PURCHASE AND SALE AGREEMENT

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

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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.

“ 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.

“ 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.

“ 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.

“ 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.

“ 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.

“ 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).

“ 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.

“ 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.

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;

(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.

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;

(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.

(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

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.

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.

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.

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.

(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;

(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.

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 bank