure Schedule” has meaning set forth in the introductory paragraph of Article III.

“Dollars” and “$” means the lawful currency of the United States of America.

“Employee Benefit Plan” means (i) any “employee benefit plan” (within the meaning of Section 3(3) of ERISA); and (ii) any Multiemployer Plan within the meaning of Section 3(37) of ERISA, including a terminated plan or frozen plan to which any of the Companies are making contributions or have made contributions within the preceding six (6) years.

“Employee Welfare Benefit Plan” means any “employee welfare benefit plan” within the meaning of Section 3(1) of ERISA.

“Employment Agreements” means the Employment Agreements in the form and substance attached hereto as Exhibit A.

“Encumbrance(s)” means any security interest, pledge, mortgage, lien, charge, encumbrance, adverse claim, preferential arrangement with a creditor or restriction of any kind, including any restriction on the use, voting, transfer, receipt of income or other exercise of any attributes of ownership.

“Environment” means any surface waters, ground waters, soil, sediments, subsurface strata, ambient air, plant and animal life, and any other environmental medium or natural resource.

“Environmental Claims” means any and all administrative, regulatory or judicial actions, suits, demands, demand letters, citations, claims, liens, liabilities, notices of liability, non-compliance or violation, governmental information requests, notices of intent to sue, investigations, proceedings, consent orders, decrees, agreements, or other communications (hereafter “Claims”) relating in any way to any Environmental Laws, Environmental Permits, or Release of Regulated Substances, including the following: (a) any and all Claims or judgments by Governmental Authorities for enforcement, abatement, investigation, monitoring, cleanup, removal, response, remediation, penalties, fines, costs, fees, or other actions or damages, pursuant to any applicable Environmental Laws or Environmental Permits; and (b) any and all Claims by any Person seeking damages, contribution, indemnification, corrective action or cleanup, cost recovery, compensation, or injunctive relief resulting from Regulated Substances or arising from alleged natural resource damages, medical monitoring, damages or injury or threat of damages or injury to human health or safety or the Environment.

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“Environmental Laws” means any applicable federal, state or local law, rule, regulation, code, ordinance, order, standard and requirement, including common law, in each case now in effect, including any judicial or administrative order, consent decree or judgment to which one of the Companies is a party, relating to the Environment, human health and safety, or Regulated Substances, including under: CERCLA; Occupational Safety and Health Act of 1970 (“OSHA”), as amended, 29 U.S.C. § 651 et. seq. as amended through the date hereof and the rules promulgated thereunder; the Resource Conservation and Recovery Act (“RCRA”), 42 U.S.C. § 6901 et seq. as amended through the date hereof and the rules promulgated thereunder; the Hazardous Materials Transportation Act, 49 U.S.C. § 6901 et seq. as amended through the date hereof and the rules promulgated thereunder; the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq. as amended through the date hereof and the rules promulgated thereunder; the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq. as amended through the date hereof and the rules promulgated thereunder; the Clean Air Act, 42 U.S.C. § 7401 et seq. as amended through the date hereof and the rules promulgated thereunder; the Safe Drinking Water Act, 42 U.S.C. § 300f et seq. as amended through the date hereof and the rules promulgated thereunder; the Atomic Energy Act, 42 U.S.C. § 2011 et seq. as amended through the date hereof and the rules promulgated thereunder; the Emergency Planning and Community Right to Know Act, 42 U.S.C. § 11001, et seq., as amended through the date hereofand the rules promulgated thereunder; and the Federal Insecticide Fungicide and Rodenticide Act, 7 U.S.C. § 136, et seq., as amended through the date hereof and the rules promulgated thereunder.

“Environmental Liabilities” means any and all debts, expenses, costs, claims, liabilities, fines, judgments, penalties, and obligations, whether accrued or fixed, absolute or contingent, matured or unmatured or determined or determinable, arising from or under any Environmental Laws, Environmental Claims and Environmental Permits.

“Environmental Permits” means all permits, certificates, exemptions, approvals, identification numbers, registrations, variances, waivers, renewals, applications, modifications, licenses, and other authorizations required under any applicable Environmental Laws.

“ERISA” means the Employee Retirement Income Security Act of 1974, and the related regulations, in each case as amended as of the date hereof and as the same may be amended or modified from time to time. References to titles, subtitles, sections, paragraphs or other provisions of ERISA and the related regulations also refer to successor provisions.

“Escrow Agent” means U.S. Bank, National Association, as escrow agent pursuant to the Escrow Agreement.

“Escrow Agreement” means an Escrow Agreement executed by the Escrow Agent, the Shareholders and Buyer on the Closing Date in the form and substance attached hereto as Exhibit B.

“Escrow Shares” has the meaning specified in Section 2.5(b).

“Exchange Act” means the Securities Exchange Act of 1934 and the rules and regulations promulgated thereunder, each as amended from time to time.

“Excluded Assets” has the meaning specified in Section 2.2.

“Financial Statements” has the meaning specified in Section 3.5.

“GAAP” means generally accepted accounting principles and practices as in effect in the United States from time to time and applied consistently throughout the periods involved.

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“Government Contract” means any Company’s contract(s) with the any Governmental Authority.

“Governmental Authority” means any applicable federal, state, local or foreign government, governmental, regulatory or administrative authority, board, bureau, department, instrumentality, agency, commission or quasi-governmental unit, or any court, tribunal or judicial or arbitral body.

“Include” and “Including,” whether such terms are capitalized or not, shall mean “include but not limited to” and “including without limitation.”

“Indebtedness” means, with respect to any Person, the following: (a) all indebtedness for borrowed money of such Person, whether or not contingent, (b) all obligations of such Person for the deferred purchase price of property or services, (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all obligations of such Person as lessee under leases that have been, in accordance with GAAP, recorded as capital leases, (f) all obligations, contingent or otherwise, of such Person under acceptance, letter of credit or similar facilities, (g) all obligations of such Person to purchase, redeem, retire, defease or otherwise acquire for value any Capital Stock of such Person or any warrants, rights or options to acquire such Capital Stock, valued, in the case of redeemable preferred stock, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends but only to the extent such obligation is payable (i) at a fixed or determinable date, whether by operation of a sinking fund or otherwise, (ii) at the option of any Person other than such Person or (iii) upon the occurrence of a condition not solely within the control of such Person, such as a redemption required to be made out of future earnings, (h) all Indebtedness of other Persons referred to in clauses (a) through (f) above guaranteed directly or indirectly in any manner by such Person, or in effect guaranteed directly or indirectly by such Person through an agreement (i) to pay or purchase such Indebtedness or to advance or supply funds for the payment or purchase of such Indebtedness, (ii) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such Indebtedness or to assure the holder of such Indebtedness against loss, (iii) to supply funds to or in any other manner invest in the debtor (including any agreement to pay for property or services irrespective of whether such property is received or such services are rendered) or (iv) otherwise to assure a creditor against loss, and (A) all Indebtedness referred to in clauses (a) through (f) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Encumbrance on property (including accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness.

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“Intellectual Property” means (a) all inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all patents, patent applications, and patent disclosures, together with all reissuances, continuations, continuations-in-part, revisions, extensions, and reexaminations thereof, (b) all trademarks, service marks, trade dress, logos, trade names, and corporate names, together with all translations, adaptations, derivations, and combinations thereof and including all goodwill associated therewith, and all applications, registrations, and renewals in connection therewith, (c) all copyrightable works, all copyrights, and all applications, registrations, and renewals in connection therewith, (d) all mask works and all applications, registrations, and renewals in connection therewith, (e) all trade secrets and confidential business information (including ideas, research and development, know-how, formulas, compositions, manufacturing and production processes and techniques, technical data, designs, drawings, specifications, customer and supplier lists, pricing and cost information, and business and marketing plans and proposals), (f) all computer software (including data and related documentation), (g) all other proprietary rights, and (h) all copies and tangible embodiments of the items described in (a) through (g) above (in whatever form or medium).

“Inventory” means asset items that are held for sale in the Ordinary Course of Business and goods that will be used or consumed in the production of goods to be sold. Inventories include raw materials (goods and materials on hand but not yet placed in production), work-in-process (cost of raw materials on which production has started but has not been completed plus direct labor costs plus a ratable share of manufacturing overhead costs) and finished goods (completed but unsold goods on hand).

“IRS” means the Internal Revenue Service of the United States.

“Knowledge” or “Known” (whether such terms are capitalized or not) means with respect to any Company or the Shareholders, the actual conscious awareness of information that each of Kevin Kelly, Craig Miller, Dave Feeney, Amy Rock or Lee Ann LeBlanc have obtained, or should have obtained, as of the date of this Agreement in the exercise of reasonable diligence under the circumstances, and with respect to Buyer, the actual conscious awareness of information that Robert Ready, Ronald S. Stowell or James P. Sferra have obtained or should have obtained as of the date of this Agreement in the exercise of reasonable diligence under the circumstances.

“Law” means any applicable federal, state, local, or foreign statute, law, ordinance, regulation, rule, executive order, code or other requirement of law, including Environmental Laws, and Permits.

“Leased Real Property” means any real property leased or subleased by any of the Companies, as tenant, and any real property to which any Company has a right to occupy, together with all buildings and other structures, facilities or improvements located thereon, all fixtures, systems, equipment and items of personal property of any Company attached or appurtenant thereto, and all easements, licenses, rights and appurtenances relating to the foregoing.

“Liabilities” means any and all debts, expenses, costs, claims, fines, penalties, liabilities and obligations, including Environmental Liabilities and Environmental Claims, whether accrued or fixed, absolute or contingent, matured or unmatured or determined or determinable, including those arising under any Law or Action or asserted by any third party, including any Governmental Authority and those arising under any contract, lease, Permit, agreement, arrangement, commitment or undertaking.

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“Licensed Intellectual Property” has the meaning set forth in Section 3.17(a)

“Losses” has the meaning specified in Section 10.1.

“LSI” has the meaning specified in the preamble to this Agreement.

“LSI Common Shares” shall mean duly authorized and validly issued common shares, no par value, of LSI.

“LSI SEC Reports” shall have the meaning set forth in Section 4.4.

“Material Adverse Effect” and/or “Material Adverse Change” means any effect, event, change or occurrence which, individually or together with another effect, event, change or occurrence, would be (or would reasonably be expected to be) materially adverse to the business, assets, condition (financial or otherwise), operating results, operations, or business prospects of the Companies, taken as a whole, or to the ability of the Shareholders to consummate timely the transactions contemplated hereby (regardless of whether or not such adverse effect or change can be or has been cured at any time or whether Buyer has Knowledge of such effect or change on the date hereof), but expressly excluding any adverse change, event, development, or effect arising from or relating to (a) general business or economic conditions, (b) national or international political or social conditions, including the engagement by the United States in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack upon the United States, or any of its territories, possessions, or diplomatic or consular offices or upon any military installation, equipment or personnel of the United States, and (c) changes in Law. In no event need any effect or change materially and adversely affect a party’s long-term earnings power or potential in a durationally significant manner in order to constitute a Material Adverse Effect or a Material Adverse Change, it being understood and agreed that a short-term materially adverse effect or change may constitute a Material Adverse Effect or a Material Adverse Change.

“Material Contracts” has the meaning specified in Section 3.11.

“Motor Vehicles” has the meaning specified in Section 2.1(c).

“Multiemployer Plan” means an Employee Benefit Plan that is a “multiemployer plan” (within the meaning of Section 3(37) of ERISA) to which any Company contributes or has contributed or has or has had an obligation to contribute.

“Nasdaq” has the meaning specified in Section 4.3.

“Nasdaq Letter” has the meaning specified in Section 4.4.

“Operating Permits” means all permits, licenses, authorizations, certificates, exemptions, applications, modifications, variances, waivers, renewals, and approvals of Governmental Authorities, except for Environmental Permits.

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“Ordinary Course of Business” means, with respect to any action taken by a Person, that such action is consistent with the past practices of such Person and is taken in the ordinary course of the normal day-to-day operations of such Person.

“Organizational Documents” means (a) the articles or certificate of incorporation and the code of regulations (or bylaws) of a corporation; (b) the articles of organization or certificate of formation and the operating agreement or written declaration of sole member of a limited liability company; (c) any charter or similar document adopted or filed in connection with the creation, formation, or organization of a Person; and (d) any amendment to any of the foregoing.

“OSHA” has the meaning set forth in the definition of “Environmental Laws.”

“Outside Closing Date” has the meaning specified in Section 2.6.

“Owned Intellectual Property” has the meaning set forth in Section 3.17(e)

“Owned Real Property” means the real property owned by any of the Companies, together with all buildings and other structures, facilities, and improvements currently located thereon, all fixtures attached or appurtenant thereto, including all electrical, mechanical, plumbing and other building systems, fire protection, security and surveillance systems, telecommunications, computer, wiring, and cable installations, utility installations, water distribution systems, and landscaping, and all easements, licenses, rights and appurtenances relating to the foregoing.

“Pension Plan” means an Employee Benefit Plan, other than a Multiemployer Plan, that is an employee benefit pension plan as defined in Section 3(2) of ERISA.

“Permits” means all permits, consents, licenses, franchises, authorizations, certificates, registrations, renewals, applications, modifications, variances, waivers, grants, exemptions and approvals issued by Governmental Authorities, including any Environmental Permits and Operating Permits.

“Permitted Encumbrances” means such of the following as to which no enforcement, collection, execution, levy or foreclosure proceeding shall have been commenced: (a) liens for taxes, assessments and governmental charges or levies not yet due and payable; (b) Encumbrances imposed by Law, such as materialmens’, mechanics’, carriers’, workmens’ and repairmens’ liens and other similar liens arising in the Ordinary Course of Business securing obligations that (i) are not overdue for a period of more than 30 days or which are being contested in good faith and (ii) are not in excess of $2,000 in the aggregate at any time; (c) bonds, letters of credit, pledges or deposits to secure obligations under workers’ compensation Law or similar Law or to secure public or statutory obligations; (d) liens securing the Assumed Indebtedness; and (e) with respect to the Owned Real Property, the Permitted Exceptions (as such term is defined in the Real Estate Purchase Agreement).

“Person” means any individual, partnership, firm, corporation, limited liability company, association, trust, unincorporated organization or any other entity, or a Governmental Authority (or any department, agency, or political subdivision thereof).

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“Pre-Closing Environmental Liabilities” means any and all debts, expenses, costs, claims, fines, penalties, Liabilities and obligations, whether accrued or fixed, absolute or contingent, matured or unmatured or determined or determinable, arising under or related to any Environmental Liabilities, Environmental Laws, Environmental Claims and Environmental Permits prior to the Closing.

“Purchase Price” has the meaning specified in Section 2.5.

“Purchased Assets” has the meaning specified in Section 2.1.

“RCRA” has the meaning specified in the definition of “Environmental Laws.”

“Real Estate Purchase Agreement” has the meaning specified in Recital D.

“Real Property” means, collectively, the Leased Real Property and the Owned Real Property.

“Receivables” means any and all accounts receivable, notes and other amounts receivable by any of the Companies from third parties, including customers, arising before the Closing Date.

“Registration Rights Agreement” means the Registration Rights Agreement in the form and substance attached hereto as Exhibit C.

“Regulated Substances” means all petroleum and petroleum products, asbestos, asbestos containing materials, polychlorinated biphenyls, and any materials, elements, compounds, mixtures, constituents, substances, wastes, pollutants, or contaminants, including but not limited to any chemicals, materials, or substances regulated, defined, designated or listed as hazardous, extremely or imminently hazardous, dangerous or toxic, pursuant to any Law or Environmental Law by any Governmental Authority or with respect to which such a Governmental Authority otherwise requires abatement, environmental investigation, monitoring, record keeping, reporting or remediation, including all substances, wastes, pollutants, contaminants and materials regulated, or defined or designated as hazardous, extremely or imminently hazardous, dangerous or toxic, under any Environmental Laws.

“Release” means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, or disposing in the Environment, including the abandonment or discarding of barrels, containers, and other closed receptacles containing any Regulated Substances.

“Retained Liabilities” has the meaning specified in Section 2.4.

“Schedule,” when used to refer to a Schedule in Article III, has the meaning set forth in the introductory paragraph to Article III, and when used to refer to any other Schedule referred to elsewhere in this Agreement, means a schedule attached to and made a part of this Agreement.

“Securities Act” means the Securities Act of 1933, and the rules and regulations promulgated thereunder, as each may be amended from time to time.

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“Sellers” has the meaning specified in the preamble to this Agreement.

“Seller 401(k) Plan” has the meaning specified in Section 5.5(b).

“Shareholder(s)” has the meaning specified in the preamble to this Agreement.

“Subsidiary” means, with respect to any Person, any corporation, limited liability company, limited or general partnership, joint venture, association, joint stock company, trust, unincorporated organization or other entity analogous to any of the foregoing of which a majority of the equity ownership (whether voting stock or comparable interest) is, at the time, owned, directly or indirectly, by such Person.

“Tax” or “Taxes” means all federal, state, local, foreign and other taxes, or assessments including income, estimated income, business, occupation, franchise, property, sales, employment, gross receipts, use, transfer, ad valorem, profits, license, capital, payroll, excise, goods and services, severance, stamp, and including interest, penalties and additions in connection therewith for which any Company is or may become liable.

“Transfer Taxes” has the meaning specified in Section 11.2.

“USTs” means any underground storage tanks and any ancillary piping and equipment, as such term is defined in RCRA, and the regulations promulgated thereunder, or any state equivalent thereof.

Section 1.2 Provisions Pertaining to Definitions. For all purposes of this Agreement (except where such interpretations would be inconsistent with the context or the subject matter):

(a) Where appropriate, words importing the singular only shall include the plural and vice versa, and all references to dollars shall be United States Dollars.

(b) Words used herein, regardless of the number and gender specifically used, shall be deemed and construed to include any other number, singular or plural, and any other gender, masculine, feminine or neuter, as the context requires.

(c) All headings and sub-headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

(d) References to the terms Article, Section, paragraph, clause, and Exhibits are references to the Articles, Sections, paragraphs, clauses and Exhibits to this Agreement unless otherwise specified, in each case, as the meaning and the context of this Agreement shall require.

(e) Accounting terms not otherwise defined herein shall have the meanings customarily given in accordance with GAAP and all financial computations or determinations to be made under this Agreement shall, unless otherwise specifically provided herein, applied in a manner consistent with the Financial Statements.

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ARTICLE II
PURCHASE AND SALE.

Section 2.1 Purchased Assets. At the Closing, each of ADL Technology and ADL Engineering shall sell, convey, assign, transfer and deliver to Buyer, and Buyer shall purchase, acquire, accept and pay for, and LSI shall cause Buyer to purchase, acquire, accept and pay for, all of each of ADL Technology’s and ADL Engineering’s right, title and interest in and to all of the properties, assets and other rights (excluding the Excluded Assets (as defined hereinafter)) of each Company, personal or mixed, tangible or intangible (collectively, the “Purchased Assets”). Subject to the immediately preceding sentence, the Purchased Assets shall include the following:

(a) all cash and cash equivalents of ADL Technology and ADL Engineering;

(b) all Receivables of ADL Technology and ADL Engineering;

(c) all office, warehouse and other equipment, machinery, leasehold improvements, computers and computer software, vehicles (the “Motor Vehicles”), fixtures, office materials and supplies, spare parts and other tangible (or movable) personal property of every kind and description owned as of the Closing Date by ADL Technology or ADL Engineering, including those fixed assets listed on Schedule 2.1(c);

(d) all of the agreements, contracts and purchase orders for the sale of goods and products by ADL Technology and ADL Engineering and the agreements, contracts and purchase orders listed on Schedule 2.1(d), and the rights thereunder (the “Assumed Contracts”);

(e) all of ADL Technology and ADL Engineering’s right, title and interest in and to Intellectual Property, including all goodwill associated therewith, licenses and sublicenses granted and obtained with respect thereto, and rights thereunder, remedies against infringements thereof, and rights to protection of interests therein under the Laws of all jurisdictions;

(f) all customer files and records of ADL Technology and ADL Engineering, including all written technical information, employment records, data, specifications, research and development information, engineering drawings, operating guides and manuals, computer programs, tapes and software;

(g) claims, deposits, prepayments, credits, refunds, causes of action, choses in action, rights of recovery, rights of set off, and rights of recoupment (other than any such items relating to the payment of income Taxes), whether choate or inchoate, known or unknown, contingent or non-contingent;

(h) all of ADL Technology’s and ADL Engineering’s goodwill in and going concern value of each Business;

(i) all telephone numbers, Internet websites and domain names and advertising used in the Business;

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(j) all of ADL Technology’s and ADL Engineering’s right, title and interest in the Employee Benefit Plans set forth in Schedule 2.1(j);

(k) all of ADL Technology’s and ADL Engineering’s rights to insurance proceeds relating to the Purchased Assets and Assumed Liabilities;

(l) to the extent transferable under applicable Law, all Permits; and

(m) all files, books and records (including computer records) of ADL Technology and ADL Engineering relating to the foregoing.

Section 2.2 Excluded Assets. Notwithstanding any other provision of this Agreement to the contrary, the following of each of the Companies (collectively, the “Excluded Assets”) are not part of the sale and purchase contemplated hereunder and shall be excluded from the Purchased Assets and retained by the Companies after the Closing:

(a) all of each Company’s right, title and interest in and to this Agreement and all other agreements, documents and instruments delivered pursuant to the terms of this Agreement;

(b) any real property owned, leased, or occupied by any Company (except for the Real Property which is separately being transferred to Buyer pursuant to the Real Estate Purchase Agreement);

(c) each Company’s corporate seal, corporate minute books, stockholder records, canceled stock certificates, Tax records and such other books and records as each Company is required by Law to retain;

(d) all original personnel records and other records which each Company is required by Law to retain in its possession, including Family and Medical Leave Act data and documentation, workers’ compensation medical records, and the like; provided ADL Technology and ADL Engineering shall each be required to provide Buyer with copies of such items;

(e) except as set forth in Section 2.1(j), all rights in connection with and assets of the Employee Benefit Plans; and

(f) all claims for refunds of federal, state and local income Taxes and all rights to file claims for refunds thereof; and

(g) any assets of the Companies or the Shareholders described or listed on Schedule 2.2(g)

provided however, the parties acknowledge and agree that such Excluded Assets shall not deem the transactions contemplated by this Agreement to constitute a purchase and sale of less than substantially all of the properties of each of ADL Technology and ADL Engineering for federal Tax purposes.

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Section 2.3 Assumption of Liabilities. The Purchased Assets shall be sold and conveyed to Buyer free and clear of all Encumbrances except Permitted Encumbrances. On and after the Closing Date, Buyer shall assume and discharge only the Assumed Indebtedness and those Liabilities of ADL Technology relating to the Purchased Assets and the Business which are described on Schedule 2.3 (collectively, the “Assumed Liabilities”), all of which Assumed Liabilities are Liabilities solely of ADL Technology (it being understood that no Liabilities of ADL Engineering shall be assumed by Buyer hereunder).

Section 2.4 Retained Liabilities. Notwithstanding anything in this Agreement to the contrary, Buyer hereby assumes no Liabilities or obligations of ADL Technology or ADL Engineering, including any Liabilities, Pre-Closing Environmental Liabilities, Claims or Actions alleging or relating to any tort, product liability, environmental liability, Taxes or breach of contract or otherwise seeking damages and any Liabilities arising from or relating to the Excluded Assets. The Liabilities of the Companies which are not assumed by Buyer pursuant to this Agreement shall be retained by and remain obligations and Liabilities of the appropriate Company and are hereinafter collectively referred to as the “Retained Liabilities”. Without limiting the generality of this Section 2.4 and notwithstanding any other provision hereof, each of the following is a Retained Liability of the Companies which Buyer does not assume:

(a) any obligations of ADL Technology and ADL Engineering under this Agreement or any other document, instrument or agreement delivered by any Company pursuant to the terms of this Agreement;

(b) any Liability of ADL Technology and ADL Engineering arising from, or in connection with, the conduct of the Business prior to the Closing Date or the ownership of the Business or the Purchased Assets by ADL Technology or ADL Engineering prior to the consummation of the transactions contemplated hereby, including any such Liabilities arising by reason of any violation or claimed violation by ADL Technology or ADL Engineering, by acts or events or omissions arising or occurring prior to the Closing Date, of any Law or any breach of any warranty issued by the Companies;

(c) any Liability of ADL Technology or ADL Engineering for Taxes;

(d) any Liability or obligation of ADL Technology or ADL Engineering under any agreement or contract which is not listed on Schedule 2.1(d);

(e) any Liability arising out of the employment or termination of employment, in either case prior to the Closing Date, of any Person employed in the Business;

(f) any Liability of ADL Technology or ADL Engineering or any present or former director or officer of ADL Technology or ADL Engineering arising from any claim, action or proceeding, including any derivative action, brought by or on behalf of any present or former holder of any debt or equity security of ADL Technology or ADL Engineering or by any lender to ADL Technology or ADL Engineering, including any Liability arising from any indemnification, reimbursement or advance in connection therewith;

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(g) any other Liability of ADL Technology or ADL Engineering which is not expressly described as an Assumed Liability under Section 2.3; and

(h) any Pre-Closing Environmental Liabilities.

Section 2.5 Purchase Price and Method of Payment. The aggregate purchase price (the “Purchase Price”) for the Purchased Assets and the covenants and agreements of the Sellers not to compete with Buyer in the Business as set forth more specifically herein shall be the assumption by Buyer of the Assumed Liabilities, Two Million Four Hundred Sixty-Nine Thousand Six Hundred Seventy Six (2,469,676) unregistered LSI Common Shares and Four Hundred Forty Seven Thousand Eight Hundred Ninety Six Thousand Dollars ($447,896.00) in immediately available funds, all of which shall be payable as follows:

(a) As consideration for the purchase and acquisition by Buyer of the Purchased Assets owned by ADL Technology, the covenants and agreements of ADL Technology hereunder not to compete with Buyer in the Business following the Closing, at the Closing (i) Seven Hundred Twenty Seven Thousand Four Hundred Fifty Eight (727,458) unregistered LSI Common Shares (the “ADL Technology Closing Shares”) shall be issued in the name of ADL Technology and delivered to ADL Technology , and (ii) Nine Hundred and Nine Thousand Three Hundred Fifty Three (909,353) unregistered LSI Common Shares (the “ADL Technology Escrow Shares”) shall be issued in the name of ADL Technology to be delivered to the Escrow Agent at Closing and held by the Escrow Agent pursuant to and in accordance with the terms of the Escrow Agreement; and

(b) As consideration for the purchase and acquisition by Buyer of the Purchased Assets owned by ADL Engineering and the covenants and agreements of ADL Engineering hereunder not to compete with Buyer in the Business following the Closing, at the Closing (i) Four Hundred Forty Seven Thousand Eight Hundred Ninety Six Thousand Dollars ($447,896.00) in immediately available funds shall be delivered by wire transfer to such bank account of ADL Engineering as ADL Engineering shall direct Buyer in writing at least two (2) days prior to the Closing (the “ADL Engineering Closing Cash Payment”), (ii) Three Hundred Seventy Thousand One Hundred Fifty Six (370,156) unregistered LSI Common Shares (the “ADL Engineering Closing Shares” and, together with the ADL Technology Closing Shares, the “Closing Shares”) shall be delivered to ADL Engineering, and (iii) Four Hundred Sixty Two Thousand Seven Hundred and Nine unregistered LSI Common Shares (the “ADL Engineering Escrow Shares” and, together with the ADL Technology Escrow Shares, the “Escrow Shares”) shall be issued in the name of ADL Engineering to be delivered to the Escrow Agent at Closing and held by the Escrow Agent pursuant to and in accordance with the terms of the Escrow Agreement; provided, however, (x) at the Closing ADL Engineering may distribute the ADL Engineering Escrow Shares to each Shareholder in accordance with his percentage interest in the Capital Stock of ADL Engineering as of the Closing Date to be immediately reissued by LSI in the name of each of such Shareholder in such amount for delivery to the Escrow Agent at the Closing, and (y) at the Closing ADL Technology may distribute the ADL Technology Escrow Shares to each Shareholder in accordance with his percentage interest in the Capital Stock of ADL Technology as of the Closing Date to be immediately reissued by LSI in the name of each Shareholder in such amount for delivery to the Escrow Agent at the Closing, in each case in satisfaction of such Company’s obligations to otherwise deliver the Escrow Shares to the Escrow Agent.

