Exhibit 10.6

 

THIRD AMENDMENT TO TERM LOAN AGREEMENT

 

This THIRD AMENDMENT TO TERM LOAN AGREEMENT (this “Amendment”), is entered into
as of September 10, 2015, by and among Lighting Science Group Corporation, a
Delaware corporation (the “Borrower”), the Lenders (as defined below) signatory
hereto, and Medley Capital Corporation, a Delaware corporation (“Medley”), as
administrative agent for the Lenders (in such capacity, together with its
successors and assigns in such capacity, the “Agent”).

 

W I T N E S S E T H:

 

WHEREAS, the Borrower, the lenders from time to time party thereto (“Lenders”)
and the Agent are parties to that certain Term Loan Agreement dated as of
February 19, 2014, as amended by the First Amendment to Term Loan Agreement
dated as of April 25, 2014 and by the Limited Consent and Second Amendment to
Term Loan Agreement dated as of January 30, 2015 (as amended hereby and as may
be further amended, restated, supplemented or otherwise modified from time to
time, the “Loan Agreement”);

 

WHEREAS, Borrower, Agent and Lender desire to amend the Loan Agreement, on the
terms and subject to the conditions set forth.

 

NOW, THEREFORE, in consideration of the foregoing and for other good and valid
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows:

 

1.     Defined Terms. Capitalized terms used but not defined herein shall have
the respective meanings ascribed to such terms in the Loan Agreement.

 

2.     Amendments to Loan Agreement. Upon satisfaction of the conditions to
effectiveness set forth in Section 4 below, the Loan Agreement is hereby amended
as follows:

 

(a)     Section 2.4(e)(vi)(B) of the Loan Agreement is hereby amended by
deleting such Section in its entirety and replacing it with the following:

 

“(B)      At least one (1) Business Day prior to the date that Borrower redeems
any Equity Interests permitted by Section 6.7(a)(ii), Borrower shall prepay the
outstanding principal of the Obligations in accordance with Section 2.4(f) in an
amount equal to the outstanding Obligations.”

 

(b)     Section 7.1 of the Loan Agreement is hereby amended by replacing the
table set forth in such Section with the following table in lieu thereof: 

 

 
 

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Fiscal Quarter

Minimum EBITDA

September 30, 2015

-($4,800,000); provided, that for the twelve-month period ending on September
30, 2015, EBITDA, for the purposes of calculating compliance with this Section
7.1 and for no other purpose, shall be increased by Eight Million Thirty Three
Thousand and Seven Hundred and Fifty Dollars ($8,033,750)

December 31, 2015

$5,200,000; provided, that for the twelve-month period ending on December 31,
2015, EBITDA, for the purposes of calculating compliance with this Section 7.1
and for no other purpose, shall be increased by Ten Million Five Hundred Thirty
Three Thousand and Seven Hundred and Fifty Dollars ($10,533,750)

March 31, 2016

EBITDA projected for such fiscal quarter in Borrower’s Projections delivered in
accordance with clause (e) of Schedule 5.1(a) to the extent reasonably
satisfactory to Agent; less an amount equal to 25% of such projected EBITDA for
such fiscal quarter; provided, that for the twelve-month period ending on March
31, 2016, EBITDA, for the purposes of calculating compliance with this Section
7.1 and for no other purpose, shall be increased by Four Million Dollars
($4,000,000)

June 30, 2016

EBITDA projected for such fiscal quarter in Borrower’s Projections delivered in
accordance with clause (e) of Schedule 5.1(a) to the extent reasonably
satisfactory to Agent; less an amount equal to 25% of such projected EBITDA for
such fiscal quarter; provided, that for the twelve-month period ending on June
30, 2016, EBITDA, for the purposes of calculating compliance with this Section
7.1 and for no other purpose, shall be increased by Four Million Dollars
($4,000,000)

Each fiscal quarter thereafter

EBITDA projected for such fiscal quarter in Borrower’s Projections delivered in
accordance with clause (e) of Schedule 5.1(a) to the extent reasonably
satisfactory to Agent; less an amount equal to 25% of such projected EBITDA for
such fiscal quarter

