Document:

Escrow Agreement

 Exhibit 10.1 
 ESCROW AGREEMENT 
 This Escrow Agreement (“Escrow Agreement”) is dated as of the
26th day of June, 2006 among SACO TECHNOLOGIES INC., a corporation incorporated under the Canada Business Corporation Act, (“Saco”), LSI INDUSTRIES INC., an Ohio corporation (“LSI”), and THE BANK OF NEW YORK TRUST
COMPANY, N.A., as escrow agent (the “Escrow Agent”). 
 BACKGROUND 
 WHEREAS, LSI, Saco and certain Affiliates of Saco have entered into a Stock Purchase Agreement dated as of even date herewith (the “Purchase
Agreement”) pursuant to which LSI has purchased all of the issued and outstanding stock of 4349466 Canada, Inc., a corporation incorporated under the Canada Business Corporation Act; 
 WHEREAS, pursuant to the terms of the Purchase Agreement, LSI and Saco have agreed that One Million Four Hundred and Nineteen Thousand Three Hundred
Fifty Five (1,419,355) LSI Common Shares (the “Escrow Shares”) issued to Saco 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 September 30, 2008, and to serve, in the interim, as security for the “Sellers’” and the “Shareholders’” obligations under the Purchase Agreement; and 
 WHEREAS, in accordance with the provisions of the Purchase Agreement, Escrow Agent is designated to act as the escrow agent for the parties hereto under
the terms of this Escrow 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 Saco hereby designate The Bank of New York
Trust Company, N.A. as “Escrow Agent” under this Escrow Agreement. LSI and Saco have delivered to the Escrow Agent a copy of the Purchase Agreement, which agreement is attached hereto as Exhibit A. LSI, in accordance with the terms
of Section 2.2 of the Purchase Agreement, hereby delivers to the Escrow Agent certificates in the name of Saco evidencing the Escrow Shares (the “Deposit”). Saco hereby delivers to the Escrow Agent duly executed stock powers of
Saco covering the Escrow Shares (the “Stock Transfer Powers”). 
 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) 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 or other income, 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 prior to the receipt by Escrow Agent of any Notice of Claim shall be paid promptly to
Saco and shall not become part of the Escrow Fund; provided further, after the receipt by Escrow Agent of any Notice of Claim, all cash dividends earned on or with respect to the Escrow Shares received by the 

 
Escrow Agent shall be added to the Deposit. Upon written request of Saco, 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. 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 portion 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 Saco 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, Saco shall retain all of its 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 the written notice provided in 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 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 any failure to act) in good faith. 
 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 Saco 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 Saco to the contrary, no statement need be rendered pursuant to this Escrow
Agreement if no activity occurred for such month. LSI and Saco 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. 
 5. Compensation of 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 B; provided, however, that the Escrow Agent shall, to the extent practicable, give reasonable prior written notice of its intention to engage counsel to Saco and LSI. 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 Saco. The Escrow Agent shall have, and
is hereby granted, a prior lien upon any property, cash, or 

  

 2 

 
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. 
 6. Resignation; Disagreements. 
 (a) The Escrow Agent may resign from all further
duties and liabilities hereunder as escrow agent by giving to Saco and LSI written notice of such resignation at least 60 days prior to the effective date thereof, or such shorter notice as Saco and LSI may accept as sufficient. Saco 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, Saco and LSI may appoint a new escrow agent, and, failing such
appointment, the retiring escrow agent may apply to any court of competent jurisdiction in the State of New York for the appointment of a new escrow agent. Upon the appointment of a new escrow agent, the Escrow Agent shall transfer the Escrow Fund
to such new escrow agent. 
 (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, 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 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 Saco and LSI hereto directing delivery of the Escrow Fund, in which event 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 seeking distribution of the Escrow Fund satisfactory to Escrow Agent to the effect that the order is final and
non-appealable. 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), this Escrow Agreement shall terminate upon
the earlier of (i) September 30, 2008 or (ii) the date upon which the Escrow Agent shall have distributed all of the Escrow Fund as provided herein. 
 (b) If, on or prior to September 30, 2008, LSI shall not have delivered to the Escrow Agent and Saco a Notice of Claim (as defined in
Section 7(g)below), with respect to the Escrow Fund, the Escrow Fund shall be promptly released and delivered in its entirety to Saco by the Escrow Agent. 
 (c) If, on or prior to September 30, 2008, LSI shall have delivered a Notice of Claim to the Escrow Agent and Saco, and Saco shall
not have disputed the Notice of Claim 