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(c) The Closing Shares, the Escrow Shares, the ADL Engineering Closing Cash Payment and the Assumed Liabilities collectively constitute and represent the entirety of the Purchase Price to be delivered to ADL Technology and ADL Engineering under this Agreement.

Section 2.6 Closing. The closing (the “Closing”) of the purchase and sale of the Purchased Assets shall take place at the law offices of Keating Muething & Klekamp PLL, One East Fourth Street, Suite 1400, Cincinnati, Ohio 45202, or by means of electronic data transmission methods including facsimile transmission and PDF e-mail transmission of executed signature pages among the parties (with original executed signature pages to be distributed by overnight courier) if so agreed, at 10:00 A.M. EST time on July 22, 2009, except that any party hereto may postpone the Closing if a condition precedent to such party’s obligation to close has not been met by such date, but in no event may such party extend closing beyond July 22, 2009 (the “Outside Closing Date”). The date on which Closing occurs is referenced to as the “Closing Date”. The Closing shall be effective at the close of business on the Closing Date.

Section 2.7 Tax Treatment. The parties to this Agreement intend that the transactions contemplated hereby shall constitute reorganizations for purposes of Section 368(a)(1)(C) of the Code (one involving ADL Technology as the transferor and another involving ADL Engineering as the transferor); provided however, the Sellers acknowledge and agree that compliance with all requirements under the Internal Revenue Code, Treasury Regulations or other relevant Tax authorities the Sellers deem necessary or appropriate to qualify for such treatment shall be the responsibility of the Sellers. The parties to this Agreement adopt this Agreement as a “plan of reorganization” for purposes of Treasury Regulation Section 1.368-2(g) and 1.368-3(a) and agree to adopt the plan of reorganization and file the statement required by Section 1.368-3(a) with their Tax returns for the taxable year in which the Closing occurs. The LSI Common Shares to be transferred as consideration hereunder, will be unregistered, restricted stock that is subject to Rule 144 trading limitations. ADL Technology and ADL Engineering shall liquidate following the Closing and the LSI Common Shares transferred to ADL Technology and ADL Engineering shall be distributed to the Shareholders pursuant to the corporate liquidation and distribution requirements in Section 368(a)(2)(G) of the Internal Revenue Code. Buyer and LSI make no representation or warranty to any Company or any Shareholder regarding the Tax treatment of the purchase of the Purchased Assets.

Section 2.8 Consent of Third Parties. Notwithstanding anything to the contrary in this Agreement, this Agreement shall not constitute an agreement to assign or transfer any instrument, contract, lease, Permit or other agreement or arrangement or any claim, right or benefit arising thereunder or resulting therefrom if an assignment or transfer or an attempt to make such an assignment or transfer without the consent of any Governmental Authority or other Person would constitute a breach or violation thereof or affect adversely the rights of Buyer or any Company thereunder; and any transfer or assignment to Buyer by any Company of any interest under any such instrument, contract, lease, Permit or other agreement or arrangement that requires the

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consent of any Governmental Authority or other Person shall be made subject to such consent or approval being obtained. In the event any such consent or approval is not obtained on or prior to the Closing Date, the Company which is a party thereto shall continue to use all commercially reasonable efforts to obtain any such approval or consent after the Closing Date and such Company will cooperate with Buyer and LSI in any lawful and economically feasible arrangement to provide that Buyer shall receive the interest of the Company, as the case may be, in the benefits under any such instrument, contract, lease, Permit or other agreement or arrangement, including performance by the Company, as the case may be, as agent, if economically feasible, provided that Buyer shall undertake to pay or satisfy the corresponding Liabilities for the enjoyment of such benefit to the extent Buyer would have been responsible therefor hereunder if such consent or approval had been obtained. Nothing in this Section 2.8 shall be deemed a waiver by Buyer of its right to have received on or before the Closing an effective assignment of all of the Purchased Assets nor shall this Section 2.8 be deemed to constitute an agreement to exclude from the Purchased Assets any assets described under Section 2.1.

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS.

ADL Technology, ADL Engineering and the Shareholders have delivered to Buyer individually numbered schedules (collectively, the “Disclosure Schedule,” and each individually referred to herein as a “Schedule”) corresponding to the sections and subsections of this Article containing exceptions to the representations and warranties of ADL , ADL Engineering and the Shareholders in the sections and subsections in this Article and setting forth the exceptions in reasonable detail, with attached documentation as necessary to reasonably explain the stated exceptions. Any exception to the representations and warranties in any section or subsection of this Article is described in a separate Schedule of the Disclosure Schedule that specifically identifies the applicable section or subsection of this Article, provided, however, that (a) any disclosure on a Schedule within the Disclosure Schedule shall be deemed disclosed in respect of other Schedules within the Disclosure Schedule to the extent reasonably apparent on its face that such disclosure is also applicable to other Schedules within the Disclosure Schedule, (b) inclusion of any information in the Disclosure Schedule shall not be deemed an admission or acknowledgment by ADL Technology, ADL Engineering or the Shareholders, or otherwise imply, that such matter is required to be disclosed pursuant to this Agreement (because certain information may be included thereupon for information purposes only), or is material to or outside the Ordinary Course of Business of the Companies, (c) references in the Disclosure Schedule to enforceability of agreements with third parties, existence or non-existence of third-party rights, absence of breaches or defaults by third parties or similar matters or statements, are intended only to allocate rights and risks solely between Buyer on the one hand and the Sellers on the other hand and are not intended to be admissions against interests, give rise to any inference or proof of accuracy, be admissible against any party to this Agreement by any Person who is not a party to the Agreement or give rise to any claim or benefit to any Person not a party to this Agreement, and (d) in no event shall the disclosure of matters disclosed in any Schedule or under any section or subsection specified in the Disclosure Schedule be deemed or interpreted to broaden the Sellers’ representations and warranties, obligations, covenants or agreements contained in this Agreement. The Sellers have provided to Buyer true and complete copies of all documents specifically referenced in the Disclosure Schedule.

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ADL Technology, ADL Engineering and each of the Shareholders, jointly and severally, hereby represent and warrant to Buyer and LSI as follows:

Section 3.1 Corporate Existence. Schedule 3.1 attached hereto contains a complete and accurate list for each Company of its corporate name, its jurisdiction of incorporation, and other jurisdictions in which it is qualified or authorized to transact business as a foreign corporation. Each of ADL Technology and ADL Engineering is a corporation duly organized, validly existing and in good standing under the laws of the State of Ohio and has the corporate power and authority to own its properties and to transact the business in which it is currently engaged, including the Business. Kelmilfeen is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Ohio and has the limited liability company power and authority to own its properties and to transact the business in which it is currently engaged. Each of ADL Technology and ADL Engineering is duly qualified to transact business and is in good standing as a foreign corporation, as applicable, in each jurisdiction where it owns or leases properties and where the conduct of its business requires it to be so qualified. The minute books containing records of meetings of the shareholders and directors of each of ADL Technology and ADL Engineering, and its stock certificates and stock records, are true, accurate and complete in all material respects. No Company is in default or in violation of any provision of its Organizational Documents. The Shareholders have delivered to Buyer copies of the Organizational Documents of each Company, as currently in effect.

Section 3.2 Authorization; Enforceable Obligations. Each of ADL Technology and ADL Engineering has the corporate power and authority, and each Shareholder has the power, authority and legal right, to execute, deliver and perform this Agreement; and each of ADL Technology and ADL Engineering and each Shareholder confirms that (a) the execution, delivery and performance of this Agreement by each of ADL Technology and ADL Engineering have been duly authorized by all necessary corporate and shareholder action; (b) this Agreement has been, and the other agreements, documents and instruments required to be delivered by each of ADL Technology, ADL Engineering, Kelmilfeen or any Shareholder at the Closing in accordance with the provisions hereof will be, duly executed and delivered on behalf of such party; and (c) this Agreement constitutes, and such other documents and instruments when executed and delivered will constitute, the legal, valid and binding obligations of each of ADL Technology, ADL Engineering, Kelmilfeen and each Shareholder, respectively, enforceable against each of ADL Technology, ADL Engineering, Kelmilfeen and each Shareholder in accordance with their respective terms, except to the extent that such enforcement may be subject to bankruptcy, insolvency, fraudulent transfer, fraudulent conveyance, reorganization, moratorium or other similar laws now or hereinafter in effect relating to creditors’ rights generally.

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Section 3.3 Capital Stock and Ownership of Shares; Subsidiaries. Schedule 3.3 attached hereto sets forth: (i) total number of shares of Capital Stock and the classes and par values thereof, which each Company is authorized to issue; (ii) the number of such shares or other equity interests which are issued and outstanding and the number of such outstanding shares or other equity interests owned by each Shareholder; and (iii) the identity of each holder of Capital Stock of each Company and the number of shares of Capital Stock held by each. There are no outstanding subscriptions, options, warrants, preemptive rights, voting trust agreements, shareholder agreements, or other contracts, agreements or arrangements restricting voting or dividend/distribution rights or transferability or other rights entitling any third party to acquire from the Shareholders or any Company any shares of Capital Stock or other securities of any Company. There are no contracts or agreements relating to the issuance, sale, or transfer of any shares of Capital Stock or other securities of any Company. None of the outstanding shares of Capital Stock or other securities of any Company was issued in violation of the Securities Act or any other Law. No Company owns, or has any contract to acquire, any shares of Capital Stock or other securities of any Person or any direct or indirect equity or ownership interest in any other business. No Company has any Subsidiaries.

Section 3.4 Validity of Contemplated Transactions, Needed Consents, etc. Except as set forth on Schedule 3.4, neither the execution and delivery of this Agreement nor the consummation or performance of any of the transactions contemplated hereby will, directly or indirectly (with or without notice or lapse of time), conflict with or result in the breach or acceleration of any term, condition or provision of, or require the consent of any other Person or accelerate the performance required by, or result in the creation of any Encumbrance (other than Permitted Encumbrances) upon any of the properties or assets of any of the Companies under (a) any existing Law to which any Company or Shareholder is subject, (b) any judgment, order, writ, injunction, decree or award of any Governmental Authority which is applicable to any of the Companies, (c) the Organizational Documents of any Company or any securities issued by any of the Companies, or (d) any Material Contract or give any party with rights thereunder the right to terminate, modify, accelerate or otherwise change the existing rights or obligations of any of the Companies thereunder in any material respect. No authorization, approval or consent of, and no registration or filing with, any Governmental Authority is required in connection with the execution, delivery or performance of this Agreement by any of the Companies or the Shareholders. Except as set forth on Schedule 3.4, no Shareholder or Company is or will be required to give any notice to or obtain any consent from any Person in connection with the execution and delivery of this Agreement or the consummation or performance of any of the transactions contemplated hereby.

Section 3.5 Financial Information. The Shareholders have delivered to the Buyer true and complete copies of the following financial statements (collectively, the “Financial Statements”): (i) unaudited balance sheets and statements of income, changes in owners’ equity, and cash flow as of and for the fiscal years ended December 31, 2007 and December 31, 2008 (the “Most Recent Fiscal Year End”) for each of the Companies; and (ii) unaudited consolidated and consolidating balance sheets and statements of income, changes in owners’ equity, and cash flow (the “Most Recent Financial Statements”) as of and for the months ended May 31, 2009 (the “Most Recent Fiscal Month End”) for each of the Companies. Except as identified as on Schedule 3.5, the Financial Statements (including the notes thereto, if any) present fairly in all material respects the financial condition of each of the Companies as of such dates and the results of operations of each of the Companies for such periods, and are consistent with the books and records of each of the Companies (which books and records are correct and complete in all material respects), provided, however, the parties acknowledge that the Financial Statements have not been prepared in accordance with GAAP and are based solely on the accounting methods used for federal income Tax reporting.

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Section 3.6 Undisclosed Liability. Except as set forth on Schedule 3.6, no Company has any Liabilities (and there is no basis for any pending or future suit, Action, proceeding, hearing, investigation, charge, complaint, demand or claim against any Company giving rise to any Liabilities) except for: (i) Liabilities set forth on the Most Recent Financial Statements, and (ii) Liabilities which have arisen after the Most Recent Fiscal Month End in the Ordinary Course of Business (none of which results from, arises out of, relates to, is in the nature of or was caused by any breach of contract, breach of warranty, tort, infringement or violation or liability under any Law, including any Environmental Laws).

Section 3.7 Tax and Other Returns and Reports.

(a) Filing of Tax Returns. Each Company and each Shareholder (and any affiliated group of which any Company is now or has been a member) has timely filed with the appropriate taxing authorities all returns (including all forms W-2 and 1099 and other information returns) in respect of Taxes required to be filed through the date hereof. All such Tax returns were correct and complete in all material respects and were prepared in substantial compliance with all applicable Law (including the Code). All Taxes due and owing by each Company (whether or not shown on any Tax return) have been paid, accrued on the Most Recent Financial Statements or an adequate reserve therefor has been established on the books and records of the Companies. For purposes of this Section 3.7, the term “Company” shall be deemed to include any predecessor of any of the Companies or any Persons from which any of the Companies incurs a Liability for Taxes as a result of transferee Liability. None of the Companies nor any affiliated group of which any Company is now or was a member, has requested any extension of time within which to file returns that have not been filed (including information returns) in respect of any Taxes.

(b) Payment of Taxes. All Taxes, in respect of periods beginning before the Closing Date, have been paid, or an adequate reserve has been established therefor, and none of the Companies has any Liability for Taxes in excess of the amounts so paid or reserves so established. Each of the Companies have withheld and paid all Taxes required to have been withheld and paid in connection with any amounts paid or owing to any employee, independent contractor, creditor, shareholder, member or other third party.

(c) Audit History. No material deficiencies for Taxes have been claimed, proposed or assessed by any taxing or other Governmental Authority, which deficiencies have not been paid. There are no pending or, to each Company’s and each Shareholder’s Knowledge, threatened audits, investigations or claims for or relating to any Liability in respect of Taxes, and there are no matters under discussion with any Governmental Authorities with respect to Taxes that, in the reasonable judgment of the Shareholders and each Company, is likely to result in an obligation by any of the Companies to pay any additional amount of Taxes. None of the Companies has received written notice that any taxing authority intends to audit a return for any period. No extension of a statute of limitations relating to Taxes is in effect with respect to any of the Companies.

(d) Other Tax Matters. There are no liens for Taxes (other than Taxes not yet past due and payable) upon any of the assets of any of the Companies. None of the Companies is a party to any Tax allocation or sharing agreement. None of the Companies has been a member of an affiliated group filing a consolidated federal income tax return or has any Liability for the Taxes of any Person (other than the Companies) under Treasury Regulation Section 1.1502-6 as a transferee or successor by contract or otherwise.

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(e) Continuity of Business Enterprise. Each of ADL Technology and ADL Engineering operates at least one significant historic business line, or owns at least a significant portion of its historic business assets, in each case within the meaning of Treasury Regulation Section 1.368-1(d).

(f) Continuity of Shareholder Interest. Prior to the Closing, the Shareholders will not have disposed of any Capital Stock of any of ADL Technology and ADL Engineering, or received any distributions from of ADL Technology and ADL Engineering, in a manner that will cause the transactions contemplated herein to violate the continuity of shareholder interest requirement set forth in Treasury Regulation Section 1.368-1(e).

Section 3.8 Title to and Condition of Properties.

(a) Schedule 3.8(a) sets forth the address and legal description of each parcel of Owned Real Property. With respect to each parcel of Owned Real Property, except as set forth on Schedule 3.8(a):

(i) one of the Companies has good and marketable indefeasible fee simple title, free and clear of all Encumbrances, except Permitted Encumbrances;

(ii) no Company has leased, licensed or otherwise granted to any Person the right to use or occupy such Owned Real Property or any portion thereof;

(iii) there are no outstanding options, rights of first offer or rights of first refusal to purchase such Owned Real Property or any portion thereof or interest therein; and

(iv) the Shareholders have delivered or made available to Buyer copies of the deeds and other instruments (as recorded) by which the Companies acquired such Owned Real Property, and copies of all title insurance policies, opinions, abstracts, and surveys in the possession of the Shareholders or the Companies and relating to such property or interests.

(b) Schedule 3.8(b) lists and describes all Leased Real Property of the Companies and all leases and subleases with respect thereto. The Companies have delivered to Buyer correct and complete copies of all of the leases and subleases identified on Schedule 3.8(b). With respect to each lease and sublease listed on Schedule 3.8(b):

(i) the leases or subleases are legal, valid, binding, enforceable and in full force and effect with respect to the applicable Company and, to the Knowledge of the Shareholders and the Companies, with respect to each other party thereto;

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(ii) the leases or subleases will continue to be legal, valid, binding, enforceable and in full force and effect on identical terms following the consummation of the transactions contemplated hereby;

(iii) none of the Companies nor, to the Knowledge of any Company or any of the Shareholders, any other party to the leases or subleases are in breach or default, and no event has occurred which with notice or lapse of time, would constitute a breach or default or permit termination, modification, or acceleration thereunder;

(iv) there are no disputes, oral agreements or forfeiture programs in effect as to any such leases or subleases;

(v) none of the Companies have assigned, transferred, conveyed, mortgaged or encumbered any interest in any such leasehold; and

(vi) each Company’s ownership and/or use of the Leased Real Property is in substantial compliance with all applicable Law, including Environmental Laws and Permits.

(c) Each Company has good, valid and marketable title to all of its properties and assets, real, personal and mixed, reflected on the Most Recent Financial Statements as being owned by such Company (except for Inventory or other assets sold since the date thereof in the Ordinary Course of Business consistent with past practice) except for Permitted Encumbrances. The Companies own or lease all buildings, machinery, equipment and other tangible assets reasonably necessary for the conduct of their business as presently conducted and as presently proposed to be conducted. Each such tangible asset (i) to the Knowledge of each of the Companies and each of the Shareholders is free from material defects (patent and latent), (ii) has been maintained in accordance with normal industry practice, (iii) is in good operating condition and repair (ordinary wear and tear excepted), and (iv) is reasonably suitable for the purposes for which it presently is used and presently is proposed to be used.

Section 3.9 Litigation. Except for the matters set forth on Schedule 3.9, no litigation, arbitration, action, suit, investigation or other proceeding by or before any court, arbitrator or Governmental Authority is pending or, to the Knowledge of each Company and the Shareholders, threatened against any of the Companies, or the Real Property, Owned Intellectual Property, Inventory, or Purchased Assets at law or in equity. To each Company’s and each Shareholder’s Knowledge, each product manufactured, sold, leased or distributed by each Company was (at the time of its sale, manufacture, lease or distribution) in conformity in all material respects with all applicable contractual commitments and all express and implied warranties. No Company has any Liabilities in excess of the Liabilities set forth in the Financial Statements for any guaranty, warranty or other indemnity arising from products manufactured, sold, leased or distributed by any of the Companies.

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Section 3.10 Insurance. Schedule 3.10 sets forth a list of each insurance policy (including policies providing property, casualty, liability, workers’ compensation and bond and surety arrangements) under which each Company is presently an insured, a named insured or otherwise a principal beneficiary of coverage, including all bonds and letters of credit whether provided by the Shareholders or any Company. With respect to each such insurance policy, bond or letter of credit:

(a) the policy, bond or letter of credit is legal, valid, binding and enforceable in accordance with its terms against such Company and, to the Knowledge of the Shareholders and the Companies, against each other party thereto, except as enforceability may be limited by applicable bankruptcy and insolvency, fraudulent conveyance, fraudulent transfer, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and, except for policies that have expired under their terms in the ordinary course, and no Company has received any notification or allegation from any other Person that any such policy, bond or letter of credit is not in full force and effect;

(b) each Company having rights under such insurance policy, bond or letter of credit is not in breach or default of such policy, bond or letter of credit (including any breach or default with respect to the payment of premiums or the giving of notice), and no event has occurred which, with notice or the lapse of time, would constitute such a material breach or material default by such Company or permit termination or modification under the policy; and

(c) to the Knowledge of the Companies and the Shareholders, no party to the policy, bond or letter of credit has repudiated, or given notice of an intent to repudiate, any provision thereof.

Section 3.11 Contracts and Commitments.

(a) Schedule 3.11 contains a complete and accurate list of each of the following contracts and agreements of each of the Companies (such contracts and agreements, together with all agreements relating to Intellectual Property set forth in Schedule 3.11, being herein referred to as “Material Contracts”):

(i) each contract and agreement for the purchase of Inventory under the terms of which the Companies: (A) is required to pay or otherwise give consideration of more than $10,000 in the aggregate after the Closing Date, and (B) which cannot be cancelled by any Company party to such contract or agreement without penalty and without more than thirty (30) days’ notice;

(ii) each contract and agreement for the sale of products or for the furnishing of services by the Companies: (A) pursuant to which any such Company is to receive consideration of more than $10,000 in the aggregate after the Closing Date, and (B) which cannot be cancelled by any such Company without penalty and without more than thirty (30) days’ notice;

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(iii) all employment agreements or other contracts (including severance agreements and arrangements) with employees, independent contractors, consultants or similar individuals or entities to which any Company is a party or is bound;

(iv) all contracts and agreements relating to Indebtedness or Liabilities of any Company;

(v) all Government Contracts to which any Company is a party, including record retention agreements and powers of attorney;

(vi) all contracts and agreements that limit or purport to limit the ability of any of any Company or any Shareholder to compete in any line of business or with any Person or in any geographic area or during any period of time;

(vii) all contracts and agreements between or among any Company and any Shareholder or any Affiliate of a Shareholder; and

(viii) all agreements for the purchase, sale, lease or improvement of real property, and capital expenditures.

(b) Except as disclosed in Schedule 3.11(b), each Material Contract and Government Contract:

(i) is valid and binding on and enforceable against each Company which is a party thereto and, to such Company’s and each Shareholder’s Knowledge, on the other respective parties thereto and is in full force and effect;

(ii) no Company which is a party thereto is in breach of, or in default under, any Material Contract and no event or action has occurred, is pending, or to the Knowledge of such Company and the Shareholders, is threatened, which after the giving of notice, or the lapse of time, or otherwise, will constitute or result in a breach or default by such Company, in each case other than immaterial breaches or defaults that are curable in the Ordinary Course of Business;

(iii) to the best of each Company’s and Shareholders’ Knowledge, no other party to any Material Contract is in material breach thereof or material default thereunder; and

(iv) the Companies are current with the payment obligations of the Assumed Indebtedness and Assumed Liabilities in accordance with their terms.

(c) There is no contract, agreement or other arrangement granting any Person any preferential right to purchase, other than in the Ordinary Course of Business consistent with past practice, any of the properties or assets of any of the Companies.

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Section 3.12 Supplier Contracts. With respect to each Company’s relationships with its suppliers :

(a) All written supply agreements are listed on Schedule 3.12;

(b) All sourcing agreements for products sold or distributed by any of the Companies which extend beyond ninety (90) days of the Closing are listed on Schedule 3.12;

(c) Schedule 3.12 lists any rebate arrangements which exist between the Companies and their respective suppliers; and

(d) All notifications of price increases or rebate reductions or discount reductions received by any of the Companies from suppliers of any of the Companies are listed on Schedule 3.12.

Section 3.13 Employees. To the Knowledge of each Company and each Shareholder, no executive, key employee or group of employees has any plans to terminate employment with the Business. None of the employees of any of the Companies are subject to any collective bargaining agreement. No Company has committed an unfair labor practice, as such term is defined in federal labor Law, or experienced any strikes, charges of unfair labor practices or other collective bargaining disputes. No Company has any Knowledge of any organizational effort presently being made or threatened by or on behalf of any labor union with respect to employees of any of the Companies.

Section 3.14 Employee Benefit Plans and Arrangements.

(a) Schedule 3.14 lists each Employee Benefit Plan that any Company maintains or to which any one of the Companies contributes.

(b) To the Knowledge of the Companies and the Shareholders, each such Employee Benefit Plan (and each related trust, insurance contract or fund) subject to ERISA complies in form and in operation with its terms and in all material respects with the applicable requirements of ERISA, the Code and other applicable laws.

(c) All required reports and descriptions, including Form 5500 Annual Reports, Summary Annual Reports, PBGC-1s and Summary Plan Descriptions, have been filed or distributed appropriately with respect to each Employee Benefit Plan subject to Title I of ERISA. The requirements of Part 6 of Subtitle B of Title 1 of ERISA and of Code §4980B have materially been met with respect to each such Employee Benefit Plan which is an Employee Welfare Benefit Plan.

(d) All contributions, including all employer contributions and employee salary reduction contributions, which are due prior to the date of this Agreement have been paid to each such Employee Benefit Plan which is a Pension Plan and all contributions which are due for any period ending on or before the Closing Date will have been paid on or before the Closing Date to each such Pension Plan or will have been accrued in accordance with the past custom and practice of the Companies. All premiums or other payments which are due for all periods ending on or before the Closing Date will have been paid on or before the Closing Date with respect to each such Employee Benefit Plan which is an Employee Welfare Benefit Plan (to the extent that such payments are contributed on a payroll basis).

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(e) Each such Employee Benefit Plan which is a Pension Plan covering employees in the United States which is intended to be a “qualified plan” under Code §401(a) substantially meets the requirements of Code §401(a) and either (i) has received a current favorable determination letter from the Internal Revenue Service, (ii) has pending an application for a determination letter which was timely filed, or (iii) has relied upon an IRS opinion letter for such plan obtained by the applicable plan sponsor, as applicable, and nothing has occurred with respect to the operation of such Employee Benefit Plans that will adversely affect the qualified status of such Employee Benefit Plans.