 

 

 
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(c)     Section 8.3 of the Loan Agreement is hereby amended by deleting such
Section in its entirety and replacing it with the following:

 

 

“8.3     Judgments. If one or more judgments, orders, or awards for the payment
of money involving an aggregate amount of $250,000, or more (except to the
extent covered (other than to the extent of customary deductibles) by insurance
pursuant to which the insurer has not denied coverage) is entered or filed
against a Loan Party or any of its Subsidiaries, or with respect to any of their
respective assets, and either:

 

(a)      there is a period of forty-five (45) consecutive days at any time after
the entry of any such judgment, order, or award during which (1) the same is not
discharged, satisfied, vacated, or bonded pending appeal, or (2) a stay of
enforcement thereof is not in effect;

 

(b)      enforcement proceedings are commenced with respect to any such
judgment, order, or award against any Loan Party, any subsidiary of a Loan
Party, or any property of a Loan Party or a subsidiary of a Loan Party;

 

(c)     any Person becomes a lien creditor (as defined in the Code) as a result
of or based upon any such judgment, order or award entered or rendered in the
Geveran Litigation; or

 

(d)     as a result of the entry or rendition of any such judgment, order or
award, any Lien in favor of Agent is (or with the passage of time, may become)
subordinate in priority to any Lien arising from or created by such judgment,
order or award.”

 

(b)     Article 8 of the Loan Agreement is hereby amended by adding the
following provision as Section 8.12:

 

 
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“8.12     Geveran Defaults

 

(a)     If any Lien with respect to any of the Collateral shall exist in favor
of any Person (including, without limitation, Sponsor, any of Sponsor's
Affiliates, any Geveran Surety or any Geveran Indemnitor) with respect to or
otherwise in connection with a Geveran Appeal Bond;

 

(b)     If any Loan Party other than LSGC shall agree to become liable for any
obligations with respect to a Geveran Appeal Bond, whether as a guarantor,
indemnitor or otherwise;

 

(c)     If any payment by any Loan Party shall become due with respect to a
Geveran Appeal Bond (unless such payment is paid in full by a Geveran
Subordinated Creditor when it becomes due); provided, that this clause (xxi)
shall not prohibit LSGC from paying premium payments to one or more Geveran
Sureties in connection with the posting of one or more Geveran Appeal Bonds, as
long as the aggregate amount of all such premium payments paid by LSGC does not
exceed $200,000;

 

(d)     If any Geveran Surety shall make any payment with respect to a Geveran
Appeal Bond and shall not be reimbursed in full for such payment by a Geveran
Subordinated Creditor within five (5) Business Days thereafter;

 

(e)     If any Loan Party, Sponsor or Affiliate of Sponsor shall execute any
agreement other than the Second Lien Geveran Appeal Bond Rights Subordination
Agreement in favor of the Loan Parties (or any of them) that provides for the
subordination of any Geveran Appeal Bond Rights;

 

(f)     If any Loan Party shall enter into any documentation in respect of a
Geveran Appeal Bond without Agent's written consent (not to be unreasonably
withheld or delayed) other than (A) the Specified Geveran Documents, and (B)
corporate or other company authorization documentation that does not alter the
Specified Geveran Documents or otherwise contravene the provisions of this
Agreement, as long as the form of such authorization documentation is provided
to Agent prior to the execution thereof;

 

(g)     If Sponsor, any of Sponsor’s Affiliates, or any Loan Party shall enter
into any Specified Appeal Bond Documents unless:

 

(i)     concurrently with the execution of such Specified Appeal Bond Documents,
LSGC shall provide Agent with true, correct and complete copies of such
Specified Appeal Bond Documents, together with a certification from an
authorized officer of LSGC that such copies are true, correct and complete;

 

 
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(ii)     prior to the execution of such Specified Appeal Bond Documents, LSGC
shall have provided to Agent fully executed copies of the Geveran Appeal Bond
Rights Subordination Agreement and, if a Second Lien Geveran Appeal Bond Rights
Subordination Agreement is executed in connection with such documents, (1) a
true, correct and complete copy of such Second Lien Geveran Appeal Bond Rights
Subordination Agreement, and (2) a fully executed copy of the Specified Geveran
Intercreditor Amendment; and