  

 3 

 
in writing within 15 business days after its receipt of the Notice of Claim, the amount of the indemnity claim specified in LSI’s 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 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. 
 (d) If, on or prior to
September 30, 2008, LSI shall have delivered a Notice of Claim to Saco and the Escrow Agent and Saco shall have disputed the Notice of Claim in writing within 15 business days after its receipt of the Notice of Claim, 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 Saco even if the resolution of the dispute occurs after September 30, 2008 and shall distribute the portion so retained either pursuant to joint written instructions from LSI and Saco 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 the 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 Saco that the Notice of Claim is being disputed. 
 (e) On each of the dates set forth
below, the Escrow Agent shall release such number of LSI Common Shares constituting Escrow Shares set forth opposite such date (each, a “Release Date”): 
  

			
	 Release Date
	  	 Escrow Shares
 to be Released

	 September 30, 2006
	  	419,355
	 September 30, 2007
	  	500,000
	 September 30, 2008
	  	500,000

 ; provided, however, if a Notice of Claim has been delivered to the Escrow Agent prior to the
applicable Release Date the Escrow Agent shall release only those number of Escrow Shares less (i) the number of Escrow Shares equal to the amount of indemnity claims specified in any and all Notice of Claims delivered to the Escrow Agent prior
to the applicable Release 

  

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Date and (ii) the number of Escrow Shares previously released to Saco pursuant to Section 7(f). 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 Saco, the Escrow Agent shall distribute to Saco the portion of the Escrow Fund equal to the amount of indemnity claims specified in any and all Notice of
Claims delivered to the Escrow Agent prior to the applicable Release Date, less the amount which is finally determined as due and owing to LSI. 
 (f) Notwithstanding anything in this Escrow Agreement to the contrary, if at any time prior to September 30, 2008, LSI concludes, based on the determination of LSI’s Board of Directors, after consulting with
legal counsel and other experts retained by LSI, that no claim for indemnification by any Indemnified LSI Party is likely to arise out of the Sellers’ or the Company’s infringement upon, misappropriation of, or conflict with the
Intellectual Property rights of third parties, LSI shall give written notice to the Escrow Agent of such determination and authorize the release of the entire amount of the Escrow Fund, except for 290,000 LSI Common Shares which such amount shall
remain subject to the terms of this Escrow Agreement until September 30, 2008. 
 (g) For purposes of this Escrow
Agreement, a “Notice of Claim” is a written notice by LSI to Escrow Agent, with a copy thereof to Saco, stating (i) that LSI is asserting a claim for indemnification in respect of the Escrow Fund against the Sellers and/or the
Shareholders pursuant to the indemnification provisions contained in the Purchase Agreement, (ii) the nature of the claim, and (iii) LSI’s reasonable estimate of the amount of damages expected to be incurred in conjunction with the
claim for which indemnification is available to LSI under the Purchase Agreement. 
 (h) Any release or disbursement of Escrow
Shares in accordance with this Section 7 shall be made by delivering the share certificates representing such Escrow Shares to the designated party. In the event of disbursement to LSI, the Escrow Agent shall also deliver to LSI an appropriate
Stock Transfer Power, completed with the amount of Escrow Shares being disbursed to LSI. 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. Saco hereby appoints the Escrow Agent, as Saco’s attorney-in-fact to act, in the name, place and stead of Saco to (i) execute and complete additional Stock Transfer Powers, (ii) to take any
actions or exercising any rights, powers or privileges that Saco is entitled or required to take or exercise under the terms of any 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 Saco to transfer Saco’s right, title and interest in and to the LSI Common Shares.
Notwithstanding anything to the contrary, a disbursement of any Escrow Shares to LSI shall, if accompanied by delivery of the 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. 
  