(f) The market value of assets under each such Employee Benefit Plan which is a Pension Plan that is covered by Title IV of ERISA and subject to the minimum funding standards of Section 412 of the Code covering employees in the United States, other than any Multiemployer Plan, equals or exceeds the present value of all vested and non-vested liabilities thereunder determined in accordance with the methods of the U.S. Pension Benefit Guaranty Corporation factors and assumptions applicable to such a Pension Plan terminating on the date for determination.

(g) Each Company has delivered to Buyer correct and complete copies of the plan documents (including amendments) and summary plan description, the most recent determination letter received from the Internal Revenue Service (for each Pension Plan), the most recent Form 5500 Annual Report, if applicable, and all related trust agreements, insurance contracts and other funding agreements or other documents which implement each Employee Benefit Plan.

(h) Each Company has the right to amend or terminate, without the consent of any other Person, any Employee Benefit Plan it maintains, except as proscribed by Law.

(i) With respect to each Employee Benefit Plan that each Company maintains or ever has maintained, within the seven (7) years ending on the Closing Date, or to which any of them contributes, contributed within the seven (7) years ending on the Closing Date, or ever has been required to contribute, within the seven (7) years ending on the Closing Date:

(i) No such Employee Benefit Plan is a Pension Plan that is subject to Title IV of ERISA.

(ii) To each Company’s and Shareholder’s Knowledge, there have been no prohibited transactions (as defined in ERISA §406 and Code §4975) with respect to any such Employee Benefit Plan subject to Title I of ERISA. To the Knowledge of each Company and each Shareholder, no Fiduciary (as defined in ERISA §3(21)) has any liability for breach of fiduciary duty or any other failure to act or comply in connection with the administration or investment of the assets of any such Employee Benefit Plan. No action, suit, proceeding, hearing or investigation relating to any such Employee Benefit Plan (other than routine claims for benefits) is pending or, to each Company’s and each Shareholder’s Knowledge, threatened. To the Knowledge of each Company and the Shareholders, there is no basis for any such action, suit, proceeding, hearing or investigation.

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(j) No Company has, within the seven (7) years ending on the Closing Date, contributed to, or been required to contribute to, any Multiemployer Plan or has any Liability, including withdrawal liability, under any Multiemployer Plan as defined in §4001(a)(3) of ERISA.

(k) No Company is required to contribute to any Employee Welfare Benefit Plan providing medical, health or life insurance or other welfare-type benefits for current or future retired or terminated employees, their spouses or their dependents, other than in accordance with Code §4980B.

(l) The consummation of this Agreement and the performance of each of the respective obligations of each Company and Buyer under this Agreement do not cause or trigger the obligation to make any severance payment or other payments to any officer, director or employee of any of the Companies.

Section 3.15 Environmental Matters.

(a) Schedule 3.15 lists all Environmental Permits presently held by each Company. Each of the Companies holds all Environmental Permits reasonably necessary or proper for the lawful conduct and operation of its Business and the occupancy and use of the Real Property, and all such Environmental Permits are in full force and effect. Each Company has timely submitted renewal applications, application fees and annual filing fees for all such Environmental Permits and has paid all fees associated with the Environmental Permits. No Company nor any of the Shareholders have received any written notice from any Governmental Authority revoking, canceling, rescinding, materially modifying or refusing to renew any Environmental Permits or threatening to revoke, cancel, rescind, materially modify or refuse to renew any Environmental Permit or providing written notice of violations or liabilities or alleged violations or liabilities, under any Environmental Laws or Environmental Permits. Each Company has been and is presently in substantial compliance with all applicable Environmental Laws and Environmental Permits and the terms, conditions, and requirements of the Environmental Permits and all Environmental Laws.

(b) Except as disclosed in Schedule 3.15:

(i) to the Knowledge of each of the Companies and each of the Shareholders, there has been no Release of any Regulated Substances from, on, at, in or under any Real Property by any Company nor from, on, at, in or under any real property, on, at, in or under any real property owned, leased, or formerly owned, leased or used by any Company or, to each Company’s and Shareholder’s Knowledge, by any other Person in violation of or which creates liability under any Environmental Laws, and no Regulated Substances have been generated, used, handled, disposed, treated or stored on, or transported to or from, any Real Property, other than in substantial compliance with all applicable Environmental Laws and Environmental Permits;

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(ii) each Company has not disposed of any Regulated Substances in a manner which is not in compliance with all applicable Environmental Laws and Environmental Permits;

(iii) there are no pending or, to the Knowledge of each of the Companies and each of the Shareholders, threatened Environmental Claims or Environmental Liabilities against any of the Companies or any Real Property, and no Company has received any written notice of any such Environmental Claims or Environmental Liabilities;

(c) there are not currently nor to the Knowledge of the Companies and the Shareholders were there previously any: (a) USTs or associated contamination on any Real Property; (b) asbestos-containing materials in any form on the Real Property; (c) materials or equipment containing polychlorinated biphenyls; or (d) landfills or disposal areas on any Real Property. Any USTs and associated contamination previously existing on the Owned Real Property and the Leased Real Property were removed in accordance with Environmental Laws, and to the extent applicable each Company has obtained a closure certificate, or comparable approval from the respective Governmental Authority for such removal and cleanup.

(d) the Shareholders and each Company have made available to Buyer, prior to the Closing, with complete and accurate copies of all written information in their possession or control pertaining to each Company’s compliance with and Liability under all Environmental Laws and Environmental Permits, including compliance audits and environmental assessments, notices of violation and liability, orders, regulatory inspections, and sampling of the Environment at, on, in, under or around the Real Property.

(e) During each Shareholder’s and each Company’s ownership and operation of the Real Property, and except as disclosed on Schedule 3.15: (a) each Company has substantially complied with all Environmental Laws and Environmental Permits; (b) no Release has occurred by any Company or, to the Knowledge of the Companies and the Shareholders, by any other Person, of any Regulated Substances into the Environment at the Owned Real Property in violation of or which creates any Liability under any Environmental Laws; (c) no landfill, disposal area, dry wells, fills, injection wells, dumps, flooding, historical or archaeological areas, wetlands or other adverse environmental conditions exist or occurred on the Real Property; and (d) to the Knowledge of the Companies and the Shareholders no contaminants exist on or about the Real Property.

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Section 3.16 Compliance or Liability Under Laws; Permits, etc. Schedule 3.16 lists all Permits presently held by each Company. Except as set forth on Schedule 3.16, no Company has been or is in violation in any material respect, nor has any Liability under, any Law, including any Environmental Laws. Each Company currently holds all Permits reasonably necessary or proper for the conduct of its Business and all such Permits are in full force and effect. No Company nor any Shareholder has received any written notice from any Governmental Authority or Person revoking, canceling, rescinding, materially modifying or refusing to renew any Permit, or providing written notice of violations or Liabilities under any Law, Environmental Laws, or Permits. Except as disclosed on Schedule 3.15 or Schedule 3.16, each Company has been and is in substantial compliance with the Permits, and the requirements of such Permits.

Section 3.17 Intellectual Property.

(a) Schedule 3.17(a) sets forth a true and complete list of all Intellectual Property owned by each Company (the “Owned Intellectual Property”), to the extent such Owned Intellectual Property constitutes a Company-owned patent, trademark, service mark, trade name, registered copyright or other registration of Intellectual Property, including each pending patent application or application for registration of Intellectual Property, as well as each material unregistered trademark, service mark, trade name, corporate name, Internet domain name, computer software (other than commercially available off-the-shelf software purchased or licensed for less than $1,000.00 per purchase or license) and each material unregistered copyright used by the Companies. Schedule 3.17(a) also sets forth a true and complete list of any written license, sublicense, agreement or permission to use Intellectual Property of another Person (the “Licensed Intellectual Property”). Except as otherwise described in Schedule 3.17(a), in each case where a registration of Owned Intellectual Property or application for registration of Owned Intellectual Property listed in Schedule 3.17(a) is held by any Company by assignment, the assignment has been duly recorded with the applicable Governmental Authority. To the Knowledge of each Company and the Shareholders, except as set forth on Schedule 3.17(a), the rights of each Company in or to such Intellectual Property do not conflict with or infringe on the rights of any other Person, and no Company nor any Shareholders have received any claim or written notice from any Person to such effect.

(b) Except as disclosed in Schedule 3.17(a);

(i) all the Owned Intellectual Property is owned by one or more of the Companies free and clear of any Encumbrance except Permitted Encumbrances;

(ii) each Company has the right, pursuant to valid and enforceable licenses, to use the Licensed Intellectual Property in the manner in which the Licensed Intellectual Property is currently being used; and

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(iii) no Actions are pending (nor, to the Knowledge of the Companies and the Shareholders, have been threatened) against any of the Companies (A) based upon, or challenging, or seeking to deny or restrict, the use by any Company of any of the Intellectual Property, or (B) alleging that any services provided or products sold by any Company are being provided or sold in violation of any patents, trademarks or intellectual property rights of any Person. To each Company’s and each Shareholder’s Knowledge, no Person is using any patents, copyrights, trademarks, service marks, trade names or trade secrets that infringe upon the Owned Intellectual Property or upon the rights of any Company therein. Except as disclosed in Schedule 3.17(a), no Company has granted any license or other right to any other Person with respect to the Owned Intellectual Property. The consummation of the transactions contemplated by this Agreement will not result in the termination or impairment of any of the Owned Intellectual Property or any of the rights of any Company in any of the Licensed Intellectual Property; provided, however, that assignments thereof required by applicable Law shall be required to be filed with applicable Governmental Authorities following the Closing.

(c) The Intellectual Property described in Schedule 3.17(a) constitutes all items of Intellectual Property used or held by each Company in the conduct of the Business that are material to the Companies or the Business, and there are no other items of Intellectual Property not described thereupon that are material to the Companies or the Business.

(d) As to each item of Intellectual Property that any third party owns and that any Company uses pursuant to licenses, sublicenses, agreements or permissions, the Companies have delivered to Buyer copies of all such licenses, sublicenses, agreements and permissions, and with respect to each such item of Intellectual Property:

(i) the licenses, sublicenses, agreements or permissions, covering the item is legal, valid, binding, enforceable and in full force and effect against the applicable Company and, to the Knowledge of the Companies and the Shareholders, against the other parties thereto;

(ii) the licenses, sublicenses, agreements or permissions will continue to be legal, valid, binding, enforceable and in full force and effect on identical terms following the consummation of the transactions contemplated hereby;

(iii) none of the Companies, nor to the Knowledge of the Shareholders and the Companies, any other party to the licenses, sublicenses, agreements, or permissions is in breach or default, and to the Knowledge of the Shareholders and the Companies no event has occurred which with notice or lapse of time, would constitute a breach or default or permit termination, modification, or acceleration thereunder;

(iv) the licenses, sublicenses, agreements and permissions are not subject to any outstanding injunction, judgment, order, decree, ruling or charge of any Governmental Authority;

(v) no Action is pending or, to any Company’s or any Shareholder’s Knowledge, is threatened which challenges the legality, validity or enforceability of the licenses, sublicenses, agreements or permissions; and

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(vi) except as disclosed in Schedule 3.17(a), no Company has granted any sublicenses or similar right with respect to such licenses, sublicenses, agreements or permissions.

(e) Except as disclosed on Schedule 3.17(e), no Company has interfered with, infringed upon, misappropriated or come into conflict with any Intellectual Property rights of third parties. To the Knowledge of each Company and the Shareholders no third party has interfered with, infringed upon, misappropriated or otherwise come into conflict with any Intellectual Property rights of any of the Companies.

Section 3.18 Products, Inventories and Operations.

(a) No Company maintains or is required by Law to maintain a registration of its manufacturing facilities with any Government Authority.

(b) All Inventory of the Companies, whether or not reflected in the Financial Statements or the Most Recent Financial Statements, consists of a quality and quantity usable and salable in the Ordinary Course of Business, except for obsolete items and items of below-standard quality, all of which have been written off or written down to net realizable value in the Financial Statements or the Most Recent Financial Statements or on the accounting records of the Companies as of the Closing Date, as the case may be. All Inventories not written off have been priced based on average costing. The quantities of each item of Inventory (whether raw materials, work-in-process, or finished goods) are not excessive, but are reasonable in the present circumstances of the Companies, and at Closing such quantities will be at or about the same levels as those measured in the most recent cycle count of Inventory and otherwise consistent with the quantities of such items of Inventory that have been maintained by the Companies in the Ordinary Course of Business during the six (6) month period immediately preceding the Closing Date. The finished goods Inventories, net of reserves for excess and obsolete Inventories, at the Closing are in good, usable and salable condition, free from any material defect, whether latent or patent, and currently of a quality, strength and durability which is in conformity with the highest prevailing industry standards and are fit for their intended purpose and use.

(c) Schedule 3.18(c) contains a true and correct list of the products currently in Inventory and currently being manufactured by each Company. The manufacture, use and sale by each Company of its Inventory are in accordance in all material respects with the provisions of applicable Law and to the Knowledge of each Company or the Shareholders do not interfere with the rights of any Person to know-how or to any property right the existence of which would materially adversely affect the value of the Inventories.

(d) Except as listed on Schedule 3.18(d), all Inventory for the Company is subject of a valid and enforceable legal commitment of a customer to purchase such Inventory.

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Section 3.19 Product Liability. There are no Liabilities (and there is no basis for any present action, suit, proceeding, hearing, investigation, charge, complaint, claim or demand against Company giving rise to any Liabilities) arising out of any injury to any Person or property as a result of ownership, possession, or use of any product manufactured, sold, leased or delivered by any of the Companies.

Section 3.20 Product Warranty. Each Product manufactured, sold, leased or delivered by each Company has been in conformity in all material respects with all applicable contractual commitments and all express or implied warranties and no Company has any Liabilities (and there is no basis for any present or future Action giving rise to any Liabilities) for replacement or repair thereunder or other damages in connection therewith (except as reserved against in the Most Recent Financial Statements). Schedule 3.20 attached hereto contains the standard terms and conditions of sale or lease by each Company (containing applicable guaranty, warranty and indemnity provisions). No product manufactured, sold, leased or delivered by any of the Companies is subject to any guaranty, warranty or other indemnity beyond the applicable standard terms and conditions of sale or lease set forth in Schedule 3.20.

Section 3.21 Sufficiency of the Purchased Assets. The assets of the Companies constitute all of the assets, tangible and intangible, of any nature whatsoever, reasonably necessary to operate the Business in the manner in which it is currently conducted and as it is proposed to be conducted by the Companies taking into account leased and licensed property as disclosed in the Disclosure Schedule and property in the public domain.

Section 3.22 Notes and Accounts Receivable. Except as set forth on Schedule 3.22, all notes and accounts receivable of each Company are reflected properly on its books and records, are valid Receivables subject to no setoffs or counterclaims and are current and collectible in accordance with their terms, subject to only to the reserve for bad debts on the Most Recent Financial Statements as adjusted through the Closing in accordance with past customary practices of the Companies.

Section 3.23 Conduct of Business. Since the Most Recent Fiscal Year End, each Company has conducted its business only in the ordinary course, and, except as contemplated by this Agreement or disclosed in Schedule 3.23, there has not been any:

(a) event which has had a Material Adverse Effect or a Material Adverse Change;

(b) sale, assignment, transfer, mortgage, pledge or lease of any assets of any of the Companies except in the Ordinary Course of Business;

(c) issuance, sale or other disposition by any Company of any equity interest, equity interest options, bonds, notes or other securities of any Company;

(d) any payment of a cash dividend or distribution by any Company;

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(e) increase in the rates of direct compensation payable or to become payable by any of the Companies to any officer, employee, agent or consultant, other than routine increases made in the Ordinary Course of Business, or any bonus, percentage compensation, service award or other like benefit, granted, made or agreed to for any such officer, employee, agent or consultant, or any welfare, pension, retirement or similar payment or arrangement made or agreed to which is greater than any such bonus, percentage compensation, service award or other like benefit or any welfare, pension, retirement or similar payment or arrangement existing or made pursuant to arrangements, agreements, or plans existing at December 31, 2008, except as required by existing agreements or Law;

(f) revaluation by any Company of any of its respective assets; or

(g) damage, destruction or loss affecting the properties or business of any of the Companies having a Material Adverse Effect or which has caused (or would be reasonably expected to cause) a Material Adverse Change.

Section 3.24 Customers and Suppliers.

(a) Schedule 3.24 lists the ten (10) largest customers of ADL Technology and ADL Engineering (on a consolidated basis) for each of the two most recent fiscal years and sets forth opposite the name of each such customer the percentage of consolidated net sales of ADL Technology and ADL Engineering (on a consolidated basis) attributable to such customer. Schedule 3.24 also lists any additional current customers that each Company anticipates (to the Knowledge of the Companies and the Shareholders) shall be among the ten (10) largest customers of ADL Technology and ADL Engineering (on a consolidated basis) for the current fiscal year (it being agreed that neither the Companies nor the Shareholders shall be liable for any failure of such customers to meet such expectations).

(b) Since the date of the Most Recent Fiscal Year End, no supplier of any of the Companies has notified any Company or any Shareholder that it shall stop, or materially decrease the rate of, supplying materials, products or services to any of the Companies, and no customer listed on Schedule 3.24 has notified any Company or any Shareholder that it shall stop, or materially decrease the rate of, buying materials, products or services from any of the Companies.

Section 3.25 Investments. None of the Companies own any Capital Stock or other securities or any other direct or indirect interest or investment in any firm, corporation or other Person (including any joint venture or partnership).

Section 3.26 Guaranties. No Company is a guarantor or otherwise is liable for any Liability (including Indebtedness) of any other Person.

Section 3.27 Powers of Attorney. To the Knowledge of the Companies and the Shareholders, there are no outstanding powers of attorney executed on behalf of any of the Companies.

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Section 3.28 Affiliate Transactions. Except as disclosed on Schedule 3.28, the Shareholders have not, since January 1, 2005, had, directly or indirectly (a) any interest in any Person which purchases from or sells or furnishes to any Company any goods or services (other than his beneficial ownership of less than 1% of the publicly traded securities of such Person); (b) a beneficial interest in any contract, commitment or agreement to which any Company is a party or by which it is bound or affected; or (c) any interest or claim against any Company (other than routine interests and claims resulting from service as employees and/or from being shareholders of the Companies in the Ordinary Course of Business).

Section 3.29 Brokers. All negotiations relative to this Agreement have been carried on by the Shareholders and their representatives without the intervention of any other Person engaged by them who may be entitled to any brokerage or finder’s fee or other commission in respect of this Agreement or the consummation of the transactions contemplated hereby.

Section 3.30 Investment Purpose. ADL Technology, ADL Engineering and the Shareholders acknowledge that they have had the opportunity to ask questions of and receive information from LSI and Buyer regarding their receipt of the LSI Common Shares. ADL Technology, ADL Engineering and the Shareholders are accepting the LSI Common Shares for investment only and not with a view to resale or otherwise dispose of all or any part of the LSI Common Shares unless and until the Shareholders determine at such future date that changed circumstances, not now anticipated, make such disposition advisable, and then, only in compliance with the Securities Act and all other applicable securities Laws. ADL Technology, ADL Engineering and the Shareholders acknowledge that the LSI Common Shares are not registered under the securities Laws of the United States or any state thereof and are being transferred to the Companies (which will be promptly upon dissolution transferring the same to the Shareholders) in reliance upon one or more exemptions from the registration requirements made available under such Laws, and that the statutory basis for such exemptions may not be present if any of ADL Technology, ADL Engineering or any Shareholder has a present intent to acquire the LSI Common Shares with a view to the distribution thereof in violation of the Securities Act or other applicable securities Laws. Neither Buyer nor its advisors, agents or representatives has made any representations or warranties regarding the future stock price of the LSI Common Shares or the future financial performance of Buyer or LSI.

Section 3.31 Disclosure. No statement of fact by ADL Technology, ADL Engineering or the Shareholders contained in this Agreement contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements herein contained, in the light of the circumstances under which they were made, not misleading as of the date of which it speaks. The Companies and the Shareholders have provided to Buyer true and complete copies of all documents specifically referenced in the Disclosure Schedule.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF LSI AND BUYER.

LSI and Buyer, jointly and severally, represent and warrant to the Sellers and Shareholders as follows:

Section 4.1 Corporate Existence. Each of LSI and Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Ohio. One hundred percent (100%) of the issued and outstanding shares of Capital Stock of Buyer is owned beneficially and of record by LSI. Neither LSI nor Buyer is a party to any contract, agreement or other commitment, arrangement or understanding to transfer any of the issued and outstanding shares of Capital Stock of Buyer to any Person that is not presently (and will not be after any such transfer) an Affiliate of LSI.

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Section 4.2 Corporate Power and Authorization. Each of LSI and Buyer has the corporate power, authority and legal right to execute, deliver and perform this Agreement. The execution, delivery and performance of this Agreement by LSI and Buyer have been duly authorized by all necessary corporate action of each of them. This Agreement has been, and the other agreements, documents and instruments required to be delivered by LSI and Buyer in accordance with the provisions hereof will be at the Closing, duly executed and delivered by LSI and Buyer, and this Agreement constitutes and when executed and delivered at the Closing such other agreements, documents and instruments will constitute, the legal, valid and binding obligations of LSI or Buyer, as the case may be, enforceable against each of them in accordance with their respective terms, except to the extent that such enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereinafter in effect relating to creditors’ rights generally.

Section 4.3 Validity of Contemplated Transactions, etc. Neither the execution, delivery and performance of this Agreement nor the consummation of the transactions contemplated hereby violates, conflicts with or results in the breach of any term, condition or provision of, or requires the consent of any other Person or accelerates the performance required by, or results in the creation of any Encumbrance upon any of the properties or assets of LSI or Buyer, under (i) any Law to which LSI or Buyer is subject, (ii) any judgment, order, writ, injunction, decree or award of any court, arbitrator or Governmental Authority which is applicable to LSI or Buyer, (iii) the Organizational Documents of, or any securities issued by LSI or Buyer, or (iv) any mortgage, indenture, agreement, contract, commitment, lease, plan or other instrument, document or understanding, oral or written, to which LSI or Buyer is a party or by which LSI or Buyer is otherwise bound. Except for notifications that may be required by Listing Rules or other requirements of The Nasdaq Stock Market (“Nasdaq”), no authorization, approval or consent of, and no registration or filing with, any Governmental Authority is required in connection with the issuance of the LSI Common Stock by LSI to be delivered by Buyer or for the execution, delivery and performance of this Agreement by LSI or Buyer; provided, however, that Sellers acknowledge that LSI may have certain filing or reporting obligations with the Commission, including, but not limited to the requirements of Form 8-K, and Sellers acknowledge that they may be subject to the reporting requirements of Sections 13 and 16 of the Exchange Act. Each share of LSI Common Stock to be delivered by Buyer at the Closing pursuant to this Agreement has been duly authorized by LSI and, upon consummation of the Closing, will be validly issued, fully paid and non-assessable, and held by the record holder thereof free of any adverse claims (within the meaning of Article 8 of the Uniform Commercial Code) other than those created under this Agreement and the Escrow Agreement.

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Section 4.4 SEC Reports. LSI has filed with the Commission all materials and documents required to be filed prior to December 31, 2008 by LSI under the Securities Act and under the Exchange Act. All the materials and documents filed by LSI since January 1, 2008 are hereinafter referred to as the “LSI SEC Reports”. The LSI SEC Reports, copies of which have been delivered to the Sellers, are true and correct in all materials respects, including the financial statements and other financial information contained therein, and do not omit to state any material fact necessary to make the statements in such LSI SEC Reports, in light of the circumstances in which they were made, not misleading. The financial statements included in the LSI SEC Reports fairly present the financial condition and the results of operations, changes in shareholders’ equity and cash flow of LSI and its subsidiaries as at the respective dates of and for the periods referred to in such financial statements, all in accordance with GAAP. Sellers acknowledge that they have received from Buyer the Delinquency Compliance Plan letter dated July 17, 2009 that LSI submitted to Nasdaq (the “Nasdaq Letter”) and that such Nasdaq Letter responds to a letter from Nasdaq dated May 19, 2009 notifying LSI of LSI’s noncompliance with certain Nasdaq Listing Rules. Sellers further acknowledge that each of the representations, warranties and other statements of LSI and Buyer set forth in this Section 4.4, are qualified by the disclosures, terms and conditions expressly set forth in the Nasdaq Letter.

Section 4.5 Brokers. All negotiations relative to this Agreement have been carried on by it directly without the intervention of any Person engaged by it who may be entitled to any brokerage or finder’s fee or other commission in respect of this Agreement or the consummation of the transactions contemplated hereby, except J. Jeffrey Brausch & Company, which such fee shall be paid by LSI or Buyer.

Section 4.6 Continuity of the Business Enterprise. The Buyer intends to continue at least one significant historic business line of each of ADL Technology and ADL Engineering, or to use at least a significant portion of each such Company’s historic business assets in the Business, in each case within the meaning of Treasury Regulation Section 1.368-1(d).

ARTICLE V
COVENANTS.

Section 5.1 Conduct of Business Prior to the Closing. Between the date hereof and the Closing Date, the Sellers shall conduct the Business in the Ordinary Course of Business. Without limiting the generality of the foregoing, without Buyer’s prior consent, the Sellers shall:

(a) except as required by Law or GAAP, not change any of the Companies’ or the Business’ accounting or financial reporting methods, principles or practices;

(b) not change or amend the articles of incorporation, bylaws or other Organizational Document of any Company;

(c) continue their advertising and promotional activities, and pricing and purchasing policies in accordance with the past practice of the Business;

(d) not shorten or lengthen the customary payment cycles for any of its payables or Receivables;

(e) use commercially reasonable efforts, without making any commitments on behalf of Buyer, to (A) preserve intact the organization of the Business, (B) keep available to Buyer the services of the management and employees of the Companies, (C) continue in full force and effect without material modification all existing policies or binders of insurance currently maintained in respect of the Business, and (D) preserve the each Company’s current relationships with its customers, suppliers and other Persons with which it has significant business relationships;

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(f) not engage in any practice, take any action, fail to take any action or enter into any transaction which would cause any representation or warranty of the Shareholders or the Companies in this Agreement to be untrue or result in a material breach of any covenant made by the Shareholders or the Companies in this Agreement;

(g) not transfer to any Shareholder by way of dividend, distribution or otherwise any amounts;

(h) maintain in full force and effect all insurance policies set forth on Schedule 3.10 or an equivalent replacement policy;

(i) refrain from doing any act or omitting to do any act, or permitting any act or omission to act, which will cause a breach of any Material Contract or which will have a Material Adverse Effect;

(j) furnish to Buyer within 15 days after the end of a fiscal month unaudited financial statements for the Companies for such period in the same form as delivered to Buyer with respect to the Business for the prior months of 2009;

(k) not merge or consolidate with any Person or engage in any other transaction involving the Companies, the Business or any material asset of any Company without the prior written consent of Buyer;

(l) promptly notify Buyer of any event which will have a Material Adverse Effect;

(m) not enter into, or become obligated under, any lease, contract, agreement or commitment except for any lease, contract, agreement or commitment involving a payment by the Companies of less than $10,000 which is entered into in the Ordinary Course of Business; and

(n) not change, amend or terminate or otherwise modify any lease, contract, agreement or commitment, unless such change, amendment or termination is entered into in the Ordinary Course of Business and would not have a Material Adverse Effect.