 

(iii)     the “Bond Amount” (as defined in the Specified Appeal Bond Documents)
is not greater than the lesser of (A) $25,000,000, and (B) 50% of the amount of
the judgment, order or award entered or rendered in the Geveran Litigation
pursuant to the Order Entry; or

 

(h)     whether pursuant to the Specified Geveran Documents or otherwise in
connection with a Geveran Appeal Bond, any Person (including, without
limitation, Sponsor, any of Sponsor's Affiliates, any Geveran Surety or any
Geveran Indemnitor) shall have recourse against any Loan Party or any Collateral
that is in either case senior to or pari passu with the interests of Agent or
any Lender (other than pari passu recourse with respect to LSGC (but not to any
other Loan Party or any Collateral) for amounts that are to be reimbursed by a
Geveran Subordinated Creditor in accordance with Section 8.12(d), as long as
such amounts are actually reimbursed by a Geveran Subordinated Creditor in
accordance with Section 8.12(d) and not reimbursed by LSGC or any other Loan
Party); provided, that it is understood and agreed that certain Persons who
procure or participate in the procurement of a Geveran Appeal Bond may have
rights of contribution or indemnification from LSGC or other Loan Parties and
any such rights of contribution or indemnification (collectively, “Geveran
Appeal Bond Rights”) in favor of the Sponsor or any of Sponsor’s Affiliates
shall be subject to the Geveran Appeal Bond Rights Subordination Agreement.” 

 

3.     The definition of “Change of Control” set forth in Schedule 1.1 of the
Loan Agreement is hereby amended by deleting the reference to “or (e) the
failure of Borrower to own directly or indirectly one hundred percent (100.0%)
of the voting power of the total outstanding Voting Stock of any other Loan
Party, except as expressly permitted under Section 6.3 hereof.” and replacing it
with the following:

 

“(e) the failure of Borrower to own directly or indirectly one hundred percent
(100.0%) of the voting power of the total outstanding Voting Stock of any other
Loan Party, except as expressly permitted under Section 6.3 hereof; or (f) a
Change of Control as defined in any Certificate of Designation.”

 

 
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4.     Schedule 1.1 of the Loan Agreement is hereby amended by deleting the
following definitions of “Certificates of Designation” and “Fixed Charge
Coverage Ratio” and by substituting the following in lieu thereof:

 

“Certificates of Designation” shall mean, collectively, the Certificates of
Designation filed with the Delaware Secretary of State with respect to the
Series H Preferred Shares of Borrower, the Series I Preferred Shares of
Borrower, the Series J Preferred Shares of Borrower and the Series K Preferred
Shares of Borrower, in each case as in effect on the Third Amendment Date.

 

“Fixed Charge Coverage Ratio” means a ratio of (i) EBITDA, to (ii) for Revolving
Borrowers on a consolidated basis, interest expense (but excluding interest paid
in property other than cash and any other interest expense not paid in cash
during such period), plus payments of principal actually made or scheduled to be
made with respect to indebtedness (other than scheduled but unpaid payments on
indebtedness subordinated to the Obligations and principal payments on the
revolving loans under the Revolving Loan Agreement), plus payments with respect
to capitalized leases, plus payments with respect to taxes, plus dividends and
distributions, plus unfinanced capital expenditures; provided, that for the
purposes of calculating Fixed Charge Coverage Ratio (A) for each of the
twelve-month periods ending on September 30, 2015 and December 31, 2015, clause
(i) of this definition shall be increased by Twenty One Million Five Hundred
Thousand Dollars ($21,500,000), and (B) for each of the twelve-month periods
ending on March 31, 2016 and June 30, 2016, clause (i) of this definition shall
be increased by Ten Million Dollars ($10,000,000).

 

5.     Schedule 1.1 of the Loan Agreement is hereby amended by adding the
following definitions in the correct alphabetical order as follows:

 

“Cash Equity Contribution” shall mean a cash equity contribution on or about the
Third Amendment Date in the form of Series J Convertible Preferred Stock.