 5 

 (i) 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. 
 (j) Notwithstanding any obligation of the Escrow Agent to disburse Escrow Shares to LSI pursuant
to this Escrow Agreement, the Escrow Agent is hereby authorized by Saco and LSI to sell any Escrow Shares to any third party on commercially reasonable terms and conditions and remit to the LSI, instead of the Escrow Shares to which LSI is entitled,
the consideration received by the Escrow Agent with respect to such shares; provided that the Escrow Agent shall have received from counsel to LSI a legal opinion providing that such sale is registered or exempt from registration under applicable
securities laws. 
 (k) The parties hereto acknowledge and agree that the delivery of the proceeds of the sale of Escrow
Shares is subject to the sale and final settlement of such Escrow Shares. Proceeds of a sale of Escrow Shares will be delivered on the business day on which the sale of such Shares is settled. If written instructions to sell Escrow Shares are
received by the Escrow Agent pursuant to Section 2 after the applicable deadline on a Business Day, such Escrow Shares will be sold (to the extent commercially reasonable) on the next succeeding Business Day. The Escrow Agent shall not be
responsible for any losses incurred due to market price fluctuations occurring between the time of receipt by the Escrow Agent of a written instruction to sell Escrow Shares and the time of the actual sale of such Escrow Shares, provided that such
sale takes place within a reasonable time. 
 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 and Saco 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 Escrow Agreement except to the extent caused by or arising out of 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 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. 
 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 Escrow Agent’s gross negligence, willful misconduct or fraud or except
for a failure to comply with 

  

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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. 
 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 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 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 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. 
 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 Saco:	  	Saco Technologies Inc.
		  	260 Strathcona
		  	Mont-Royal, QC
		  	H3R 1E7
		  	Facsimile No.: (514) 745-1299

  

 7 

			
	with a copy to:	  	Davies Ward Phillips & Vineberg LLP
		  	1501 McGill College Avenue, 26th Floor
		  	Montréal QC Canada H3A 3N9
		  	Attention: Denis Ferland, Esq.
		  	Facsimile No.: (514) 841-6499
		
	If to LSI:	  	LSI Industries 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: Paul V. Muething, Esq.
		  	Facsimile No.: (513) 579-6457
		
	If to Escrow Agent:	  	The Bank of New York Trust Company, N.A.
		  	525 Vine Street, Suite 900
		  	Cincinnati, Ohio 45202
		  	Attention: Geoffrey Anderson
		  	Facsimile No.: (513) 721-3240

 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. Saco agrees that, for purposes of federal and other taxes based on income, Saco will be treated as the owner of
the Escrow Shares and that Saco will report all income, if any, that is earned on, or derived from the Escrow Shares as its income in the taxable year or years in which such income is properly includible and pay any taxes attributable thereto.

 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, 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. 
  

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 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) 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. This Escrow Agreement is made under, and shall be construed and enforced in accordance with, the laws of the State of New York applicable to agreements made and to be performed solely therein, without giving effect to principles of
conflicts of law. 
 18. Definitions. To the extent not specifically defined herein, all terms used herein shall have the meanings
ascribed to them in the Purchase Agreement. 
 19. 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 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 INDUSTRIES INC.
		
	By:	 	/s/ Ronald S. Stowell
	 Name:
 Title:
	 	 Ronald S. Stowell
 Vice President, Chief Financial
Officer and Treasurer

	
	SACO TECHNOLOGIES INC.
		