Section 5.2 Due Diligence. The Shareholders and the Companies and such parties’ officers, directors, employees, agents, representatives, accountants and counsel will permit representatives of Buyer to have reasonable access at reasonable times upon reasonable notice to all premises, properties, personnel, books, records including Tax records, contracts, and documents of or pertaining to the Purchased Assets, Real Property, and the Business. The Shareholders and the Companies will also furnish Buyer and its representatives with copies of all such information and data concerning the affairs of the Companies and the Business that Buyer reasonably may request for the purpose of verifying the representations and warranties made herein and further investigating the Business, Real Property, and the Purchased Assets. In furtherance thereof, the Shareholders and the

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Companies will permit Buyer, in a manner approved by the Shareholders, to make contact with all members of management of the Companies, with their customers and with such other Persons with which the Companies have been conducting business. The performance of this due diligence on the part of Buyer or the acquisition of information by Buyer shall not relieve the Shareholders and the Companies from any representation, warranty or covenant made by any of them in this Agreement. The Shareholders and the Companies will provide Buyer with appropriate access to the facilities of the Companies until Closing. All information obtained by Buyer pursuant to this Agreement shall be kept confidential in accordance with the terms of the Letter of Intent by and among LSI, the Companies and the Shareholders dated June 6, 2009.

Section 5.3 Regulatory and Other Authorizations; Notices and Consents.

(a) Each of the parties to this Agreement shall use its commercially reasonable efforts to perform and fulfill all conditions and obligations on their part to be performed or fulfilled under this Agreement as promptly as practicable and to effect the transactions contemplated by this Agreement expeditiously in accordance with the terms and provisions hereof and to effect the transition and integration of the business and operations of the Business with the business and operations of Buyer and its Affiliates. Each of the parties shall furnish to each other party in a timely manner all information, data and documents in the possession of such party requested by such party as may be required to obtain any necessary regulatory or other approvals of this Agreement or the transactions contemplated by this Agreement and shall otherwise use its commercially reasonable efforts to cooperate fully with Buyer to carry out the purpose and intent of this Agreement and the transactions contemplated hereby.

(b) Each party hereto shall use its commercially reasonable efforts to obtain any authorizations, consents, orders and approvals of all Governmental Authorities and officials that may be or become necessary for its or their execution and delivery of, and the performance of its or their respective obligations pursuant to this Agreement and will use commercially reasonably efforts to cooperate fully with the other parties hereto in promptly seeking to obtain all such authorizations, consents, orders and approvals. The Shareholders and each Company shall give promptly such notices to third parties and use their commercially reasonable efforts to obtain such third party consents and estoppel certificates as may be required by each of them or Buyer in connection with the transactions contemplated by this Agreement. Buyer shall cooperate and assist the Sellers in giving such notices and obtaining such consents and estoppel certificates.

Section 5.4 No Solicitation or Negotiation; Break-Up Fee. The Shareholders ADL Technology and ADL Engineering each agree that between the date of this Agreement and the earlier of the Closing and the termination of this Agreement in accordance with the terms hereof, neither ADL Technology, ADL Engineering, nor any of the Shareholders, nor any of their respective Affiliates, officers, directors, representatives or agents will:

(a) solicit, initiate or intentionally encourage any other proposals or offers (each of those identified in subsections (i), (ii) and (iii) below, hereinafter referred to as an “Acquisition Transaction”) from any Person,

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(i) relating to any acquisition or purchase of all or any portion of the Capital Stock of any Company or the assets used in the Business (other than Inventory to be sold in the Ordinary Course of Business),

(ii) to enter into any business combination with any Company, or

(iii) to enter into any other extraordinary business transaction involving or otherwise relating to any Company; or

(b) participate in any discussions, conversations, negotiations and other communications regarding, or unless otherwise required by Law, furnish to any other Person any information with respect to, or otherwise cooperate in any way, assist or participate in, facilitate or encourage any effort or attempt by any other Person to seek to do any of the foregoing. Each Shareholder and Company shall cease and cause to be terminated all existing discussions, conversations, negotiations and other communications with any Persons heretofore conducted with respect to any of the foregoing. The Sellers shall notify Buyer promptly if any such proposal or offer, or any inquiry or other contact with any Person with respect thereto, is made and shall, in any such notice to Buyer, indicate in reasonable detail the terms and conditions of such proposal, offer, inquiry or other contact.

(c) If, after the execution of this Agreement and prior to the termination hereof in accordance with the terms of Section 12.1(a), any Shareholder or any Company enters into a binding agreement to engage in an Acquisition Transaction with a third party, or any Shareholder or any Company actually completes an Acquisition Transaction with a third party, Buyer shall be entitled to terminate this Agreement in its entirety forthwith upon written notice to the Sellers and without any further rights or obligations on the part of any party except as specifically provided for herein, and ADL Technology, ADL Engineering and the Shareholders shall jointly and severally be liable to Buyer for an amount equal to (a) Buyer’s documented costs and expenses actually incurred in connection with this contemplated transaction, plus (b) Two Million Dollars ($2,000,000), payable by wire transfer of immediately available funds to the bank account or accounts specified by Buyer. The parties agree that payment of the foregoing sum constitutes a fair and equitable measure of liquidated damages which would be sustained by Buyer by reason or arising out of such party’s violation of the provisions of this Agreement and shall in no event or respect be deemed a penalty.

Section 5.5 Employee Benefit Plans; Employees.

(a) Without the prior written consent of Buyer, the Companies shall not make any announcements to any employees of the Companies or the Business regarding employment, salary, wages, benefits or compensation to be provided by Buyer following the Closing Date.

(b) As of the Closing, each employee of the Company or the Business who is a participant in an Employee Benefit Plan that is intended to be qualified under Sections 401(a) and 401(k) of the Code (each a “Seller 401(k) Plan”) shall become fully vested in his or her account balance under such Seller 401(k) Plan. The Seller 401(k) Plan shall be terminated effective as of the Closing.

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Section 5.6 Tax Matters. Except as required by applicable Tax Laws, the Companies shall not make or change any election, change an annual accounting period, adopt or change any accounting method, file any amended Return, enter into any closing agreement, settle any Tax claim or assessment relating to the Purchased Assets, surrender any right to claim a refund of Taxes, consent to any extension or waiver of the limitation period applicable to any Tax claim or assessment relating to the Purchased Assets, or take any other similar action relating to the filing of any Tax return, or the payment of any Tax, if such election, adoption, change, amendment, agreement, settlement, surrender, consent or other action would have the effect of increasing the Tax liability of Buyer for any period ending after the Closing Date or decreasing any Tax attribute of Buyer existing on the Closing Date.

Section 5.7 Insurance. After Closing, the Companies will provide Buyer with full and unrestricted access to all of the insurance policies of the Companies with respect to any claims or occurrences arising with respect to the period prior to Closing, known or unknown, covered thereby as of the Closing. For the avoidance of doubt, each Company may satisfy its obligations hereunder to provide such full and unrestricted access to such policies by assigning such policies to Buyer, and each Company agrees that prior to any liquidation, dissolution or other winding-up of such Company, and each other Affiliate of it to which any such policy may have been assigned, such Company shall assign such policy to Buyer.

Section 5.8 Change of Name After the Closing. On or immediately after the Closing Date, the Shareholders shall cause the respective Organizational Documents of ADL Technology and ADL Engineering to be amended so as to change the name of ADL Technology to KCD Technology Inc. and the name of ADL Engineering to KCD Engineering Inc. and will thereafter take such action as may be reasonably requested by LSI to make the names “ADL Technology” and “ADL Engineering” available to Buyer and its Affiliates.

Section 5.9 Dissolution of the Companies. From and after the Closing, neither ADL Technology or ADL Engineering will engage in any business except that which is necessary and appropriate to effect its liquidation and winding down, and each of ADL Technology and ADL Engineering will liquidate and dissolve as a corporation, and will distribute the LSI Common Shares received pursuant to the terms of this Agreement to its shareholders in complete cancellation and redemption of their Capital Stock in the respective Companies in accordance with the liquidation and distribution requirements of Section 368(a)(2)(G) of the Code.

Section 5.10 Further Action. Each of the parties hereto shall use all commercially reasonable efforts to take, or cause to be taken, all appropriate action, do or cause to be done all things necessary, proper or advisable under applicable Law, and to execute and deliver such documents and other instruments or papers as may be required to carry out the provisions of this Agreement and to consummate and render effective the transactions contemplated by this Agreement.

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Section 5.11 Press Releases. No party shall make any public statement or issue any press release concerning the transaction referenced herein without the prior approval of all other parties hereto, which approval shall not be unreasonably withheld, conditioned or delayed; provided, however, that any party may make any public disclosure it believes in good faith is required by applicable Law or any listing or trading agreement concerning its publicly-traded securities (in which case the disclosing party will advise the other parties prior to making the disclosure and afford the other parties reasonable time to approve and comment upon the disclosure).

Section 5.12 Additional Covenants of LSI. After the Closing, following resolution of the matters referred to in the Nasdaq Letter, LSI covenants and agrees to (a) use commercially reasonable efforts to make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act, (b) use commercially reasonable efforts to file with the Commission in a timely manner all reports and other documents required by LSI under the Securities Act and the Exchange Act, and (c) at any time after the date that is six (6) months following the Closing Date, to furnish to any Shareholder upon request a written statement of LSI as to its compliance with reporting requirements of said Rule 144 and the Securities Act and the Exchange Act, a copy of the most recent annual and quarterly report of LSI, and such other reports and documents of LSI as such Shareholder may reasonably request to attempt to avail himself of Rule 144 or any similar rule or regulation of the Commission allowing such Shareholder to sell any LSI Common Shares without registration.

ARTICLE VI
STOCK CONSIDERATION.

Section 6.1 LSI Common Shares to be Issued. The LSI Common Shares to be issued in connection with this Agreement will not be registered under the Securities Act at the time of issuance and will be issued pursuant to an exemption from registration. As a result, such LSI Common Shares must be held indefinitely unless subsequently registered under the Securities Act or unless an exemption from such registration is available. Except as expressly set forth in the Registration Rights Agreement, LSI, Buyer (and their Affiliates) hereby assume no obligation to register the LSI Common Shares. In certain circumstances after the expiration of the restricted period described herein, sales of the LSI Common Shares may be made in reliance upon Commission Rules 145 and 144 pursuant to the terms and conditions of those rules.

Section 6.2 Restrictive Legend. The certificates for the LSI Common Shares issued pursuant to this Agreement will each bear a legend substantially as follows:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933 AND APPLICABLE STATE LAWS OR (B) AN OPINION OF COUNSEL ACCEPTABLE TO THE HOLDER OF RECORD HEREOF THAT SUCH REGISTRATION IS NOT REQUIRED.

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Section 6.3 Information. The Shareholders ADL Technology and ADL Engineering acknowledge receipt of the LSI SEC Reports and the Nasdaq Letter. Each of the Shareholders and the Companies acknowledge the willingness of LSI and Buyer to provide appropriate officers to answer any questions that any Shareholder ADL Technology or ADL Engineering may have with respect to the contents of such documents.

ARTICLE VII
CONDITIONS PRECEDENT TO THE CLOSING.

Section 7.1 Conditions Precedent to LSI’s and Buyer’s Obligations. All obligations of LSI and Buyer under this Agreement are subject to the fulfillment or satisfaction, prior to or at the Closing, of each of the following conditions precedent:

(a) Representations and Warranties True as of the Closing Date. The representations and warranties of the Shareholders, ADL Technology and ADL Engineering contained in this Agreement or in any schedule, certificate or document delivered by any of the Shareholders or the Companies to Buyer and/or LSI pursuant to the provisions of this Agreement shall have been true and correct as of the date of this Agreement and shall be true and correct on the Closing Date with the same effect as though such representations and warranties were made as of such date.

(b) Compliance with this Agreement. Each Shareholder and each Company shall have performed and complied with all covenants, agreements and conditions required by this Agreement and the Real Estate Purchase Agreement to be performed or complied with by it prior to or at the Closing.

(c) No Pending Litigation. On the Closing Date, no suit, action, investigation or other proceeding, or injunction or final judgment relating thereto, shall be pending or threatened by any Governmental Authority or by any other Person before any court or Governmental Authority in which it is sought to restrain, prohibit or challenge the consummation of the transactions contemplated hereby or the operation of the Business.

(d) No Material Change. Since the date of this Agreement, there shall not have been any event which is reasonably likely to result in a Material Adverse Effect.

(e) Satisfactory Completion of Due Diligence. LSI and Buyer shall, in their sole discretion, be satisfied with the results of their due diligence investigation of the Business, and the Purchased Assets, and the Real Property to be transferred under the Real Estate Purchase Agreement, including their environmental assessment of such Real Property.

(f) Termination of Agreement. Neither LSI, Buyer, the Shareholders, ADL Technology nor ADL Engineering shall have terminated this Agreement pursuant to Section 12.1.

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(g) Items to be Delivered at Closing by the Companies and Shareholders. At the Closing and subject to the terms and conditions herein contained, the Shareholders, ADL Technology and ADL Engineering shall deliver to LSI and Buyer the following:

(i) possession of the Purchased Assets;

(ii) a bill of sale (or assignments as appropriate) in a form approved by Buyer’s counsel conveying free, clear and unencumbered title to the Purchased Assets from ADL Technology and ADL Engineering to Buyer;

(iii) such documents of assignment and transfer (including assignments of certificates of title to the Motor Vehicles and an assignment and assumption of Assumed Contracts), together with such consents and approvals as may be reasonably required to vest in Buyer all right, title and interest of each of ADL Technology’s and ADL Engineering’s in and to the Assumed Contracts and each Company’s Receivables;

(iv) certified copies of minutes or unanimous written consents of the shareholders/members of each of the Companies and the Board of Directors of each of the Companies, respectively, approving the execution, delivery and performance of this Agreement, the Real Estate Purchase Agreement and the consummation of the transactions contemplated under this Agreement;

(v) certificates from the Secretary of State of the State of Ohio dated as of a recent date to the effect that each Company is in good standing in the State of Ohio;

(vi) certificates from the Companies and the Shareholders dated the Closing Date, certifying in such detail as Buyer may reasonably request, that the conditions specified in Sections 7.1(a), 7.1(b) and 7.1(c) hereof have been fulfilled or satisfied;

(vii) all records and files of each Company relating to the Purchased Assets and the Business, including all ledger records, account records, inventory records, accounting records and related records, copies of other records or documents concerning its customers, suppliers, employees, financial matters and other matters relating to the Purchased Assets and the Business;

(viii) such other documents to be delivered by either the Shareholders or the Companies hereunder or as Buyer or its counsel may reasonably request to carry out the purpose of this Agreement.

(h) Third Party Consents. The consents, approvals, permissions, agreements, acknowledgments or notices listed on Schedule 7.1(h) shall have been obtained or made, and Buyer shall have received reasonably acceptable written evidence thereof.

(i) Release of Encumbrances. All Encumbrances (other than Permitted Encumbrances) as to which any of the Purchased Assets are subject shall have been released and the Companies shall have delivered to Buyer such duly and validly executed agreements, instruments, certificates and other documents, in form and substance reasonably satisfactory to Buyer, as may be reasonably requested by Buyer to evidence the release of such Encumbrances.

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(j) Management. LSI and Buyer shall have entered into the Employment Agreements with each of the Shareholders.

(k) Real Estate Purchase Agreement. Buyer shall have closed the transactions contemplated by the Real Estate Purchase Agreement.

(l) Escrow Agreement. LSI, Buyer, the Shareholders and the Escrow Agent shall have entered into the Escrow Agreement.

Buyer and LSI shall have the right to waive any of the foregoing conditions precedent.

Section 7.2 Conditions Precedent to the Obligations of the Shareholders and the Companies. All obligations of the Shareholders, ADL Technology and ADL Engineering under this Agreement are subject to the fulfillment or satisfaction, prior to or at the Closing, of each of the following conditions precedent:

(a) Representations and Warranties True as of the Closing Date. The representations and warranties of LSI and Buyer contained in this Agreement or in any list, certificate or document delivered by LSI or Buyer to the Shareholders and/or the Companies pursuant to the provisions hereof shall be true and correct on the Closing Date with the same effect as though such representations and warranties were made as of such date.

(b) Compliance with this Agreement. LSI and Buyer shall have performed and complied with all agreements and conditions required by this Agreement to be performed or complied with by them prior to or at the Closing.

(c) No Pending Litigation. On the Closing Date, no suit, action or other proceeding, or injunction or final judgment relating thereto, shall be pending or threatened before any court or Governmental Authority in which it is sought to restrain or prohibit the consummation of the transactions contemplated hereby.

(d) Termination of Agreement. Neither LSI, Buyer, the Shareholders ADL Technology nor ADL Engineering shall have terminated this Agreement pursuant to Section 12.1.

(e) Items to be Delivered at Closing by Buyer. LSI and Buyer shall deliver the following to the Shareholders, ADL Technology and ADL Engineering:

(i) the ADL Engineering Closing Cash Payment;

(ii) duly executed certificates evidencing the Closing Shares;

(iii) certified copies of minutes or unanimous written consents of the sole shareholder of Buyer and of the Boards of Directors of each of LSI and Buyer, respectively, approving the execution, delivery and performance of this Agreement, the Real Estate Purchase Agreement, the Escrow Agreement, the Employment Agreements and the Registration Rights Agreement and the consummation of the transactions contemplated hereunder and thereunder;

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(iv) certificates from the Secretary of State of the State of Ohio dated as of a recent date to the effect that each of LSI and Buyer is in good standing in the State of Ohio;

(v) certificates from LSI and Buyer dated the Closing Date, certifying in such detail as the Sellers may reasonably request, that the conditions specified in Section 7.2(a), Section 7.2(b) and Section 7.2(c) hereof have been fulfilled or satisfied; and

(vi) such other documents to be delivered by LSI and Buyer hereunder or as the Shareholders, ADL Technology or ADL Engineering or their counsel may reasonably request to carry out the purposes of this Agreement.

(f) Employment Agreements. LSI and Buyer shall have entered into the Employment Agreements with each of the Shareholders.

(g) Registration Rights Agreement. LSI shall have executed the Registration Rights Agreement in favor of the Shareholders.

(h) Escrow Agreement. Buyer, the Shareholders and the Escrow Agent shall have entered into the Escrow Agreement, and Buyer shall have delivered to the Escrow Agent the Escrow Shares.

The Shareholders, ADL Technology and ADL Engineering shall have the right to waive any of the foregoing conditions precedent.

Section 7.3 Consummation of Agreement. The Shareholders, ADL Technology, ADL Engineering, LSI and Buyer shall each use their respective commercially reasonable efforts to perform and fulfill all obligations on each of their parts to be performed and fulfilled under this Agreement, and to cause all of the conditions precedent to the consummation of the transactions contemplated by this Agreement to be met.

Section 7.4 Further Assurances. After the Closing, each of the parties hereto will cooperate with the others and execute and deliver to the other parties hereto such other instruments and documents and take such other actions as may be reasonably requested from time to time by any other party hereto as reasonably necessary to carry out, evidence and confirm the intended purposes of this Agreement. Sellers shall cooperate in all reasonable respects with Buyer and LSI, at Buyer’s sole cost and expense, in promptly determining whether any filings required by Items 2.01 and/or 9.01 of the Commission’s Form 8-K are required of LSI in connection with the transactions contemplated hereby. Sellers shall cooperate and shall cause their respective representatives to cooperate with LSI in making any such filings required by Items 2.01 and/or 9.01 of the Commission’s Form 8-K.

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ARTICLE VIII
SHAREHOLDER RESTRICTIVE COVENANTS.

Section 8.1 Unfair Competition. Each Shareholder warrants and agrees that beginning on the Closing Date and ending on the seventh (7^th) anniversary of the Closing Date (together, the “Non-Competition Period”), that such Shareholder shall not:

(a) directly or indirectly, for himself or on behalf of or in conjunction with any other Person, without the prior written consent of Buyer:

(i) acquire or have any interest in, whether as a proprietor, partner, co-venturer, financier or investor, any person, firm, partnership, corporation, association, limited liability company or other entity that directly or through an Affiliate, either (1) directly or indirectly offers, solicits, provides or engages in the business of designing, engineering, manufacturing and marketing a broad array of lighting and graphics products for commercial/industrial lighting applications and corporation visual image programs or the business of producing electronic assemblies and subassemblies per customer specifications (“Conflicting Business”), or (2) to the Shareholder’s Knowledge, intends to offer, solicit, provide or engage in a Conflicting Business; or

(ii) be employed by or accept new employment to serve as director, officer, servant, agent, representative or otherwise to any Person that directly or through an Affiliate, either (1) offers, solicits, provides or engages in a Conflicting Business or (2) to the Shareholder’s Knowledge, intends to offer, solicit, provide or engage in a Conflicting Business. Each Shareholder agrees that the Business is conducted worldwide, and that this Section 8.1 applies to the Shareholders’ activities throughout the United States and any other country in which ADL Technology’s, ADL Engineering’s products have been sold, leased or distributed in the twelve (12) months preceding the Closing Date.

(iii) without the prior written consent of LSI or Buyer, directly, indirectly, or in concert with any other Person, whether as a proprietor, partner, co-venturer, financier, investor, director, officer, employer, employee, servant, agent, representative or otherwise (A) request, induce or attempt to induce any customer or supplier of Buyer or any of its Affiliates (including LSI) to terminate its relationship with Buyer or any of its Affiliates (including LSI); (B) solicit, contact, participate in or offer to participate in any Conflicting Business for any customer of Buyer or any of its Affiliates; or (C) interfere with or disrupt, or attempt to interfere with or disrupt, the relationship, contractual or otherwise, between Buyer or its Affiliates (including LSI) and any customer, supplier or employee of Buyer or its Affiliates (including LSI);

(iv) without the prior written consent of LSI or Buyer, directly, indirectly, or in concert with any other Person, whether as a proprietor, partner, co-venturer, financier, investor, director, officer, employer, employee, servant, agent, representative or otherwise offer employment to or solicit (directly or indirectly, individually or in connection with any new employer or other business partner) any individual who is an employee of Buyer or its Affiliates (including LSI) regardless of who initiates the contact or how the Person comes to the Shareholder’s attention.

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(b) It is agreed by the parties that the foregoing covenants in this Section 8.1 impose a reasonable restraint on the Shareholders in light of the activities and business of Buyer and its Affiliates (including LSI) on the date of the execution of this Agreement and the current plans of LSI and Buyer. The Shareholders acknowledge that, in light of the significant benefit received by the Shareholders as a result of the parties entering into this Agreement, the covenants in this Section 8.1 shall not prevent the Shareholders from earning a livelihood upon the termination of employment hereunder, but merely prevents unfair competition with Buyer and its Affiliates (including LSI) for a limited period of time.

(c) The covenants in this Section 8.1 are severable and separate, and the unenforceability of any specific covenant shall not affect the provisions of any other covenant. In the event any court of competent jurisdiction shall determine that the scope, time or territorial restrictions set forth herein are unreasonable, then it is the intention of the parties that such restrictions be enforced to the fullest extent that such court deems reasonable, and this Agreement shall thereby be reformed. For avoidance of doubt, notwithstanding any other term or provision of this Agreement (including those contained in Article X) to the contrary, the Liability of each Shareholder for any breach of his covenants and other obligations contained in this Article VIII shall be only personal and individual, not joint and several.

(d) All of the covenants in this Section 8.1 shall be construed as an agreement independent of any other provision in this Agreement, and the existence of any claim or cause of action of the Shareholders against Buyer or its Affiliates (including LSI), whether predicated in this Agreement or otherwise, shall not constitute a defense to the enforcement by LSI and Buyer of such covenants against any Shareholder.

Section 8.2 Confidential Information.

(a) Each Shareholder acknowledges that, by reason of the Shareholder’s association with the Business, the Shareholders had access to confidential information which shall be owned by Buyer upon consummation of the transactions contemplated by this Agreement, including information and knowledge pertaining to products, services, benefits, policies, inventions, discoveries, improvements, innovations, designs, ideas, trade secrets, proprietary information, advertising, marketing, distribution and sales methods, sales and profit figures, customer and client lists and relationships between Buyer and regulators, sales representatives, distributors, customers, clients, business partners, suppliers and others who have business dealings with them (collectively, “Confidential Information”). Each Shareholder acknowledges that any information and materials received by Buyer from third parties in confidence (or subject to nondisclosure or similar covenants) shall be deemed to be and shall be Confidential Information within the meaning of this Section 8.2. Each

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Shareholder further acknowledges that upon Closing such Confidential Information shall be a valuable and unique asset of Buyer and covenants that, both during and after the Non-Competition Period, such Shareholder will not disclose any Confidential Information to any third party without the prior written authorization of the Chief Executive Officer of Buyer. The obligation of confidentiality imposed by this Section 8.2 shall not apply to Confidential Information that otherwise becomes generally known to the public through no act of the Shareholders in breach of this Agreement. If any person or authority makes a demand on a Shareholder purporting to legally compel him to divulge any Confidential Information, such Shareholder promptly shall give notice of the demand to Buyer so that Buyer may first assess whether to challenge the demand prior to the Shareholder divulging such Confidential Information. Unless otherwise required by Law, the Shareholder shall not divulge such Confidential Information until Buyer either has concluded not to challenge the demand, or has exhausted its challenge, including appeals, if any; and thereafter shall divulge only such Confidential Information which is legally required.

(b) All records, designs, business plans, financial statements, customer lists, manuals, memoranda, lists, research and development plans, Intellectual Property and other property delivered to or compiled by the Shareholders by or on behalf of the Companies, their predecessors and their Affiliates or business partners, clients or customers that pertain to the Business, shall be and remain the property of the Companies until transferred to Buyer at the Closing and be subject at all times to their discretion and control. Likewise, all correspondence, reports, records, charts, advertising materials and other similar data pertaining to the business, activities, research and development, Intellectual Property or future plans of the Companies and their Affiliates (including the Business) that was collected by the Shareholders shall be delivered promptly to the Buyer without request by them on or before the Closing Date.

Section 8.3 Remedy for Breach. Each Shareholder agrees that in the event of any breach or threatened breach by such Shareholder of any covenant, obligation or other provision contained in this Article VIII, Buyer shall be entitled (in addition to any other remedy that may be available to it) to (a) a decree or order of specific performance or mandamus to enforce the observance and performance of such covenant, obligation or other provision, (b) an injunction restraining such breach or threatened breach, and (c) any other relief which a court deems just and equitable, all of which remedies shall be available without requiring Buyer to post a bond or any other similar requirement, which are hereby waived by the Shareholders. Each Shareholder further acknowledges that the restrictions contained in this Article VIII are intended to be, and shall be, for the benefit of and shall be enforceable by, Buyer’s successors and assigns.