 

“Geveran Appeal Bond” shall mean any bond posted in connection with the Geveran
Litigation, including the Appeal Bond.

 

“Geveran Appeal Bond Rights” shall have the meaning set forth in Section
8.12(h).

 

“Geveran Appeal Bond Rights Subordination Agreement” shall mean an agreement in
the form attached as Exhibit B to the Third Amendment.

 

“Geveran Indemnitor” shall mean any obligor or indemnitor under a Geveran Appeal
Bond.

 

 
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“Geveran Subordinated Creditor” shall mean any Person that is a "Sponsor
Affiliate" under (and as defined in) the Geveran Appeal Bond Rights
Subordination Agreement or that otherwise is a holder of "Subordinated
Obligations" (as defined in the Geveran Appeal Bond Rights Subordination
Agreement).

 

“Geveran Surety” shall mean any surety with respect to a Geveran Appeal Bond.

 

“Second Lien Geveran Appeal Bond Rights Subordination Agreement” shall mean an
agreement identical in form (other than changes that solely consist of inserting
the date of such agreement) to the draft of such agreement attached as Exhibit C
to the Third Amendment, as long as such agreement does not become effective
prior to the effectiveness of the Geveran Appeal Bond Rights Subordination
Agreement or the Specified Geveran Intercreditor Amendment.

 

“Specified Appeal Bond Documents” shall mean documentation identical in form to
the drafts of such documentation that are attached as Exhibit A to the Third
Amendment, among Loan Parties, Agent and Lenders, other than changes that solely
consist of inserting the dates of such documents and confirming the final "Bond
Amount" (as defined in such documentation).

 

“Specified Geveran Documents” shall mean the Specified Appeal Bond Documents,
the Specified Geveran Intercreditor Amendment, the Geveran Appeal Bond Rights
Subordination Agreement and the Second Lien Geveran Appeal Bond Rights
Subordination Agreement.

 

“Specified Geveran Intercreditor Amendment” shall mean an agreement in the form
attached as Exhibit D to the Third Amendment.

 

“Third Amendment” means that certain Third Amendment to this Agreement dated
September 10, 2015, among Borrower, Agent and Lenders.

 

“Third Amendment Date” means September 10, 2015.

 

6.     Affirmative Covenant. Within ten (10) Business Days after the Order
Entry, or such later date to which the Agent may consent in its sole discretion,
Borrower shall have delivered to the Agent true, correct and complete executed
copies of the Specified Appeal Bond Documents, in the form of Exhibit A attached
hereto. For avoidance of doubt, compliance with this Section 4 shall be deemed
to satisfy Section 5.18 of the Loan Agreement. 

 

7.     Conditions. The effectiveness of this Amendment is subject to the
following conditions:

 

 
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(a)     the execution and delivery of this Amendment by the Borrower, Agent, and
each of the Lenders;

 

(b)     after giving effect to this Amendment, the representations and
warranties set forth herein shall be true and correct and no Default or Event of
Default shall exist and be continuing;

 

(c)     Borrower shall have delivered to the Agent substantially final forms of
the Geveran Appeal Bond Rights Subordination Agreement, which is attached hereto
as Exhibit B, the Second Lien Geveran Appeal Bond Rights Subordination
Agreement, which is attached hereto as Exhibit C, and the Specified Geveran
Intercreditor Amendment, which is attached hereto as Exhibit D; and

 

(d)     Borrower shall have paid all fees, costs and expenses of the Agent and
Lenders in connection with this Amendment, including, without limitation,
reasonable fees, costs and expenses of the Agent’s and Lenders’ counsel.