	By:	 	/s/ Fred Jalbout
	 Name:
 Title:
	 	 Fred Jalbout
 President

	
	THE BANK OF NEW YORK TRUST COMPANY, N.A.
		
	By:	 	/s/ Geoffrey D. Anderson
	Name:	 	Geoffrey D. Anderson
	Title:	 	Assistant Vice President

  

 10 

 EXHIBIT “A” 
 Purchase Agreement 
  

 11 

 EXHIBIT “B” 
 Escrow Agent Fees 
 

 
 THE BANK OF NEW YORK TRUST COMPANY, N.A. 
 Proposal to serve as Escrow Agent for 
 LSI Industries, Inc./Saco Technologies Inc.

 Escrow Deposit Agreement 
 Fee Schedule 

 Upon appointment of BNY as Escrow Agent, LSI Industries, Inc. and Saco
Technologies Inc. shall be responsible for their prorata share (50%) of the fees, expenses and charges as set forth in this Fee Schedule. 
  

				
	 ACCEPTANCE FEE:
	  	$	2,500
	 ANNUAL FEE:
	  	$	2,500

 The acceptance fee is a one-time charge (nonrecurring fees unless considered extraordinary see below) per issue
and is payable at the time of closing and includes: 

	•	 	Initial Review of Escrow Deposit Agreement including that of internal counsel 

	•	 	Initial Escrow Trust Account Set-up 

	•	 	Initial Receipt and Investment of escrowed funds or escrowed holdings 

 The annual fee includes the following and is billed in annually in advance: 

	•	 	Statements of Account/Trust Reports when applicable 

	•	 	Asset Principal and Income Collection 

	•	 	Audit Confirmations when applicable 

	•	 	Distribution of Funds or escrowed holdings as directed in the escrow agreement 

 INVESTMENT FEES: 
 We will charge a 25 basis point fee for investment management. BNYTC may also receive compensation (12b1 fee) from
the money fund provider. The 12b1 fee compensates BNYTC for handling the record keeping activities associated with any deposits held. We offer a variety of U.S. Treasury, Government and Prime Money Funds from fund families such as Fifth Third Bank,
BNY Hamilton, Goldman Sachs, Federated to name a few. 
  

 12Registrant Rights Agreement

 Exhibit 10.2 
 REGISTRATION RIGHTS AGREEMENT 
 DATED AS OF JUNE 26, 2006 
 BY AND BETWEEN 
 LSI INDUSTRIES INC.

 AND 
 SACO
TECHNOLOGIES INC. 

 TABLE OF CONTENTS 
  

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

  

 - i - 

 REGISTRATION RIGHTS AGREEMENT 
 This REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is entered into as of June 26, 2006 by and between LSI INDUSTRIES INC., an
Ohio corporation (the “Company”), and SACO TECHNOLOGIES INC., a corporation incorporated under the Canada Business Corporation Act (the “Holder”). Capitalized terms used but not otherwise defined herein have the
meanings given to them in the Stock Purchase Agreement (as hereinafter defined). 
 WITNESSETH: 
 WHEREAS, pursuant to that certain Stock Purchase Agreement (the “Stock Purchase Agreement”), dated as of even date herewith, by and
among the Company, Jalbout Holdings Inc., 3970957 Canada, Inc., the Holder, 4349466 Canada Inc. (the “Acquired Company”), Fred Jalbout and Bassam Jalbout, the Holder sold the Purchased Shares and the Promissory Note to the Company
in consideration for the Purchase Price; and 
 WHEREAS, the Holder was induced in part to enter into the Stock 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)	“Holder” 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)	“Mandatory Registration” has the meaning set forth in Section 2.1(a); 

  

	 	(i)	“Registrable Security” means any LSI Common Shares constituting the stock consideration pursuant to the Stock Purchase Agreement (including such LSI Common Shares
held in escrow pursuant to the Stock Purchase Agreement and the Escrow Agreement) and held by the Holder. 