Section 8.4 Non-Exclusivity. The rights and remedies of Buyer provided in this Article VIII are not exclusive of or limited by any other rights or remedies which Buyer may have, whether at law, in equity, by contract or otherwise, all of which shall be cumulative (and not alternative). Without limiting the generality of the foregoing, the rights and remedies of Buyer hereunder, and the obligations and Liabilities of the Shareholders under this Article VIII are in addition to their respective rights, remedies, obligations and Liabilities under the Law of unfair competition, misappropriation of trade secrets and the like. This Agreement does not limit, and is not limited by, the terms of the Employment Agreements or any other agreement between the Shareholders and the Companies, LSI, Buyer or any Affiliate of Buyer.

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ARTICLE IX
SURVIVAL OF REPRESENTATIONS AND WARRANTIES.

Section 9.1 Survival of Representations and Warranties. All representations and warranties of the Shareholders, ADL Technology and ADL Engineering set forth in Article III of this Agreement shall survive the Closing for a period of eighteen (18) months after the Closing Date (the “Indemnity Period”), except for those representations and warranties set forth in Section 3.1, Section 3.2, Section 3.3, Section 3.7, Section 3.8 (other than those contained in the last sentence of Section 3.8(c), which survive only for the Indemnity Period), Section 3.14, and Section 3.15, each of which shall survive the Closing indefinitely, except that any claims for Losses attributable to the representations and warranties set forth in Section 3.7, Section 3.14 and Section 3.15 shall survive only until the expiration of the applicable statute of limitations. The making of a claim for indemnification for specified Losses under this Agreement shall toll the running of the Indemnity Period, but solely with respect to such specified Losses. Subject to the foregoing, the representations and warranties of each of the Shareholders and each Company shall survive the Closing and any investigation conducted by or on behalf of Buyer, even if an Indemnified Buyer Party had Knowledge of any misrepresentation or breach of warranty at the time of Closing. Nothing in this Section 9.1 shall be construed to limit the ability of Buyer to assert a claim against any Company or any Shareholder for fraud committed in connection herewith or the period of time in which Buyer may bring such a claim.

ARTICLE X
INDEMNIFICATION.

Section 10.1 General Indemnification Obligation of the Shareholders and the Companies. Each Shareholder, ADL Technology and ADL Engineering, jointly and severally, will reimburse, indemnify, defend, and hold harmless Buyer, LSI and each of their respective Affiliates, officers, directors, employees, agents, and successors and assigns (each an “Indemnified Buyer Party”) against and in respect of any and all damages, losses, deficiencies, Liabilities, costs and expenses (including reasonable legal fees and expenses) (all of the foregoing, “Losses”) incurred or suffered by any Indemnified Buyer Party that result from, relate to or arise out of any of the following:

(a) any misrepresentation, breach of warranty or non-fulfillment of any agreement or covenant on the part of the Companies or any Shareholder under this Agreement or the Real Estate Purchase Agreement or the other documents or instruments furnished by the Companies or the Shareholders to LSI or Buyer pursuant to this Agreement or the Real Estate Purchase Agreement,

(b) any misrepresentation in or omission from any certificate, schedule, document or instrument furnished to LSI or Buyer pursuant to this Agreement or the Real Estate Purchase Agreement;

(c) any Pre-Closing Environmental Liabilities;

(d) any Taxes arising out of or in connection with the Purchased Assets or operations of the Business, in each case with respect to any taxable period or portion thereof ending on or before the Closing Date to the extent liability arises out of or relates to the failure to accurately report income;

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(e) the Retained Liabilities;

(f) any of the matters set forth on Schedule 3.9 or on Schedule 3.17(e) as described thereon;

(g) any and all actions, suits, claims, or legal, administrative, arbitration, governmental or other proceedings or investigations, demands, assessments, audits, fines, judgments, costs and other expenses (including reasonable legal fees and expenses) incident to the foregoing or to the enforcement of this Section 10.1;

provided however, that the Companies and Shareholders shall not have any obligation to indemnify any Indemnified Buyer Party for Losses arising out this Agreement in an amount in excess of Four Million Seven Hundred Seventeen Thousand Two Hundred Sixty Five Dollars ($4,717,265.00) (the “Indemnification Cap”), except to the extent such Losses arise out of or relates to (i) fraud or any intentional breach of the representations or warranties under this Agreement, (ii) any breach of any of the representations or warranties contained in Sections 3.1, 3.2, 3.3, 3.4, 3.7, 3.8 (other than the last sentence of Section 3.8(c)), 3.14 and 3.15, (iii) any claim for indemnification brought pursuant to Section 10.1(f) (or Section 10.1(g) to the extent relating to or arising out of a claim for indemnification brought pursuant to Section 10.1(f)), or (iv) any Pre-Closing Environmental Liabilities.

Section 10.2 General Indemnification Obligation of LSI and Buyer. LSI and Buyer, jointly and severally, will reimburse, indemnify, defend, and hold harmless the Shareholders, ADL Technology and ADL Engineering, their officers, directors, employees, agents and successors or assigns (each an “Indemnified Seller Party”) against and in respect of any and all Losses incurred or suffered by any Indemnified Seller Party that result from, relate to or arise out of any of the following:

(a) any misrepresentation, breach of warranty or, non-fulfillment of any agreement or covenant on the part of LSI or Buyer under this Agreement or the Real Estate Purchase Agreement or the other documents or instruments furnished by LSI or Buyer to the Shareholders or the Companies pursuant to this Agreement or the Real Estate Purchase Agreement;

(b) any misrepresentation in or omission from any certificate, schedule, document or instrument furnished by LSI or Buyer to the Shareholders or the Companies pursuant to this Agreement or the Real Estate Purchase Agreement; and

(c) any and all actions, suits, claims, proceedings, investigations, demands, assessments, audits, fines, judgments, costs and other expenses (including reasonable legal fees and expenses) incident to any of the foregoing or to the enforcement of this Section 10.2;

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provided however, that LSI and Buyer shall not have any obligation to indemnify any Indemnified Seller Parties under this Agreement for Losses arising out of this Agreement in an amount in excess of the Indemnification Cap except to the extent such Losses arise out of or relate to (i) any breach of the representations and warranties set forth in Sections 4.1, 4.2, 4.3 or 4.4 or (ii) fraud or any intentional breach of the representations or warranties under this Agreement, with respect to which there shall be no limitation on the aggregate amount of liability for any Losses.

Section 10.3 Third Party Claims — Indemnification.

(a) If any claim, demand, Action or proceeding for which any of the Sellers would be liable to an Indemnified Buyer Party hereunder is asserted against or sought to be collected from an Indemnified Buyer Party by a third party, or if an Indemnified Buyer Party otherwise suffers any Losses for which indemnification would be available under Section 10.1, in each case regardless of the applicability of the Threshold or the Indemnification Cap, the Indemnified Buyer Party shall promptly notify each of the Sellers of such claim, demand, Action or proceeding by delivering to each of the Sellers a written notice (the “Claim Notice”), (i) stating that the Indemnified Buyer Party is asserting a claim for indemnification and/or that Losses were incurred which are subject to indemnification under Section 10.1 (irrespective of the Threshold or Indemnification Cap), (ii) containing a reasonably detailed description of the nature and basis of such claim and (iii) setting forth in reasonable detail and with reasonable specificity its estimate of the amount of monetary damages and other Losses reasonably expected to be incurred in conjunction with such claim for which indemnification is available under Section 10.1 (taking into consideration, among other limitations, to the extent applicable, the Threshold and the Indemnification Cap), but such estimate shall not be conclusive of the final amount of such claim, demand, Action or proceeding. Each Seller shall have fifteen (15) Business Days from receipt of the Claim Notice to notify the Indemnified Buyer Party, (A) whether or not such Seller disputes its liability to the Indemnified Buyer Party hereunder with respect to such claim or demand and (B) notwithstanding any such dispute, whether or not such Seller desires, at its sole cost and expense, to defend the Indemnified Buyer Party against such claim, demand, Action or proceeding. (subject only to the proviso in subsection (b) below).

(b) If such claim, demand, Action or proceeding is a third party claim, demand, Action or proceeding, the Sellers will have the right at their expense to assume the defense thereof using counsel reasonably acceptable to the Indemnified Buyer Party; provided, however, that if the third-party claim relates to conduct that occurred both before and after the Closing, then notwithstanding subsection (a) above the Sellers and the Indemnified Buyer Party shall agree to share in the defense pursuant to a mutually acceptable joint defense agreement. The Indemnified Buyer Party shall have the right to participate, at its own expense, with respect to any such third party claim, demand, Action or proceeding in connection with any such third party claim, demand, Action or proceeding, and the parties shall cooperate with each other and provide each other with access to relevant books and records in their possession. No such third party claim, demand, Action or proceeding shall be settled by the Sellers without the prior written consent of the Indemnified Buyer Party, which consent shall not be unreasonably withheld, conditioned or delayed.

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All claims for indemnification by an Indemnified Seller Party under this Agreement shall be asserted and resolved under the procedures set forth above substituting in the appropriate place “Indemnified Seller Party” for “Indemnified Buyer Party” and variations thereof and “LSI and Buyer” for “Sellers”.

Section 10.4 Provisions Regarding Indemnity.

(a) None of the Indemnified Buyer Parties nor the Indemnified Seller Parties will have a right to indemnification under this Agreement unless and until the aggregate indemnifiable amount to which all such parties shall be entitled to exceeds $100,000.00 (the “Threshold”), at which time the indemnifying party or parties shall only be responsible for the amount in excess of the Threshold, provided however, the Threshold shall not be applicable to any claim for Losses incurred and the Indemnified Buyer Parties or the Indemnified Seller Parties, as the case may be, shall be entitled to indemnification beginning at dollar one, regardless of the amount of the claim for Losses, for either (i) fraud, (ii) any breach of any of the representations and warranties set forth in Section 3.1, Section 3.2, Section 3.3, Section 3.7, Section 3.8 (except for the last sentence of Section 3.8(c)), Section 4.1, Section 4.2 or Section 4.3, or (iii) any claim for indemnification brought pursuant to Section 10.1(f) (or Section 10.1(g) to the extent arising out of or related to an indemnification claim brought pursuant to Section 10.1(f)).

(b) The amount of any Losses for which indemnification is provided hereunder shall be net of (i) amounts recovered either any Indemnified Buyer Party, or any Indemnified Seller Party, as the case may be (such party being an “Indemnified Party”), pursuant to any indemnification by, or indemnification agreement with, any third Person, (ii) insurance proceeds or other cash receipts or sources of reimbursement received as an offset against such Losses, and (iii) an amount equal to the present value of the Tax benefit, if any, attributable to such Losses. If the amount to be netted hereunder from any indemnification payment required under this Article X is determined after payment by LSI or Buyer, or any or all of the Sellers, as the case may be, of any amount otherwise required to be paid as indemnification pursuant hereto, the Indemnified Party shall repay, promptly after such determination, any amount that LSI or Buyer, or any or all of the Sellers, as the case may be, would not have had to pay pursuant hereto had such determination been made at the time of such payment. Each party hereto shall use commercially reasonable efforts to mitigate any consequential damages for which any claim may be made against any of the other parties hereto for indemnification under this Agreement.

(c) This Article X shall provide the sole and exclusive remedy for any and all Losses sustained or incurred by any of the Indemnified Seller Parties or Indemnified Buyer Parties, as the case may be, in connection with the transactions contemplated by this Agreement and the Real Estate Purchase Agreement, absent fraud or willful misconduct on the part of any Company, any Shareholder, LSI or Buyer.

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(d) Notwithstanding the decision of any party to complete the Closing, each party shall be entitled to rely upon the representations and warranties set forth herein. Each party shall be entitled to assert any right of indemnification under this Article X after the termination of this Agreement pursuant to Section 12.1 with respect to any dispute, claim, proceeding or action pending prior to such termination for which indemnification is available under this Article X and such party shall be able to continue to have the right to be indemnified with respect thereto after such termination date. The right to indemnification, reimbursement or any other remedy based upon such representations, warranties, covenants and obligations shall not be affected by any investigation (including any environmental investigation or assessment) conducted with respect to, or any Knowledge acquired (or capable of being acquired) at any time, whether before or after the execution and delivery of this Agreement or the Closing Date, with respect to, the accuracy or inaccuracy of or compliance with any such representation, warranty, covenant or obligation.

Section 10.5 Payment. Upon the determination of the liability for indemnification, the appropriate party or parties shall pay to the others, as the case may be, within ten (10) days after such determination, the amount of any claim for indemnification made hereunder. If the Indemnified Buyer Party is not paid in full for any such claim pursuant to the foregoing provisions promptly after the obligation of the other parties to indemnify has been determined in accordance herewith, it shall have the right, notwithstanding any other rights that it may have against any other Person, to setoff the unpaid amount of any such claim against any amounts owed by it or its Affiliates to the Sellers under any agreements entered into pursuant to this Agreement or otherwise; provided, however that such right of set-off shall not apply to the obligation of Buyer to pay the Base Salary under any Employment Agreement. Upon the payment in full of any claim, either by setoff or otherwise, the entity making payment shall be subrogated to the rights of the Indemnified Buyer Party against any Person with respect to the subject matter of such claim.

ARTICLE XI
TAX MATTERS.

Section 11.1 General Tax Matters. The Sellers and Buyer shall cooperate fully, as and to the extent reasonably requested by the other party or parties and at the requesting party’s out-of-pocket expense, in connection with the filing of any Tax returns and any audit, litigation or other proceeding with respect to Taxes. Such cooperation shall include the retention of all books and records relating to Tax matters pertinent to the Companies for a period of six (6) years after the Closing and (upon the other party’s request and expense) the provision of records and information which are reasonably relevant to any such audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder.

Section 11.2 Transfer Taxes. Any transfer, documentary, sales, use, stamp, registration and other such Taxes and fees (including recording fees) incurred in connection with this Agreement, the Real Estate Purchase Agreement and the transactions contemplated hereby and thereby (“Transfer Taxes”) shall be paid one-half (1/2) by the Sellers and one-half (1/2) by Buyer when due, and Sellers will file all necessary Tax returns and other documentation with respect to all such transfer, documentary, sales, use, stamp, registration and other Taxes and fees (including recording fees), if required by applicable Law. The expense of preparing and making such filing or filings shall be borne by the Sellers. For the avoidance of doubt, nothing in this Section 11.2 shall be construed to make LSI or Buyer liable for or obligated to pay any income Taxes of any Company or any Shareholder.

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ARTICLE XII
MISCELLANEOUS.

Section 12.1 Termination. Anything herein or elsewhere to the contrary notwithstanding, this Agreement may be terminated by written notice of termination at any time before the Closing Date only as follows:

(a) by mutual consent of the Sellers and LSI and Buyer;

(b) by LSI and Buyer, upon written notice to the Sellers given at any time after the Outside Closing Date or such later date as shall have been specified in a writing authorized on behalf of Sellers (on the one hand) and LSI and Buyer (on the other hand) if all of the conditions precedent set forth in Section 7.1 have not been met; or

(c) by the Sellers, upon written notice to LSI and Buyer given at any time after the Outside Closing Date (or such later date as shall have been specified in writing authorized on behalf of the Sellers on the one hand and LSI and Buyer on the other hand) if all of the conditions precedent set forth in Section 7.2 have not been met.

In the event of the termination and abandonment hereof prior to the Closing Date pursuant to the provisions of this Section 12.1, this Agreement shall become void and have no effect, without any Liability on the part of any of the parties or their directors or officers or shareholders in respect of this Agreement, unless the termination was the result of the representations and warranties of a party being materially incorrect when made or the material breach of such party of a covenant hereunder in which event the party whose representations and warranties were incorrect or who breached such covenant shall be liable to the other party for all costs and expenses of the other party in connection with the preparation, negotiation, execution and performance of this Agreement, including the fees, expenses and disbursements of its counsel and auditors.

Section 12.2 Expenses. Except as otherwise provided in this Agreement, LSI, Buyer and the Shareholders shall each pay their own expenses and the Shareholders shall pay the expenses of the Companies incidental to the preparation of this Agreement, the carrying out of the provisions of this Agreement and the consummation of the transactions contemplated hereby, regardless of whether such expenses of the Companies may have been incurred prior to Closing or after Closing. To the extent that such transaction related expenses incurred by the Shareholders and/or the Companies have been paid by any of the Companies prior to Closing, the aggregate dollar amount of such payments shall be paid by Shareholders to Buyer as reimbursement for the depletion of the Company’s cash caused by such Company’s payment of the transaction related expenses of Shareholders and/or the Companies prior to Closing; provided however, Buyer does hereby agree to assume (and to pay at Closing) up to a maximum amount of $180,000.00 of ADL Technology’s and ADL Engineering’s legal fees and expenses incurred with respect to the transaction as additional Purchase Price for the Purchased Assets.

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Section 12.3 Waiver. Any term or provision of this Agreement may be waived at any time by the party entitled to the benefit thereof by a written instrument duly executed by such party.

Section 12.4 Notices. Any notice, request, demand, waiver, consent, approval or other communication which is required or permitted hereunder shall be in writing and shall be deemed given only if (i) delivered personally, (ii) sent by registered or certified mail, postage prepaid, (iii) sent by confirmed facsimile with the original to follow by first class mail, postage prepaid, or (iv) sent by an internationally recognized overnight courier service with next day delivery guaranteed and delivery charges prepaid, as follows:

If to LSI or Buyer, to:

LSI Acquisition Inc.
P.O. Box 42728
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: Michael J. Moeddel

If to any Seller:

5521 Kinvarra Court
Dublin, OH 43016
Attention: David T. Feeney

With a required copy to:

Bricker & Eckler LLP
100 South Third Street
Columbus, Ohio 43215
Attention: John W. Cook III

or to such other address as the addressee may have specified in a notice duly given to the sender as provided herein. Such notice, request, demand, waiver, consent, approval or other communication will be deemed to have been given as of the date so delivered, mailed or received by facsimile transmission.

Section 12.5 Headings. All section headings contained in this Agreement are for convenience of reference only, do not form a part of this Agreement and shall not affect in any way the meaning or interpretation of this Agreement.

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Section 12.6 Schedules and Exhibits. Contemporaneously with the execution and delivery of this Agreement, the Sellers have delivered the Disclosure Schedules to Buyer. All Exhibits and Schedules referred to herein (including the Disclosure Schedule) are intended to be and hereby are specifically made a part of this Agreement. All capitalized terms used in any Exhibit to this Agreement or in any Schedule to this Agreement shall have the definitions specified in this Agreement unless (and then only to the extent) otherwise specified therein.

Section 12.7 Severability. Any provision of this Agreement which is invalid or unenforceable in any jurisdiction shall be ineffective to the extent of such invalidity or unenforceability without invalidating or rendering unenforceable the remaining provisions hereof, and any such invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. The parties further agree to replace such invalid or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such invalid or unenforceable provision.

Section 12.8 Counterparts. This Agreement may be executed in any number of counterparts and any party hereto may execute any such counterpart, each of which when executed and delivered shall be deemed to be an original and all of which counterparts taken together shall constitute but one and the same instrument. This Agreement shall become binding when one or more counterparts taken together shall have been executed and delivered by the parties. It shall not be necessary in making proof of this Agreement or any counterpart hereof to produce or account for any of the other counterparts.

Section 12.9 Entire Agreement. This Agreement, including the Exhibits, Schedules and other documents referred to herein which form a part hereof, including the Employment Agreements, the Escrow Agreement and the Registration Rights Agreement, contain the entire understanding of the parties hereto with respect to the subject matter contained herein and therein. Such agreements, documents and instruments supersede all prior agreements and understandings between the parties with respect to such subject matter, including the Letter of Intent dated June 6, 2009 between LSI and the Sellers.

Section 12.10 Amendments; Waivers. This Agreement may not be changed orally, but only by an agreement in writing signed by each of the parties hereto. Any provision of this Agreement can be amended, supplemented or modified only by written agreement of each of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed, or shall constitute, a waiver of any other provision, whether or not similar, nor shall any waiver constitute a continuing waiver. No waiver shall be binding unless executed in writing by the party making the waiver.

Section 12.11 Assignment and Binding Effect. This Agreement may not be assigned by any party hereto without the prior written consent of the other parties, except by Buyer to any of its Affiliates or in connection with the merger, consolidation or sale of all or substantially all of its business or assets. Subject to the foregoing, all of the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties and their successors and permitted assigns and their respective, executors, heirs, legal representatives. The parties expressly acknowledge and agree that Buyer may designate one or more of its Affiliates to acquire the Purchased Assets or portion of the Purchased Assets, provided however, LSI and Buyer shall continue to remain responsible for their obligations under this Agreement.

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Section 12.12 Exclusive Benefits. Nothing in this Agreement, express or implied, is intended to confer any rights or remedies, whether express or implied, under or by reason of this Agreement, on any persons other than the parties hereto and their respective successors and permitted assigns, nor is anything in this Agreement intended to relieve or discharge the obligation or liability of any third persons to any party to this Agreement.

Section 12.13 Delays or Omissions. No delay or omission to exercise any right, power or remedy accruing to any party hereto, upon any breach or default of any other party hereto, under this Agreement, shall impair any such right, power or remedy of such party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or in any similar breach or default thereafter occurring, nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring.

Section 12.14 Construction. This Agreement is to be deemed to have been prepared jointly by the parties hereto after arms-length negotiations, and any uncertainty or ambiguity existing herein shall not be interpreted against any party, but according to the application of the rules of interpretation of contracts.

Section 12.15 Governing Law. The Agreement shall be governed by and construed in accordance with the laws of the State of Ohio without regard to its conflict of law provisions.

Section 12.16 Submission to Jurisdiction; Waiver. Each of the parties hereto irrevocably agrees that any legal action or proceeding with respect to this Agreement or for the recognition and enforcement of any judgment in respect hereof brought by any other party hereto or its or his executors, heirs, legal representatives, successors or permitted assigns may be brought and determined in any federal or state court located in Hamilton County, Ohio, and each of the parties hereby irrevocably submits with regard to any action or proceeding for itself and himself and in respect to its or his property, generally and unconditionally, to the exclusive jurisdiction of the aforesaid courts. Each of the parties hereby irrevocably waives and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any action or proceeding with respect to this Agreement (a) any claim that it or he is not personally subject to the jurisdiction of the above-named courts for any reason other than the failure to lawfully serve process, (b) that it or he or its or his property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise), and (c) to the fullest extent permitted by applicable Law, that (i) the suit, action or proceeding in any such court is brought in an inconvenient forum, (ii) the venue of such suit, action or proceeding is improper and (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.

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Section 12.17 Waiver of Jury Trial. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED IN CONTRACT, TORT OR OTHERWISE) ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY AGREEMENT, DOCUMENT OR INSTRUMENT EXECUTED OR DELIVERED PURSUANT TO THIS AGREEMENT OR ANY RELATED DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENT OF ACTION RELATED HERETO OR THERETO.

[Remainder of page intentionally left blank. Signature page to follow.]

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IN WITNESS WHEREOF, the parties hereto have duly executed this Purchase and Sale Agreement on the date first written.

LSI INDUSTRIES INC.
By:	/s/ Ronald S. Stowell
	Name:	Ronald S. Stowell
	Title:	Vice President, Chief Financial Officer and Treasurer
LSI ACQUISITION INC.
By:	/s/ Ronald S. Stowell
	Name:	Ronald S. Stowell
	Title:	Treasurer and Secretary
ADL TECHNOLOGY INC.
By:	/s/ Craig A. Miller
	Name:	Craig A. Miller
	Title:	President
ADL ENGINEERING INC.
By:	/s/ Craig A. Miller
	Name:	Craig A. Miller
	Title:	President
/s/ Craig A. Miller
CRAIG A. MILLER
/s/ Kevin A. Kelly
KEVIN A. KELLY
/s/ David T. Feeney
DAVID T. FEENEY

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EX-10.1

Exhibit 10.1

ESCROW AGREEMENT

This ESCROW AGREEMENT (“Escrow Agreement”) is made and entered into as of the 22nd day of July, 2009 by and among LSI ACQUISITION INC., an Ohio corporation (“LSI”), KEVIN A. KELLY, CRAIG A. MILLER and DAVID T. FEENEY (each a “Shareholder” and collectively, the “Shareholders”) and U.S. BANK, NATIONAL ASSOCIATION, as escrow agent (the “Escrow Agent”). Capitalized terms not otherwise defined herein shall have the meanings assigned such terms in the Purchase Agreement (as defined below).

BACKGROUND

WHEREAS, pursuant to the terms of a Purchase and Sale Agreement (the “Purchase Agreement”) dated as of even date herewith LSI purchased substantially all of the assets of ADL Technology Inc., an Ohio corporation, and ADL Engineering Inc., an Ohio corporation (collectively, the “Companies”) in exchange for cash and LSI Common Shares;

WHEREAS, promptly upon closing of the transactions contemplated by the Purchase Agreement, the Companies have distributed to the Shareholders the Escrow Shares with each Shareholder receiving a proportional amount of such LSI Common Shares, which percentage interest is set forth on Exhibit A attached hereto (each a “Percentage Interest” and collectively, the “Percentage Interests”); and

WHEREAS, under the terms of the Purchase Agreement, LSI, the Companies and the Shareholders agreed that One Million Three Hundred Seventy-Two Thousand Sixty-Two (1,372,062) LSI Common Shares (the “Escrow Shares”) issued to the Shareholders pursuant to the Purchase Agreement shall be held in escrow pursuant to the terms of this Escrow Agreement, to be released, subject to the terms of this Escrow Agreement, on or before the second anniversary of the date of this Escrow Agreement (the “Termination Date”), and to serve, in the interim, as security to LSI for the obligations of the Shareholders and the Companies under the Purchase Agreement.

NOW, THEREFORE, in consideration of the mutual covenants set forth below and other good and valuable consideration, the parties hereto agree as follows:

1. Designation and Delivery. LSI and Shareholders hereby designate U.S. Bank, National Association, as “Escrow Agent” under this Escrow Agreement. LSI and the Shareholders have delivered to the Escrow Agent a copy of the Purchase Agreement, which agreement is attached hereto as Exhibit B. LSI, in accordance with the terms of Sections 2.5(b) and 2.5(c) of the Purchase Agreement, hereby delivers to the Escrow Agent certificates in the name of each Shareholder evidencing the Escrow Shares (the “Deposit”). Each Shareholder hereby delivers to the Escrow Agent duly executed stock powers (the “Stock Transfer Powers”) of such Shareholder covering his portion of the Escrow Shares, as determined by such Shareholder’s Percentage Interest as set forth on Exhibit A. The parties hereto agree that, for the purposes of this Escrow Agreement, the Shareholders shall be deemed to be acting as one person and that any consent required to be given by the Shareholders or act taken by or on behalf of the Shareholders shall only be effective if given or taken by all three Shareholders. The distribution of any or all of the Escrow Shares to the Shareholders or to LSI shall be made from the Escrow Shares registered in the name of the respective Shareholders on a pro rata basis, based on the respective Percentage Interests of each such Shareholder.