 

8.     Representations and Warranties. The Borrower hereby represents and
warrants to the Agent and each Lender as follows:

 

(a)     Borrower is a corporation, duly organized, validly existing and in good
standing under the laws of the jurisdiction of its formation;

 

(b)     Borrower has the power and authority to execute, deliver and perform its
obligations under this Amendment;

 

(c)     the execution, delivery and performance by the Borrower of this
Amendment has been duly authorized by all necessary action and does not and will
not require any registration with, consent or approval of, notice to or action
by, any Person (including any Governmental Authority);

 

(d)     this Amendment constitutes the legal, valid and binding obligation of
the Borrower, enforceable against Borrower in accordance with its terms;

 

(e)     immediately before and after giving effect to this Amendment, no Default
or Event of Default exists or shall exist immediately following the consummation
of the changes contemplated hereby;

 

(f)     all representations and warranties contained in the Loan Agreement are
true and correct as of the date hereof, except to the extent made as of a
specific date, in which case each such representation and warranty is true and
correct as of such date; and

 

(g)     by its signature below, Borrower agrees that it shall constitute an
Event of Default if any representation or warranty made herein is untrue or
incorrect in as of the date when made or deemed made.

 

 
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9.     Agreement in Full Force and Effect as Amended. Except as specifically
amended hereby, the Loan Agreement and the other Loan Documents shall remain in
full force and effect and are hereby ratified and confirmed as so amended.
Except as expressly set forth herein, this Amendment shall not be deemed to be
an amendment or modification of any provisions of the Loan Agreement or any
other Loan Document or any right, power or remedy of the Lenders, nor constitute
a waiver of any provision of the Loan Agreement, any other Loan Document, or any
other document, instrument and/or agreement executed or delivered in connection
therewith or of any Default or Event of Default under any of the foregoing, in
each case, whether arising before or after the date hereof or as a result of
performance hereunder or thereunder. This Amendment also shall not preclude the
future exercise of any right, remedy, power, or privilege available to the
Lenders whether under the Loan Agreement, the other Loan Documents, at law or
otherwise and nothing contained herein shall constitute a course of conduct or
dealing among the parties hereto. All references to the Loan Agreement shall be
deemed to mean the Loan Agreement as modified hereby. This Amendment shall not
constitute a novation or satisfaction and accord of the Loan Agreement or the
other Loan Documents, but shall constitute an amendment thereof. The parties
hereto agree to be bound by the terms and conditions of the Loan Agreement and
the Loan Documents as amended by this Amendment, as though such terms and
conditions were set forth herein. Each reference in the Loan Agreement to “this
Amendment,” “hereunder,” “hereof,” “herein” or words of similar import shall
mean and be a reference to the Loan Agreement as amended by this Amendment, and
each reference herein or in any other Loan Document to the “Loan Agreement”
shall mean and be a reference to the Loan Agreement as amended and modified by
this Amendment.

 

10.     Counterparts. This Amendment may be executed by one or more of the
parties to this Amendment and any number of separate counterparts, each of which
when so executed, shall be deemed an original and all said counterparts when
taken together shall be deemed to constitute but one and the same instrument.

 

11.     Successors and Assigns. This Amendment shall be binding upon and inure
to the benefit of each party hereto and their respective successors and
assigns.     

 

12.     Further Assurance. Borrower hereby agrees from time to time, as and when
requested by the Agent or any Lender, to execute and deliver or cause to be
executed and delivered, all such documents, instruments and agreements and to
take or cause to be taken such further or other action as the Agent or such
Lender may reasonably deem necessary or desirable in order to carry out the
intent and purposes of this Amendment, the Loan Agreement, and the Loan
Documents.

 

13.     GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO CONFLICTS OF LAW PROVISIONS.

 

14.     Severability. Wherever possible, each provision of this Amendment shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Amendment shall be prohibited by or invalid under
such law, such provision shall be ineffective to the extent of such prohibition
or invalidity without invalidating the remainder of such provision or the
remaining provisions of this Amendment.

 

 
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15.     Reaffirmation. Borrower as debtor, grantor, pledgor, or in any other
similar capacity hereby ratifies and reaffirms all of its payment and
performance obligations, contingent or otherwise, under each of the Loan
Documents to which it is a party. Borrower hereby consents to this Amendment and
acknowledges that each of the Loan Documents remains in full force and effect
and is hereby ratified and reaffirmed. Except as expressly set forth herein, the
execution of this Amendment shall not operate as a waiver of any right, power or
remedy of the Agent or any Lender, constitute a waiver of any provision of any
of the Loan Documents or serve to effect a novation of the Obligations.