  

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

  

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

  

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

 
ARTICLE 2 
 REGISTRATION RIGHTS 
 
2.1 Mandatory Registration. 
 (a) Registration Requirement. The Company hereby agrees to
file a registration statement on Form S-3 (or any successor or similar short-form registration) with the Commission to effect the registration under the Securities Act of all of the Registrable Securities for resale by the Holder no later than
thirty (30) days after the date on which the Company files with the Commission its annual report on Form 10-K with respect to the fiscal year ended June 30, 2006 (the “Mandatory Registration”); provided,
however, in any event, the Company shall file the registration statement with respect to the Mandatory Registration with the Commission pursuant to Section 3.1 no later than October 15, 2006. 
 (b) Effective Registration Statement. A registration effected pursuant to Section 2.1 and Section 3.1 will not be deemed to have been
effected unless it has become effective and has remained continuously effective until the earliest to occur of (such date being referred to herein as the “Termination Date”): (i) a registration statement covering the Registrable
Securities in accordance with this Agreement has been declared effective by the Commission and such Registrable Securities have been disposed of pursuant to such effective registration statement, (ii) the Registrable Securities are sold
pursuant to Rule 144 or Rule 145 (or any similar provisions then in force) under the Securities Act or (iii) the Registrable Securities held by the Holder can be sold pursuant to Rule 144 or Rule 145 (or any similar provisions then in force)
without regard to the volume limitations set forth in Rule 144 or Rule 145 (or any similar provisions then in force), as applicable. 
  

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ARTICLE 3 
 REGISTRATION PROCEDURES 
 
3.1 Filings; Information. 
 Whenever any Registrable Securities are to be registered pursuant to
this Agreement: 
  

	 	(a)	The Company will as expeditiously as possible in accordance with Section 2.1(a) (i) prepare and file with the Commission a registration statement on (i) Form S-3 with
respect to the Mandatory Registration or (ii) if Form S-3 is not available, any form for which the Company then qualifies or which counsel for the Company shall deem appropriate and which form shall be available for the sale of the Registrable
Securities to be registered thereunder in accordance with the intended method of distribution reasonably acceptably to the Holder and the Company (provided such distribution shall not consist of an underwritten public offering), and the Company
shall use its best efforts to cause such filed registration statement to become effective as soon as practicable in accordance with this Agreement. 

  

	 	(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 securities covered by such registration statement in accordance with the intended method of
distribution in accordance with Section 3.1(a) until the Termination Date. 

  

	 	(c)	The Company will, prior to filing a registration statement or prospectus or any amendment or supplement thereto, furnish to the Holder and its counsel copies of such registration
statement as proposed to be filed, together with exhibits thereto, which documents will be subject to review by the foregoing within three (3) Business Days after delivery, and thereafter furnish to the Holder and its 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 Holder may reasonably request in order to facilitate the disposition of the Registrable Securities owned by the Holder. 

  

	 	(d)	After the filing of the registration statement, the Company will promptly notify the Holder 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. 

  

	 	(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

  

 - 3 - 

 United States and such other jurisdictions (including in Canada) as the Holder reasonably (in light of
the 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 and Canada as may be necessary by
virtue of the business and operations of the Company and the Holder’s intended plan of distribution and do any and all other acts and things that may be reasonably necessary or advisable to enable the Holder to consummate the disposition of the
Registrable Securities owned by the Holder. 
  

	 	(f)	The Company will immediately notify the Holder 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 Holder any such supplement or amendment. 

  

	 	(g)	The Company will deliver promptly to the Holder, 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 Holder
appropriate officers of the Company to answer any questions that the Holder 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 under all applicable securities laws in Canada and the rules and
regulations of all securities regulatory authorities in Canada and, 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 and laws and rules of similar effect in Canada. 