2. Cash Portion of Escrow Fund. The Escrow Agent shall cause all stock dividends, distributions in the form of securities (including shares distributed in a stock split), proceeds from any sale or liquidation, or other income (excluding cash dividends paid or payable) earned on or with respect to the Escrow Shares and received by the Escrow Agent, to be added to the Deposit. Such deposited dividends, distributions, proceeds or other income (excluding cash dividends), together with the Deposit, shall constitute the “Escrow Fund” to be distributed as provided in Section 7 hereof. Notwithstanding the foregoing, any and all cash dividends earned on or with respect to the Escrow Shares and received by the Escrow Agent shall be paid promptly to the Shareholders in accordance with their Percentage Interests and shall not become part of the Escrow Fund in accordance with their respective Percentage Interests; provided however, that after the receipt by the Escrow Agent of a Notice of Claim, all cash dividends earned on or with respect to those Escrow Shares that would be required to satisfy the indemnity claim set forth in such Notice of Claim, if the same were to be resolved in favor of LSI, shall be added to the Deposit to provide further security to LSI until resolution of such Notice of Claim (at which time such cash dividends shall be released to the Shareholders from the Escrow Fund to the extent not required to satisfy the indemnity claim represented by the Notice of Claim). Upon written request of the Shareholders, the Escrow Agent shall sell all or a portion of the Escrow Shares pursuant to instructions providing the number of Escrow Shares to be sold and any other conditions applicable to the sale of such Escrow Shares; provided that the Escrow Agent shall have received from counsel to the Shareholders a legal opinion providing that such sale is registered or exempt from registration under applicable securities laws. The proceeds of such sale shall become part of the Escrow Fund to be distributed as provided in Section 7 hereof. The Escrow Agent will invest the cash portions of the Escrow Fund that are not distributed pursuant to the terms of this Escrow Agreement in money market funds rated AAA or better which are authorized to invest in short term securities issued, or guaranteed as to principal and interest, by the U.S. Government and repurchase agreements with respect to such securities (including any money market fund managed by the Escrow Agent and any of its affiliates) (collectively, the “Permitted Investments”) as directed by the Shareholders in writing.

3. Escrow Agent as Custodian; Expenses. The Escrow Agent, for all purposes of this Escrow Agreement, shall be treated as and considered legally a custodian. Except as otherwise provided herein and in the Purchase Agreement, each Shareholder shall retain all of his rights as a stockholder of LSI while the Escrow Shares are held in escrow hereunder, including the right to vote such Escrow Shares. The Escrow Agent shall be entitled to rely conclusively upon all written notices provided pursuant to Section 7 and may assume the genuineness of all signatures and documents and the authority of all signatories. Except for its obligation to keep the Escrow Fund safely in its custody (subject to the terms and provisions of this Escrow Agreement), the Escrow Agent shall have no liability except for gross negligence or willful misconduct in the performance of its duties under this Escrow Agreement for any action taken (or omission) in good faith.

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4. Escrow Account Statements. The Escrow Agent is hereby authorized to execute purchases and sales of Permitted Investments through the facilities of its own trading or capital markets operations or those of any affiliated entity. The Escrow Agent shall send statements to LSI and the Shareholders on a monthly basis reflecting activity in the Escrow Fund for the preceding month. In doing so, the Escrow Agent may provide a statement containing information regarding any deposits and disbursements and a separate statement reflecting the investment detail, including the balance, purchases, sales, and interest postings. However, absent a specific request by either LSI or the Shareholders to the contrary, no statement need be rendered pursuant to this Escrow Agreement if no activity occurred for such month. LSI and the Shareholders each acknowledge and agree that the delivery of the escrowed property is subject to the sale and final settlement of investments described herein. Proceeds of a sale of investments will be delivered on the business day on which the appropriate instructions are delivered to the Escrow Agent if received prior to the deadline for same day sale of such investments. If such instructions are received after the applicable deadline, proceeds will be delivered on the next succeeding business day.

The Shareholders and LSI acknowledge that regulations of the Comptroller of the Currency grant them the right to receive brokerage confirmations of security transactions as they occur. They specifically waive such notification to the extent permitted by law and knowledge that they will receive periodic cash transaction statements, which will detail all investment transactions.

5. Compensation of the Escrow Agent. The Escrow Agent shall be entitled to reasonable fees and reimbursement for reasonable expenses including, but not by way of limitation, the reasonable fees and costs of attorneys or agents which it may find necessary to engage in performance of its duties hereunder, in accordance with the fee schedule attached hereto as Exhibit C; provided, however, the Escrow Agent shall to the extent practicable give reasonable prior written notice to Shareholders and LSI of its intention to engage counsel. Such fees and expenses shall, to the extent required to be paid at the Closing, be paid at the Closing, and any remaining amounts shall be invoiced on an annual basis and in each case shall be paid one half by LSI and one half by the Shareholders. The Escrow Agent shall have, and is hereby granted, a prior lien upon any property, cash or assets of the Escrow Fund, with respect to its unpaid fees and nonreimbursed expenses, superior to the interests of any other persons or entities, and shall be entitled and is hereby granted the right to set off and deduct any unpaid fees and/or nonreimbursed expenses from amounts on deposit in the Escrow Fund. To the extent that the Escrow Agent exercises such right of set off and deducts a portion of the Escrow Fund to pay its fees and expenses under this Section 5, and to the extent that such deduction results from a failure by LSI to timely pay one-half of such fees and expenses to the Escrow Agent as required hereunder, LSI shall promptly reimburse the Shareholders in cash for the full amount of such set off and deduction that was attributable to LSI’s failure to pay.

6. Resignation; Disagreements.

(a) The Escrow Agent may resign from all further duties and liabilities hereunder as escrow agent by giving to the Shareholders and LSI written notice of such resignation at least sixty (60) days prior to the effective date thereof, or such shorter notice as the Shareholders and LSI may accept as sufficient. The Shareholders and LSI shall have the power by mutual agreement at any time to remove the Escrow Agent and to appoint a new escrow agent. In the event of the Escrow Agent’s resignation or removal as aforesaid, the Shareholders and LSI may (by mutual agreement) appoint a new escrow agent to serve as Escrow Agent hereunder, and, failing such appointment, the retiring escrow agent may apply to any court of competent jurisdiction in the State of Ohio for the appointment of a new escrow agent to serve as Escrow Agent hereunder. Upon the appointment of a new escrow agent and such new escrow agent’s acceptance as Escrow Agent hereunder, the Escrow Agent shall transfer the Escrow Fund to such new escrow agent serving as Escrow Agent hereunder.

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(b) In the event of any disagreement between the other parties hereto resulting in adverse claims or demands being made in connection with the Escrow Fund or in the event that Escrow Agent is in doubt as to what action it should take hereunder, the Escrow Agent shall be entitled to (i) interplead all of the assets held hereunder into a court of competent jurisdiction, and thereafter be fully relieved from any and all liability or obligation with respect to such interpleaded assets or (ii) retain the Escrow Fund until the Escrow Agent shall have received (A) a final non-appealable order of a court of competent jurisdiction directing delivery of the Escrow Fund, or (B) a written agreement executed by both Shareholders and LSI hereto directing delivery of the Escrow Fund, in which event the Escrow Agent shall disburse the Escrow Fund in accordance with such order or agreement. Any court order shall be accompanied by a legal opinion by counsel for the party or parties seeking distribution of the Escrow Fund reasonably satisfactory to Escrow Agent to the effect that the order is final and non-appealable. The Escrow Agent shall act on such court order and legal opinion without further question or delay.

7. Termination and Distribution of Escrow Fund.

(a) Except as set forth in Section 7(d) and in Section 8, this Escrow Agreement shall terminate upon the earlier of (i) the Termination Date or (ii) the date upon which the Escrow Agent shall have distributed or released all of the Escrow Fund as provided herein.

(b) If, on or prior to the Termination Date, LSI has not delivered to the Escrow Agent and the Shareholders a Notice of Claim (as defined in Section 7(f) below) with respect to the Escrow Fund, the Escrow Fund shall be promptly released and delivered in its entirety to the Shareholders by the Escrow Agent, it being agreed that to the extent the Escrow Fund includes LSI Common Shares such release and delivery shall be accompanied by the return to each Shareholder of such Shareholder’s original stock certificates for LSI Common Shares registered in such Shareholder’s name and, in the case of any other property held by the Escrow Agent in the Escrow Fund, the distribution shall be made to each Shareholder in accordance with his Percentage Interest.

(c) If, on or prior to the Termination Date, LSI has delivered a Notice of Claim to the Escrow Agent and the Shareholders, and the Shareholders have not disputed such Notice of Claim in a writing addressed to the Escrow Agent and LSI within fifteen (15) business days after receipt, the amount of the indemnity claim specified in the Notice of Claim shall promptly be released and delivered to LSI by the Escrow Agent. For purposes of determining the number of Escrow Shares to be released to LSI pursuant to this Section 7(c) in satisfaction of indemnity claims and the amount received by LSI in satisfaction of the indemnity claims, the value of the Escrow Shares shall be based upon the average of the closing sale price of LSI’s common stock as reported on the NASDAQ National Market System (or such other market where LSI Common Shares may then be traded) for the five (5) trading days immediately preceding the second trading day immediately preceding the date on which the Escrow Shares (or portion thereof) are released. The balance of the Escrow Fund not so released shall continue to be held in escrow by the Escrow Agent pursuant to the terms of this Escrow Agreement.

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(d) If, on or prior to the Termination Date, LSI has delivered a Notice of Claim to the Shareholders and the Escrow Agent and the Shareholders have disputed the Notice of Claim in a writing delivered to the Escrow Agent and LSI within fifteen (15) business days after receipt, the Escrow Agent shall retain that portion of the Escrow Fund equal to the amount of the indemnity claim specified in the Notice of Claim until the dispute is resolved by a final, binding and non-appealable order of a court of competent jurisdiction or by agreement between LSI and the Shareholders, even if the resolution of the dispute occurs after the Termination Date, and shall distribute the portion so retained either pursuant to joint written instructions from LSI and the Shareholders or pursuant to such court order. For purposes of determining the number of Escrow Shares to be retained under this Section 7(d) and Section 7(e) by the Escrow Agent upon receipt of a Notice of Claim, the value of the Escrow Shares shall be based upon the average of the closing sale price of LSI’s common stock as reported on the NASDAQ National Market System (or other applicable market) for the five (5) trading days immediately preceding the second trading day immediately preceding the date on which the Escrow Agent receives notice from the Shareholders that the Notice of Claim is being disputed.

(e) At 5:00 pm Eastern Time on January 22, 2011 or, if such day is not a Business Day at 5:00 pm Eastern Time on the next Business Day thereafter (the “Interim Release Date”), the Escrow Agent shall release Six Hundred Eighty Six Thousand Thirty One (686,031) Escrow Shares (the “Interim Release Shares”) to the Shareholders in accordance with their Percentage Interests; provided, however, that if a Notice of Claim has been delivered to the Escrow Agent by LSI prior to the Interim Release Date, the Escrow Agent shall release all of the Interim Release Shares less the number of Escrow Shares having a value (as determined in accordance with Section 7(c)) as of the Interim Release Date equal to the amount of the indemnity claim specified in the Notice of Claim or, if the Notice of Claim was disputed and later resolved for a lesser value, then less the number of Escrow Shares having such lesser value as determined in accordance with Section 7(c) as of the Interim Release Date. If a dispute exists with respect to an indemnification claim referred to in a Notice of Claim delivered prior to the Interim Release Date, once the dispute is resolved by a final, binding and non-appealable order of a court of competent jurisdiction or by agreement between LSI and the Shareholders, the Escrow Agent shall promptly distribute to the Shareholders the portion of the Escrow Fund equal to the lesser of: (i) the amount of indemnity claim specified in the disputed Notice of Claim less the amount which is finally determined as due and owing to LSI (which amount shall be released to LSI by the Escrow Agent), or (ii) the Interim Release Shares.

(f) For purposes of this Escrow Agreement, a “Notice of Claim” is a written notice by LSI to the Escrow Agent, with copies thereof to each Shareholder, (i) stating that LSI is asserting a claim for indemnification in respect of the Escrow Fund against the Shareholders pursuant to the indemnification provisions contained in the Purchase Agreement, (ii) containing a reasonably detailed description of the nature and basis of all such claims, and (iii) setting forth in reasonable detail and with reasonable specificity LSI’s estimate of the amount of monetary damages reasonably expected to be incurred in conjunction with such claims for which indemnification is available to LSI under the Purchase Agreement (taking into consideration, among other limitations, to the extent applicable, the effect of the Threshold and the Indemnification Cap).

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(g) Any release or disbursement of Escrow Shares in accordance with this Section 7 shall be made by delivering the original share certificates representing such Escrow Shares to the designated party or parties. In the event of disbursement to LSI, the Escrow Agent shall also deliver to LSI appropriate Stock Transfer Powers, each completed with the amount of Escrow Shares being disbursed to LSI by each Shareholder in accordance with his Percentage Interests. Upon receipt thereof, LSI shall deliver to the Escrow Agent, as soon as practicable thereafter, new share certificates relating to the balance of Escrow Shares remaining in the hands of the Escrow Agent with respect to each Shareholder in accordance with his Percentage Interests. Each Shareholder hereby appoints the Escrow Agent as such Shareholder’s attorney-in-fact to act, in the name, place and stead of such Shareholder, to (i) execute and complete additional Stock Transfer Powers, (ii) to take any actions or exercising any rights, powers or privileges that such Shareholder is entitled or required to take or exercise under the terms of any of provisions of this Escrow Agreement and (iii) to do or cause to be done any or all things necessary or, in the determination of the Escrow Agent, desirable to observe or perform the terms, conditions, covenants and agreements to be observed or performed by the Shareholders to transfer their respective rights, title and interests in and to LSI Common Shares held in escrow in accordance with this Escrow Agreement. Notwithstanding anything to the contrary in this Escrow Agreement, a disbursement of any Escrow Shares to LSI shall, if accompanied by delivery of the original share certificates, be valid and shall have full force and effect even in the absence of delivery of Stock Transfer Powers to LSI. Any disbursement of Escrow Shares to LSI shall be deemed to be a redemption of such Escrow Shares.

(h) If LSI at any time or from time to time effects a stock-split, reclassification, reorganization, reverse reclassification, or other change in the number of outstanding number of LSI Common Shares into a larger or smaller number of shares, the number of Escrow Shares to be released pursuant to Section 7 shall be proportionately adjusted.

8. Duties of Escrow Agent. The duties of the Escrow Agent under this Escrow Agreement shall be entirely administrative and, except for a breach of its obligation to keep the Escrow Fund safely in its custody (subject, however, to the terms and conditions of this Agreement), the Escrow Agent shall not be liable to any third party as a result of any action or omission taken or made by it in performing its duties hereunder, if taken in good faith, except for gross negligence, willful misconduct or fraud. LSI, on one hand, and the Shareholders, on the other hand, shall severally (each being responsible for 50% of the indemnity amount claimed by the Escrow Agent) indemnify, defend and hold harmless the Escrow Agent from and against and reimburse the Escrow Agent for any and all liability, costs and expenses the Escrow Agent may suffer or incur by reason of its execution and performance of this Agreement except to the extent caused by or arising out of the Escrow Agent’s gross negligence, willful misconduct or fraud or except for a failure to comply with its obligation to keep the Escrow Fund in its custody (subject, however, to the terms and conditions of this Escrow Agreement). The Escrow Agent shall have no duties except those which are expressly set forth herein, and, except as otherwise expressly set forth herein, it shall not be bound by any notice of a claim, or demand with respect thereto, or any waiver, modification, amendment, termination or rescission of this Escrow Agreement, unless in writing received by it and signed by the parties hereto and otherwise conforming to any requirements contained herein.

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If the Escrow Agent shall find it necessary to consult with counsel of its own choosing in connection with this Escrow Agreement, the Escrow Agent shall not incur any liability for any action taken in good faith in accordance with such advice except to the extent caused by or arising out of the Escrow Agent’s gross negligence, willful misconduct or fraud or except for a failure to comply with its obligation to keep the Escrow Funds in its custody (subject, however, to the terms and conditions of this Agreement). The foregoing indemnification shall survive termination of this Escrow Agreement.

The Escrow Agent is not a party to, and is not bound by, any other agreements with the parties hereto regarding the subject matter hereof. In the event that any of the terms and provisions of any other agreement (excluding any amendment to this Escrow Agreement) between any of the parties hereto, conflict or are inconsistent with any of the provisions of this Escrow Agreement, the terms and provisions of this Escrow Agreement shall govern and control in all respects.

The Escrow Agent shall neither be responsible for, nor chargeable with, knowledge of the terms and conditions of any other agreement, instrument or document between the other parties hereto, in connection herewith, including without limitation the Purchase Agreement. This Escrow Agreement sets forth all matters pertinent to the escrow contemplated hereunder, and no additional obligations of the Escrow Agent shall be inferred from the terms of this Escrow Agreement or any other agreement. IN NO EVENT SHALL THE ESCROW AGENT BE LIABLE, DIRECTLY OR INDIRECTLY, FOR ANY (i) DAMAGES OR EXPENSES ARISING OUT OF THE SERVICES PROVIDED HEREUNDER, OTHER THAN DAMAGES WHICH RESULT FROM THE ESCROW AGENT’S FAILURE TO ACT IN ACCORDANCE WITH THE STANDARDS SET FORTH IN THIS ESCROW AGREEMENT, OR (ii) SPECIAL OR CONSEQUENTIAL DAMAGES, EVEN IF THE ESCROW AGENT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

The Escrow Agent shall have the right to perform any of its duties hereunder through agents, attorneys, custodians or nominees.

Any banking association or corporation into which the Escrow Agent may be merged, converted or with which the Escrow Agent may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Escrow Agent shall be a party, or any banking association or corporation to which all or substantially all of the corporate trust business of the Escrow Agent shall be transferred, shall succeed to all the Escrow Agent’s rights, obligations and immunities hereunder without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding.

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9. Notices. All notices, consents or other communications required or permitted to be given under this Escrow Agreement shall be in writing and shall be deemed given only if (i) delivered personally or (ii) sent by registered or certified mail, postage prepaid, or (iii) sent by an internationally recognized overnight courier service with next day delivery guaranteed and delivery charges prepaid, or (iv) sent by confirmed facsimile with the original to follow by first class mail, postage prepaid, as follows:

If to the Shareholders:	David T. Feeney 5521 Kinvarra Court Dublin, OH 43016
with a copy to:	Bricker & Eckler LLP 100 South Third Street Columbus, OH 43215 Attention: John W. Cook, III Facsimile No.: (614) 227-2390
If to LSI:	LSI Acquisition Inc. 10000 Alliance Road Cincinnati, Ohio 45242 Attention: Ronald S. Stowell Facsimile No.: (513) 791-0813
with a copy to:	Keating Muething & Klekamp PLL One East Fourth Street, Suite 1400 Cincinnati, Ohio 45202 Attention: Michael J. Moeddel, Esq. Facsimile No.: (513) 579-6457
If to Escrow Agent:	U.S. Bank, National Association 425 Walnut Street, 6th Floor Cincinnati, Ohio 45202 Attention: William Sicking Facsimile No.: (513) 632-5511

or to such other address as the addressee may have specified in a notice duly given to the sender as provided herein. Such notice, request, demand, waiver, consent, approval or other communication will be deemed to have been given as of the date so delivered, mailed or received by facsimile transmission.

10. Ownership for Tax Purposes. Each Shareholder agrees that, for purposes of federal and other taxes based on income, each Shareholder will be treated as the owner of his proportion (based on his Percentage Interest) of the Escrow Shares held in escrow and that each Shareholder will report all income, if any, that is earned on, or derived from such Escrow Shares as his income in the taxable year or years in which such income is properly includible and pay any taxes attributable thereto.

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11. Amendment. No amendment or modification of this Escrow Agreement shall be effective unless in writing and signed by the parties. This Escrow Agreement may not be terminated except in a written document signed by the parties.

12. Parties in Interest. This Escrow Agreement shall bind, benefit, and be enforceable by and against each party hereto and their successors, assigns, heirs and personal representatives. Except as otherwise expressly authorized herein or in the Purchase Agreement, no party shall in any manner assign any of its rights or obligations under this Escrow Agreement without the express prior written consent of the other parties; provided however, that LSI may assign its rights hereunder to any permitted assignee of any of LSI’s rights under the Purchase Agreement and such transferee shall be subject to LSI’s obligations hereunder. No assignment or transfer permitted hereunder shall relieve or release any such transferor from any liability or obligation hereunder.

13. No Waivers. No waiver with respect to this Escrow Agreement shall be enforceable unless in writing and signed by the party against whom enforcement is sought. Except as otherwise expressly provided herein, no failure to exercise, delay in exercising, or single or partial exercise of any right, power or remedy by any party, and no course of dealing between or among any of the parties, shall constitute a waiver of, or shall preclude any other or further exercise of the same or any other right, power or remedy.

14. Entire Agreement. This Escrow Agreement supersedes all prior agreements among the parties with respect to its subject matter and constitutes (along with the documents referred to in this Escrow Agreement, including the Purchase Agreement) a complete and exclusive statement of the terms of the agreement between the parties with respect to its subject matter.

15. Severability. If any provision of this Escrow Agreement is construed to be invalid, illegal or unenforceable, then the remaining provisions hereof shall not be affected thereby and shall be enforceable without regard thereto.

16. Counterparts. This Escrow Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall constitute an original hereof, and it shall not be necessary in making proof of this Escrow Agreement to produce or account for more than one original counterpart hereof. Facsimile signatures shall be treated as original signatures and shall be binding upon the parties.

17. Controlling Law; Forum Selection. This Escrow Agreement is made under, and shall be construed and enforced in accordance with, the laws of the State of Ohio applicable to agreements made and to be performed solely therein, without giving effect to principles of conflicts of law. Each party hereto agrees that it shall bring any action or proceeding in respect of any claim arising out of or related to this Agreement or the transactions contained in or contemplated by this Agreement, exclusively in the United States District Court for the Southern District of Ohio or any Ohio state court sitting in Hamilton County, Ohio (the “Chosen Courts”), and solely in connection with claims arising under this Agreement or the transactions that are the subject of this Agreement: (i) irrevocably submits to the exclusive jurisdiction of the Chosen Courts; (ii) waives any objection to laying venue in any such action or proceeding in the Chosen Courts; (iii) waives any objection that the Chosen Courts are an inconvenient forum or do not have jurisdiction over any party hereto; and (iv) agrees that service of process upon such party in any such action or proceeding shall be effective if notice is given in accordance with Section 9. Each party hereto irrevocably waives any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.

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18. Definitions. To the extent not specifically defined herein, all terms used herein shall have the meanings ascribed to them in the Purchase Agreement. As used in this Escrow Agreement the term “including” shall mean “including without limitation.”

19. Patriot Act. To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify and record information that identifies each person who opens an account. For a non-individual person such as a business entity, a charity, a Trust or other legal entity we will ask for documentation to verify its formation and existence as a legal entity. We may also ask to see financial statements, licenses, identification and authorization documents from individuals claiming authority to represent the entity or other relevant documentation.

20. WAIVER OF JURY. THE PARTIES HEREBY IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED IN CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS ESCROW AGREEMENT.

[Remainder of Page Intentionally Left Blank; Signature Page to Follow]

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IN WITNESS WHEREOF, the parties have executed, or caused their duly authorized representatives to execute, this Escrow Agreement on the date first written above.

LSI:
LSI ACQUISITION INC.
By:	/s/ Ronald S. Stowell
	Name:	Ronald S. Stowell
	Title:	Treasurer and Secretary
SHAREHOLDERS:
/s/ Kevin A. Kelly
Kevin A. Kelly
/s/ Craig A. Miller
Craig A. Miller
/s/ David T. Feeney
David T. Feeney
ESCROW AGENT:
U.S. BANK, NATIONAL ASSOCIATION
By:	/s/ William E. Sicking
	Name:	William E. Sicking
	Title:	Vice President and Trust Officer

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EXHIBIT “A”

Percentage Interests

Shareholder:	Percentage Interest
Kevin A. Kelly		42.47	%
Craig A. Miller		42.47	%
David T. Feeney		15.06	%

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EXHIBIT “B”

Purchase Agreement

See attached.

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EXHIBIT “C”

ESCROW AGENT FEES AND EXPENSES

The total Escrow Agent Fee under this Escrow Agreement shall be $4,000, which includes the Escrow Agent Acceptance Fee and the Annual Escrow Agent Fee for the term of this Escrow Agreement. This total fee shall be paid to the Escrow Agent at Closing.

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EX-10.2

Exhibit 10.2

REGISTRATION RIGHTS AGREEMENT

DATED AS OF JULY 22, 2009

BY AND BETWEEN

LSI INDUSTRIES INC.

AND

DAVID T. FEENEY, KEVIN A. KELLY AND CRAIG A. MILLER

TABLE OF CONTENTS

ARTICLE 1 DEFINITIONS	1
ARTICLE 2 REGISTRATION RIGHTS	2
2.1 Piggyback Registration	2
ARTICLE 3 REGISTRATION PROCEDURES	3
3.1 Filings; Information	3
3.2 Registration Expenses	5
ARTICLE 4 INDEMNIFICATION AND CONTRIBUTION	6
4.1 Indemnification by the Company	6
4.2 Indemnification by the Holder	7
4.3 Conduct of Indemnification Proceedings	7
4.4 Contribution	8
ARTICLE 5 MISCELLANEOUS	8
5.1 Rule 144 and Rule 145	8
5.2 No Inconsistent Agreements	9
5.3 Successors and Assigns	9
5.4 No Waivers, Amendments	9
5.5 Notices	10
5.6 Terms of Agreement	11
5.7 Governing Law; Submission to Jurisdiction	11
5.8 Section Headings	11
5.9 Entire Agreement	11
5.10 Severability	11
5.11 Counterparts	12
5.12 Parties in Interest	12
5.13 Enforcement; Further Assurances	12

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REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement (this “Agreement”) is entered into as of July 22, 2009 by and between LSI Industries Inc., an Ohio corporation (the “Company”), and David T. Feeney, Kevin A. Kelly and Craig A. Miller (each, a “Holder, and collectively, the “Holders”). Capitalized terms used but not otherwise defined herein have the meanings given to them in the Purchase Agreement (as hereinafter defined).

WITNESSETH:

WHEREAS, pursuant to that certain Purchase and Sale Agreement (the “Purchase Agreement”), dated as of even date herewith, by and among the Company, LSI Acquisition Inc., and the Sellers identified therein and a Real Estate Purchase Agreement dated as of even date herewith between certain parties to the Purchase Agreement, the Companies sold substantially all of their assets to the Company; and

WHEREAS, the Holders own 100% of the issued and outstanding capital interests in Kelmilfeen, Technology and Engineering and were induced in part to enter into the Purchase Agreement by the Company’s agreement to enter into this Agreement.