 

16.     Acknowledgment of Obligations. The Borrower hereby acknowledges,
confirms and agrees that as of the close of business on September 10, 2015, the
Borrower is indebted to the Lenders in respect of the Term Loans in the
principal amount of $31,461,238.29, with accrued and outstanding cash interest
in the amount of $63,187.28 and accrued and outstanding Closing Date PIK
Interest in the amount of $12,234.93. The Borrower hereby acknowledges, confirms
and agrees that all such Term Loans, together with interest accrued and accruing
thereon, and all fees, costs, expenses and other charges now or hereafter
payable by the Borrower to the Agent and Lenders, are unconditionally owing by
the Borrower to the Agent and Lenders, as applicable, without offset, defense or
counterclaim of any kind, nature or description whatsoever.

 

17.     Acknowledgment of Rights; Release of Claims. Borrower hereby
acknowledges that: (a) it has no defenses, claims or set-offs to the enforcement
by any Lender or the Agent of Borrower’s liabilities, obligations and agreements
on the date hereof; (b) to its knowledge, each Lender and the Agent have fully
performed all undertakings and obligations owed to it as of the date hereof; and
(c) except to the limited extent expressly set forth in this Amendment, each
Lender and the Agent do not waive, diminish or limit any term or condition
contained in the Loan Agreement or any of the other Loan Documents. Borrower
hereby remises, releases, acquits, satisfies and forever discharges the Lenders
and Agent, their agents, employees, officers, directors, predecessors, attorneys
and all others acting or purporting to act on behalf of or at the direction of
the Lenders and Agent (“Releasees”), of and from any and all manner of actions,
causes of action, suit, debts, accounts, covenants, contracts, controversies,
agreements, variances, damages, judgments, claims and demands whatsoever, in law
or in equity, which any of such parties ever had, now has or, to the extent
arising from or in connection with any act, omission or state of facts taken or
existing on or prior to the date hereof, may have after the date hereof against
the Releasees, for, upon or by reason of any matter, cause or thing whatsoever
through the date hereof. Without limiting the generality of the foregoing,
Borrower waives and affirmatively agrees not to allege or otherwise pursue any
defenses, affirmative defenses, counterclaims, claims, causes of action, setoffs
or other rights they do, shall or may have as of the date hereof, including, but
not limited to, the rights to contest: (a) the right of Agent and each Lender to
exercise its rights and remedies described in this Amendment; (b) any provision
of this Amendment or the Loan Documents; or (c) any conduct of the Lenders or
other Releasees relating to or arising out of the Loan Agreement or the other
Loan Documents on or prior to the date hereof.

 

 
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18.     Tax Treatment. The Loan Parties do not believe that the amendments made
pursuant to this Amendment shall be treated as a “significant modification” of
the Term Loans under Treasury Regulation 1.1001-3. 

 

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

 

 
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IN WITNESS WHEREOF, each of the undersigned has executed this Amendment as of
the date set forth above.

 

 

BORROWER:

 

              LIGHTING SCIENCE GROUP CORPORATION,     a Delaware corporation  

 

 

 

 

 

 

 

 

 

By:

/s/ Edward D. Bednarcik

 

 

 

Name: Edward D. Bednarcik    

 

 

 

Title: Chief Executive Officer     

 

                  AGENT:           MEDLEY CAPITAL CORPORATION,     a Delaware
corporation                     By: /s/ Richard T. Allorto     Name:  Richard T.
Allorto     Title: Chief Financial Officer                     LENDERS:        
  MEDLEY CAPITAL CORPORATION,     a Delaware corporation                     By:
/s/ Richard T. Allorto      Name:    Richard T. Allorto     Title:   Chief
Financial Officer                             MEDLEY OPPORTUNITY FUND II LP,    
a Delaware limited partnership                 By: /s/ Richard T. Allorto    
Name:  Richard T. Allorto     Title:  Chief Financial Officer