  

	 	(i)	The Company will use its best efforts to cause all Registrable Securities to be listed on the NASDAQ National Market or, upon, The Nasdaq Stock Market, Inc.’s registration
as a national securities exchange, the NASDAQ Global Market (which will be the successor to the NASDAQ National Market). 

  

	 	(j)	The Company may require the Holder 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. 

  

 - 4 - 

	 	(k)	The 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(g) hereof, the Holder will forthwith
discontinue disposition of Registrable Securities pursuant to the registration statement covering such Registrable Securities until the Holder’s receipt of the copies of the supplemented or amended prospectus contemplated by Section 3.1(g)
hereof, and, if so directed by the Company the Holder will deliver to the Company all copies, other than permanent file copies then in the 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(g) hereof to the date when the Company shall make available to the Holder covered by such registration statement a prospectus
supplemented or amended to conform with the requirements of Section 3.1(g) hereof. 

 
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 Holder, as may be chosen by the Holder, and customary fees and expenses for independent certified public accountants retained by the Company
(including the expenses of any comfort letters or costs associated with the delivery by independent certified public accountants of a comfort letter or comfort letters requested pursuant to Section 3.1 hereof), 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. 
 
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 the Holder, its officers, directors, employees and agents, and each person, if any, who controls the 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, 
  

 - 5 - 

 any loss, claim, damage, liability or action relating to purchases and sales of LSI Common Shares) to which the 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 the Holder and each such officer, director, employee, agent and controlling Person for any legal and other
expenses reasonably incurred by the 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 the Holder expressly for use therein; provided, however, that the Company shall not be liable to the 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 the Holder furnished to the Company by the 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 the 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 the Holder if the 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 the 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 Holder (which
consent shall not be unreasonably withheld or delayed). 
 
4.2 Indemnification by the Holder. 
 To the fullest extent permitted by law, the Holder 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 the Holder pursuant to
clauses (i) and (ii) of Section 4.1, but only with reference to information related to the Holder furnished in writing by the Holder or on the 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 Holder from the sale of Registrable 
  

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 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 the 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. 
 
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 Holder, on the other, in such proportion as is appropriate to reflect the relative fault of the Company and of
the Holder 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 Holder, 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 
  

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 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 Holder 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 Holder 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 Holder has 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 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 the Holder may reasonably request, all to the extent required from time to time to enable the 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 the Holder, the Company will deliver to the Holder a written statement as to whether it has complied with such requirements. 
 
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 Holder 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 Holder 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 
  

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 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 Holder 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 Holder to Fred Jalbout or Bassam Jalbout, 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 Holder. 
 (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. 
 
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 
  

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 with a copy to: 
 Keating Muething & Klekamp PLL 
 One East Fourth Street, Suite 1400 
 Cincinnati, Ohio 45202 
 Attention: Paul V. Muething 
 Facsimile No.:(513) 579-6457 
  

	 	(ii)	if to the Holder: 

 Saco Technologies Inc.

 260 Strathcona 
 Mont-Royal, QC 
 H3R 1E7 
 Attention: Fred Jalbout 
 Facsimile No.: (514) 745-1299 
 with a copy to: 
 Davies Ward Phillips & Vineberg LLP 
 1501 McGill College Avenue, 26th Floor 
 Montreal, Quebec, Canada H3A 3N9 
 Attention: Denis Ferland 
 Facsimile No.: (514) 841-6499 
 
5.6 Terms of Agreement. 
 This Agreement shall terminate at such time as the 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 
  

 - 10 - 

 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. 
 
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. 
  

 - 11 - 

 
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.] 
  

 - 12 - 

 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
	
	SACO TECHNOLOGIES INC.
		
	By:	 	 /s/ Fred Jalbout
  

	Name:	 	Fred Jalbout
	Title:	 	President

  

 - 13 - 

 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 June 26, 2006 (the “Agreement”), by and between LSI Industries Inc. and Saco
Technologies Inc. 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:	 	  

  

 - ii -

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