NOW THEREFORE, in consideration of the mutual covenants and agreements contained herein, the parties hereto agree as follows:

ARTICLE 1
DEFINITIONS

As used in this Agreement, the following terms have the following meanings:

(a) “Affiliate”, as applied to any Person, shall mean any other Person directly or indirectly controlling, controlled by, or under common control with, that Person. For the purposes of this definition “control” (including, with correlative meanings, the terms “controlling”, “controlled by” and “under common control with”), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities (the ownership of more than 50% of the voting securities of an entity shall for purposes of this definition be deemed to be “control”), by contract or otherwise;

(b) “Agreement” shall have the meaning set forth in the preamble of this Agreement;

(c) “Company” shall have the meaning set forth in the preamble of this Agreement;

(d) “Exchange Act” shall mean the United States Securities and Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder;

(e) “Holders” shall have the meaning set forth in the preamble of this Agreement;

(f) “Indemnified Party” has the meaning set forth in Section 4.3;

(g) “Indemnifying Party” has the meaning set forth in Section 4.3;

(h) “Piggyback Registration” has the meaning set forth in Section 2.1(a);

(i) “Purchase Agreement” has the meaning set forth in the recitals to this Agreement;

(j) “Registrable Security” means any LSI Common Shares constituting the Stock Consideration pursuant to the Purchase Agreement (including such LSI Common Shares held in escrow pursuant to the Purchase Agreement and the Escrow Agreement) and held by the Holders.

(k) “Registration Expenses” has the meaning set forth in Section 3.2;

(l) “Securities Act” shall mean the United States Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder;

ARTICLE 2
REGISTRATION RIGHTS

2.1 Piggyback Registration.

(a) Right to Piggyback. If at any time from the date hereof until the earlier of July 31, 2013 or second anniversary of the release of all of the Escrow Shares by the Escrow Agent under the Escrow Agreement, the Company proposes, either unilaterally or pursuant to the exercise of demand registration rights by a third party, to file a registration statement under the Securities Act (except with respect to registration statements on Forms S-4 or S-8, or any other form not available for registering the Registrable Securities for sale to the public generally) (a “Registration Statement”) with respect to an offering for its own account or for the account of another person (other than the Holders in their capacity as such) of LSI Shares (a “Proposed Registration”), then the Company shall in each case give written notice (the “Piggyback Notice”) of such proposed filing to each Holder at least fifteen (15) days before the anticipated filing date, and shall, subject to the terms and conditions herein, include in such Registration Statement such amount of Registrable Securities as the Holder may request within five (5) days of the receipt of such notice (each a “Piggyback Reply Notice”.) The Company shall register (“Piggyback Registration”) such Registrable Securities on the same terms and subject to the same conditions applicable to the registration in the Proposed Registration of securities to be sold by the Company or the persons selling under such Proposed Registration. The Holders acknowledge that the Company makes no representation regarding its eligibility to file a registration statement on Form S-3 with the Commission.

(b) Priority on Piggyback Registrations. If the managing underwriter or underwriters of such offering delivers an opinion to the Holders that the total dollar amount which they and any other persons intend to include in such offering is reasonably likely to materially and adversely affect the success or offering price of such offering, then the amount of securities to be offered for the accounts of holders of Registrable Securities shall be reduced and the securities to be included in such Proposed Registration shall be prioritized as follows: first, the securities which the Company proposes to sell or that the Company is requested to register pursuant to the exercise by a third party of demand registration rights; and second, the Registrable Securities of the Holders and the other securities requested to be included in such registration, pro rata in accordance with the aggregate principal amount of such securities among the holders of securities requested (including the Holders) to be included in such registration.

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(c) Right of Company to Withdraw/Abandon. Nothing herein shall be construed as limiting or otherwise interfering with the right of the Company to withdraw or abandon in its sole discretion any registration statement filed by it in connection with a Piggyback Registration notwithstanding the inclusion of Registrable Securities.

ARTICLE 3
REGISTRATION PROCEDURES

3.1 Filings; Information.

Whenever any Registrable Securities are to be registered pursuant to this Agreement:

(a) [Reserved.]

(b) The Company will prepare and file with the Commission such amendments and supplements to such Registration Statement and the prospectus used in connection therewith as may be necessary to keep such Registration Statement effective and to comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by such Registration Statement in accordance with the intended method of distribution.

(c) The Company will, prior to filing a Registration Statement or prospectus or any amendment or supplement thereto, furnish to the Holders and their counsel copies of such Registration Statement as proposed to be filed, together with exhibits thereto, which documents will be subject to review and approval, which approval shall not be unreasonably withheld or delayed, by the foregoing at least fifteen (15) days before the anticipated date of filing of the Registration Statement or prospectus or at least five (5) days before the anticipated date of filing of any amendments or supplements thereto, and thereafter furnish to the Holders and their counsel such number of copies of such Registration Statement, each amendment and supplement thereto (in each case including all exhibits thereto and documents incorporated by reference therein), the prospectus included in such Registration Statement (including each preliminary prospectus) and such other documents as the Holders may reasonably request in order to facilitate the disposition of the Registrable Securities owned by the Holders.

(d) After the filing of the Registration Statement, the Company will promptly notify the Holders covered by such Registration Statement of any stop order issued or threatened by the Commission and take all reasonable actions required to prevent the entry of such stop order or to remove it if entered.

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(e) The Company will use its best efforts to (i) register or qualify the Registrable Securities under such other securities or blue sky laws of such jurisdictions in the United States and such other jurisdictions as any Holder reasonably (in light of such Holder’s intended plan of distribution) requests and (ii) cause such Registrable Securities to be registered with or approved by such other governmental agencies or authorities in the United States as may be necessary by virtue of the business and operations of the Company and such Holder’s intended plan of distribution and do any and all other acts and things that may be reasonably necessary or advisable to enable such Holder to consummate the disposition of the Registrable Securities owned by such Holder.

(f) The Company will immediately notify the Holders of such Registrable Securities, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the occurrence of an event requiring the preparation of a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and will promptly make available to the Holders any such supplement or amendment.

(g) The Company will deliver promptly to the Holders, subject to restrictions imposed by the United States federal government or any agency or instrumentality thereof, copies of all correspondence between the Commission and the Company and its counsel or auditors and all memoranda relating to discussions with the Commission or its staff with respect to the Registration Statement. The Company will make available to the Holders appropriate officers of the Company to answer any questions that the Holders may have with respect to the contents of the Registration Statement to the extent reasonably necessary to conduct reasonable due diligence on the Company and the matters addressed in the Registration Statement.

(h) The Company will use its best efforts to comply with all applicable rules and regulations of the Commission and make available to its securityholders, as soon as reasonably practicable, an earnings statement covering a period of 12 months, beginning within three months after the effective date of the Registration Statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder.

(i) The Company will use its best efforts to cause all Registrable Securities to be listed on The Nasdaq Global Select Market or any successor thereof.

(j) The Company may require the Holders to promptly furnish in writing to the Company such information regarding the distribution of the Registrable Securities as the Company may from time to time reasonably request and such other information as may be legally required in connection with such registration.

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(k) Each Holder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3.1(f) hereof, such Holder will forthwith discontinue disposition of Registrable Securities pursuant to the registration statement covering such Registrable Securities until such Holder’s receipt of the copies of the supplemented or amended prospectus contemplated by Section 3.1(f) hereof, and, if so directed by the Company such Holder will deliver to the Company all copies, other than permanent file copies then in such Holder’s possession, of the most recent prospectus covering such Registrable Securities at the time of receipt of such notice. In the event the Company shall give such notice, the Company shall extend the period during which such Registration Statement shall be maintained effective (including the period referred to in Section 3.1(b) hereof) by the number of days during the period from and including the date of the giving of notice pursuant to Section 3.1(f) hereof to the date when the Company shall make available to the Holders covered by such registration statement a prospectus supplemented or amended to conform with the requirements of Section 3.1(f) hereof.

(l) The Company will furnish, at the request of any Holder requesting registration of Registrable Securities pursuant to Article 2, on the date or dates provided for in the underwriting agreement if such securities are being sold through underwriters, (i) an opinion, dated as of such date, of the counsel representing the Company for the purposes of such registration, covering such matters as such counsel, underwriters and the Holders may reasonably agree upon (including such matters as are customarily given to underwriters in an underwritten public offering), addressed to the underwriters, if any, and (ii) a letter or letters dated as of such date, from the independent certified public accountants of the Company, addressed to the underwriters, if any, covering such matters as such accountants, underwriters and Holders may reasonably agree upon.

3.2 Registration Expenses.

In connection with any registration statement filed pursuant to Section 2.1, the Company shall pay the following registration expenses incurred in connection with any registration hereunder (the “Registration Expenses”): (i) all registration and filing fees, (ii) fees and expenses of compliance with securities or blue sky laws (including reasonable fees and disbursements of counsel in connection with blue sky qualifications of the Registrable Securities), (iii) printing expenses, (iv) the Company’s internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), (v) fees and expenses incurred in connection with the listing of the Registrable Securities, (vi) reasonable fees and disbursements of counsel for the Company and not more than one counsel for the Holders, as may be chosen by the Holders, and customary fees and expenses for independent certified public accountants retained by the Company, and (vii) reasonable fees and expenses of any special experts retained by the Company in connection with such registration.

The Company shall have no obligation to pay any underwriting fees, discounts or commissions attributable to the sale of Registrable Securities. The Company shall have no obligation to arrange for any offering of Registrable Securities by or through any underwriter, investment bank, placement agent or other Person.

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ARTICLE 4
INDEMNIFICATION AND CONTRIBUTION

4.1 Indemnification by the Company.

To the fullest extent permitted by law, the Company agrees to indemnify and hold harmless each Holder, its officers, directors, employees and agents, and each person, if any, who controls each Holder within the meaning of the Securities Act from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof (including, but not limited to, any loss, claim, damage, liability or action relating to purchases and sales of LSI Common Shares) to which such Holder, officer, director, employee or agent or controlling Person may become subject under the Securities Act or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement, preliminary prospectus or final prospectus or any amendment or supplement thereto relating to the Registrable Securities or (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading and shall reimburse such Holder and each such officer, director, employee, agent and controlling Person for any legal and other expenses reasonably incurred by such Holder, officer, director, employee, agent or controlling Person in connection with investigating or defending or preparing to defend against any such loss, claim, damage, liability or action as such expenses are incurred, except insofar as the same are contained in any information furnished in writing to the Company by such Holder expressly for use therein; provided, however, that the Company shall not be liable to any such Holder or such Person’s directors, officers, agents or controlling Persons, in any such case for any such loss, claim, damage or liability to the extent that it arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in connection with such Registration Statement, preliminary prospectus, final prospectus or amendments or supplements thereto, in conformity with written information relating to such Holder furnished to the Company by such Holder expressly for inclusion therein in connection with such registration; and, provided, further, that as to any preliminary prospectus or any final prospectus, this indemnity agreement shall not inure to the benefit of any such Holder or such Person’s directors, officers, agents or controlling Persons, on account of any loss, claim, damage or liability arising from the sale of Registrable Securities to any Person by such Holder if such Holder or its representatives failed to send or give a copy of the final prospectus or a prospectus supplement, as the case may be (excluding documents incorporated by reference therein), as the same may be amended or supplemented, to that Person within the time required by the Securities Act, and the untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state a material fact in such preliminary prospectus or final prospectus was corrected in the final prospectus or such prospectus supplement, as the case may be (excluding documents incorporated by reference therein), unless such failure resulted from the non-compliance by the Company with Section 3.1(f). The indemnities provided by this Section 4.1 shall remain in full force and effect regardless of any investigation made by or on behalf of any Holder. Notwithstanding the foregoing, the indemnity set forth in this Section 4.1 shall not apply to amounts paid in settlement effected without the consent of the Company (which consent shall not be unreasonably withheld or delayed).

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4.2 Indemnification by the Holders.

To the fullest extent permitted by law, each Holder jointly and severally agrees to indemnify and hold harmless the Company its officers, directors and agents and each Person, if any, who controls the Company within the meaning of the Securities Act to the same extent as the indemnity from the Company to each Holder pursuant to clauses (i) and (ii) of Section 4.1, but only with reference to information related to Holders furnished in writing by the Holders or on either Holder’s behalf expressly for use in any Registration Statement or prospectus relating to the Registrable Securities, or any amendment or supplement thereto, or any preliminary prospectus; provided will be limited to the net amount of proceeds received by the Holders from the sale of Registrable Securities pursuant to such Registration Statement. Notwithstanding the foregoing, the indemnity set forth in this Section 4.2, shall not apply to amounts paid in settlements effected without the consent of each Holder (which consent shall not be unreasonably withheld or delayed).

4.3 Conduct of Indemnification Proceedings.

Promptly after receipt by any person in respect of which indemnity may be sought pursuant to Section 4.1 or 4.2 (an “Indemnified Party”) of notice of any claim or the commencement of any action, the Indemnified Party shall, if a claim in respect thereof is to be made against the person against whom such indemnity may be sought (an “Indemnifying Party”) notify the Indemnifying Party in writing of the claim or the commencement of such action, provided that the failure to notify the Indemnifying Party shall not relieve it from any liability which it may have to an Indemnified Party otherwise than under Section 4.1 or 4.2, except to the extent of any actual prejudice resulting therefrom. If any such claim or action shall be brought against an Indemnified Party, and it shall notify the Indemnifying Party thereof, the Indemnifying Party shall be entitled to participate therein, and, to the extent that it wishes, jointly with any other similarly notified Indemnifying Party, to assume the defense thereof with counsel satisfactory to the Indemnified Party. After notice from the Indemnifying Party to the Indemnified Party of its election to assume the defense of such claim or action, the Indemnifying Party shall not be liable to the Indemnified Party for any legal or other expenses subsequently incurred by the Indemnified Party in connection with the defense thereof other than reasonable costs of investigation; provided that the Indemnified Party shall have the right to employ separate counsel to represent the Indemnified Party and its controlling Persons who may be subject to liability arising out of any claim in respect of which indemnity may be sought by the Indemnified Party against the Indemnifying Party, but the fees and expenses of such counsel shall be for the account of such Indemnified Party unless (i) the Indemnifying Party and the Indemnified Party shall have mutually agreed to the retention of such counsel or (ii) in the reasonable judgment of such Indemnified Party representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any claim or pending or threatened proceeding in respect of which the Indemnified Party is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such settlement includes an unconditional release of such Indemnified Party from all liability arising out of such claim or proceeding.

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4.4 Contribution.

If the indemnification provided for in this Article 4 is unavailable to the Indemnified Parties in respect of any losses, claims, damages, liabilities or expenses referred to herein, then each such Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such losses, claims, damages, liabilities or expenses as between the Company, on the one hand, and the Holders, on the other, in such proportion as is appropriate to reflect the relative fault of the Company and of the Holders in connection with such statements or omissions, as well as any other relevant equitable considerations. The relative fault of the Company, on the one hand, and of the Holders, on the other, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by such party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

The Company and the Holders agree that it would not be just and equitable if contribution pursuant to this Section 4.4 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an Indemnified Party as a result of the losses, claims, damages or liabilities referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 4.4, the Holders shall not be required to contribute any amount in excess of the amount by which the total price at which the Registrable Securities were offered to the public (less underwriting discounts and commissions) exceeds the amount of any damages which the Holders have otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

ARTICLE 5
MISCELLANEOUS

5.1 Rule 144 and Rule 145.

The Company covenants that it will use commercially reasonable efforts to file any reports required to be filed by it under the Securities Act and the Exchange Act and that it will take such further action as each Holder may reasonably request, all to the extent required from time to time to enable such Holder to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by (a) Rule 144 or Rule 145 under the Securities Act, as such Rules may be amended from time to time, or (b) any similar rule or regulation hereafter adopted by the Commission. Upon the request of either Holder, the Company will deliver promptly to such Holder a written statement as to whether it has complied with such requirements.

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5.2 No Inconsistent Agreements.

The Company will not hereafter enter into any agreement with respect to its securities which is inconsistent with the rights granted to the Holders in this Agreement.

5.3 Successors and Assigns.

(a) Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties (including transferees of any shares of Registrable Securities) who shall, upon such successions or assignment, as the case may be, be entitled to the rights of the Holders hereunder and shall be deemed a “Holder” for this Agreement; provided further the rights to cause the Company to register Registrable Securities pursuant to Article 2 may only be assigned pursuant to the terms of Section 5.3(b). Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. In addition, the Holders shall be entitled to transfer any rights hereunder to any Affiliate, subject solely to the obligation that such member notify the Company of such assignment in writing and agree in writing to be bound by the terms of this Agreement.

(b) The rights to cause the Company to register Registrable Securities pursuant to Article 2 may be assigned (but only with all related obligations) by the Holders to their immediate family members, or any entity which is wholly owned by such person or a trust established solely for the benefit of one or more such persons, upon the transfer to such Person(s) of Registrable Securities, provided that: (a) the Company is, at the time of or within a reasonable time after such transfer, furnished with written notice of the name and address of such transferee and the securities with respect to which such registration rights are being assigned; and (b) such transferee agrees in writing to be bound by and subject to the terms and conditions of this Agreement, including the execution of an Adoption Agreement in the form attached hereto as Exhibit A.

5.4 No Waivers, Amendments.

(a) Except as expressly set forth herein, no failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

(b) Any amendment, modification or supplement to this Agreement shall not be enforced against any party hereto unless such amendment, modification or supplement is signed by the Company and the Holders.

(c) Any provision of this Agreement may be waived if, but only if, such waiver is in writing and is signed by the party against whom the enforcement of such waiver is sought.

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5.5 Notices.

All notices, requests and other communications to any party hereunder shall be in writing (including telex, telecopier or similar writing) and shall be given to such party at its address or telecopier number set forth below, or such other address or telecopier number as such party may hereinafter specify for the purpose to the party giving such notice. Each such notice, request or other communication shall be effective (a) if given by telecopy, when such telecopy is transmitted to the telecopy number specified in this Section and the appropriate answerback is received or, (b) if given by overnight courier or express mail service, when delivery is confirmed or, (c) if given by any other means, when delivered at the address specified in this Section 5.5. In each case, notice shall be sent to the parties at the following addresses (or at such other address for a party as shall be specified by like notice):

(i)	if to the Company:
	LSI Industries Inc. P.O. Box 42728 10000 Alliance Road Cincinnati, Ohio 45242 Attention: Ronald S. Stowell Facsimile No.: (513) 791-0813
	with a copy to:
	Keating Muething & Klekamp PLL One East Fourth Street, Suite 1400 Cincinnati, Ohio 45202 Attention: Michael J. Moeddel and F. Mark Reuter Facsimile No.:(513) 579-6457
(ii)	if to the Holders:
	c/o David T. Feeney 5521 Kinvarra Court Dublin, OH 43016 Facsimile No.: (614)
	with a copy to:
	Bricker & Eckler LLP 100 South Third Street Columbus, Ohio 43215 Attention: John W. Cook III Facsimile No.:(614) 227-2390

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5.6 Terms of Agreement.

This Agreement shall terminate at such time as each Holder ceases to beneficially own any Registrable Securities; provided that any termination pursuant to this Section 5.6 will not relieve any party for any liability arising from a breach of representation, warranty, covenant or agreement occurring prior to such termination.

5.7 Governing Law; Submission to Jurisdiction.

The Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to its conflict of law provisions. Each of the parties hereto irrevocably agrees that any legal action or proceeding with respect to this Agreement or for the recognition and enforcement of any judgment in respect hereof brought by the other party hereto or its, his or her executors, heirs, legal representatives, successors or permitted assigns may be brought and determined in any federal or state court located in New York, New York, and each of the parties hereby irrevocably submits with regard to any action or proceeding for itself and in respect to its property, generally and unconditionally, to the exclusive jurisdiction of the aforesaid courts. Each of the parties hereby irrevocably waives and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any action or proceeding with respect to this Agreement (a) any claim that it is not personally subject to the jurisdiction of the above-named courts for any reason other than the failure to lawfully serve process, (b) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise), and (c) to the fullest extent permitted by applicable law, that (i) the suit, action or proceeding in any such court is brought in an inconvenient forum, (ii) the venue of such suit, action or proceeding is improper and (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.

5.8 Section Headings.

The section headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.

5.9 Entire Agreement.

This Agreement and the Exhibit attached hereto constitutes the entire agreement and understanding among the parties hereto and supersedes any and all prior agreements and understandings, written or oral, relating to the subject matter hereof.

5.10 Severability.

Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdictions, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by law.

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5.11 Counterparts.

This Agreement may be signed in counterparts, each of which shall constitute an original and which together shall constitute one and the same agreement.

5.12 Parties in Interest.

This Agreement and all the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors. Except as expressly set forth herein, neither this Agreement nor any of their rights hereunder shall be assigned by any of the parties hereto without the prior written consent of the other parties.

5.13 Enforcement; Further Assurances.

(a) The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms. It is accordingly agreed that the parties shall be entitled to specific performance of the terms hereof, this being in addition to any other remedy to which they are entitled at law or in equity.

(b) The parties hereto agree to execute, acknowledge, deliver, file and record such further certificates, amendments, instruments, agreements and documents, and to do all such other acts and things, as may be required by law or as may be necessary or advisable to carry out the intent and purposes of this Agreement.

[Remainder of this page intentionally left blank.]

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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date set forth above.

LSI INDUSTRIES INC.
By:	/s/ Ronald S. Stowell
	Name:	Ronald S. Stowell
	Title:	Vice President, Chief Financial Officer, and Treasurer
/s/ David T. Feeney
DAVID T. FEENEY
/s/ Kevin A. Kelly
KEVIN A. KELLY
/s/ Craig A. Miller
CRAIG A. MILLER

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EXHIBIT A

ADOPTION AGREEMENT

This Adoption Agreement (“Adoption Agreement”) is executed by the undersigned (the “Transferee”) pursuant to the terms of that certain Registration Rights Agreement, dated as of July 22, 2009 (the “Agreement”), by and between LSI Industries Inc. and the Holder identified therein. Capitalized terms used but not defined herein shall have the respective meanings ascribed to such terms in the Agreement. By the execution of this Adoption Agreement, the Transferee agrees as follows:

1. Acknowledgement. Transferee acknowledges that Transferee is acquiring certain shares of the capital stock of the Company (the “Stock”), which shares are subject to the terms and conditions of the Agreement.

2. Agreement. As partial consideration for such transfer, Transferee (i) agrees that the Stock acquired by Transferee shall be bound by and subject to the terms of the Agreement, to the same extent and with the same rights and obligations as the person(s) from which such Stock is received and (ii) hereby agrees to become a party to the Agreement with the same force and effect as if Transferee were originally a party thereto.

3. Notice. Any notice required or permitted by the Agreement shall be given to Transferee at the address listed beside Transferee’s signature below.

4. Joinder. The spouse of the undersigned Transferee, if applicable, executes this Adoption to acknowledge its fairness and that it is in such spouse’s best interests and to bind to the terms of the Agreement such spouse’s community interest, if any, in the Stock.

EXECUTED AND DATED this              day of             ,             .

TRANSFEREE:
Title:
Address:
	Fax:
Spouse: (if applicable):
Name:

Acknowledged and accepted on_______________________, ______.

LSI INDUSTRIES INC.
By:
	Name:
	Title:

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EX-10.3

Exhibit 10.3

REAL ESTATE PURCHASE AGREEMENT

This Real Estate Purchase Agreement (this “Agreement”) is made by and between Kelmilfeen Ltd., an Ohio limited liability company (“Seller”) and LSI Acquisition Inc., an Ohio corporation (“Buyer”), and is effective as of July22, 2009.

In consideration of the mutual covenants and provisions herein contained and other good and valuable consideration paid, Seller and Buyer agree as follows:

ARTICLE 1.
DESCRIPTION OF PROPERTY

Seller hereby agrees to sell, assign, and convey to Buyer and Buyer agrees to purchase, in accordance with the terms and subject to the conditions contained herein, certain real estate containing approximately 5.002 acres of land, located at 2727 Scioto Parkway, Columbus, Ohio 43221 (the “Land”), and more particularly described on Exhibit A attached hereto and made a part hereof, together with certain improvements containing an approximately 53,396 square foot building (the “Improvement”) located on the Land, together with all easements, and other rights and privileges appurtenant to the Land, and together with fixtures, heating, ventilating and air-conditioning equipment and systems, and plumbing, telephone, and electrical equipment and systems that are now located in or attached to the Improvement, and all items of personal property currently located on the Land or in the Improvement (except for the Kubota tractor owned by Seller), including those items specifically identified on Exhibit B attached hereto and made a part hereof, (hereinafter collectively referred to as “Personal Property”) and all other assets owned by Seller, including without limitation all cash, cash equivalents and marketable securities, with the exception of the Purchase Price (hereinafter defined), which Seller shall retain. The Land, Improvement, and Personal Property are hereinafter collectively referred to as the “Property”.

ARTICLE 2.
RELATIONSHIP TO PURCHASE AGREEMENT

Buyer is a party to that certain Purchase and Sale Agreement, dated as of even date herewith (the “Purchase Agreement”), whereby Buyer has agreed to purchase substantially all of the assets of Seller’s affiliated entities, ADL Technology Inc. and ADL Engineering Inc. Seller’s and Buyer’s obligations under this Agreement are expressly conditioned upon the consummation of the transactions contemplated by the Purchase Agreement and are intended to occur simultaneously therewith. In the event the transactions contemplated by the Purchase Agreement do not close as of the date of this Agreement, Buyer shall have no obligation to purchase the Property, Seller shall have no obligation to sell the Property, and both Buyer and Seller shall be released from their respective obligations under this Agreement. Capitalized terms used, but not otherwise defined in this Agreement, shall have the meanings set forth in the Purchase Agreement.

ARTICLE 3.
PURCHASE PRICE

3.1 Determination of Purchase Price. The aggregate purchase price (the “Purchase Price”) for the Property shall be as follows:

(a) Seven Hundred Thousand Four Hundred Thirty Eight Dollars ($700,438.00) payable by Buyer at the Closing by bank or certified check or by wire transfer of immediately available funds; and

(b) the assumption by Buyer of all of Seller’s obligations under those certain documents set forth on Exhibit D attached hereto and made a part hereof (collectively, the “Mortgage Loan Documents”).

3.2 Allocation of Purchase Price. The Purchase Price for the Property shall be allocated as follows:

Land and Improvement	$	1,500,000.00
Equipment	$	686,300.00
Cash and Marketable Securities	$	85,491.00

Seller and Buyer shall report the transactions contemplated by this Agreement in a manner consistent with such allocation, including the reports required to be filed under Section 1060 of the Code. Buyer shall prepare and deliver IRS Form 8594 to Seller within forty-five (45) days after the Closing Date to be filed with the IRS.

ARTICLE 4.
CLOSING AND TRANSFER OF TITLE

4.1 Closing. The closing (the “Closing”) of the purchase and sale of the Property shall take place at the law offices of Keating Muething & Klekamp PLL, One East Fourth Street, Suite 1400, Cincinnati, Ohio 45202, or by means of electronic data transmission methods including facsimile transmission and PDF e-mail transmission of executed signature pages among the parties simultaneously with the execution and delivery of this Agreement. The date on which Closing occurs is referenced to as the Closing Date. The Closing shall be effective at the close of business on the Closing Date.

4.2 Seller’s Documents; Other Deliveries. At Closing, Seller shall execute and deliver to Buyer the following documents, and shall also make the other deliveries provided for hereinafter, all as follows:

(a) A Limited Warranty Deed for the Land and the Improvement proper for recording, conveying marketable title in the Land and the Improvement to Buyer free and clear of any Encumbrances, except for the Encumbrances set forth on Exhibit C (the “Permitted Exceptions);

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(b) A certified copy of the resolution of Seller’s members evidencing authorization of Seller to enter into this Agreement and evidencing authorization of the officer acting on behalf of Seller to consummate the transactions contemplated herein;

(c) A Bill of Sale for all items of Personal Property in form and substance acceptable to Seller;

(d) Assignment and Assumption of Permits, assigning to Buyer all Permits held by Seller with respect to the operation of the Improvement on the Property and the Personal Property, and that are legally assignable, if any such Permits exist, in form and substance reasonably acceptable to Seller;

(e) A Termination of Lease terminating that certain Lease between Seller and ADL Technology Inc. and ADL Engineering Inc., dated July 20, 2004, and recorded August 10, 2004 in Instrument No. 200408100186675 (the “ADL Lease”), in form and substance sufficient to terminate the ADL Lease as of record;

(f) the Assignment and Assumption Agreement dated as of even date herewith among Seller, Buyer and National City Bank in form and substance acceptable to the parties thereto (the “Assumption of Loan”); and

(g) Such other documents or instruments as may be reasonably required by Buyer, required by other provisions of this Agreement, or reasonably necessary to effectuate the Closing.

4.3 Buyer’s Documents and Deliveries. At Closing, Buyer shall execute and deliver to Seller the following documents, and shall also make the other deliveries provided for hereinafter, all as follows:

(a) Counterpart of Assignment and Assumption of Permits, containing Buyer’s undertaking to assume all duties and obligations under said Permits;

(b) Executed duplicate originals, with evidence of filing and governmental approval, or with appropriate arrangements for prompt filing thereafter, of governmentally required transfer applications for all Permits held by Seller with respect to the operation of the Improvement on the Property and the Personal Property that are being assigned to Buyer;

(c) A corporate secretary’s certified copy of the resolution of Buyer’s Board of Directors evidencing authorization of the Buyer to enter into this Agreement and evidencing authorization of the officer acting on behalf of Buyer to consummate the transactions contemplated herein;

(d) The Purchase Price;

(e) the Assumption of Loan executed by Buyer and National City Bank; and

(f) Such other documents or instruments as may be reasonably required by Seller, required by other provisions of this Agreement, or reasonably necessary to effectuate the Closing.

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ARTICLE 5.
REAL ESTATE TAXES AND ASSESSMENTS; UTILITY EXPENSES
AND MISCELLANEOUS EXPENSES; AND ESTIMATES

5.1 Real Estate Taxes and Assessments. Seller’s obligation to pay real estate taxes and assessments upon the Property for Ohio tax year 2009 shall be assumed by Buyer at Closing. Notwithstanding anything to the contrary contained in this Agreement, Seller warrants that all real estate taxes and special assessments have been paid in full for tax year 2008.

5.2 Utility Expenses and Miscellaneous Expenses. Buyer shall assume Seller’s obligation to pay all utilities for the Property’s gas, water, and electric usage, provided, however, Seller does not have any bills or invoices for such utilities that are delinquent in payment. If there are any unpaid or delinquent bills or invoices for such utilities, Seller shall pay the same in full prior to Closing.

ARTICLE 6.
BROKER

Buyer represents and warrants that it has dealt with no agent or broker who in any way has participated as the procuring cause of the sale of the Property other than J. Jeffrey Brausch & Company (“Buyer’s Broker”), and that Buyer shall be solely responsible for any amounts due to Buyer’s Broker in connection with this transaction. Seller represents and warrants that it has dealt with no agent or broker who in any way has participated as the procuring cause of the sale of the Property. Each party agrees to indemnify and hold harmless the other from and against any and all judgments, costs of suit, attorneys’ fees and other reasonable costs and expenses which the other may incur by reason of any action or claim made against the other by any agent, advisor or intermediary appointed by or instructed by Seller or Buyer, as the case may be, arising out of this Agreement or any subsequent sale of the Property to Buyer.

ARTICLE 7.
REPRESENTATIONS OF SELLER

7.1 Seller represents to Buyer as to the following matters, and shall be deemed to remake all of the following representations as of the date of Closing:

(a) Seller has good and marketable indefeasible fee simple title to the Property, free and clear of all Encumbrances, except Permitted Exceptions.

(b) Other than the ADL Lease, which shall be terminated at Closing, Seller has not leased, licensed or otherwise granted to any Person the right to use or occupy the Land or the Improvement or any portion thereof.

(c) There are no outstanding options, rights of first offer or rights of first refusal to purchase the Property or any portion thereof or interest therein.

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(d) Seller has delivered or made available to Buyer copies of the deeds and other instruments (as recorded) by which Seller acquired the Land and the Improvement, and copies of all title insurance policies, opinions, abstracts, and surveys in the possession of Seller and relating to the Land and the Improvement.

(e) Seller is an Ohio limited liability company in full force and effect and authorized to do business in Ohio and has the full limited liability power and authority to execute this Agreement and convey the Property at the time of Closing.

(f) The execution and delivery of this Agreement by Seller, the execution and delivery of every other document and instrument delivered pursuant hereto by or on behalf of Seller, and the consummation of the transaction contemplated hereby have been duly authorized and validly executed and delivered by Seller, and will not: (i) constitute or result in the breach of or default under any oral or written agreement to which Seller is a party or which affects the Property; (ii) constitute or result in a violation of any order, decree, or injunction with respect to which Seller and/or the Property is bound; and/or (iii) cause or entitle any party to have a right to accelerate or declare a default under any oral or written agreement to which Seller is a party or which affects the Property. This Agreement constitutes, and, when executed and delivered at the Closing, such other agreements, documents and instruments executed by or on behalf of Seller will constitute, the legal, valid and binding obligations of Seller, as the case may be, enforceable against Seller in accordance with their respective terms.

(g) The entering into of this Agreement and the consummation of the sale of the Property will not require Seller to obtain (either before or after the Closing) any consent, Permit, waiver, approval, authorization, or other action of, by, or with respect to any Governmental Authority or other Person, with the exception of National City Bank with respect to the Assumed Indebtedness.

(h) Except for the matters set forth on Schedule 3.9 to the Purchase Agreement, no litigation, arbitration, action, suit, investigation or other proceeding by or before any court, arbitrator or Governmental Authority is pending or, to the Knowledge of Seller, threatened against Seller or the Land or Improvement at law or in equity.

(i) The Improvement (i) to the Knowledge of Seller is free from material defects (patent and latent), (ii) has been maintained in accordance with normal industry practice, (iii) is in good operating condition and repair (ordinary wear and tear excepted), and (iv) is reasonably suitable for the purposes for which it presently is used and presently is proposed to be used.

(j) Seller has no Knowledge of any pending or contemplated eminent domain, condemnation, or other governmental or quasi governmental taking of all or any part of the Land or the Improvement.

(k) Seller has no Knowledge of public improvements which have been ordered to be made on the Land by a Governmental Authority and/or which have not heretofore been assessed, and Seller is not aware of any special assessments pending, threatened against, affecting, or to affect the Land.

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(l) The outstanding principal balance of the indebtedness evidenced by the Mortgage Loan Documents is $1,592,062.

(m) Seller holds all Environmental Permits reasonably necessary or proper for the lawful conduct and the occupancy and use of the Real Property, and all such Environmental Permits are in full force and effect. Seller has timely submitted renewal applications, application fees and annual filing fees for all such Environmental Permits and has paid all fees associated with the Environmental Permits. Seller has not received any written notice from any Governmental Authority revoking, canceling, rescinding, materially modifying or refusing to renew any Environmental Permits or threatening to revoke, cancel, rescind, materially modify or refuse to renew any Environmental Permit or providing written notice of violations or liabilities or alleged violations or liabilities, under any Environmental Laws or Environmental Permits. Seller has been and is presently in substantial compliance with all applicable Environmental Laws and its Environmental Permits and the terms, conditions, and requirements of the Environmental Permits and all Environmental Laws.

(n) Except as disclosed in Schedule 3.15 of the Purchase Agreement:

(i) to the Knowledge of Seller, Regulated Substances have not been released, spilled or disposed from, on, at, in or under the Property by Seller nor from, on, at, in or under any real property, on, at, in or under any real property owned, leased, or formerly owned, leased or used by Seller or, to Seller’s Knowledge, by any other Person in violation of or which creates liability under any Environmental Laws, and no Regulated Substances have been generated, used, handled, disposed, treated or stored on, or transported to or from, the Property, other than in substantial compliance with all applicable Environmental Laws and Environmental Permits;

(ii) Seller has not disposed of any Regulated Substances in a manner which is not in compliance with all applicable Environmental Laws and Environmental Permits;

(iii) there are no pending or, to the Knowledge of Seller, threatened Environmental Claims or Environmental Liabilities against any of the Seller or Property, and Seller has not received any written notice of any such Environmental Claims or Environmental Liabilities;

(iv) there are not currently nor were there previously any: (a) USTs or associated contamination on the Property; (b) asbestos-containing materials in any form on the Property; (c) materials or equipment containing polychlorinated biphenyls; or (d) landfills or disposal areas on the Property. Any USTs and associated contamination previously existing on the Property were removed in accordance with Environmental Laws, and to the extent applicable Seller has obtained a closure certificate, or comparable approval from the respective Governmental Authority for such removal and cleanup.

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(v) Seller has provided Buyer, prior to the Closing, with access to complete and accurate copies of all written information in their possession or control pertaining to Seller’s compliance with and Liability under all Environmental Laws and Environmental Permits, including compliance audits and environmental assessments, notices of violation and liability, orders, regulatory inspections, and sampling of the Environment at, on, in, under or around the Property.

(vi) During Seller’s ownership and operation of the Property: and except as disclosed on Schedule 3.15 of the Purchase Agreement: (a) Seller has substantially complied with all Environmental Laws and Environmental Permits; (b) no Release has occurred by Seller or, to the Knowledge of Seller, by any other Person, of any Regulated Substances into the Environment at the Property in violation of any Environmental Laws; (c) no landfill, disposal area, dry wells, fills, injection wells, dumps, flooding, historical or archaeological areas, wetlands or other adverse environmental conditions exist or occurred on the Property; and (d) to the Knowledge of Seller no contaminants exist on or about the Property.

7.2 All representations and warranties made by Seller in this Agreement shall not merge into any instrument or conveyance delivered at Closing and shall survive Closing and shall be deemed to be separate and apart from those set forth in the Purchase Agreement. The provisions, terms, and conditions of this Section 7.2 shall control over any contrary or inconsistent provision, term, or condition contained herein.

ARTICLE 8.
REPRESENTATIONS OF BUYER

8.1 Buyer represents to Seller as to the following matters, and shall be deemed to remake all of the following representations as of the date of Closing:

(a) The execution and delivery of this Agreement by Buyer, the execution and delivery of every other document and instrument delivered pursuant hereto by or on behalf of Buyer (including, without limitation the Assumption of Loan, and the consummation of the transaction contemplated hereby have been duly authorized and validly executed and delivered by Buyer, and will not (i) constitute or result in the breach of or default under any oral or written agreement to which Buyer is a party or which affects the Property; (ii) constitute or result in a violation of any order, decree, or injunction with respect to which the Buyer is bound and/or; (iii) cause or entitle any Person to have a right to accelerate or declare a default under any oral or written agreement to which Buyer is a party. This Agreement constitutes, and, when executed and delivered at the Closing, such other agreements, documents and instruments executed by or on behalf of Buyer will constitute, the legal, valid and binding obligations of Seller, as the case may be, enforceable against Buyer in accordance with their respective terms.

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(b) The entering into of this Agreement and the consummation of the sale of the Property will not require Buyer to obtain (either before or after the Closing) any Permit.

(c) All action required pursuant to this Agreement necessary to effectuate the transaction contemplated herein has been, or will be, taken promptly and in good faith by Buyer.

ARTICLE 9.
INDEMNIFICATION; REMEDIES

The members of Seller are parties to the Purchase Agreement. Therefore, the parties hereto agree that Article X of the Purchase Agreement shall provide the sole and exclusive remedy for any and all Losses sustained or incurred by Seller or Buyer, as the case may be, in connection with the transactions contemplated by this Agreement absent fraud or willful misconduct on the part of either Seller or Buyer. Notwithstanding the decision of any party to complete the transactions contemplated by this Agreement, each party shall be entitled to rely upon the representations and warranties set forth in this Agreement. The right to indemnification, reimbursement or any other remedy based upon such representations, warranties, covenants and obligations shall not be affected by any investigation (including any environmental investigation or assessment) conducted with respect to, or any Knowledge acquired (or capable of being acquired) at any time, whether before or after the execution and delivery of this Agreement, with respect to, the accuracy or inaccuracy of or compliance with any such representation, warranty, covenant or obligation.

ARTICLE 10.
ASSIGNMENT

This Agreement and all the terms and conditions hereof shall be binding upon and shall inure to the benefit of the parties and their respective successors and assigns. Buyer may assign its rights hereunder to another entity wholly owned by the Buyer with the prior written consent of Seller, which consent will not be unreasonably withheld.

ARTICLE 11.
NOTICES

All notices hereunder or required by law shall be in writing, and shall be deemed properly delivered when and if deposited in the (i) United States mail, postage prepaid, certified or registered mail, return receipt requested, or (ii) via recognized overnight delivery service addressed to the parties hereto at their respective addresses set forth below with receipted delivery, or (iii) by any other electronic means, with a confirmed delivery receipt, addressed as follows:

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If to Buyer:	LSI Acquisition Inc.
	10000 Alliance Road
	Cincinnati, Ohio 45242
	Attention: Ronald S. Stowell
with a copy to:	Keating Muething & Klekamp PLL
	One East Fourth Street
	Cincinnati, Ohio 45202
	Attention: Michael J. Moeddel
If to Seller:	Kelmilfeen Ltd.
	c/o David Feeney
	5521 Kinvarra Court
	Dublin, OH 43016
with a copy to:	Bricker & Eckler LLP
	100 South Third Street
	Columbus, Ohio 43215
	Attention: John W. Cook III

ARTICLE 12.
EXPENSES

Any transfer, documentary, sales, use, stamp, registration and other such Taxes and fees (including recording fees) incurred in connection with this Agreement and the transactions contemplated hereby and thereby (“Transfer Taxes”) shall be paid one-half (1/2) by Seller and one-half (1/2) by Buyer when due, and Seller will file all necessary Tax returns and other documentation with respect to all such transfer, documentary, sales, use, stamp, registration and other Taxes and fees (including recording fees), if required by applicable Law. The expense of preparing and making such filing or filings shall be borne by Seller. Seller shall pay for the cost of deed preparation in connection with the sale of the Property. Buyer shall pay for the cost of any title insurance purchased by Buyer with respect to the Property. Any other miscellaneous Closing expenses properly allocable to both parties shall be paid for by Buyer and Seller as to one-half (1/2) each. Each party shall pay for its own legal and accounting fees and incidental expenses.

ARTICLE 13.
MISCELLANEOUS

13.1 Gender. Words of any gender used in this Agreement shall be held and construed to include any other gender, any words in the singular number shall be held to include the plural, and vice versa, unless the context requires otherwise.

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13.2 Captions. The captions in this Agreement are inserted only for the purpose of convenient reference and in no way define, limit, or prescribe the scope or intent of this Agreement or any part hereof.

13.3 Recording. The parties agree that this Agreement shall not be recorded.

13.4 No Continuance. Buyer acknowledges that there shall be no assignment, transfer or continuance of any of Seller’s insurance coverage.

13.5 Time of Essence. Time is of the essence in this Agreement.

13.6 Counterparts. This Agreement may be executed in any number of counterparts and any party hereto may execute any such counterpart, each of which when executed and delivered shall be deemed to be an original and all of which counterparts taken together shall constitute but one and the same instrument. This Agreement shall become binding when one or more counterparts taken together shall have been executed and delivered by the parties. It shall not be necessary in making proof of this Agreement or any counterpart hereof to produce or account for any of the other counterparts.

13.7 Entire Agreement. This Agreement, including the Exhibits, Schedules and other documents referred to herein which form a part hereof, and the Purchase Agreement, contain the entire understanding of the parties hereto with respect to the subject matter contained herein and therein. Such agreements, documents and instruments supersede all prior agreements and understandings between the parties with respect to such subject matter, including the Letter of Intent dated June 6, 2009 between LSI Industries, Inc. and Sellers.

13.8 Amendments; Waivers. This Agreement may not be changed orally, but only by an agreement in writing signed by each of the parties hereto. Any provision of this Agreement can be amended, supplemented or modified only by written agreement of each of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed, or shall constitute, a waiver of any other provision, whether or not similar, nor shall any waiver constitute a continuing waiver. No waiver shall be binding unless executed in writing by the party making the waiver.

13.9 Assignment and Binding Effect. This Agreement may not be assigned by any party hereto without the prior written consent of the other parties, except by Buyer to any of its Affiliates or in connection with the merger, consolidation or sale of all or substantially all of its business or assets. Subject to the foregoing, all of the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties and their successors and permitted assigns and their respective, executors, heirs, legal representatives. The parties expressly acknowledge and agree that Buyer may designate one or more of its Affiliates to acquire the Property or portion of the Property, provided however, Seller and Buyer shall continue to remain responsible for their obligations under this Agreement.

13.10 Construction. This Agreement is to be deemed to have been prepared jointly by the parties hereto after arms-length negotiations, and any uncertainty or ambiguity existing herein shall not be interpreted against any party, but according to the application of the rules of interpretation of contracts.

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13.11 Governing Law. The Agreement shall be governed by and construed in accordance with the laws of the State of Ohio without regard to its conflict of law provisions.

13.12 Submission to Jurisdiction; Waiver. Each of the parties hereto irrevocably agrees that any legal action or proceeding with respect to this Agreement or for the recognition and enforcement of any judgment in respect hereof brought by any other party hereto or its or his executors, heirs, legal representatives, successors or permitted assigns may be brought and determined in any federal or state court located in Hamilton County, Ohio, and each of the parties hereby irrevocably submits with regard to any action or proceeding for itself and himself and in respect to its or his property, generally and unconditionally, to the exclusive jurisdiction of the aforesaid courts. Each of the parties hereby irrevocably waives and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any action or proceeding with respect to this Agreement (a) any claim that it or he is not personally subject to the jurisdiction of the above-named courts for any reason other than the failure to lawfully serve process, (b) that it or he or its or his property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise), and (c) to the fullest extent permitted by applicable Law, that (i) the suit, action or proceeding in any such court is brought in an inconvenient forum, (ii) the venue of such suit, action or proceeding is improper and (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.

13.13 Waiver of Jury Trial. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED IN CONTRACT, TORT OR OTHERWISE) ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY AGREEMENT, DOCUMENT OR INSTRUMENT EXECUTED OR DELIVERED PURSUANT TO THIS AGREEMENT OR ANY RELATED DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENT OF ACTION RELATED HERETO OR THERETO.

13.14 Non-Merger and Survival. In addition to the specific language of non-merger or survival found in certain sections of this Agreement, any provision hereof which by its terms would be performed after Closing shall survive the Closing and shall not merge in the Closing or in the deed, except as specifically provided to the contrary herein.

Remainder of Page Intentionally Blank. Signatures to Follow.

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Seller and Buyer have executed duplicate originals of this Real Estate Purchase Agreement as of the day and year first written above.

SELLER: KELMILFEEN LTD., an Ohio limited liability company
By:	/s/ Craig A. Miller
	Name:	Craig A. Miller
	Title:	President
BUYER: LSI ACQUISITION INC., an Ohio corporation.
By:	/s/ Ronald S. Stowell
	Ronald S. Stowell
	Secretary and Treasurer

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EXHIBIT A

PROPERTY DESCRIPTION

Situate in the City of Columbus, County of Franklin, in the State of Ohio and being further described as:

Being Lot Number Three (3) of Scioto Industrial Park, as the same is numbered and delineated upon the recorded plat thereof, of record in Plat Book 54, Page 41, Record’s Office, Franklin County, Ohio.

EXHIBIT B

LIST OF PERSONAL PROPERTY

EXHIBIT C

PERMITTED EXCEPTIONS

Provisions of existing building and zoning laws, restrictions and regulations of all Governmental Authorities having jurisdiction and all zoning variances and special exceptions, if any.

Such Taxes for the calendar year in which the Closing takes place (or portion of such Taxes) as are not due and payable on the date of the delivery of the Deed.

Any Encumbrances for municipal betterments ratified, approved and assessed but not due as of the date of the Closing.

All recorded agreements, covenants, conditions, easements, restrictions or reservations affecting the Land or the Improvement as of the date hereof.

Minor survey exceptions, reciprocal easement agreements and other customary encumbrances that (i) were not incurred in connection with any Indebtedness, (ii) do not render title to the Land or the Improvement encumbered thereby unmarketable and (iii) do not, individually or in the aggregate, have a Material Adverse Effect on the Land or the Improvement.

Mortgage from Kelmilfeen, Ltd., an Ohio limited liability company to National City Bank in the amount of $1,211,000.00 dated August 2, 2007 and recorded August 15, 2007 in Instrument No. 200708150143978 of the Franklin County, Ohio Records.

EXHIBIT D

MORTGAGE LOAN DOCUMENTS

1. Promissory Note by Seller in favor of National City Bank in the Principal Amount of $1,211,000.00, dated August 2, 2007.

2. Funding Cost Recovery Addendum by Seller in favor of National City Bank, dated August 2, 2007.

3. Open-End Mortgage by Seller in favor of National City Bank, dated August 2, 2007, recorded with the Franklin County, Ohio Recorder (the “Recorder”) as Instrument No. 200708150143978.

4. Assignment of Rents by Seller in favor of National City Bank, dated August 2, 2007, recorded with the Recorder as Instrument No. 200708150143979.

5. Agreement to Provide Insurance by Seller in favor of National City Bank, dated August 2, 2007.

6. Promissory Note by Seller in favor of National City Bank in the Principal Amount of $200,000, dated April 13, 2005, as modified by that certain Promissory Note Modification Agreement dated as of September 23, 2005 by and between Seller and National City Bank, increasing the Principal Amount to $600,000.

7. Funding Cost Recovery Addendum by Seller in favor of National City Bank, dated April 13, 2005.

8. Commercial Note Addendum by Seller in favor of National City Bank, dated April 13, 2005.

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EX-99.1

Exhibit 99.1

	CONTACT:	BOB READY OR
FOR IMMEDIATE RELEASE		RON STOWELL
DATE: JULY 22, 2009		(513) 793-3200

LSI INDUSTRIES INC. COMPLETES ACQUISITION OF
AdL TECHNOLOGY AND RELATED COMPANIES

Cincinnati, OH; July 22, 2009 — LSI Industries Inc. (NASDAQ: LYTS) today announced it has completed the acquisition of AdL Technology and related companies (AdL Engineering and Kelmilfeen), privately owned and based in Columbus, Ohio. Consideration for the asset purchase of these businesses consisted of 2,469,676 shares of LSI’s unregistered common stock, cash of $1,328,000, and assumed indebtedness of $3,526,000. The management team of AdL has entered into employment agreements and will continue in their current positions to manage the business for LSI.

AdL Technology engineers and manufactures custom designed circuit boards, assemblies, and sub-assemblies used in various applications including the control of solid-state lighting. AdL has a history of profitable operations and the acquisition is expected to be accretive before giving effect to one-time transaction costs and non-cash amortization expenses.

Commenting on the completed acquisition, Robert J. Ready, President and Chief Executive Officer, stated, “We are very pleased to welcome AdL to the family of LSI companies and look forward to many meaningful contributions, particularly as they relate to our solid-state LED lighting initiatives.” As stated in our earlier press release, “So as to further establish and advance our leadership position in LED lighting, we made the decision to vertically integrate our capabilities in connection with designing, engineering, and producing the solid-state electronics that control and power LEDs. For the past two years, we and our Montreal-based engineers at LSI Saco Technologies have been working with the talented engineering and manufacturing people at AdL Technology. As part of the LSI family, AdL will allow us to stay on the leading edge of product development while at the same time providing opportunities to drive down manufacturing costs and control delivery of key components. AdL’s capabilities will also have applications in our other LED product lines such as digital scoreboards, and advertising ribbon boards and billboards...”

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995:

This document contains certain forward-looking statements that are subject to numerous assumptions, risks or uncertainties. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. Forward-looking statements may be identified by words such as “estimates,” “anticipates,” “projects,” “plans,” “expects,” “intends,” “believes,” “seeks,” “may,” “will,” “should” or the negative versions of those words and similar expressions, and by the context in which they are used. Such statements are based upon current expectations of the Company and speak only as of the date made. Actual results could differ materially from those contained in or implied by such forward-looking statements as a result of a variety of risks and uncertainties. These risks and uncertainties include, but are not limited to, the impact of competitive products and services, product demand and market acceptance risks, reliance on key customers, financial difficulties experienced by customers, the adequacy of reserves and allowances for doubtful accounts, fluctuations in operating results or costs, unexpected difficulties in integrating acquired businesses, and the ability to retain key employees of acquired businesses. The Company has no obligation to update any forward-looking statements to reflect subsequent events or circumstances.

About the Company

LSI Industries is an Image Solutions company, dedicated to advancing solid-state LED technology in lighting and graphics applications. We combine integrated technology, design, and manufacturing to supply high quality, environmentally friendly lighting fixtures and graphics elements for commercial, retail and specialty niche market applications. LSI is a U.S. manufacturer with marketing / sales efforts throughout the world with concentration currently on North American, South American, Asian, Australian, New Zealand and European markets.

Building upon its success with the Crossover^® LED canopy fixture, LSI’s Lighting Segment is committed to producing affordable, high performance, energy efficient lighting products, including solid-state LED light fixtures, for indoor and outdoor use. The Graphics Segment designs, produces, markets and manages a wide array of custom indoor and outdoor graphics programs including signage, menu board systems, decorative fixturing, LED displays and digital signage, and large format billboard and sports screens using solid-state LED technology. In addition, we provide design support, engineering, installation and project management for custom rollout programs for today’s retail environment. The Company’s technology R&D operation located in Montreal, Canada designs, produces and supports high performance light engines and large format billboard, sports and entertainment video screens using solid-state LED technology.

LSI’s major markets are the commercial / industrial lighting, petroleum / convenience store, multi-site retail (including automobile dealerships, restaurants and national retail accounts), sports and entertainment markets. LSI employs approximately 1,200 people in facilities located in Ohio, New York, North Carolina, Kansas, Kentucky, Rhode Island, Tennessee, Texas and Montreal, Canada. The Company’s common shares are traded on the NASDAQ Global Select Market under the symbol LYTS.

For further information, contact either Bob Ready, Chief Executive Officer and President, or Ron Stowell, Vice President, Chief Financial Officer, and Treasurer at (513) 793-3200.

Additional note: Today’s news release, along with past releases from LSI Industries, is available on the Company’s internet site at www.lsi-industries.com or by email or fax, by calling the Investor Relations Department at (513) 793-3200.

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